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Definition of 'International Financial Reporting Standards


A set of international accounting standards stating how

particular types of transactions and other events should be
reported in financial statements. IFRS are issued by the
International Accounting Standards Board.
IFRS are sometimes confused with International
Accounting Standards (IAS), which are the older
standards that IFRS replaced. (IAS were issued from 1973
to 2000.)
Investopedia explains 'International Financial Reporting
Standards - IFRS'
The goal with IFRS is to make international comparisons as easy as possible.
This is difficult because, to a large extent, each country has its own set of
rules. For example, U.S. GAAP are different from Canadian GAAP.
Synchronizing accounting standards across the globe is an ongoing process in
the international accounting community.
International Financial Reporting Standards (IFRS) are designed as a common global language for
business affairs so that company accounts are understandable and comparable across international
boundaries. They are a consequence of growing international shareholding and trade and are particularly
important for companies that have dealings in several countries. They are progressively replacing the
many different national accounting standards. The rules to be followed by accountants to maintain books
of accounts which is comparable, understandable, reliable and relevant as per the users internal or
IFRS began as an attempt to harmonize accounting across the European Union but the value of
harmonization quickly made the concept attractive around the world. They are sometimes still called by
the original name of International Accounting Standards (IAS). IAS were issued between 1973 and

2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the
new International Accounting Standards Board took over from the IASC the responsibility for setting
International Accounting Standards. During its first meeting the new Board adopted existing IAS and
Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards
calling the new standards International Financial Reporting Standards (IFRS).
In the absence of a Standard or an Interpretation that specifically applies to a transaction, management
must use its judgement in developing and applying an accounting policy that results in information that is
relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the
definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in
the Framework.

History of ifrs
International convergence of accounting standards is not a new idea. The concept of
convergence first arose in the late 1950s in response to post World War II economic
integration and related increases in cross-border capital flows.
Initial efforts focused on harmonizationreducing differences among the accounting
principles used in major capital markets around the world. By the 1990s, the notion of
harmonization was replaced by the concept of convergencethe development of a unified
set of high-quality, international accounting standards that would be used in at least all
major capital markets.
The International Accounting Standards Committee, formed in 1973, was the first
international standards-setting body. It was reorganized in 2001 and became an
independent international standard setter, the International Accounting Standards Board
(IASB). Since then, the use of international standards has progressed. As of 2013, the
European Union and more than 100 other countries either require or permit the use of
international financial reporting standards (IFRSs) issued by the IASB or a local variant of
The FASB and the IASB have been working together since 2002 to improve and converge
U.S. generally accepted accounting principles (GAAP) and IFRS. As of 2013, Japan and
China were also working to converge their standards with IFRSs. The Securities and
Exchange Commission (SEC) consistently has supported convergence of global accounting
standards. However, the Commission has not yet decided whether to incorporate
International Financial Reporting Standards ( IFRS) into the U.S. financial reporting
system. The Commission staff issued its final report on the issue in July 2012 without
making a recommendation.
The following is a chronology of some of the key events in the evolution of the international
convergence of accounting standards.

The 1960sCalls for International Standards and Some Early Steps

The 1970s and 1980sAn International Standard-Setting Body Takes Root

The 1990sThe FASB Formalizes and Expands its International Activities

The 2000sThe Pace of Convergence Accelerates: Use of International Standards Grows Rapidly,
the FASB and IASB Formally Collaborate, and the U.S. Explores Adopting International Accounting

Objective of ifrs
The International Accounting Standards Board (IASB) was established in 2001 and is the independent
standard-setting body of the IFRS Foundation, an independent, private sector, not-for-profit organisation
working in the public interest. Its principal objectives are:

1 to develop, in the public interest, a single set of high quality, understandable, enforceable and globally
accepted international financial reporting standards (IFRSs) based upon clearly articulated principles.
These standards should require high quality, transparent and comparable information in financial
statements and other financial reporting to help investors, other participants in the world's capital
markets and other users of financial information make economic decisions;
2 to promote the use and rigorous application of those standards;
3 in fulfilling the objectives associated with (1) and (2), to take account of, as appropriate, the needs of a
range of sizes and types of entities in diverse economic settings; and
4 to promote and facilitate adoption of IFRSs, being the standards and interpretations issued by the IASB,
through the convergence of national accounting standards and IFRSs.
The governance and oversight of the activities undertaken by the IFRS Foundation and its standardsetting body rests with a geographically and professionally diverse body of Trustees, who are also
responsible for safeguarding the independence of the IASB and ensuring the financing of the organisation.
The Trustees are publicly accountable to a Monitoring Board of public authorities.

The IASB is an independent group of experts with an appropriate mix of recent practical experience in
setting accounting standards; in preparing, auditing, or using financial reports; and in accounting
education. Broad geographical diversity is also required. Members are appointed by the Trustees through
an open and rigorous process that includes advertising vacancies and consulting relevant organisations.
The IASB has 16 full-time members.

The IASB develops and maintains a set of accounting requirements collectively referred to as
International Financial Reporting Standards (IFRSs). IFRSs are a set of high quality, understandable,
enforceable and globally accepted Standards based up on clearly articulated accounting principles. The
IASB has no authority to impose those Standards. However, entities that wish, or are required by a
particular jurisdiction, to assert compliance with IFRSs must comply with all of the individual IFRSs
(Standards) and IFRS Interpretations (Interpretations) issued by the IASB. The individual IFRSs and
Interpretations that comprise the collective IFRSs are 41 Standards (issued as at 1 December 2013: 13
IFRSs and 28 International Accounting Standards developed by its predecessor, the IASC, and adopted by
the IASB) and 25 current IFRIC Interpretations (17 developed by the IFRS Interpretations Committee
(formerly the International Financial Reporting Interpretations Committee) and 8 developed by its
predecessor, the Standing Interpretations Committee).

IFRSs generally contain principles and accompanying application guidance, both of which are mandatory
and carry equal weight. Some Standards also include illustrative examples or implementation guidance,
neither of which is part of IFRSs. They are therefore not mandatory. Each Standard and Interpretation has
a basis for conclusions that explains the IASB's reasons for developing the particular requirements. The
basis for conclusions is not part of IFRSs and is therefore also not mandatory.

Additionally, the IASB has a Conceptual Framework for Financial Reporting (the Framework). This
Framework is designed to help the IASB develop IFRSs. The Framework is also designed to help those
applying IFRSs address matters not covered by IFRSs. However, the Framework is not a Standard and the
accounting requirements in an IFRS take precedence over the Framework.

The IASB develops IFRSs in the public interest. Through the IASB's due process, it consults and engages
with investors, regulators, business leaders and the global accountancy profession at every stage of the
process, whilst maintaining collaborative efforts with the worldwide standard-setting community. In
developing IFRSs and Interpretations the IASB publishes and seeks public comment on Discussion Papers
and Exposure Drafts. Those documents are not part of IFRSs.

