At issuance, an issuer must classify separately the debt and
equity components of a
single compound instrument such as convertible debt and
debt issued with detachable
rights or warrants.
A financial asset and a financial liability should be offset
other costs to bring inventory to its present location and
condition, but not foreign
For inventory items that are not interchangeable, specific
costs are attributed to the
specific individual items of inventory.
A simple analogy may help to explain this. Three entities
each issue one-year bonds for proceeds
of 100. The bonds require a single payment of 105 in one
year. The first entity invests the
proceeds in one-year government securities bearing interest
b) Measuring contractual rights to future investment
management fees at an amount that
exceeds their fair value as implied by a comparison with
current fees charged by other
market participants for similar services;
c) Using non-uniform accounting policie
- Rendering or receiving of services.
- Transfers of research and development.
- Transfers under license agreements.
- Transfers under finance arrangements (including loans and
- Provision of guarantees or collateral.
- IASB standards and interpretations, taking into account any
relevant IASB implementation
- In the absence of a standard, look to the requirements and
guidance in IASB standards
and interpretations dealing with similar and related issues;
IFRS 1 First-time Adoption of International Financial
Reporting Standards was issued in June
2003 and applies to an entity whose first IFRS financial
statements are for a period beginning on
or after 1 January 2004. IFRS 1 also applies to each interim
12, Income Taxes), assets arising from employee benefits
(see IAS 19, Employee Benefits),
financial assets (see IAS 39, Financial Instruments:
Recognition and Measurement), investment
property measured at fair value (see IAS 40, Investment
capital firm, mutual fund, or unit trust, in which case IAS 39
must be followed.
The key characteristic of a JV is a contractual arrangement
to share control. JVs may be
classified as jointly controlled operations, jointly controlled
assets, or jointly c
minority interests, and after deduction of preference
- Denominator: Weighted average number of shares
outstanding during the
Diluted EPS calculation:
- Earnings numerator: The net profit for the period
attributable to ordinary shares
to match it with the related costs), and not the capital
approach (credited directly to
Income-related grants may either be presented as a credit in
the income statement or
deduction in reporting the related expense.
benefits); pensions; post-employment life insurance and
medical benefits; and other long-term
employee benefits (long-service leave, disability, deferred
compensation, and long-term profitsharing
Summary: Underlying principle: the cost of pr
Planned future expenditure, even where authorised by the
board of directors or equivalent
governing body, is excluded from recognition, as are
accruals for self-insured losses, general
uncertainties, and other events that have not yet taken place.
statements. Some of those models were extended later to
require some financial assets to be
measured at fair value, with changes in fair value recognised
directly in equity (i.e. the same
treatment as for available-for-sale financial assets under IAS
Lessors must spread initial direct costs over the lease term
Accounting for sale and leaseback transactions depends on
whether these are
essentially finance or operating leases.
Interpretations SIC 15, Operating Leases
about those contracts.
3. How do IFRSs treat financial assets that insurers
hold to back their insurance
IFRS 4 does not change the measurement of financial assets
held by insurers to back
insurance contracts. These assets are within the scope
and 12 of IAS 8 which specify a hierarchy of sources of
IFRS GAAP in the absence
of a specific standard. Thus an entity adopting IFRS 6 may
continue to use its existing
Requires an impairment test when there is an indication
which does not change the valuation of investments at
balance sheet date).
Dividends proposed or declared on equity instruments after
the balance sheet date should
not be recognised as a liability at the balance sheet date.
Disclosure is required.
translated at exchange rates at the dates of the transactions;
- all resulting exchange differences are recognised as a
separate component of
Special rules for translating into a presentation currency
the results and financial position
All exchanges of property, plant, and equipment should be
measured at fairvalue,
including exchanges of similar items, unless the exchange
transaction lacks commercial
substance or the fair value of neither the asset received nor
the asset given up is re
A temporary difference is a difference between the carrying
amount of an asset or
liability and its tax base.
Deferred tax liabilities must be recognized for the future tax
consequences of all taxable
temporary differences with three exceptions:
subsidiaries either at cost or as investments under IAS 39.
Interpretations SIC 12, Consolidation Special
An enterprise should consolidate a special purpose entity
(SPE) when, in substance, the
enterprise controls the SPE.
IAS 28 Investm
including guidelines for their structure and the minimum
Fundamental principles underlying the preparation of
financial statements, including going
concern assumption, consistency in presentation and
classification, accrual basis of acco
IFRS 4 Insurance Contracts was issued in March 2004
and is applicable for annual periods
beginning on or after 1 January 2005.
IFRS 4 prescribes the financial reporting for insurance
contracts by any entity that issues such
contracts. It applies to insura
Deferred tax assets (IAS 12 Income Taxes);
Assets arising from employee benefits (IAS 19 Employee
Financial assets within the scope of IAS 39 Financial
Instruments: Recognition and
Non-current assets that are accounted for in a
the purpose of identifying its business segments and
If internal segments are not geographical or
products/service-based, then look to next
lower level of internal segmentation to identify reportable
Guidance is provided