IAS/IFRS-2016
IAS 1: Presentation of Financial Statements
The standard describes the preparation and presentation requirements of financial statements. It defines the requirements which a financial statement has to observe to achieve a fair presentation that is to provide a picture that corresponds to the actual economic conditions. According to IAS a complete financial statement has to contain the following components: a balance sheet, an income statement, a statement showing changes in equity, a cash flow statement and notes, comprising a summary of significant accounting policies and other explanatory information a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading.
IAS 2: Inventories
IAS 2 defines how to determine the costs of purchase and conversion and states that the inventories "should be measured at the lower of cost and net realizable value". In addition, it describes treatments which are permitted for calculating the costs of inventories.
The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognized as an
Asset and carried forward until the related revenues are recognized. This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories. Inventories shall be measured at the lower of cost and net realizable value.Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified. When inventories are sold, the carrying amount of those inventories shall be recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories shall be recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, shall be recognized as a reduction in the amount of inventories recognized as an expense in the
period in which the reversal occurs.
IAS 7: Cash Flow Statements
The objective of this Standard is to require the provision of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows which classifies cash flows during the period from operating, investing and financing activities. Cash flows are inflows and outflows of cash and cash equivalents. Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Information about the cash flows of an entity is useful in providing users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilise those cash flows. The economic decisions that are taken by users require an evaluation of the ability of an entity to generate cash and cash equivalents and the timing and certainty of their generation. The statement of cash flows shall report cash flows during the period classified by operating, investing and financing activities.
It involves use of two methods that is the direct method and the indirect method.The cash flow statement is a required component of an IAS financial statement. IAS 7 explains this requirement by the benefits of cash flow information which it provides. It defines cash and cash equivalents and stipulates the rough structure of a cash flow statement.
IAS 8: Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies
This standard is supposed to guarantee that all enterprises present their income statement in a consistent form. It defines ordinary business activities and requires disclosing extraordinary items separately. The disclosure of single items of income and expense is dependent upon how relevant the information is for explaining the performance of the enterprise. In addition, it regulates how to handle fundamental balancing errors from prior accounting periods and under which circumstances changes in the accounting policy are permitted.
Fundamental Errors
Errors in the preparation of financial statements of one or more prior periods may be discovered in the current period. Errors may be occurred as a result of mathematical mistakes, mistakes in applying accounting policies, misinterpretation of facts, fraud or oversights. The correction of these errors is normally included in the determination of net profit or loss for the current period.
Fundamental Errors:
On rare occasions, an error has such a significant effect on the financial statements of one or more prior periods that those financial statements can no longer be considered as reliable as on the date of their issuance. For example, inclusion of a fraudulent and non-enforceable contract in the financial statement.
Methods of Correcting Fundamental Errors:
There are two suggested methods for correcting fundamental errors:
a) Benchmark treatment
b) Allowed alternative treatment.
Accounting Policies
Accounting Policies are specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting financial statements. Users of financial statements needed the sustainability of the accounting policies in order to compare the financial statements over a period of time. Therefore, the same accounting policies are normally adopted in each period.
Change in Accounting Policies:
A change in accounting policy should be made only if required by law or if the change will result in a more appropriate presentation of events or transactions in the financial statements of the enterprise. Revaluation of fixed assets is a change in accounting policy but it is dealt with as a revaluation in accordance with IAS 16, Property, Plant and Equipment, or IAS 25,Accounting for Investments, rather than in accordance with this Standard. A change in accounting policy is applied either retrospectively or prospectively.
(i) Retrospectively Application:
Retrospective application results in the new accounting policy being applied to events and transactions as if the new accounting policy had always been in use. Therefore, the accounting policy is applied to events and transactions from the date of origin of such items.
(ii) Prospective Application:
Prospective application means that the new accounting policy is applied to the events and transactions occurring after the date of the change. No adjustments relating to prior periods are made either to the opening balance of retained earnings or in reporting the net profit or loss for the current period because existing balances are not recalculated. However, the new accounting policy is applied to existing balances as from the date of the change.
IAS 10: Events After the Balance Sheet Date
Events may occur between the end of the reporting period and the date when financial statements are authorized for issue which may present information that should be considered in the preparation of financial statements. IAS 10 Events after the Reporting Period provides guidance as to which events should lead to adjustments in the financial statements and which events shall be disclosed in the notes to financial statements.Events after Reporting Period are those that occur between the end of the reporting period and when the financial statements are authorized for issue. The date of authorization for issue is usually taken to be the date when the board of directors authorizes the issue of financial statements. Where management is required to issue its financial statements to a supervisory board or shareholders for approval, the authorization is considered to be complete upon the management's authorization for issue of financial statements rather than when the supervisory board or shareholders give their approval.
Events after the end of reporting period may be classified into two types:
Adjusting Events - Those events that provide further evidence about conditions that existed at the end of reporting period.
Non-Adjusting Events - Those events that reflect conditions that arose after the end of reporting period.
