IFRS Glimpse PDF Summary

IFRS GLIMPSE AK  IFRS GLIMPSE IFRS Glimpse (IG) has been created to assist in gaining a high-level overview of IASB Conceptual Framework, International Accounting Standards (IASs) and International Financial Reporting Stan...

IFRS GLIMPSE AK  IFRS GLIMPSE IFRS Glimpse (IG) has been created to assist in gaining a high-level overview of IASB Conceptual Framework, International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs). IG does not contain SIC and IFRIC interpretations. IG provides a summary in the form of flowcharts and decisions tree about the recognition and measurement requirements of the IFRSs issued by the International Accounting Standards Board (IASB). IG includes all IASs and IFRSs issued and effective as at June 2020. IG publication has been carefully prepared, but it has been written in overall terms and should be read as broad guidance only and does not constitute our professional advise. IG cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein AK without obtaining specific professional advice. Moreover, no representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. AK CONTENTS PAGE IFRS GLIMPES IASB CONCEPTUAL FRAMEWORK……………………………….……………………………………………….………1 IAS 1 PRESENTATION OF FINANCIAL STATEMENTS…………………………………………………………….…2 IAS 2 INVENTORIES………………………………………………………………………………………………………….….3 IAS 7 STATEMENT OF CASH FLOWS………………………………………………………………………………….….4 IAS 8 ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS……………5 IAS 10 EVENTS AFTER THE REPORTING PERIOD…………………………………………………………………..6 IAS 12 INCOME TAXES ………………………………………………………………………………………………………..7 IAS 16 PROPERTY, PLANT AND EQUIPMENT ……………………………………………………………………….8 IAS 19 EMPLOYEE BENEFITS …………………………………………………………………………………………….…9 IAS 20 ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURES OF GOVERNMENT ASSISTANCE……………………………………………………………………………………………………………………….10 IAS 21 THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES……………………………………..11 IAS 23 BORROWING COSTS……………………………………………………………………………………………….12 IAS 24 RELATED PARTY DISCLOSURES………………………………………………………………………………..13 IAS 26 ACCOUNTING AND REPORTING BY RETIREMENT BENEFIT PLANS…………………………..14 IAS 27 SEPARATE FINANCIAL STATEMENTS………………………………………………………………………..15 IAS 28 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES…………………………………………….16 IAS 29 FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES………………………………..17 IAS 32 FINANCIAL INSTRUMENTS: PRESENTATION…………………………………………………………….18 AK CONTENTS (CONTINUED) PAGE IAS 33 EARNINGS PER SHARE……………………………………………………………………….……………………..20 IAS 34 INTERIM FINANCIAL REPORTING………………………………………………………….…………………..21 IAS 36 IMPAIRMENT OF ASSETS………………………………………………………………………….……………….23 IAS 37 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS………….……………….24 IAS 38 INTANGIBLE ASSETS………………………………………………………………………………….………………26 IAS 40 INVESTMENT PROPERTY……………………………………………….………………………………………….27 IAS 41 AGRICULTURE………………………………………………………………………….……………………………….28 IFRS 1 FIRST-TIME ADOPTION OF IFRSs…………..………………………………….………………………….…...30 IFRS 2 SHARE-BASED PAYMENT……………………………………………………………………………………….....31 IFRS 3 BUSINESS COMBINATIONS…………………………………………………………………………………….....32 IFRS 4 INSURANCE CONTRACTS…………………………………………………………………………………………..33 IFRS 5 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS………………34 IFRS 6 EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES…….…………………………35 IFRS 7 FINANCIAL INSTRUMENTS: DISCLOSURES…………………………………….…………………………..36 IFRS 8 OPERATING SEGMENTS…………………………………………………………………………………………....37 IFRS 9 FINANCIAL INSTRUMENTS………………………………………………………………………………………..38 IFRS 10 CONSOLIDATED FINANCIAL STATEMENTS……………………………………………………………….40 IFRS 11 JOINT ARRANGEMENTS….…………………………………………………………………………..............43 AK CONTENTS (CONTINUED) PAGE IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES……….…………………….…………...........44 IFRS 13 FAIR VALUE MEASUREMENT……………………………………………………………………………….45 IFRS 14 REGULATORY DEFERRAL ACCOUNTS……………………….…………………………….…………….46 IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS….……………………………….….………..47 IFRS 16 LEASES………………………………………………….……………………………………………….....………..49 IFRS 17 INSURANCE CONTRACTS……………………….……………………………………………….…...........52 ABOUT THE AUTHOR and SUPPORT TEAM………………………………………………………………………55 REFERENCES………………………………………………………………………………………..