The IFRS Interpretations Committee is the interpretative body of the IASB. The Interpretations Committee
has 14 voting members appointed by the Trustees, and its members are drawn from a variety of countries
and professional backgrounds. The Interpretations Committee's mandate is to review on a timely basis
widespread accounting issues that have arisen within the context of current IFRSs and to provide
authoritative guidance (IFRIC Interpretations) on those issues. The Interpretations Committee also

develops proposals for narrow scope amendments to IFRSs on behalf of the IASB. In developing
Interpretations and narrow scope amendments, the Interpretations Committee follows a transparent,
thorough and open due process. However, it is the IASB that issues Interpretations and narrow scope
amendments and the IASB that considers and votes on each Interpretation and narrow scope amendment
before it is issued.

As well as IFRSs, the Board has issued IFRS for SMEs, to meet the needs and capabilities of small and
medium-sized entities (SMEs) and users of their financial statements. Any company of any size is eligible
to use the IFRS for SMEs, provided it does not have public accountability. An entity has public
accountability if it is publicly traded, or if it is a financial institution or similar entity. The IFRS for SMEs is
based on IFRSs but is much less complex.

Assessment Methodology
Description As part of the Reports on the Observance of Standards and Codes (ROSC) initiative, the
World Bank has established a program to assist its member countries in implementing
international accounting and auditing standards for strengthening the financial reporting
regime. The objectives of this program are two-fold:

Analyze comparability of national accounting and auditing standards with international

standards, determine the degree with which applicable accounting and auditing
standards are complied, and assess strengths and weaknesses of the institutional
framework in supporting high-quality financial reporting.
Assist the country in developing and implementing a country action plan for improving
institutional capacity with a view to strengthening the country's corporate financial
reporting regime.

Requirements of IFRS[edit]
See Requirements of IFRS. IFRS financial statements consist of (IAS1.8)

a Statement of Financial Position

a Statement of Comprehensive Income separate statements comprising an Income

Statement and separately a Statement of Comprehensive Income, which reconciles Profit or
Loss on the Income statement to total comprehensive income

a Statement of Changes in Equity (SOCE)

a Cash Flow Statement or Statement of Cash Flows

notes, including a summary of the significant accounting policies

Comparative information is required for the prior reporting period (IAS 1.36). An entity preparing IFRS
accounts for the first time must apply IFRS in full for the current and comparative period although
there are transitional exemptions (IFRS1.7).
On 6 September 2007, the IASB issued a revised IAS 1 Presentation of Financial Statements. The
main changes from the previous version are to require that an entity must:

present all non-owner changes in equity (that is, 'comprehensive income' ) either in one
Statement of comprehensive income or in two statements (a separate income statement and a
statement of comprehensive income). Components of comprehensive income may not be
presented in the Statement of changes in equity.

present a statement of financial position (balance sheet) as at the beginning of the earliest
comparative period in a complete set of financial statements when the entity applies the new

present a statement of cash flow.

make necessary disclosure by the way of a note.

The revised IAS 1 is effective for annual periods beginning on or after 1 January 2009. Early adoption
is permitted.

Adoption of IFRS[edit]
IFRS is used in many parts of the world, including the European Union, India, Hong Kong,
Australia, Malaysia, Pakistan, GCC countries, Russia, Chile, South Africa, Singapore and Turkey. As
of August 2008, more than 113 countries around the world, including all of Europe, currently require
or permit IFRS reporting and 85 require IFRS reporting for all domestic, listed companies, according
to the U.S. Securities and Exchange Commission.
It is generally expected that IFRS adoption worldwide will be beneficial to investors and other users of
financial statements, by reducing the costs of comparing alternative investments and increasing the
quality of information. Companies are also expected to benefit, as investors will be more willing to
provide financing. Companies that have high levels of international activities are among the group
that would benefit from a switch to IFRS. Companies that are involved in foreign activities and
investing benefit from the switch due to the increased comparability of a set accounting
standard. However, Ray J. Ball has expressed some skepticism of the overall cost of the
international standard; he argues that the enforcement of the standards could be lax, and the regional
differences in accounting could become obscured behind a label. He also expressed concerns about
the fair value emphasis of IFRS and the influence of accountants from non-common-law regions,
where losses have been recognized in a less timely manner.
For a current overview see PwC's map of countries that apply IFRS.

The Australian Accounting Standards Board (AASB) has issued 'Australian equivalents to IFRS' (AIFRS), numbering IFRS standards as AASB 18 and IAS standards as AASB 101141. Australian
equivalents to SIC and IFRIC Interpretations have also been issued, along with a number of

'domestic' standards and interpretations. These pronouncements replaced previous Australian

generally accepted accounting principles with effect from annual reporting periods beginning on or
after 1 January 2005 (i.e. 30 June 2006 was the first report prepared under IFRS-equivalent
standards for June year ends). To this end, Australia, along with Europe and a few other countries,
was one of the initial adopters of IFRS for domestic purposes (in the developed world). It must be
acknowledged, however, that IFRS and primarily IAS have been part and parcel of accounting
standard package in the developing world for many years since the relevant accounting bodies were
more open to adoption of international standards for many reasons including that of capability.
The AASB has made certain amendments to the IASB pronouncements in making A-IFRS, however
these generally have the effect of eliminating an option under IFRS, introducing additional disclosures
or implementing requirements for not-for-profit entities, rather than departing from IFRS for Australian
entities. Accordingly, for-profit entities that prepare financial statements in accordance with A-IFRS
are able to make an unreserved statement of compliance with IFRS.
The AASB continues to mirror changes made by the IASB as local pronouncements. In addition, over
recent years, the AASB has issued so-called 'Amending Standards' to reverse some of the initial
changes made to the IFRS text for local terminology differences, to reinstate options and eliminate
some Australian-specific disclosure. There are some calls for Australia to simply adopt IFRS without
'Australianising' them and this has resulted in the AASB itself looking at alternative ways of adopting
IFRS in Australia

The use of IFRS became a requirement for Canadian publicly accountable profit-oriented enterprises
for financial periods beginning on or after 1 January 2011. This includes public companies and other
"profit-oriented enterprises that are responsible to large or diverse groups of shareholders."

European Union[edit]
All listed EU companies have been required to use IFRS since 2005.
In order to be approved for use in the EU, standards must be endorsed by the Accounting Regulatory
Committee (ARC), which includes representatives of member state governments and is advised by a
group of accounting experts known as the European Financial Reporting Advisory Group. As a result
IFRS as applied in the EU may differ from that used elsewhere.
Parts of the standard IAS 39: Financial Instruments: Recognition and Measurement were not
originally approved by the ARC. IAS 39 was subsequently amended, removing the option to record
financial liabilities at fair value, and the ARC approved the amended version. The IASB is working
with the EU to find an acceptable way to remove a remaining anomaly in respect of hedge
accounting. The World Bank Centre for Financial Reporting Reform is working with countries in the
ECA region to facilitate the adoption of IFRS and IFRS for SMEs.