Adjusting Events
If any events occur after the end of the reporting period that provide further evidence of conditions that existed at the end of reporting period (i.e. Adjusting Events), then the financial statements must be adjusted accordingly. Examples of Adjusting Events include settlement of litigation against the entity after the reporting date, in respect of events that occurred before the end of reporting period, may provide evidence of the existence and amount of liability at the reporting date. A liability in respect of the litigation may be recorded in the financial statements if not recognized initially or the amount of liability may be adjusted in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Non-Adjusting Events
Entity shall not adjust the financial statements in respect of those events after the end of reporting period that reflect conditions that arose after the end of reporting period .Example of Non-Adjusting Events include declaration of dividends after the reporting date does not indicate existence of liability to pay dividends at the reporting date and shall not therefore trigger the recognition of liability in financial statements in accordance with IAS 37. The nature and estimate of the financial impact of material non-adjusting events shall be disclosed in the financial statements.
Non-Adjusting Events are considered material if they could influence the economic and financial decisions of the users of financial statements.
IAS 11: Construction Contracts
The Standard prescribes the accounting treatment of revenue and costs associated with construction contracts. Because of the nature of the activity undertaken in construction contracts, the date at which the contract activity is entered into and the date when the activity is completed usually fall into different accounting periods. Therefore, the primary issue in accounting for construction contracts is the allocation of contract revenue and contract costs to the accounting periods in which construction work is performed. This Standard shall be applied in accounting for construction contracts in the financial statements of contractors.
A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use. The requirements of this Standard are usually applied separately to each construction contract. However, in certain circumstances, it is necessary to apply the Standard to the separately identifiable components of a single contract or to a group of contracts together in order to reflect the substance of a contract or a group of contracts.
Contract revenue shall comprise the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. Contract revenue is measured at the fair value of the consideration received or receivable. Contract costs shall comprise costs that relate directly to the specific contract, costs that are attributable to contract activity in general and can be allocated to the contract and such other costs as are specifically chargeable to the customer under the terms of the contract. When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract shall be recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period. When the outcome of a construction contract cannot be estimated reliably revenue shall be recognized only to the extent of contract costs incurred that it is probable will be recoverable and contract costs shall be recognized as an expense in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss shall be recognized as an expense immediately.
IAS 12: Income Taxes
The Standard prescribes the accounting treatment for income taxes. For the purposes of this Standard, income taxes include all domestic and foreign taxes which are based on taxable profits. Income taxes also include withholding taxes, which are payable by a subsidiary, associate or joint venture on distributions to the reporting entity. The principal issue in accounting for income taxes is how to account for the current and future tax consequences of the future recovery of the carrying amount of assets (liabilities) that are recognized in an entity’s statement of financial position and transactions and other events of the current period that are recognized in an entity’s financial statements. Current tax for current and prior periods shall, to the extent unpaid, be recognized as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess shall be recognized as an asset. Current tax liabilities (assets) for the current and prior periods shall be measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. It is inherent in the recognition of an asset or liability that the reporting entity expects to recover or settle the carrying amount of that asset or liability. If it is probable that recovery or settlement of that carrying amount will make future tax payments larger (smaller) than they would be if such recovery or settlement were to have no tax consequences, this Standard requires an entity to recognize a deferred tax liability (deferred tax asset), with certain limited exceptions. A deferred tax asset shall be recognized for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Measurement Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets shall reflect the tax consequences that would follow from the manner in which the entity expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities shall not be discounted. The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period. An entity shall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or that entire deferred tax asset to be utilized. Any such reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available.
IAS 14: Segment Reporting
The standard help users of financial statements better understand the entity’s past performance better assess the entity’s risks and returns and make more informed judgments about the entity as a whole. Many entities provide groups of products and services or operate in geographical areas that are subject to differing rates of profitability, opportunities for growth, future prospects for different types of products and services and its operations in different geographical areas often called segment information that is relevant to assessing the risks and returns of adiversified or multinational entity but may not be determinable from theaggregated data. Therefore, segment information is widely regarded as necessary to meeting the needs of users of financial statements. If a subsidiary is itself an entity whose securities are publicly traded, it will present segment information in its own separate financial report. Financialstatements of an entity whose securities are publicly traded and theseparate financial statements of an equity method associate or joint venture in which the entity has a financial interest, segment information need be presented only on the basis of the entity’s financial statements. If the equity method associate or joint venture is itself an entity whose securities are publicly traded, it will present segment information in its own separate financial report
Reportable segment
Is a business segment or a geographical segmentidentified based on the foregoing definitions for which segmentinformation is required to be disclosed by this Standard.
A Business segment
Is a distinguishable component of an entity that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. Factors that shall be considered in determining whether products and services are related include the nature of the products or services, the nature of the production processes, the type or class of customer for the products or services, the methods used to distribute the products or provide the services, if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.
Geographical segment is a distinguishable component of an entity that is engaged in providing products or services within a particular economic environment.
IAS 15: Information Reflecting the Effects of Changing Prices
Since no consensus could be reached concerning the application of this standard, it isn't obligatory. The purpose of IAS 15 is to bring clarity about the effects of changing prices on the measurement of balance sheet items. Therefore corresponding disclo-sures are required, such as the amount of depreciation or cost of sales adjustments.