………………………….56  AK IASB Conceptual Framework Issued March 2018 Page#1 Status and Purpose Focus Theoretical principles Assist IASB in standard setting Bedrock of IFRS Doesn’t override IFRS Objectives of Financial statements Underlying Elements of Financial Users of financial Qualitative characteristics general-purpose and reporting assumption Statements information of useful financial entities financial reporting information Going Concern Assets To provide Primary users Liabilities financial Other users Reporting Financial Equity information Fundamental Enhancing Entities Statements Incomes about the Expenses reporting entity Unit of Account Relevant Comparative that is useful to Faithful Verifiability existing and Recognition and representation Timeliness potential Derecognition Criteria Understandability investors, lenders and creditors Measurement Basis Financial capital maintenance Capital and Capital Physical capital maintenance Maintenance AK Effective date: Periods beginning on or after 1 Jan 2005 Page#2 IAS 1 Presentation of Financial Statements Legends: Financial statements = FS Overall Considerations Components of Financial Statements Financial position = FP Structure & Contents Statement of profit or Statement of cash Statement of changes in Fair presentation Statement of FP Notes loss and other flows equity Compliance & structure and content comprehensive income Departure Going concern Statement of Current and Other Cash and ▪ Operating Total Transactions Accrual basis compliance with Comprehensive Cash activities; comprehensive with Materiality & Non-Current IFRS; Income Equivalence ▪ Investing income shareholders Aggregation distinction Summary of activities; Offsetting significant Expenses by ▪ Financing Reporting frequency Will not be reclassified accounting Function activities. Comparative subsequently to profit policies; Information Expenses by Nature or loss Supporting Consistency May be reclassified calculation on each subsequently to profit item presented in or loss when specific the financial conditions are met statements; Other disclosures: Contingent liabilities. Commitments. Non-financial disclosures. AK IAS 2 Inventories Effective date: Periods beginning on or after 1 Jan 2005 Page#3 Scope: All inventories except: Legends: ▪ FI (IAS 32, IFRS 9 & Inventories are measured at lower of cost and net releasable value (NRV). Fair value = FV IAS 39. Financial Instruments = FI ▪ Biological assets (IAS Overhead = OH 41). Note: Definition: Cost of Net Realizable ▪ Does not apply to 1. Inventories: Inventory Value Inventories are assets: producers of agriculture & forest Held for sale in products measured ordinary course of at NRV. business; For finished goods and work in process ▪ Minerals & mineral In process of inventory products measured Cost of purchase of direct material Excludes: production for such at NRV. Add + irrecoverable taxes ▪ Abnormal waste sale; Estimated selling price in the ordinary course of ▪ Commodity brokers Add + transport & handling charges ▪ Warehouse costs (unless In the form of business who measure Less – trade volume rebates/discounts necessary for production materials or supplies less – Estimated costs of completion inventory at FV less Costs of conversion process) to be consumed in Less – estimated costs to make such sale cost to sell. Direct labor ▪ Admin expenses production process or Add + other direct cost ▪ Selling expenses in rendering of Add + factory overhead cost (fixed and ▪ Interest charges / services. variable) borrowing cost, except in NRV for material and supplies inventory is its the cases where replacement cost. inventory is a qualifying Cost formulas: asset under IAS 23 Disclosure requirement: ▪ For non-interchangeable Standard cost ▪ Accounting policies adopted in measuring inventories, including the costing items method methods. - Specific identification ▪ Total carrying amount of inventories and the carrying amount in classifications. ▪ For interchangeable items ▪ Carrying amount of inventories carried at fair value less costs to sell. - FIFO or Retail ▪ Amount of inventories recognised as an expense during the period. - Weighted average cost method ▪ Amount of any write-down of inventories recognised as an expense in the period. ▪ Amount of any reversal of any previous write-down that is recognised in profit or loss for the period. ▪ Circumstances or events that led to the reversal of a write-down of inventories to net realisable value. ▪ Carrying amount of inventories pledged as security for liabilities.  AK IAS 7 Statement of Cashflows Effective date: Periods beginning on or after 1 Jan 1994 Page#4 Legend: Long term assets = LTA Operating activities Investing activities Financing activities Cash and Cash Equivalent Single entity Definition: Relates to statement Relates to non- Relates to owner's Unrestricted Cash in 1. Cash & cash of profit or loss current assets and equity, non-current hand or at bank Split finance lease equivalence: current investments liabilities and short- Short term, highly instalments ▪ Short term not part of cash & term borrowings liquid, readily Interest = operating (maturity 3 Cash generated cash equivalent convertible to known activities months or less); from operations amount of cash Consolidated Capital = financing ▪ Highly liquid Received or paid interest and dividends are disclosed Less bank over-draft statement of activities investments; separately and can be classified as operating, cashflows ▪ Readily Direct Indirect investing or financing, based on their nature and as original maturity is 3 Method Method long as they are consistently treated from period to months or less, convertible to period. irrespective of known amounts of maturity timing post cash. Important to consider: balance date ▪ Subject