The (ICAI) has announced that IFRS will be mandatory in India for financial statements for the
periods beginning on or after 1 April 2012, but this plan has been failed and IFRS/IND-AS (Coverged
IFRS) are still not applicable. There was a roadmap as given below but still Indian companies are
following old Indian GAAP.There is no clear new date of adoption of IFRS.

Reserve Bank of India has stated that financial statements of banks need to be IFRS-compliant for
periods beginning on or after 1 April 2011.
The ICAI has also stated that IFRS will be applied to companies above INR 1000 crore (INR 10
billion) from April 2011. Phase wise applicability details for different companies in India:
Phase 1: Opening balance sheet as at 1 April 2011*
i. Companies which are part of NSE Index Nifty 50
ii. Companies which are part of BSE Sensex BSE 30
a. Companies whose shares or other securities are listed on a stock exchange outside India
b. Companies, whether listed or not, having net worth of more than INR 1000 crore (INR 10 billion)
Phase 2: Opening balance sheet as at 1 April 2012*
Companies not covered in phase 1 and having net worth exceeding INR 500 crore (INR 5 billion)
Phase 3: Opening balance sheet as at 1 April 2014*
Listed companies not covered in the earlier phases * If the financial year of a company commences
at a date other than 1 April, then it shall prepare its opening balance sheet at the commencement of
immediately following financial year.
On 22 January 2010, the Ministry of Corporate Affairs issued the road map for transition to IFRS. It is
clear that India has deferred transition to IFRS by a year. In the first phase, companies included in
Nifty 50 or BSE Sensex, and companies whose securities are listed on stock exchanges outside India
and all other companies having net worth of INR 10 billion will prepare and present financial
statements using Indian Accounting Standards converged with IFRS. According to the press note
issued by the government, those companies will convert their first balance sheet as at 1 April 2011,
applying accounting standards convergent with IFRS if the accounting year ends on 31 March. This
implies that the transition date will be 1 April 2011. According to the earlier plan, the transition date
was fixed at 1 April 2010.
The press note does not clarify whether the full set of financial statements for the year 201112 will
be prepared by applying accounting standards convergent with IFRS. The deferment of the transition
may make companies happy, but it will undermine India's position. Presumably, lack of preparedness
of Indian companies has led to the decision to defer the adoption of IFRS for a year. This is
unfortunate that India, which boasts for its IT and accounting skills, could not prepare itself for the
transition to IFRS over last four years. But that might be the ground reality.
Transition in phases
Companies, whether listed or not, having net worth of more than INR 5 billion will convert their
opening balance sheet as at 1 April 2013. Listed companies having net worth of INR 5 billion or less
will convert their opening balance sheet as at 1 April 2014. Un-listed companies having net worth of
Rs5 billion or less will continue to apply existing accounting standards, which might be modified from
time to time. Transition to IFRS in phases is a smart move.
The transition cost for smaller companies will be much lower because large companies will bear the
initial cost of learning and smaller companies will not be required to reinvent the wheel. However, this
will happen only if a significant number of large companies engage Indian accounting firms to provide
them support in their transition to IFRS. If, most large companies, which will comply with Indian

accounting standards convergent with IFRS in the first phase, choose one of the international firms,
Indian accounting firms and smaller companies will not benefit from the learning in the first phase of
the transition to IFRS.
It is likely that international firms will protect their learning to retain their competitive advantage.
Therefore, it is for the benefit of the country that each company makes judicious choice of the
accounting firm as its partner without limiting its choice to international accounting firms. Public sector
companies should take the lead and the Institute of Chartered Accountants of India (ICAI) should
develop a clear strategy to diffuse the learning.
Size of companies
The government has decided to measure the size of companies in terms of net worth. This is not the
ideal unit to measure the size of a company. Net worth in the balance sheet is determined by
accounting principles and methods. Therefore, it does not include the value of intangible assets.
Moreover, as most assets and liabilities are measured at historical cost, the net worth does not reflect
the current value of those assets and liabilities. Market capitalisation is a better measure of the size
of a company. But it is difficult to estimate market capitalisation or fundamental value of unlisted
companies. This might be the reason that the government has decided to use 'net worth' to measure
size of companies. Some companies, which are large in terms of fundamental value or which intend
to attract foreign capital, might prefer to use Indian accounting standards convergent with IFRS
earlier than required under the road map presented by the government. The government should
provide that choice.

The minister for Financial Services in Japan announced in late June 2011 that mandatory application
of the IFRS should not take place from fiscal year-ending March 2015; five to seven years should be
required for preparation if mandatory application is decided; and to permit the use of U.S. GAAP
beyond the fiscal year ending 31 March 2016.

Montenegro gained independence from Serbia in 2006. Its accounting standard setter is the Institute
of Accountants and Auditors of Montenegro (IAAM).
In 2005, IAAM adopted a revised version of
the 2002 "Law on Accounting and Auditing" which authorized the use of IFRS for all
IFRS is currently required for all consolidated and standalone financial statements,
however, enforcement is not effective except in the banking sector.
Financial statements for
banks in Montenegro are, generally, of high quality and can be compared to those of the European
Foreign companies listed on Montenegro's two stock exchanges (Montenegro Stock
Exchange and NEX Stock Exchange) are also required to apply IFRS in their financial
statements. Montenegro does not have a national GAAP.
no Montenegrin translation of IFRS exists, and because of this Montenegro applies
the Serbian translation from 2010.
IFRS for SMEs is not currently applied in Montenegro.

All listed companies must follow all issued IAS/IFRS except the following:
IAS 39 and IAS 42: Implementation of these standards has been held in abeyance by State Bank of
Pakistan for Banks and DFIs
IFRS-1: Effective for the annual periods beginning on or after 1 January 2004. This IFRS is being

considered for adoption for all companies other than banks and DFIs.
IFRS-9: Under consideration of the relevant Committee of the Institutes (ICAP & ICMAP). This IFRS
will be effective for the annual periods beginning on or after 1 January 2013.