IAS 16: Property, Plant and Equipment
This standard determines which assets may be accounted as property, plant and equipment, under which conditions their recognition is carried out, how they are to be measured, and which depreciation method should be chosen. In addition it describes, what the financial statement should disclose.
IAS 17: Leases
IAS 17 distinguishes between finance and operating leases. The respective assign-ment has considerable consequences for the way in which the leased asset is bal-anced. In addition, it establishes how to deal with any excess of sales proceeds and leaseback transactions.
IAS 18: Revenue
The date at which revenue is recognised is important for the accurate determination of the enterprise's success. According to IAS 18 the revenue should be recognised "when it is probable that future economic benefits will flow to the enterprise and these benefits can be measured reliably". There are requirements for the measurement of revenue, for the identification of the transactions and for recognising revenue from different business activities.
IAS 19: Employee Benefits
Employees receive various benefits: salaries and wages, supplementary payments, pensions, specific leaves, termination and equity compensation benefits. IAS 19 standardises the recognition and measurement of all short-term and long-term em-ployee benefits as well as post-term employement benefits. The treatment of obliga-tions resulting from retirement benefits are of increasing importance.
IAS 20: Accounting for Government Grants and Disclosure of Government Assistance
If an enterprise receives direct government grants, then, according to the standard, these are to be recognised as income and assigned to the accounting periods in which they are intended to provide compensation for corresponding expenses by the enterprise.
IAS 21: The Effects of Changes in Foreign Exchange Rates
Business transactions in foreign currencies carry the risk of fluctuations in the ex-change rate. IAS 21 regulates the initial recognition of a foreign currency transaction and the subsequent reportage, particularly the determination of the correct exchange rate that applies to later balance sheet dates. Furthermore it determines how to deal with exchange differences.
IAS 22: Business Combinations
A business combination can occur either in the form of an acquisition of an enterprise or a uniting of interests. IAS 22 establishes the procedure for preparing a financial statement according to these two forms. For example, it determines that the pur-chase method should be applied in accounting for an acquisition and that goodwill
(the difference between the cost of purchase and the fair value of the acquired as-sets) should be amortised on a systematic basis over its useful life.
IAS 23: Borrowing Costs
Interest charges and other costs which arise in connection with the borrowing of funds are recognised under IAS 23 as an expense. The capitalisation of borrowed funds as part of the acquisition or production costs of so-called "qualifying assets" is alternatively permitted. "Qualifying assets" are those which take a substantial period of time for the conversion into a serviceable or marketable condition.
IAS 24: Related Party Disclosures
Related enterprises or individuals which exert a significant influence or even control over the reporting enterprise could have an effect on its financial position and operat-ing results. For example, they could carry out transactions with the enterprise which a third party wouldn't do. IAS 24 requires detailed information about links to related en-terprises and persons, provided that there exists control. If business was carried out between related parties, the type of transaction and the nature of the related party relationship should be disclosed.
IAS 26: Accounting and Reporting by Retirement Benefit Plans
If the employer guarantees retirement benefits, then their balancing under IAS 26 is dependent upon whether the retirement benefit plan is a defined contribution plan (usually a pension fund) or a defined benefit plan. The latter is processed via funds or provisions for pension fund liabilities. Accounting and disclosure requirements for retirement benefit plans are specified in this standard.
IAS 27: Consolidated Financial Statements and Accounting for In-vestments in Subsidiaries
According to IAS 27 all domestic and foreign subsidiaries are in principle to be in-cluded in the consolidated financial statement of the parent company, unless the subsidiary is solely held for the purpose of subsequent disposal or it is significantly impaired by severe long-term restrictions in its ability for funds transfer to the parent. IAS 27 also establishes the procedures regarding consolidation.
IAS 28: Accounting for Investments in Associates
If the reporting enterprise has significant influence in, but not control over, another enterprise, then it is considered an associate. IAS 28 requires the equity method be applied in balancing such enterprises. The investment in these enterprises should be recorded at cost and, thereafter, to be adjusted for the change in the investor's share of the profit or losses.
IAS 29: Financial Reporting in Hyperinflationary Economies
Without the necessary adjustments, the reporting in hyperi nflationary economies can be misleading due to a severe loss in purchasing power. IAS 29 characterises the concept of "hyperinflationary economies" and establishes that the measuring unit has to reflect the price levels, respectively the purchasing power at the balance sheet date. So the historical costs are to be adjusted to the current costs at the balance sheet date.
IAS 30: Disclosures in the Financial Statements of Banks and Similar Financial Institutions
Due to their economic significance and the special character of their business opera-tion, specific rerequirements exist for the financial statements of banks. That's why in this standard - amongst other issues - a detailed breakdown of the income statement is required with regard to the interest, dividend income, fee and commission income and expense, gains less losses arising from dealing securities, investment securities and foreign currencies. The listing of the assets and liabilities, reflecting their relative liquidity, is characteristic for a bank balance sheet. Also of great importance are the instructions for stating the contingencies and risks of banking.
IAS 31: Financial Reporting of Interests in Joint Ventures
Joint ventures are jointly controlled operations, enterprises or assets. IAS 31 stipu-lates that jointly controlled entities should be reported by proportionate consolidation (the equity method is, however, permitted as an alternative).