to ▪ Gross Vs. Net cash flows insignificance risk ▪ Foreign currency cash flows of change in value. ▪ Cash flow per share is not a required disclosure ▪ Net reporting by financial institutions ▪ Reporting; forward contracts, futures, options and swaps Dividends Dividends Acquisition / Acquisition ▪ Reporting extra ordinary items paid to NCI received from disposal of of associate ▪ Acquisition and disposal of subsidiary and other group units associates and subsidiary or joint joint ventures venture Required Disclosures Classify as cash The amount of significant cash and cash equivalent balances held by an entity flows from which are not available for use by the group should be disclosed along with a financing Classify as cash Show net cash Show commentary by management. flows from effects as part of payments Recommended Disclosures Investing cash flows from under cash a) The amount of undrawn borrowing facilities, indicating restrictions on their use, if activities Investing activities flows from any; Investing b) The aggregate amount of cash flows that are attributable to the increase in Disclosure in activities operating capacity separately from those cash flows that are required to maintain notes to the operating capacity; and c) The amount of the cash flows arising from the operating, investing and financing statement activities of each reportable segment determined in accordance with IFRS 8.  AK Effective date: Periods beginning on or after 1 Jan 2005 IAS 8 Accounting policies, Change in Accounting Estimates and Errors Page#5 Legends: Accounting policies = AP Accounting policies Changes in Accounting Errors Earning per share = EPS Estimates Definitions: Requirement: Impracticability Exception: 1.Accounting policies: If change in policy is due to new Comparative information The specific principles, standard or interpretation, presented for a particular Requirement: Requirement bases, conventions, rules & apply transitional provisions. prior period need not be Changes in estimates be Retrospective Restatement: practices applied by an If no transitional provision, restated if doing so is recognised prospectively Material prior period errors should be entity in preparing & apply retrospectively. impracticable. corrected retrospectively by: presenting FS. by including them in profit 1.Adjust the carrying amounts of assets and 2.Change in accounting or loss in Retrospective Inability to determine period-specific liabilities at the beginning of the first estimates: 1. The period of change if application: effects: comparative period in the financial Adjustment of the carrying the change affects that amount of an asset or adjust the opening 1. Adjust the carrying amounts of the assets statements for the amount of the period only; or liability, or related expense, balance of each affected and liabilities for the cumulative effect of correction. 2. The period of change resulting from reassessing component of equity for applying the new accounting principle at 2.Offset the amount of the adjustment in and future periods if the Step 1 (if any) by adjusting the opening the expected future benefits the earliest prior period the beginning of the earliest period presented, and change affects both. balance of retained earnings for that and obligations associated presented for which it is practicable to with the asset or liability. present other period. make the computation, which may be the Disclosure: 3.Errors: comparative amounts 3.Adjust the financial statements of each disclosed for each prior current period. Nature & amount of the change Prior period errors are individual prior period presented for the period as if the new 2. Any offsetting adjustment required by affecting current period. effects of correcting the error on that omission from & accounting policy had applying Step 1 is made to each affected The fact that effect of future misstatement in, an entity’s specific period (referred to as the period- always been applied. component of equity (usually to beginning FS for one or more prior period is not disclosed because of specific effects of the error). retained earnings) of that period. periods arising from failure impracticability. to use/misuse of reliable Policies should be information: Inability to determine effects of new When it is difficult to distinguish a Disclosure: consistent for similar Was available when FS accounting principle on any prior periods: change in an accounting policy from Nature of material prior period error. transactions, events or for that period was The new principle is applied prospectively as a change in an accounting estimate, Each prior period presented, if practicable, conditions. issued; of the earliest date that it is practicable to the change is treated as a change in disclose correction to each line item and EPS. Could have been do so. an accounting estimate. Amount of correction at beginning of the reasonably expected to earliest comparative period; be taken in to account in Disclosure: For the current period and each prior period