The government of Russia has been implementing a program to harmonize its national accounting
standards with IFRS since 1998. Since then twenty new accounting standards were issued by the
Ministry of Finance of the Russian Federation aiming to align accounting practices with IFRS. Despite
these efforts essential differences between Russian accounting standards and IFRS remain. Since
2004 all commercial banks have been obliged to prepare financial statements in accordance with
both Russian accounting standards and IFRS. Full transition to IFRS is delayed but starting 2012
new modifications making Russian GAAP converging to IFRS have been made. They notably include
the booking of reserves for bad debts and contingent liabilities and the devaluation of inventory and
financial assets.
Still, several differences between the two sets of account still remain. Major reasons for deviation
between Russian GAAP and IFRS / US-GAAP (e.g. when the Russian affiliate of a larger group need
to be consolidated to the mother company) are the following:
1) Booking of payables in the General Ledger according to national accounting standards can only be
made upon recepit of the actual acceptance protocol (good's receipt). Indeed in Russia, opposely to
IFRS and US-GAAP, the invoice (outgoing or incoming) is not an official tax or accounting document
and does not trigger any boolking. There is also no provision to book in the General Ledger any
expense for goods and services that according to a contract are effectively received but for whom
documents are still not exchanged.
2) There is no possibility under Russian GAAP to recognise the good-will as an intangible asset in the
balance sheet of a company. This has a major consequence when a company in sold. Indeed, if a
company (or part of it) is sold at a higher value than its book value (i.e. to account for the good-will
value), the selling party need to pay tax at the relevant profit tax rate (20% in 2013) on the difference
in value between selling and accounting value and the buyer has no possibility to ammortize the cost
and deduct it from present and future revenues.
3) There is no equivalent of IAS 37 in the Russian GAAP. Loans and monetary securitiesare not
discounted, so the present value of such financial assets is not discounted for the relevant interest
rates at the different maturities of the loans.

In Singapore the Accounting Standards Committee (ASC) is in charge of standard setting. Singapore
closely models its Financial Reporting Standards (FRS) according to the IFRS, with appropriate
changes made to suit the Singapore context. Before a standard is enacted, consultations with the
IASB are made to ensure consistency of core principles.

South Africa[edit]
All companies listed on the Johannesburg Stock Exchange have been required to comply with the
requirements of International Financial Reporting Standards since 1 January 2005.

The IFRS for SMEs may be applied by 'limited interest companies', as defined in the South African
Corporate Laws Amendment Act of 2006 (that is, they are not 'widely held'), if they do not have public
accountability (that is, not listed and not a financial institution). Alternatively, the company may
choose to apply full South African Statements of GAAP or IFRS.
South African Statements of GAAP are entirely consistent with IFRS, although there may be a delay
between issuance of an IFRS and the equivalent SA Statement of GAAP (can affect voluntary early

Adoption scope and timetable
(1) Phase I companies: listed companies and financial institutions supervised by the Financial
Supervisory Commission (FSC), except for credit cooperatives, credit card companies and insurance
A. They will be required to prepare financial statements in accordance with Taiwan-IFRS starting
from 1 January 2013.
B. Early optional adoption: Firms that have already issued securities overseas, or have registered
an overseas securities issuance with
the FSC, or have a market capitalization of greater than NT$10 billion, will be permitted to
prepare additional consolidated financial statements

[TW-original 1]

in accordance with Taiwan-IFRS

starting from 1 January 2012. If a company without subsidiaries is not required to prepare
consolidated financial statements, it will be permitted to prepare additional individual financial
statements on the above conditions.
(2) Phase II companies: unlisted public companies, credit cooperatives and credit card
A. They will be required to prepare financial statements in accordance with Taiwan-IFRS starting
from 1 January 2019
B. They will be permitted to apply Taiwan-IFRS starting from 1 January 2013.
(3) Pre-disclosure about the IFRS adoption plan, and the impact of adoption
To prepare properly for IFRS adoption, domestic companies should propose an
IFRS adoption plan and establish a specific taskforce. They should also
disclose the related information from 2 years prior to adoption, as follows:
A. Phase I companies:
(A) They will be required to disclose the adoption plan, and the impact of adoption, in 2011
annual financial statements, and in 2012 interim and annual financial statements.
(B) Early optional adoption:

a. Companies adopting IFRS early will be required to disclose the adoption plan, and the impact
of adoption, in 2010 annual financial statements, and in 2011 interim and annual financial
b. If a company opts for early adoption of Taiwan-IFRS after 1 January 2011, it will be required to
disclose the adoption plan, and the impact of adoption, in 2011 interim and annual financial
statements commencing on the decision date.
B. Phase II companies will be required to disclose the related information from 2 years prior to
adoption, as stated above.


Jump up^ To maintain the consistency of information declaration

and supervision with other companies, the early adopted companies
should still prepare individual and consolidated financial statements
in accordance with domestic accounting standards.

Year Work Plan


Establishment of IFRS Taskforce


Acquisition of authorization to translate IFRS

Translation, review, and issuance of IFRS

Analysis of possible IFRS implementation problems,and resolution


Proposal for modification of the related regulations and

supervisory mechanisms

Enhancement of related publicity and training activities


IFRS application permitted for Phase I companies

Study on possible IFRS implementation problems,and resolution


Completion of amendments to the related regulations and

supervisory mechanisms

Enhancement of the related publicity and training activities


Application of IFRS required for Phase I companies,and permitted

for Phase II companies

Follow-up analysis of the status of IFRS adoption,and of the



Follow-up analysis of the status of IFRS adoption,and of the



Applications of IFRS required for Phase II companies

Expected benefits
(1) More efficient formulation of domestic accounting standards,
improvement of their international image, and enhancement of the
global rankings and international competitiveness of our local capital
(2) Better comparability between the financial statements of local and
foreign companies;
(3) No need for restatement of financial statements when local
companies wish to issue overseas securities, resulting in reduction in
the cost of raising capital overseas;
(4) For local companies with investments overseas, use of a single set
of accounting standards will reduce the cost of account conversions
and improve corporate efficiency.
Above is quoted from Accounting Research and Development
Foundation, with the original here PDF (18.9 KB) .

Turkish Accounting Standards Board translated IFRS into Turkish in
2005. Since 2005 Turkish companies listed in Istanbul Stock Exchange
are required to prepare IFRS reports.

List of International Financial Reporting Standards

From Wikipedia, the free encyclopedia

This is a list of the International Financial Reporting Standards (IFRSs) and official interpretations, as set out by
the IFRS Foundation. It includes accounting standards either developed or adopted by the International Accounting
Standards Board (IASB), the standard-setting body of the IFRS Foundation.[1][2]
The IFRS include

International Financial Reporting Standards (IFRSs)developed by the IASB;

International Accounting Standards (IASs)adopted by the IASB;

Interpretations originated from the International Financial Reporting Interpretations Committee (IFRICs); and

Standing Interpretations Committee (SICs).[2][3]

The list contains all standards and interpretations regardless whether they have been suspended. Full texts are available on
the IASB website.