IAS 32: Financial Instruments: Disclosure and Presentation
The objective of this Standard is to establish principles for presenting financial instruments as liabilities or equity and for offsetting financial assets and financial liabilities. It applies to the classification of financial instruments, from the perspective of the issuer, into financial assets, financial liabilities and equity instruments; the classification of related interest, dividends, losses and gains; and the circumstances in which financial assets and financial liabilities should be offset. The principles in this Standard complement the principles for recognizing and measuring financial assets and financial liabilities in IFRS 9 Financial Instruments, and for disclosing information about them in IFRS 7 Financial Instruments: Disclosures. The issuer of a financial instrument shall classify the instrument, or its component parts, on initial recognition as a financial liability, a financial asset or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument. The issuer of a non-derivative financial instrument shall evaluate the terms of the financial instrument to determine whether it contains both a liability and an equity component. Such components shall be classified separately as financial liabilities, financial assets or equity instruments. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. A financial asset is any asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset from another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity or a contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments or a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose the entity’s own equity instruments do not include portable financial instruments classified as equity instruments A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the entity or a contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instrument or a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.
IAS 33: Earnings Per Share
This Standard shall be applied by entities whose ordinary shares or potential ordinary shares are publicly traded and by entities that are in the process of issuing ordinary shares or potential ordinary shares in public markets. An entity that discloses earnings per share shall calculate and disclose earnings per share in accordance with this Standard. An ordinary share is an equity instrument that is subordinate to all other classes of equity instruments. A potential ordinary share is a financial instrument or other contract that may entitle its holder to ordinary shares. An entity shall present in the statement of comprehensive income basic and diluted earnings per share for profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity and for profit or loss attributable to the ordinary equity holders of the parent entity for the period for each class of ordinary shares that has a different right to share in profit for the period. An entity shall present basic and diluted earnings per share with equal prominence for all periods presented. An entity that reports a discontinued operation shall disclose the basic and diluted amounts per share for the discontinued operation either in the statement of comprehensive income or in the notes.
Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period. For the purpose of calculating basic earnings per share, the amounts attributable to ordinary equity holders of the parent entity in respect of profit or loss from continuing operations attributable to the parent entity and profit or loss attributable to the parent entity shall be the amounts. For the purpose of calculating basic earnings per share, the number of ordinary shares shall be the weighted average number of ordinary shares outstanding during the period. The weighted average number of ordinary shares outstanding during the period and for all periods presented shall be adjusted for events, other than the conversion of potential ordinary shares, that have changed the number of ordinary shares outstanding without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss attributable to ordinary equity holders of the parent entity, and the weighted average number of shares outstanding, for the effects of all dilutive potential ordinary shares. Dilution is a reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions. For the purpose of calculating diluted earnings per share, the number of ordinary shares shall be the weighted average number of ordinary shares calculated in accordance with paragraphs 19 and 26, plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations. An entity uses profit or loss from continuing operations attributable to the parent entity as the control number to establish whether potential ordinary shares are dilutive or antidilutive. In determining whether potential ordinary shares are dilutive or antidilutive, each issue or series of potential ordinary shares is considered separately rather than in aggregate.
IAS 34: Interim Financial Reporting
The Standard prescribes the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed financial statements for an interim period. Timely and reliable interim financial reporting improves the ability of investors, creditors, and others to understand an entity’s capacity to generate earnings and cash flows and its financial condition and liquidity. This Standard applies if an entity is required or elects to publish an interim financial report in accordance with International Financial Reporting Standards. Interim financial report means a financial report containing either a complete set of financial statements as described in IAS 1 Presentation of Financial Statements (as revised in 2007)) or a set of condensed financial statements (as described in this Standard) for an interim period. Interim period is a financial reporting period shorter than a full financial year. In the interest of timeliness and cost considerations and to avoid repetition of information previously reported, an entity may be required to or may elect to provide less information at interim dates as compared with its annual financial statements. This Standard defines the minimum content of an interim financial report as including condensed financial statements and selected explanatory notes. The interim financial report is intended to provide an update on the latest complete set of annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported. Nothing in this Standard is intended to prohibit or discourage an entity from publishing a complete set of financial statements (as described in IAS 1) in its interim financial report, rather than condensed financial statements and selected explanatory notes. If an entity publishes a complete set of financial statements in its interim financial report, the form and content of those statements shall conform to the requirements of IAS 1 for a complete set of financial statements. An interim financial report shall include, at a minimum, the following components condensed statement of financial position, condensed statement of comprehensive income, presented as either a condensed single statement or a condensed separate income statement and a condensed, statement of comprehensive income, condensed statement of changes in equity and condensed statement of cash flows and selected explanatory notes. An entity shall apply the same accounting policies in its interim financial statements as are applied in its annual financial statements, except for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. To achieve that objective, measurements for interim reporting purposes shall be made on a year-to-date basis. The measurement procedures to be followed in an interim financial report shall be designed to ensure that the resulting information is reliable and that all material financial information that is relevant to an understanding of the financial position or performance of the entity is appropriately disclosed. While measurements in both annual and interim financial reports are often based on reasonable estimates, the preparation of interim financial reports generally will require a greater use of estimation methods than annual financial reports.