presented, the If retrospective application is impracticable, those FS. Reference of the IFRS or IFRIC that caused amount of the adjustment to each line item affected and explain how error was corrected. Errors include; the change; earnings per share. Subsequent periods need to repeat these mathematical mistake, Nature of the change in policy; Amount of the adjustment relating to prior periods not disclosures. mistake in AP, fraud & Description of the transitional provisions; presented. oversight of fact. AK IAS 10 Events after the Reporting Period Effective date: Periods beginning on or after 1 Jan 2005 Page#6 Legend: Adjusting Events Authorization Date Non-Adjusting Financial statements = FS Events The date when Financial Statements could be Definition: An event after the reporting date considered legally authorised for issuance, generally by An event after the reporting date 1.Events after the that provides further evidence of action of the board of directors of the reporting entity. that is indicative of a condition reporting period: conditions that existed at the that arose after the reporting Favorable or unfavorable reporting date. It serves as the cutoff point after the end of reporting event, that occurs date. It is an event that provides period, up to which the events qualify for treatment as between the reporting It is an event that provides new additional information about per IAS 10. date and the date that information about conditions conditions in existence at the end that did not exist at the end of a the financial statements of a reporting period, reporting period. are authorized for issue. Presentation and Disclosure Examples: Examples: Where non-adjusting events are of such Major business combinations significance a disclosure should be made or disposal of subsidiary; Events that indicate that the An entity shall present and disclose: of the: Major purchase / disposal of going concern assumption in a) the date when the financial a)Nature of the event assets; relation to the whole or part of statements were authorised for issue b)Quantitative impact of an estimate of Destruction of major plant. the entity is not appropriate; b) who gave that authorization for its financial effect, or a statement that Announcing a plan to Settlement after reporting date issuance such an estimate cannot be made discontinue operation. of court cases that confirm the c) If the entity’s owners or others have c) Qualitative impact of such event entity had a present obligation the power to amend the financial However, not all non-adjusting events at reporting date statements after issue, the entity are significant enough to require Non-adjusting events are not shall disclose that fact. disclosure. accounted for in the reporting Adjusting events are accounted for period prior to the period in in the reporting period prior to the which those happened. Updated Disclosure period in which those happened. Instead, specific disclosure is provided considering the a) If an entity receives information after the reporting period about conditions that materiality of the event that existed at the end of the reporting period, it shall update disclosures that relate to has happened. those conditions, in the light of the additional information. b) In some cases, an entity needs to update the disclosures in its financial statements to reflect information received after the reporting period, even when the information does not affect the amounts that it recognises in its financial statements. AK IAS 12 Income Taxes Effective date: Periods beginning on or after 1 Jan 1998 Page#7 Tax payable on profits for the year Tax on any part of accounting profit (loss) which is payable Legends: computed as per tax laws. Current Tax (Amount actually payable to the (recoverable) in future accounting Deferred Tax Goodwill = GW tax authorities) periods Taxable Temporary Difference = TTB Tax for the current and prior Deductible Temporary periods is recognised as a Deferred Tax Deferred Difference = DTD liability to the extent it is Liabilities Tax Assets Carrying Amount = CA unpaid. Tax Base = TB An asset is recognised if amount paid exceeds the respective Recognize liabilities for all taxable temporary Recognize for deductible temporary differences, Definitions: current tax. differences, extent it arises from: unused tax losses, unused tax credits to the extent 1.Temporary difference: ▪ Initial recognition of GW. that taxable profit will be available against which the Difference between the Measurement ▪ Initial recognition of an asset/liability that does not asset can be used, except to the extent it arises from carrying amount of an affect accounting or tax profit and the transaction is the initial recognition of an asset/liability that: asset/liability and its tax not a business combination Is not a business combination; and Current tax liabilities are measured base. ▪ Liabilities from undistributed profits from Doesn’t affect accounting / tax profit. at the amount expected to be paid 2.Tax base of an asset: investments in subsidiaries, branches and associates, Recognize for deductible temporary differences to the taxation authorities, using Is the amount that will be and interests in joint ventures where company can arising from investments in subsidiaries and the tax rates (and tax laws) that deductible for tax control the timing of the reversal. associates to the extent it is probable the temporary have been enacted or substantially purpose against any enacted by the end of the difference will reverse in the foreseeable future and taxable benefits that will reporting period. their will be available tax profit to be utilized. flow to the entity when it Measurement Current tax assets are similarly recovers the carrying measured at the amount expected amount of the asset. to be recovered from the taxation Measure the balance at tax rates that are expected to apply in the period in which the asset is 3.Tax base of a liability: authorities. realized, or liability settled based on tax rates that have been enacted or substantively enacted by Its’ carrying amount less the end of the reporting period; any amount that will be Accounting Treatment Deferred tax assets and liabilities are not discounted; deductible for tax The applicable tax rate depends on how the carrying amount of an asset or liability is recovered or purposes in respect of Type For Asset For Accounting settled; the liability in future of Diff Liability Treatment upon Current and deferred tax shall be recognized as income or an expense and included in profit or loss periods. creation for the period, except to the extent that the tax arises from a transaction or event which is 4.Tax base of income: recognized, in the same or a different period, directly in equity or other comprehensive income, or a Is its’ carrying amount Dr. Tax Expense TTD CA > TB CA < TB business combination; less revenue that will not Cr. Def Tax Liab. Current tax and deferred tax are charged or credited directly to equity or other comprehensive be taxable in future. Dr. Def Tax Asset income if the tax relates to items that are credited or charged, in the DTD CA < TB CA > TB Cr. Tax Income same or a different period, directly to equity or other comprehensive income.  AK IAS 16 Property, Plant and Equipment Effective date: Periods beginning on or after 1 Jan 2005 Page#8 Recognition & Disclosure Measurement Disclosure include but are not Initial Subsequent limited to: Measurement bases used for determining the gross carrying amount; Depreciation methods used; Recognition Measurement Cost Model Revaluation Model Useful lives or the depreciation rates used Gross carrying amount and the Initial record at cost; accumulated depreciation at the ▪ Probable that Cost Less The asset is carried at a Subsequent cost in beginning and end of the period; economic benefits Accumulated revalued amount, being its case it can be A reconciliation of the carrying amount will flow to entity; depreciation Less measured and has an fair value at the date of the at the beginning and end of the period ▪ Cost can be Impairment revaluation, less subsequent showing: additions / assets classified as measured reliably. additional economic benefits flow to the depreciation, provided that held for sale or included in a disposal entity. fair value can be measured group classified as held for sale / other reliably. disposals / acquisitions through Cost comprise: business combinations / changes (a) Purchase price plus import resulting from revaluations and from duties and taxes; impairment losses recognized or (b) Any costs directly Asset Revaluation Changes Recognition reversed in other comprehensive / attributable to bringing the Value increases Recognize in other comprehensive income and in the “revaluation impairment losses recognized in profit asset to the location and or loss / impairment losses reversed in surplus” equity account condition necessary for it to profit or loss / depreciation / exchange be capable of operating in a Value increases, and reverses a Recognize gain in profit or loss to the extent of the previous loss, differences / other changes; manner intended by prior revaluation decrease with the remainder in other comprehensive income Existence and amounts of restrictions management; on title, and PPE pledged as security for (c) The initial estimate of the Value decreases Recognize in profit or loss liabilities; costs of dismantling and Contractual commitments for the removing the item and Value decreases, but there is a Recognize in other comprehensive income to the extent of the acquisition of PPE. restoring the site on which it credit in the revaluation surplus credit, with the remainder in profit or loss is located.  