International Financial Reporting Standards





First-time Adoption of International Financial Standards



Share-based Payment



Business Combinations



Insurance Contracts



Non-current Assets Held for Sale and Discontinued Operations



Exploration for and Evaluation of Mineral Assets



Financial Instruments: Disclosures



Operating Segments



Financial Instruments



Consolidated Financial Statements



Joint Arrangements



Disclosure of Interests in Other Entities



Fair Value Measurement


International Accounting Standards





Presentation of Financial Statements





Consolidated Financial Statements


Superseded in 1989 by IAS 27 and IAS 28


Depreciation Accounting

Withdrawn in 1999

Information to Be Disclosed in Financial Statements


Superseded by IAS 1 effective 1 July 1998


Accounting Responses to Changing Prices


Superseded by IAS 15, which was withdrawn December 2003


Statement of Cash Flows



Accounting Policies, Changes in Accounting Estimates and Errors


Accounting for Research and Development Activities


Superseded by IAS 39 effective 1 July 1999

IAS 10

Events After the Reporting Period


IAS 11

Construction Contracts


IAS 12

Income Taxes


Presentation of Current Assets and Current Liabilities

IAS 13

Superseded by IAS 39 effective 1 July 1998

Segment Reporting
IAS 14

Superseded by IFRS 8 effective 1 January 2009


Information Reflecting the Effects of Changing Prices

IAS 15

Withdrawn December 2003


IAS 16

Property, Plant and Equipment


IAS 17



IAS 18



Employee Benefits (1998)

IAS 19

Superseded by IAS 19 (2011) effective 1 January 2013


IAS 19

Employee Benefits (2011)


IAS 20

Accounting for Government Grants and Disclosure of Government Assistance


IAS 21

The Effects of Changes in Foreign Exchange Rates


Business Combinations
IAS 22

Superseded by IFRS 3 effective 31 March 2004


IAS 23

Borrowing Costs


IAS 24

Related Party Disclosures


Accounting for Investments

IAS 25

Superseded by IAS 39 and IAS 40 effective 2001

IAS 26

Accounting and Reporting by Retirement Benefit Plans


IAS 27

Separate Financial Statements (2011)


Consolidated and Separate Financial Statements

IAS 27

Superseded by IFRS 10, IFRS 12 and IAS 27 (2011) effective 1 January 2013


IAS 28

Investments in Associates and Joint Ventures (2011)


Investments in Associates
IAS 28

Superseded by IAS 28 (2011) and IFRS 12 effective 1 January 2013


IAS 29

Financial Reporting in Hyperinflationary Economies


Disclosures in the Financial Statements of Banks and Similar Financial

IAS 30

Superseded by IFRS 7 effective 1 January 2007


Interests In Joint Ventures

IAS 31

Superseded by IFRS 11 and IFRS 12 effective 1 January 2013


IAS 32

Financial Instruments: Presentation


IAS 33

Earnings Per Share


IAS 34

Interim Financial Reporting


Discontinuing Operations
IAS 35

Superseded by IFRS 5 effective 1 January 2005


IAS 36

Impairment of Assets


IAS 37

Provisions, Contingent Liabilities and Contingent Assets


IAS 38

Intangible Assets


IAS 39

Financial Instruments: Recognition and Measurement


Superseded by IFRS 9 where IFRS 9 is applied

IAS 40

Investment Property


IAS 41



IFRIC Interpretations




Changes in Existing Decommissioning, Restoration and Similar Liabilities



Members' Shares in Co-operative Entities and Similar Instruments


Emission Rights

Withdrawn June 2005



Determining Whether an Arrangement Contains a Lease



Rights to Interests arising from Decommissioning, Restoration and

Environmental Rehabilitation Funds


Liabilities Arising from Participating in a Specific Market - Waste Electrical


and Electronic Equipment


Applying the Restatement Approach under IAS 29 Financial Reporting in


Hyperinflationary Economies


Scope of IFRS 2

Withdrawn effective 1 January 2010



Reassessment of Embedded Derivatives


Interim Financial Reporting and Impairment




IFRS 2: Group and Treasury Share Transactions

Withdrawn effective 1 January 2010


Service Concession Arrangements



Customer Loyalty Programmes



IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding

Requirements and their Interaction



Agreements for the Construction of Real Estate


Hedges of a Net Investment in a Foreign Operation


Distributions of Non-cash Assets to Owners


Transfers of Assets from Customers



Extinguishing Financial Liabilities with Equity Instruments



Stripping Costs in the Production Phase of a Surface Mine









SIC Interpretations





Consistency Different Cost Formulas for Inventories



Consistency Capitalisation of Borrowing Costs



Elimination of Unrealised Profits and Losses on Transactions with Associates


Classification of Financial Instruments - Contingent Settlement Provisions


Costs of Modifying Existing Software








Introduction of the Euro




First-Time Application of IASs as the Primary Basis of Accounting



Business Combinations Classification either as Acquisitions or Unitings of




Government Assistance No Specific Relation to Operating Activities



Foreign Exchange Capitalisation of Losses Resulting from Severe Currency




Consolidation Special Purpose Entities


Superseded by IFRS 10 and IFRS 12 effective 1 January 2013



Jointly Controlled Entities Non-Monetary Contributions by Venturers


Superseded by IFRS 11 and IFRS 12, effective for annual periods beginning on or
after 1 January 2013


Property, Plant and Equipment Compensation for the Impairment or Loss of





Operating Leases Incentives



Share Capital Reacquired Own Equity Instruments (Treasury Shares)








Equity Costs of an Equity Transaction



Consistency Alternative Methods



Reporting Currency Measurement and Presentation of Financial Statements

under IAS 21 and IAS 29


Equity Accounting Method Recognition of Losses



Income Taxes Recovery of Revalued Non-Depreciable Assets

Superseded by, and incorporated into, IAS 12 by amendments made by Deferred




Tax: Recovery of Underlying Assets, effective for annual periods beginning on or

after 1 January 2012


Business Combinations Subsequent Adjustment of Fair Values and Goodwill

Initially Reported


Property, Plant and Equipment Major Inspection or Overhaul Costs



Earnings Per Share Financial Instruments and Other Contracts that May Be

Settled in Shares



Income Taxes Changes in the Tax Status of an Enterprise or its Shareholders


Evaluating the Substance of Transactions in the Legal Form of a Lease




Business Combinations 'Date of Exchange' and Fair Value of Equity



Disclosure Service Concession Arrangements



Reporting Currency Translation from Measurement Currency to Presentation




Revenue Barter Transactions Involving Advertising Services


Intangible Assets Web Site Costs




Consolidation and Equity Method Potential Voting Rights and Allocation of


Ownership Interests


Other pronouncements


Conceptual Framework for Financial Statements 2010


Preface to International Financial Reporting Standards


IFRS for Small and Medium Sized Entities


IFRS Practice Statement Management Commentary


The above tables list the most recent version (or versions if a pronouncement has not yet been superseded) of each
pronouncement and the date that revisions was originally issued. Where a pronouncement has been reissued with the same
or a different name, the date indicated in the above tables is the date the revised pronouncement was reissued (these are
indicated with an asterisk (*) in the tables). The majority of the pronouncements have also been amended through IASB or
IFRS Interpretations Committee projects, for consequential amendments arising on the issue of other pronouncements, the
annual improvements process, and other factors. Our page for each pronouncement has a full history of the pronouncement,
its development, amendments and other information.

