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Unformatted text preview: C H A P T E R 24 PRESENTATION AND DISCLOSURE IN FINANCIAL REPORTING This IFRS Supplement provides expanded discussions of accounting guidance under International Financial Reporting Standards (IFRS) for the topics in Intermediate Accounting. The discussions are organized according to the chapters in Intermediate Accounting (13 th or 14 th Editions) and therefore can be used to supplement the U.S. GAAP requirements as presented in the textbook. Assignment material is provided for each supplement chapter, which can be used to assess and reinforce student understanding of IFRS. DISCLOSURE ISSUES Differential Disclosure A trend toward differential disclosure is also occurring. 1 The IASB has developed IFRS for small- and medium-sized entities (SMEs). SMEs are entities that publish general-purpose financial statements for external users but do not issue shares or other securities in a public market. Many believe a simplified set of standards makes sense for these companies because they do not have the resources to implement full IFRS. Simplified IFRS for SMEs is a single standard of fewer than 230 pages. It is de- signed to meet the needs and capabilities of SMEs, which are estimated to account for over 95 percent of all companies around the world. Compared with full IFRS (and many national accounting standards), simplified IFRS for SMEs is less complex in a number of ways: • Topics not relevant for SMEs are omitted. Examples are earnings per share, interim financial reporting, and segment reporting. • Simplified IFRS for SMEs allows fewer accounting policy choices. Examples are no option to revalue property, equipment, or intangibles, and no corridor approach for actuarial gains and losses. • Many principles for recognizing and measuring assets, liabilities, revenue, and expenses are simplified. For example, goodwill is amortized (as a result, there is no annual impairment test) and all borrowing and R&D costs are expensed. • Significantly fewer disclosures are required (roughly 300 versus 3,000). • To further reduce standard overload, revisions to the IFRS for SMEs will be limited to once every three years. Thus, the option of using simplified IFRS helps SMEs meet the needs of their financial statement users while balancing the costs and benefits from a preparer perspective.  2 Chapter 24 Presentation and Disclosure in Financial Reporting · 24–1 U.S. GAAP PERSPECTIVE Due to the broader range of judgments allowed in more principles-based IFRS, note disclosures generally are more expansive under IFRS compared to U.S. GAAP. 1 The IASB is evaluating disclosure issues such as those related to fair value measurements and management commentary. However, as noted by one standard-setter, the usefulness of expanded required disclosure also depends on users’ ability to distinguish between disclosed versus recognized items in financial statements. Research to date is inconclusive on this matter....
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- Spring '11