AK IAS 19 Employee Benefits Effective date: Periods beginning on or after 1 Jan 2013 IAS 19 is applicable to both defined contribution and defined benefit pension plans. Page#9 Scope: Applies to all employees’ benefits Short term Post Employment Termination Other Long-term Legends: except IFRS 2 shared- Employee Benefits Benefits Benefits Employee benefits Statement of Financial based payment. Position = SOFP Statement of Payments to be made upon Long-term (sabbatical) leave, Includes normal wages and salaries, compensated Payable after completion of Comprehensive Income = termination of employment under long-term disability benefits absences, profit sharing and bonuses, and such employment. SOCI defined circumstances, generally and, if payable after 12 months non-monetary fringe benefits as health insurance, ▪ Retirement benefits (e-g when employees are induced to beyond the end of the reporting Defined benefit plan = housing subsidies and employer-provided vehicles. pension, life insurance etc.) DBP leave employment before normal period, profit sharing and bonus ▪ Others (e-g post emp. Life retirement age. arrangements and deferred insurance.). Definition: compensation. 1. Employee benefits: all forms of consideration given by an entity in exchange for services Defined Benefit Plan (DBP): Defined Contribution Plan: Multi Employer Plan: Disclosure: rendered or for the IAS 19 prohibits delayed recognition ▪ Entity pay fixed ▪ Post employment plan Defined Contribution Plan: termination of of actuarial gain/losses & past contribution into fund & other than state plans that Amount of expense included in current period earnings. employment. service cost, with actual net defined doesn’t have obligation to pool asset of many entities Defined Benefit Plan: benefit asset/liability in SOFP. pay further contrib. if fund (not under common doesn’t hold sufficient asset 1. A general description of each plan. control). ▪ Recognize contrib. 2. Accounting policy recognition of actuarial gains or losses. ▪ May be DCP or DBP. expense/liability when ▪ If it is DBP, entity may 3. A reconciliation of the plan-related assets and liabilities. SOFP SOCI employee rendered service. apply DCP accounting 4. Amount of plan assets used by the entity itself. when info. Is not available 5. A reconciliation of movements (i.e., changes) during the sufficient to apply reporting period in the net asset or liability. Recognize net defined benefit Actuarial gain/loss in OCI as occur in the accounting requirement of 6. The amount of, and location in profit or loss of, the liability/asset in SOFP. In case of period: DBP> reported amounts of current service cost, net interest surplus in DBP it measures it at Past-service-costs are recorded in P&L as cost (income), remeasurements, past service cost, and lower: incur. effect of any curtailment or settlement. ▪ Surplus in DBP Net interest on net defined benefit Presentation of three 7. The actual return earned on plan assets for the reporting ▪ Asset ceiling (being PV of any liability/asset is recognize in P&L: components of defined economic benefit available in Equal to change of defined benefit period. benefit cost: 8. The principal actuarial assumptions used. form or refund from plan or liability/asset. Determined by multiplying Service cost in P&L; 9. A sensitivity analysis on the significant actuarial reduction in future it to discount rate. Net interest in P&L; assumptions. contribution) using discounted rate in reference to mkt yield at Remeasurement in OCI. 10.A description of the risks and characteristics of the period end on high quality defined benefit plans. quarter bonds.  AK Effective date: Periods beginning on or after 1 Jan 2005 IAS 20 Accounting for Government Grants and Disclosures of Government Assistance Page#10 Scope: Not applies to: ▪ Government Definition: assistance that Types of Grants Disclosure 1. Government Grants: is provided for ▪ Assistance from an entity in the government; form of ▪ In form of resources Disclosure include but are not limited from government; benefits that are available in Grants related Grants related to: ▪ In return to past / determining to Income to Assets ▪ Accounting policy adopted for future compliance taxable income grants, including method of with certain or are statement of financial position conditions relating to determined or presentation; operating activities of the entity; limited to the ▪ Nature and extent of grants basis of income Presentation Recognition recognized in the FS; Presentation Recognition tax liability; ▪ An indication of other forms of ▪ Government government assistance from which participation in Can be There is a reasonable Can be presented The grant is recognized as the entity has directly benefited; the ownership presented in assurance: in two ways: income over the period ▪ Unfulfilled conditions and of an entity; two way: 1. The entity will 1. As deferred necessary to match it with the contingencies attaching to ▪ Government 1. Separately comply to all income; or related costs, for which it is recognized grants. grants covered as “other conditions 2. Deduction from intended to compensate on a by IAS 41. income”. attached to the the assets systematic basis and should 2. Deduction grants; & carrying not be credited directly to Repayment of Government Grants from 2. The grant will be amount. equity. related