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IAS 35: Discontinuing Operations
The standard establishes principles for reporting information about discontinuing activities (as defined), thereby enhancing the ability of users of financial statements to make projections of an enterprise's cash flows, earnings-generating capacity and financial position, by segregating information about discontinuing activities from information about continuing operations. The Standard does not establish any recognition or measurement principles in relation to discontinuing operations – these are dealt with under other IAS. In particular, IAS 35 provides guidance on how to apply IAS 36 Impairment of Assets and IAS 37 Provisions, Contingent Liabilities and Contingent Assets to a discontinuing operation. Discontinuing operation is a relatively large component of a business enterprise – such as a business or geographical segment under IAS 14 Segment Reporting – that the enterprise, pursuant to a single plan, either is disposing of substantially in its entirety or is terminating through abandonment or piecemeal sale. A restructuring, transaction or event that does not meet the definition of a discontinuing operation should not be called a discontinuing operation. The disclosures are required if a plan for disposal is both approved and publicly announced after the end of the financial reporting period but before the financial statements for that period are approved. A board decision after year-end, by itself, is not enough.
The following must be disclosed a description of the discontinuing operation, the business or geographical segment(s) in which it is reported in accordance with IAS 14,the date that the plan for discontinuance was announced, the timing of expected completion, if known or determinable, the carrying amounts of the total assets and the total liabilities to be disposed of, the amounts of revenue, expenses, and pre-tax operating profit or loss attributable to the discontinuing operation, and (separately) related income tax expense, the amount of gain or loss recognized on the disposal of assets or settlement of liabilities attributable to the discontinuing operation, and related income tax expense, the net cash flows attributable to the operating, investing, and financing activities of the discontinuing operation and the net selling prices received or expected from the sale of those net assets for which the enterprise has entered into one or more binding sale agreements, and the expected timing thereof, and the carrying amounts of those net asset
The disclosures may be, but need not be, shown on the face of the financial statements. Only the gain or loss on actual disposal of assets and settlement of liabilities must be on the face of the income statement. IAS 35 does not prescribe a particular format for the disclosures. Among the acceptable ways are separate columns in the financial statements for continuing and discontinuing operations one column but separate sections (with subtotals) for continuing and discontinuing operations within that single column one or more separate line items for discontinuing operations on the face of the financial statements with detailed disclosures about discontinuing operations in the notes .
IAS 36: Impairment of Assets
An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset. Irrespective of whether there is any indication of impairment, an entity shall also test an intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test may be performed at any time during an annual period, provided it is performed at the same time every year. Different intangible assets may be tested for impairment at different times. However, if such an intangible asset was initially recognized during the current annual period, that intangible asset shall be tested for impairment before the end of the current annual period. If there is any indication that an asset may be impaired, recoverable amount shall be estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, an entity shall determine the recoverable amount of the cash-generating unit to which the asset belongs (the asset’s cash-generating unit). A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Measuring recoverable amount the recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of disposal and its value in use. It is not always necessary to determine both an asset’s fair value less costs of disposal and its value in use. If either of these amounts exceeds the asset’s carrying amount, the asset is not impaired and it is not necessary to estimate the other amount. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Costs of disposal are incremental costs directly attributable to the disposal of an asset or cash-generating unit, excluding finance costs and income tax expense. Value in use is the present value of the future cash flows expected to be derived from an asset or cash generating unit.
IAS 37: Provisions, Contingent Liabilities and Contingent Assets
The objective of this Standard is to ensure that appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities and contingent assets and that sufficient information is disclosed in the notes to enable users to understand their nature, timing and amount. IAS 37 prescribes the accounting and disclosure for all provisions, contingent liabilities and contingent assets, except those resulting from financial instruments that are carried at fair value, those resulting from executory contracts and except where the contract is onerous. Executory contracts are contracts under which neither party has performed any of its obligations nor both parties have partially performed their obligations to an equal extent, those arising in insurance entities from contracts with policyholders, those covered by another Standard. Provisions a provision is a liability of uncertain timing or amount. A provision should be recognized when an entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision shall be recognized. The amount recognized as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The best estimate of the expenditure required to settle the present obligation is the amount that an entity would rationally pay to settle the obligation at the end of the reporting period or to transfer it to a third party at that time. Where the provision being measured involves a large population of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities. Where a single obligation is being measured, the individual most likely outcome may be the best estimate of the liability. A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. An entity should not recognize a contingent liability. An entity should disclose a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets a contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. An entity shall not recognize a contingent asset. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
IAS 38: Intangible Assets
The objective of this Standard is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another Standard. This Standard requires an entity to recognize an intangible asset if, and only if, specified criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires specified disclosures about intangible assets. An intangible asset is an identifiable non-monetary asset without physical substance. Recognition and measurement the recognition of an item as an intangible asset requires an entity to demonstrate that the item meets the definition of an intangible asset and the recognition criteria. This requirement applies to costs incurred initially to acquire or internally generate an intangible asset and those incurred subsequently to add to, replace part of, or service it. An asset is identifiable if it either is separable, i.e. is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations. An intangible asset shall be recognized if, and only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. The probability recognition criterion is always considered to be satisfied for intangible assets that are acquired separately or in a business combination. An intangible asset shall be measured initially at cost. The cost of a separately acquired intangible asset comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates and any directly attributable cost of preparing the asset for its intended use. In accordance with IFRS 3 Business Combinations, if an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date. If an asset acquired in a business combination is separable or arises from contractual or other legal rights, sufficient information exists to measure reliably the fair value of the asset. In accordance with this Standard and IFRS 3 (as revised in 2008), an acquirer recognizes at the acquisition date, separately from goodwill, an intangible asset of the acquirer, irrespective of whether the asset had been recognized by the acquire before the business combination. This means that the acquirer recognizes as an asset separately from goodwill an in-process research and development project of the acquiree if the project meets the definition of an intangible asset.