IFRS is a principle based model as compared to rule based US GAAP. IFRS requires extensive use of fair valuations for
measurement of assets and liabilities. The objective of IFRS is to set the Balance Sheet right, and hence a significant
volatility may come in Profit & Loss statement.

Improved access to Global Market

Majority of the Stock exchange globally require financial information as per IFRS. If the financial information is as per
Indian Accounting Standard then a risk premium is added in pricing.

Lower Cost of Capital

Convergence with IFRS means the Indian companies need not prepare two sets of Financial Statements to comply with the
requirements abroad and this would lead to lower cost of administration, removal risk premium and hence pricing and the
companies can approach any market for capital.

Benchmarking with Global Peers

Preparing accounts as per IFRS will give better understanding of performance relative to the Global peers / benchmarks.
Targets and Milestones will be set based on global business environment instead of Local.

True Value of acquisition

In Indian GAAP except for a few exceptions net assets acquired is recorded on the carrying value instead of fair value.
Hence the true value of the combination is not reflected. IFRS overcomes this flaw as it mandates accounting of business
combinations at fair value.

. Advantages of IFRS compared to GAAP reporting standards

1.1 Focus on investors

One of the significant advantages of IFRS compared to GAAP is its focus on investors in
the following ways:

1. The first factor is that IFRS promise more accurate, timely and comprehensive financial statement
information that is relevant to the national standards. And the information provided by financial
statements prepared under IFRS tends to be more understandable for investors as they can
understand the financial statement without the necessity of other sources which makes investors
more informed
2. This also helps new or small investors by making the reporting standards simpler and better
quality as it puts small and new investors in the same position with other professional investors as
it was impossible under the previous reporting standards. This also helps to reduce the risk for
new or small investors while trading as professional investors can not take advantage due to the
simple to understand nature of financial statements.
3. Due to harmonization and standardization of reporting standards under IFRS, the investors do not
need to pay for processing and adjusting the financial statements to be able to understand them,
thus eliminating the fees of analysts. Therefore, IFRS reduces the cost for investors.
4. Reducing international differences in reporting standards by applying IFRS, in a sense removes a
cross border takeovers and acquisitions by investors.
Based on information mentioned above, it can be assumed that because higher information
quality reduces both the risk to investors from buying and owning shares and the risk to less
informed investors due to wrong selection due to lack of understanding, it should lead to
reduction in firms cost of equity capital.
This on one hand should increase the share prices, and on the other should make new
investments by firms more attractive.
Moreover, the following points mark additional advantages of IFRS compared to GAAP

1.2 Loss recognition timeliness

Recognising the loss immediately is one of the key features of IFRS as it is not only the
benefit for the investors, but also for the lender and other stakeholders within the company.
The increased transparency and loss recognition of IFRS, usually increases the efficiency of
contracting between companies and their management, which also enhances the corporate

With increased transparency as promised by IFRS, the lenders also benefit from IFRS as it
makes it compulsory for the companies recognize the loss immediately.
This timelier loss recognition of IFRS, triggers the issues as when the companies face
economic losses, it will be known to the stakeholders of other potential investors. Timelier
loss recognition also enables the company review its book values of assets and liabilities,
earnings, equity.

1.3 Comparability
The convergence to IFRS has improved the comparability of financial statements in the EU.
This has been achieved through having the same reporting standard under a single market,
the EU.
As all companies, preparing their consolidated financial statements, have been reporting
underone reporting standard have improved the comparability not only for investors, but
also all stakeholders who use the financial statements.
Another reason that has contributed to the overall success of the IFRS adoption has been
due to the transition period, as more than 8000 listed companies in the EU adopted it in the
same year.
However, there has been an argument about the lack of efficiency and comparability of
IFRS. The following is the arguments against the lack of comparability and consistency of
Due to the strong national identity of IFRS reports, as the main effects of IFRS has been on
how companies recognize, measure and disclose items. And the companies have adopted
an approach which minimized the changes from previous national standards which reduced
the ability to compare the financial statements across an industry.
The extensive judgement has been required under IFRS due to the absence of industry
related guidance which created gaps and inconsistencies in the IFRS reporting standards.
And this is another reason for the lack of comparability and inconsistency

And companies are not confident that the IFRS is adequate for the purposes of
communicating their performance to the financial markets, as GAAP reporting standards
tended to be more detailed which could provide more detailed information
Another factor that shows the lack of comparability and inconsistency is because the IFRS
reporting standards are more complicated than the national accounting standards (UK),
therefore, it may become a process of following the complex mechanism but does not
necessarily promote the performance of the companies.

1.4 Standardization of accounting and financial

The most mentioned factor about the advantages of IFRS has been the standardization of
financial reporting which eventually improves the comparability of financial statements in
major financial markets. This also removes the trade barrier, as this was one of the key
factors as why the EU has been trying to adopt single reporting standards.

1.5 Improved consistency and transparency of

financial reporting
This factor can also be mentioned as one of the crucial advantages of converting to IFRS as
it makes the EU member countries to be consistent not only on macroeconomic aspects,
but also on financial reporting which improves relationship between investors and
companies among member countries.

1.6 Better access to foreign capital markets and

As thousands of companies in Europe and other joining countries across the world has
already created a huge base for IFRS adoption, it also improves the companies to access to

financial markets by having the financial statements prepared under one reporting
One of the main reasons for converting from previously used GAAP to new IFRS was for
improving comparability in international financial markets, thus increasing the focus on
investors. And this has been mainly achieved and still going to be achieved as more and
more countries around the world have been converting to IFRS from their national reporting
standards as mentioned during the interview.

1.7 Improved comparability of financial information

with global competitors
The comparability of financial statements under IFRS will be improved only if the adoption
of IFRS expands including more countries. However, the comparability of financial
statements get worse if the same country uses two different sets of reporting standards,
thus IFRS and national reporting standards.
Due to the gap between the market and book values, the local stock market gets adversely
affected when the IFRS is applied in line with other national reporting standards.
Moreover, there has been no significant achievement in terms of usefulness and improved
comparability of financial statements in the short term which is mainly due to the fact that
the IFRS reporting standards is fairly new as a reporting standard and the harmonization
has not fully been achieved yet by all EU member countries. And it is hoped that the
usefulness and improved comparability of IFRS may be achieved in the medium-long term.
In order to assure the comparability of financial statements, all companies should follow the
same rules by adopting IFRS. Private and small and medium sized, unconsolidated
statements can be prepared under IFRS which further improves the comparability and
consistency of financial statements. And eventually, the adoption of IFRS by all countries
around the world gives even more increased usefulness and comparability of financial

1.8 Relevance
And the relevance of the IFRS can be mentioned as a substantial advantage due to the
following reasons:

The new IFRS reflects on economic substance more than legal form. This helps the companies
and other stakeholders to have true and fair view of the companies transactions.
The way IFRS reflects to gains and losses in a timely manner puts IFRS in a more reliable and
credible position than the GAAP in terms of reporting standards
The balance sheets prepared under IFRS tends to be more useful due to its layout and the
consistency, and the level of complexity compared to GAAP that tended to be more detailed
The manipulation by managers by creating hidden reserves is not allowed any more under new
IFRS, so less manipulative and more shareholders oriented
Moreover, other benefits as mentioned during the interview are cost saving with new IFRS
especially for multinational corporations. However, before companies can start enjoying the
cost savings, they have to spend considerable amount of money as a transitional costs.