received. expenses. Repayment of a grant related to income should: 1. First apply against any unamortised deferred income; and Non-Monetary Grant 2. The repayment in excess to step 1, should be recognised immediately as an expense. Government grant may take the form of a transfer of a non-monetary asset, such as grant of a plot of Repayment of a grant related to an asset should be: land or a building in a remote area. In these circumstances the standard prescribes the following 1. Recorded by increasing the carrying amount of the asset or reducing optional accounting treatments: the deferred income balance by the amount repayable; and 1. To account for both the grant and the asset at the fair value of the non- monetary asset; or 2. The cumulative additional depreciation that would have been 2. To record both the asset and the grant at a “nominal amount.” recognised to date as an expense in the absence of the grant should be recognised immediately as an expense.  AK Effective date: Periods beginning on or after 1 Jan 2005 IAS 21 The Effects of Changes in Foreign Exchange Rates Page#11 Monetary Vs. Non- monetary Items: Foreign Currency ? Legends: Monetary items are those Currency other than the functional currency of the entity Net Investments = NI granting or imposing “a Net Realizable Value = right to receive, or an NRV obligation to deliver, a Revalued amount = RA fixed or determinable Financial Statements = FS number of units of Foreign Currency Consolidation of Foreign currency.” In contrast, Transaction Operations Definition: non-monetary items are Functional currency is defined as being those exhibiting “the the currency of the primary economic absence of a right to environment in which an entity receive, or an obligation to Initial Disposal of Loan Forming part of Translation into operates. This is normally, but not Subsequent deliver, a fixed or Recognition Foreign net investment in presentation necessarily, the currency in which that Measurement determinable number of Operation Foreign Operation entity principally generates and currency: units of currency.” expends cash. ▪ Assets & At spot rate; or At Monetary Non-Monetary Liabilities; at Foreign operation is an average rate if Items Items Exchange gains and closing Scope: entity that is a subsidiary, fluctuation is losses to equity on exchange rate ▪ Does not apply to derivates that associate, joint insignificant consolidation only. ▪ Income & come under IFRS 9. However, those arrangement or branch of ▪ At a rate on transaction foreign currency derivatives that are Recorded in SOPL in expenses; at a reporting entity, the date (if the item was on not within the scope of IFRS 9 (e.g., ▪ At closing rate on the separate FS. exchange rate activities of which are historical cost) some foreign currency derivatives reporting date on transaction based in a country or ▪ At a rate on revaluation ▪ Gain/loss is date or that are embedded in other currency other than those date (if the item was contracts), and the translation of recognized in SOPL. average rate. of the reporting entity. carried at revalued The cumulative amount of amounts relating to derivatives from amount). exchange differences that Resulting its functional currency to its was recognized in OCI is Key Notes: exchange gain or presentation currency are within the reclassified to SOPL ▪ No need to present FS in functional currency. A In case the asset is subject to loss in OCI. scope of this standard; (recycled). presentation currency can be selected. impairment under IAS 2 or IAS 36: ▪ Applies in translating the financial ▪ Accounting records must be kept in functional At lower of either: position and financial results of currency. ▪ Cost/CA at historical rate. foreign operations as a result of ▪ A group does not have a functional currency. ▪ NRV/RA at closing rate on consolidation or the equity method; Functional currency is assessed separately for reporting date. and each entity in the group. Translation gain or loss in SOPL. ▪ Applies in translating an entity’s financial statements into a presentation currency.  AK IAS 23 Borrowing Costs Effective date: Periods beginning on or after 1 Jan 2009 Page#12 Definitions: Specific General Disclosure 1. Borrowing costs: Borrowing Borrowing Borrowing costs are interest and other costs incurred by an entity in connection with the Key Notes: Borrowing cost eligible to be Borrowing cost eligible to be ▪ Amount of borrowing borrowing of funds. Borrowing costs that capitalized is actual borrowing capitalized is determined by cost capitalized during 2. Qualifying asset: are directly cost incurred on specific applying weighted average rate on the period; An asset that necessarily attributable to the borrowing general (overall) borrowings. ▪ Capitalization rate used. takes a substantial period of acquisition, time to get ready for its construction or intended use or sale. Less: income on temporary Note: production of a Amount of borrowing cost investment (if any) of the qualifying asset are excess borrowing not yet used. capitalized