IAS 39: Financial Instruments, Recognition and Measurement
The International Accounting Standards Board has decided to replace IAS 39 Financial Instruments: Recognition and Measurement over a period of time. The requirements for classification and measurement of financial liabilities and derecognition of financial assets and liabilities were added to IFRS 9 in October 2010. The remaining requirements of IAS 39 continue in effect until superseded by future installments of IFRS 9. The Board expects to replace IAS 39 in its entirety. Impairment and uncollectibility of financial assets measured at amortized cost .An entity shall assess at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets measured at amortized cost is impaired. If there is objective evidence that an impairment loss on financial assets measured at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate that is the effective interest rate computed at initial recognition. The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of the loss shall be recognized in profit or loss.
A hedging relationship qualifies for hedge accounting under paragraphs 89–102 if, and only if, all of the following conditions are met: the inception of the hedge there is formal designation and documentation of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk, the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash flows attributable to the hedged risk, consistently with the originally documented risk management strategy for that particular hedging relationship, for cash flow hedges, a forecast transaction that is the subject of the hedge must be highly probable and must present an exposure to variations in cash flows that could ultimately affect profit or loss, the effectiveness of the hedge can be reliably measured, that is the fair value or cash flows of the hedged item that are attributable to the hedged risk and the fair value of the hedging instrument can be reliably measured and the hedge is assessed on an ongoing basis and determined actually to have been highly effective throughout the financial reporting periods for which the hedge was designated.
IAS 40: Investment Property
The Standard prescribes the accounting treatment for investment property and related disclosure requirements. Investment property is property (land or a building or part of a building or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business. A property interest that is held by a lessee under an operating lease may be classified and accounted for as investment property provided that the rest of the definition of investment property is met, the operating lease is accounted for as if it were a finance lease in accordance with IAS 17 Leases and the lessee uses the fair value model set out in this Standard for the asset recognized. Investment property shall be recognized as an asset when, and only when it is probable that the future economic benefits that are associated with the investment property will flow to the entity and the cost of the investment property can be measured reliably. An investment property shall be measured initially at its cost. Transaction costs shall be included in the initial measurement. The initial cost of a property interest held under a lease and classified as an investment property shall be as prescribed for a finance lease by paragraph 20 of IAS 17that is the asset shall be recognized at the lower of the fair value of the property and the present value of the minimum lease payments. An equivalent amount shall be recognized as a liability in accordance with that same paragraph. The Standard permits entities to choose either a fair value model, under which an investment property is measured, after initial measurement, at fair value with changes in fair value recognized in profit or loss or a cost model. The cost model is specified in IAS 16 and requires an investment property to be measured after initial measurement at depreciated cost (less any accumulated impairment losses). An entity that chooses the cost model discloses the fair value of its investment property. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. An investment property shall be derecognized (eliminated from the statement of financial position) on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses arising from the retirement or disposal of investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or loss (unless IAS 17 requires otherwise on a sale and leaseback) in the period of the retirement or disposal..
IAS 41: Agriculture
The Standard prescribes the accounting treatment and disclosures related to agricultural activity. Agricultural activity is the management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets. Biological transformation comprises the processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset. A biological asset is a living animal or plant. Agricultural produce is the harvested product of the entity’s biological assets. Harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life processes. IAS 41 prescribes, among other things, the accounting treatment for biological assets during the period of growth, degeneration, production, and procreation, and for the initial measurement of agricultural produce at the point of harvest. It requires measurement at fair value less costs to sell from initial recognition of biological assets up to the point of harvest, other than when fair value cannot be measured reliably on initial recognition. This Standard is applied to agricultural produce, which is the harvested product of the entity’s biological assets, only at the point of harvest. Thereafter, IAS 2 Inventories or another applicable Standard is applied. Accordingly, this Standard does not deal with the processing of agricultural produce after harvest; for example, the processing of grapes into wine by a vintner who has grown the grapes. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Costs to sell include commissions to brokers and dealers, levies by regulatory agencies and commodity exchanges, and transfer taxes and duties. Costs to sell exclude transport and other costs necessary to get assets to a market. Such transport and other costs are deducted in determining fair value (that is, fair value is a market price less transport and other costs necessary to get an asset to a market). IAS 41 requires that a change in fair value less costs to sell of a biological asset be included in profit or loss for the period in which it arises. In agricultural activity, a change in physical attributes of a living animal or plant directly enhances or diminishes economic benefits to the entity. IAS 41 does not establish any new principles for land related to agricultural activity.