2. Disadvantages of IFRS compared to GAAP reporting standards

The most noteworthy disadvantage of IFRS relate to the costs related to the application by
multinational companies which comprise of changing the internal systems to make it
compatible with the new reporting standards, training costs and etc.
The issue of regulating IFRS in all countries, as it will not be possible due to various
reasons beyond IASB or IASC control as they can not enforce the application of IFRS by all
countries of the world.
Issues such as extraordinary loss/gain which are not allowed in the new IFRS still remain an
Another major disadvantage of converting to IFRS makes the IASB the monopolist in terms
of setting the standards. And this will be strengthened if IFRS is adopted by the US
companies. And if there is competition, such IFRS vs. GAAP, there is more chance of
having reliable and useful information that will be produced during the course of
The total cost of transition costs for the US companies will be over $8 billion and one off
transition costs for small and medium sized companies will be in average $420,000, which
is quite a huge amount of money to absorb by companies.
And even though the companies and countries are incurring huge transitional costs, the
benefits of IFRS can not be seen until later point due to the fact that it takes some years for
the harmonization and to have sufficient years of financial statements to be prepared under
IFRS to improve consistency.
They key problem in conversion to IFRS that has stressed with high importance is the use
of fair value as the primary basis of asset and liability measurements. And the interviewers
think that this principle will bring increased volatility as the assets are reported.
And another disadvantage of IFRS is that IFRS is quite complex and costly, and if the
adoption of IFRS needed or required by small and medium sized businesses, it will be a big
disadvantage for SMEs as they will be hit by the large transition costs and the level of
complexity of IFRS may not be absorbed by SMEs.

And moreover, one of the aims of European Union from applying and standardizing the
reporting standards was to increase the international comparability of financial statements;
however, only over 7000 listed companied adopted IFRS from 2005, there were still more
than 7000,000 SMEs in EU, which preferred their national version of reporting standards.
This contradicts the aim of the EU and partly of IFRS in implementing single international
reporting standards.

IFRS financial statements come in various shapes and sizes, but they all have certain features in common.
Information in IFRS financial statements has these characteristics:

Relevance: So that it makes a difference to the decisions about a company made by users of the statements.

Faithful representation: Financial statements are complete and free from bias and error.

Comparability: You can compare financial statements from one period to the next or for two companies in the
same industry so that you can make informed decisions about the companies.

Verifiability: Different people could reach the same decision based on the information, but not necessarily
reach complete agreement.

Timeliness: You make information available to users in good time. Historical information quickly becomes out of

Understandability: You present and classify information clearly and concisely to make it understandable to


Indian Accounting Standards (AS) is formulated on the basis of the IFRS. While
formulating AS, the endeavor of the ICAI
remains to converge with the IFRS. The
ICAI has till date issued 29 AS
corresponding to IFRS. Some recent AS,
issued by the ICAI, are totally at par with
the corresponding IFRS, e.g., the
Standards on Impairment of Assets and
Construction Contracts. While
formulating Indian Accounting Standards,
changes from the corresponding IAS/ IFRS
are made only in those cases where these
are unavoidable considering:l Legal and/ or regulatory framework
prevailing in the country.
l To reduce or eliminate the alternatives
so as to ensure comparability.
l State of economic environment in the

l Level of preparedness of various
interest groups involved in
implementing the accounting

The problem of differences in
accounting standards will continue to
exist for some time. From a regulatory
perspective, convergence to IFRS would
require amendments to the Companies Act
and the Income Tax Act, to mention the
major ones. Currently industries such as
banking and insurance are also regulated
by specific acts that prescribe accounting
norms. Today, IFRS does not provide
industry specific standards so there would
be additional transition challenges as and
when progress is made. IFRS requires
valuations and future forecasts, which will
involve use of estimates, assumptions and
managements judgements. The ICAI and
the Ministry of Corporate Affairs have
already made noteworthy progress in
moving towards IFRS.
1. Legal and regulatory considerations
In some cases, the legal and
regulatory accounting requirements in
India differ from the IFRS. In India,
Companies Act of 1956, Banking
Regulation Act of 1949, IRDA regulations
and SEBI guidelines prescribe detailed
formats for financial statements to be
followed by respective enterprises in their
financial reporting. In such cases, strict
adherence to IFRS in India would result in
various legal problems.
2. Economic Environment
Some IFRS require fair value approach
to be followed, for example:
IAS 39, Financial Instruments:
Recognition and Measurement
IAS 41, Agriculture
The markets of many economies such
as India normally do not have adequate
depth and breadth for reliable
determination of fair values. With a view to
provide further guidance on the use of fair
value approach, the IASB is developing a

document. Till date, no viable solution of

objective fair value measures is available.

3. SME Concerns
In emerging economies like India, a
significant part of the economic activities is
carried on by small- and medium-sized
entities (SMEs). Such entities face
problems in implementing the accounting
standards because of:
Scarcity of resources and expertise
with the SMEs to achieve compliance.
Cost of compliance not commensurate
with the expected benefits.
In India, exemptions/ relaxations
have been provided to SMEs. These
exemptions/ relaxations are primarily
related to disclosure requirements, though
some exemptions/ relaxations from
measurement principles have also been
provided, e.g., AS 28 - Impairment of
Assets and AS 15 - Employee Benefits.
Keeping in view the difficulties faced by the
SMEs, the IASB is developing an IFRS for
4. Training to Preparers
Some IFRS are complex. There is lack
of adequate skills amongst the preparers
and users of Financial Statements to apply
IFRS. Proper implementation of such IFRS
requires extensive education of preparers.
5. Interpretation
A large number of application issues
arise while applying IFRS. There is a need
to have a forum which may address the
application issues in specific cases. In
India, the Institute of Chartered
Accountants of India has constituted the
Expert Advisory Committee to provide

guidance on enterprise specific issues.