cannot exceed in the required to be capitalized as part of period on amount of borrowing the cost of that asset; cost incurred. Other borrowing costs are recognized as an expense when incurred. Capitalization Capitalization Capitalization Commencement Suspension Ceases When: When: When: Substantially all the activities necessary to prepare the qualifying ▪ Expenditures for the asset are Active development is asset for its intended use or sale are complete. being incurred; interrupted (during that period). Note: When construction of a qualifying asset is completed in ▪ Borrowing costs are being parts and each part is capable of being used while construction incurred; continues on other parts; capitalization of borrowing costs ▪ Activities that are necessary to ceases when substantially all the activities necessary to prepare prepare the asset for its intended that part for its intended use or sale are completed. use or sale are in progress. AK Effective date: Periods beginning on or after 1 Jan 2011 Focus: IAS 24 Related Party Disclosures Page#13 Disclosure of related party relationships Legends: Disclosure Requirements Related Party (ies) = RP Disclosure of related party transactions Key Management Disclosure of outstanding Personnel = KMP General Compensation Transaction Level KMP Services Govt Control balances with related parties Disclosure of commitments Definitions: to related parties The nature of all The total amount of For specific related party The amounts Transaction-level 1. Key Management related party compensation for key transactions; nature of incurred for KMP disclosures are not Personnel: Application: relationships, management the relationship, services from a required when the Persons having authority To identify the circumstances even in the personnel, as well as transaction terms and separate related party is a & responsibility for: in which disclosure is absence of any for their short-term conditions, outstanding management government entity that Planning, directing & required; and transactions benefits, post- balances, commitments entity. has control or influence controlling the activity of To determine the disclosures between the employment benefits, or guarantees, related over the business, or entity to be made parties, and the other long-term collateral arrangements, another entity over (directly/indirectly) name of the benefits, termination provisions for related which the same including all directors. RP include: ultimate benefits, and any doubtful debts, and any government entity also 2. Close Family Member: Other subsidiaries under controlling party share-based related bad debt exercises control or Includes but not limited: common control (usually the payments. expense recognized influence. ▪ Children, & Owners of a business, its key parent entity). during the period. dependence; managers, and their families These disclosures should ▪ Spouse/partner; The parent entity RP do not include: be reported separately Instead, disclose the ▪ Children & Post-employment Benefit Lenders; for the parent entity, any name of the government dependents of Plans for the benefit of Trade unions; entities with joint control entity and the nature of spouse/partner. employees Public utilities; or influence over the the relationship with it, (Must access level of An entity that provides Key Government entities that do not control the business, subsidiaries, as well as the nature and influence case by case). Management Personnel business; associates, joint amount of those Services to the reporting Entities that have a director or key manager ventures, KMP, and Transactions between transactions, if entity in common; other related parties. related parties cannot be considered significant. Fellow joint venturers who jointly control a presumed to be at an For possible RP relationship venture. arm’s length. consider the substance of relationship and not merely the legal form.  AK Effective date: Periods beginning on or after 1 Jan 1998 IAS 26 Accounting & Reporting by Retirement Benefits Plan Page#14 Scope: Retirement Applies to FS of RBP. Legends: Benefits Plans Defined benefit plan = It does not establish a mandate for the publication of such reports by retirement DBP Retirement benefit plans are usually described as being either defined contribution or defined benefit plans. Defined contribution plans. IAS 26 regards a RBP as a separate entity, plan = DCP distinct from the employer of the plan’s Retirement benefits plan Defined Benefits Defined = RBP participants. Plans Contribution Plans Determined by formulae which involve factors such as years of service and salary level at the time of retirement. Quantum of the future benefits payable to the RBM Definitions: Ultimate responsibility for payment remains with the employer. Reporting DBP includes: participants is determined by the contributions 1. Retirement benefit 1. Description of significant activities for the period & the effect of changes, its membership and terms & together with investment earnings thereon