b.) IFRS
IFRS 1: First-time Adoption of International Financial Reporting Standards
The objective of this IFRS is to ensure that an entity’s first IFRS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information that is transparent for users and comparable over all periods presented, provides a suitable starting point for accounting in accordance with International Financial Reporting Standards (IFRSs) and can be generated at a cost that does not exceed the benefits. An entity shall prepare and present an opening IFRS statement of financial position at the date of transition to IFRSs. This is the starting point for its accounting in accordance with IFRSs. An entity shall use the same accounting policies in its opening IFRS statement of financial position and throughout all periods presented in its first IFRS financial statements. Those accounting policies shall comply with each IFRS effective at the end of its first IFRS reporting period. In particular, the IFRS requires an entity to do the following in the opening IFRS statement of financial position that it prepares as a starting point for its accounting under IFRSs recognise all assets and liabilities whose recognition is required by IFRSs, not recognise items as assets or liabilities if IFRSs do not permit such recognition, reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with IFRSs and apply IFRSs in measuring all recognised assets and liabilities.
IFRS 2: Share-based Payment
IFRS 3: Business Combinations
The objective of the IFRS is to enhance the relevance, reliability and comparability of the information that a reporting entity provides in its financial statements about a business combination and its effects. It does that by establishing principles and requirements for how an acquirer: (a) recognises and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree; (b) recognises and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Core principle An acquirer of a business recognises the assets acquired and liabilities assumed at their acquisition-date fair values and discloses information that enables users to evaluate the nature and financial effects of the acquisition. Applying the acquisition method A business combination must be accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. One of the parties to a business combination can always be identified as the acquirer, being the entity that obtains control of the other business (the acquiree). Formations of a joint venture or the acquisition of an asset or a group of assets that does not constitute a business are not business combinations. The IFRS establishes principles for recognising and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. Any classifications or designations made in recognising these items must be made in accordance with the contractual terms, economic conditions, acquirer’s operating or accounting policies and other factors that exist at the acquisition date. Each identifiable asset and liability is measured at its acquisition-date fair value. Any non-controlling interest in an acquiree is measured at fair value or as the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The IFRS provides limited exceptions to these recognition and measurement principles: (a) Leases and insurance contracts are required to be classified on the basis of the contractual terms and other factors at the inception of the contract (or when the terms have changed) rather than on the basis of the factors that exist at the acquisition date. (b) Only those contingent liabilities assumed in a business combination that are a present obligation and can be measured reliably are recognised. (c) Some assets and liabilities are required to be recognised or measured in accordance with other IFRSs, rather than at fair value. The assets and liabilities affected are those falling within the scope of IAS 12 Income Taxes, IAS 19 Employee Benefits, IFRS 2 Share-based Payment and IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. (d) There are special requirements for measuring a reacquired right. (e) Indemnification assets are recognised and measured on a basis that is consistent with the item that is subject to the indemnification, even if that measure is not fair value. The IFRS requires the acquirer, having recognised the identifiable assets, the liabilities and any non-controlling interests, to identify any difference between: (a) the aggregate of the consideration transferred, any non-controlling interest in the acquiree and, in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree; and (b) the net identifiable assets acquired.
IFRS 4: Insurance Contracts
The objective of this IFRS is to specify the financial reporting for insurance contracts by any entity that issues such contracts (described in this IFRS as an insurer) until the Board completes the second phase of its project on insurance contracts. In particular, this IFRS requires: (a) limited improvements to accounting by insurers for insurance contracts. (b) disclosure that identifies and explains the amounts in an insurer’s financial statements arising from insurance contracts and helps users of those financial statements understand the amount, timing and uncertainty of future cash flows from insurance contracts. An insurance contract is a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. The IFRS applies to all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds, except for specified contracts covered by other IFRSs. It does not apply to other assets and liabilities of an insurer, such as financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments. Furthermore, it does not address accounting by policyholders. The IFRS exempts an insurer temporarily (ie during phase I of this project) from some requirements of other IFRSs, including the requirement to consider the Framework in selecting accounting policies for insurance contracts. However, the IFRS: (a) prohibits provisions for possible claims under contracts that are not in existence at the end of the reporting period (such as catastrophe and equalisation provisions). (b) requires a test for the adequacy of recognised insurance liabilities and an impairment test for reinsurance assets. (c) requires an insurer to keep insurance liabilities in its statement of financial position until they are discharged or cancelled, or expire, and to present insurance liabilities without offsetting them against related reinsurance assets. The IFRS permits an insurer to change its accounting policies for insurance contracts only if, as a result, its financial statements present information that is more relevant and no less reliable, or more reliable and no less relevant. In particular, an insurer cannot introduce any of the following practices, although it may continue using accounting policies that involve them: (a) measuring insurance liabilities on an undiscounted basis. (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 policies for the insurance liabilities of subsidiaries.
IFRS 5: Non-current Assets Held for Sale and Discontinued Operations
The objective of this IFRS is to specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations. In particular, the IFRS requires: (a) assets that meet the criteria to be classified as held for sale to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease; (b) an asset classified as held for sale and the assets and liabilities included within a disposal group classified as held for sale to be presented separately in the statement of financial position; and (c) the results of discontinued operations to be presented separately in the statement of comprehensive income. The IFRS: (a) adopts the classification ‘held for sale’. (b) introduces the concept of a disposal group, being a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. (c) classifies an operation as discontinued at the date the operation meets the criteria to be classified as held for sale or when the entity has disposed of the operation. An entity shall classify a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset (or disposal group), and an active programme to locate a buyer and complete the plan must have been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification, except as permitted by paragraph 9, and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and (a) represents a separate major line of business or geographical area of operations, (b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or (c) is a subsidiary acquired exclusively with a view to resale.
IFRS 6: Exploration for and Evaluation of Mineral Assets
The objective of this IFRS is to specify the financial reporting for the exploration for and evaluation of mineral resources. Exploration and evaluation expenditures are expenditures incurred by an entity in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Exploration for and evaluation of mineral resources is the search for mineral resources, including minerals, oil, natural gas and similar non-regenerative resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Exploration and evaluation assets are exploration and evaluation expenditures recognised as assets in accordance with the entity’s accounting policy. The IFRS: (a) permits an entity to develop an accounting policy for exploration and evaluation assets without specifically considering the requirements of paragraphs 11 and 12 of IAS 8. Thus, an entity adopting IFRS 6 may continue to use the accounting policies applied immediately before adopting the IFRS. This includes continuing to use recognition and measurement practices that are part of those accounting policies. (b) requires entities recognising exploration and evaluation assets to perform an impairment test on those assets when facts and circumstances suggest that the carrying amount of the assets may exceed their recoverable amount. (c) varies the recognition of impairment from that in IAS 36 but measures the impairment in accordance with that Standard once the impairment is identified. An entity shall determine an accounting policy for allocating exploration and evaluation assets to cashgenerating units or groups of cash-generating units for the purpose of assessing such assets for impairment. Each cash-generating unit or group of units to which an exploration and evaluation asset is allocated shall not be larger than an operating segment determined in accordance with IFRS 8 Operating Segments. Exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount, an entity shall measure, present and disclose any resulting impairment loss in accordance with IAS 36. One or more of the following facts and circumstances indicate that an entity should test exploration and evaluation assets for impairment (the list is not exhaustive): (a) the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed. (b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned. (c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area. (d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
IFRS 7: Financial Instruments: Disclosures
Categories of financial assets and financial liabilities The carrying amounts of each of the following categories shall be disclosed either on the face of the balance sheet or in the notes: (a) financial assets at fair value through profit or loss, showing separately: (i) those designated as such upon initial recognition and (ii) those classified as held for trading in accordance with IAS 39; (b) held-to-maturity investments; (c) loans and receivables; (d) available-for-sale financial assets; (e) financial liabilities at fair value through profit or loss, showing separately (i) those designated as such upon initial recognition and (ii) those classified as held for trading in accordance with IAS 39; and (f) financial liabilities measured at amortised cost.
IFRS 8: Operating Segments
Core principle—An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. This IFRS shall apply to: (a) the separate or individual financial statements of an entity: (i) whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or (ii) that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market; and (b) the consolidated financial statements of a group with a parent: (i) whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or (ii) that files, or is in the process of filing, the consolidated financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market. The IFRS specifies how an entity should report information about its operating segments in annual financial statements and, as a consequential amendment to IAS 34 Interim Financial Reporting, requires an entity to report selected information about its operating segments in interim financial reports. It also sets out requirements for related disclosures about products and services, geographical areas and major customers. The IFRS requires an entity to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. The IFRS requires an entity to report a measure of operating segment profit or loss and of segment assets. It also requires an entity to report a measure of segment liabilities and particular income and expense items if such measures are regularly provided to the chief operating decision maker. It requires reconciliations of total reportable segment revenues, total profit or loss, total assets, liabilities and other amounts disclosed for reportable segments to corresponding amounts in the entity’s financial statements. The IFRS requires an entity to report information about the revenues derived from its products or services (or groups of similar products and services), about the countries in which it earns revenues and holds assets, and about major customers, regardless of whether that information is used by management in making operating decisions. However, the IFRS does not require an entity to report information that is not prepared for internal use if the necessary information is not available and the cost to develop it would be excessive. The IFRS also requires an entity to give descriptive information about the way the operating segments were determined, the products and services provided by the segments, differences between the measurements used in reporting segment information and those used in the entity’s financial statements, and changes in the measurement of segment amounts from period to period.
IFRS 9: Financial Instruments
The International Accounting Standards Board (the Board) completed the final element of its comprehensive response to the financial crisis with the publication of IFRS 9 Financial Instrument sin July 2014. The package of improvements introduced by IFRS 9 includes a logical model for classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting.
The IASB has previously published versions of IFRS 9 that introduced new classification and measurement requirements (in 2009 and 2010) and a new hedge accounting model (in 2013). The July 2014 publication represents the final version of the Standard, replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.
REFERENCES
https://www.ifrs.org/documents/ias7
https://accounting-simplified.com/standard/