Benefits of IFRS
It is believed that IFRS, when adopted worldwide, will benefit investors and
other users of financial statements by reducing the cost of investments and
increasing the quality of the information provided. Additionally, investors will be
more willing to provide financing with greater transparency among different
firms' financial statements. Furthermore, multinational corporations serve to
benefit the most from only needing to report to a single standard and, hence,

can save money. It offers the major benefit where it is used in over 120
different countries, while U.S. GAAP is used only in one country.
First-time Adoption of International Financial Reporting Standards A first-time adopter is an entity
that, for the first time, makes an explicit and unreserved statement that its general purpose financial
statements comply with IFRSs. An entity can also be a first-time adopter if, in the preceding year, its
published financial statements asserted: Compliance with some but not all IFRSs. Included only a
reconciliation of selected figures from previous GAAP to IFRSs. (Previous GAAP means the GAAP that
an entity followed immediately before adopting to IFRSs.) However, an entity is not a first-time
adopter if, in the preceding year, its published financial statements asserted: Compliance with IFRSs
even if the auditor's report contained a qualification with respect to conformity with IFRSs.
Compliance with both previous GAAP and IFRSs. Adjustments required to move from previous GAAP
to IFRSs at the time of first-time adoption Recognize all assets and liabilities whose recognition is
required by IFRS Not recognize items as assets or liabilities if IFRS does not permit such recognition
Reclassify items that do not match IFRS requirements Apply IFRS in measuring all recognized
assets and liabilities Difference amount is adjusted with Retained Earning Recognition and
measurement Opening IFRS Balance Sheet Date of transition to IFRS Same accounting policies
Throughout all periods

Optional exceptions Business combinations that occurred before opening

balance sheet date Property, plant, and equipment, intangible assets, and investment property
carried under the cost model IAS 19 - Employee benefits: actuarial gains and losses IAS 21 Accumulated translation reserves Compound financial instruments Transition date for subsidiaries
etc FV measurement Share-based payments Comparatives for IAS39 Comparatives for Insurance
Decommissioning Liabilities Arrangements containing leases Comparatives for exploration
Designation of financial assets and liabilities Mandatory exceptions IAS 39 - Derecognition of
financial instruments IAS 39 - Hedge accounting Estimates Assets held-for-sale and discontinuing

Different IFRS adoption dates of investor and investee

A parent or investor may

become a first-time adopter earlier than or later than its subsidiary, associate, or joint venture
investee. In these cases, IFRS 1 is applied as follows: 1.If the subsidiary has adopted IFRSs in its
entity-only financial statements before the group to which it belongs adopts IFRS for the consolidated
financial statements, then the subsidiary's first-time adoption date is still the date at which it adopted
IFRS for the first-time, not that of the group. However, the group must use the IFRS measurements of
the subsidiary's assets and liabilities for its first IFRS financial statements except for adjustments
relating to the business combinations exemption and to conform group accounting policies.

2. If the

group adopts IFRSs before the subsidiary adopts IFRSs in its entity-only financial statements, then the
subsidiary has an option either (a) to elect that the group date of IFRS adoption is its transition date
or (b) to first-time adopt in its entity-only financial statements. 3. If the group adopts IFRSs before
the parent adopts IFRSs in its entity-only financial statements, then the parent's first-time adoption
date is the date at which the group adopted IFRSs for the first time. 4. If the group adopts IFRSs
before its associate or joint venture adopts IFRSs in its entity-only financial statements, then the
associate or joint venture should have the option to elect that either the group date of IFRS adoption
is its transition date or to first-time adopt in its entity-only financial statements

Total thanks : 2

times CA. Amit Daga Finance Controller CA. CS. CFA. CIFRS. M.COM. [ Scorecard : 8871] Forum
Moderator Posted 4 years ago

IFRS 2 - Share-based Payment

A share-based payment is a

transaction in which the entity receives or acquires goods or services either as consideration for its
equity instruments or by incurring liabilities for amounts based on the price of the entity's shares or
other equity instruments of the entity. The accounting requirements for the share-based payment
depend on how the transaction will be settled, that is, by the issuance of (a) equity, (b) cash, or (c)
equity or cash.

IFRS 2 applies to all entities. There is no exemption for private or smaller entities.

Furthermore, subsidiaries using their parent's or fellow subsidiary's equity as consideration for goods
or services are within the scope of the Standard. There are two exemptions to the general scope

First, the issuance of shares in a business combination should be accounted for under

IFRS 3 Business Combinations. However, care should be taken to distinguish share-based payments
related to the acquisition from those related to employee services.

Second, IFRS 2 does not address

share-based payments within the scope of paragraphs 8-10 of IAS 32 Financial Instruments:
Disclosure and Presentation, or paragraphs 5-7 of IAS 39 Financial Instruments: Recognition and
Measurement. Therefore, IAS 32 and 39 should be applied for commodity-based derivative contracts
that may be settled in shares or rights to shares.

IFRS 2 does not apply to share-based payment

transactions other than for the acquisition of goods and services. Share dividends, the purchase of
treasury shares, and the issuance of additional shares are therefore outside its scope


Depending on the type of share-based payment, fair value may be determined by the

value of the shares or rights to shares given up, or by the value of the goods or services received:
General fair value measurement principle. In principle, transactions in which goods or services are
received as consideration for equity instruments of the entity should be measured at the fair value of
the goods or services received. Only if the fair value of the goods or services cannot be measured
reliably would the fair value of the equity instruments granted be used. Measuring employee share
options. For transactions with employees and others providing similar services, the entity is required
to measure the fair value of the equity instruments granted, because it is typically not possible to
estimate reliably the fair value of employee services received. When to measure fair value - options.
For transactions measured at the fair value of the equity instruments granted (such as transactions
with employees), fair value should be estimated at grant date. When to measure fair value - goods
and services. For transactions measured at the fair value of the goods or services received, fair value
should be estimated at the date of receipt of those goods or services. Measurement guidance. For
goods or services measured by reference to the fair value of the equity instruments granted, IFRS 2
specifies that, in general, vesting conditions are not taken into account when estimating the fair value
of the shares or options at the relevant measurement date (as specified above). Instead, vesting
conditions are taken into account by adjusting the number of equity instruments included in the
measurement of the transaction amount so that, ultimately, the amount recognised for goods or
services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest. More measurement guidance. IFRS 2 requires the fair value of
equity instruments granted to be based on market prices, if available, and to take into account the
terms and conditions upon which those equity instruments were granted. In the absence of market
prices, fair value is estimated using a valuation technique to estimate what the price of those equity

instruments would have been on the measurement date in an arm's length transaction between
knowledgeable, willing parties. The standard does not specify which particular model should be used.
If fair value cannot be reliably measured. IFRS 2 requires the share-based payment transaction to be
measured at fair value for both listed and unlisted entities. IFRS 2 permits the use of intrinsic value
(that is, fair value of the shares less exercise price) in those "rare cases" in which the fair value of the
equity instruments cannot be reliably measured. However this is not simply measured at the date of
grant. An entity would have to remeasure intrinsic value at each reporting date until final settlement.
Performance conditions. IFRS 2 makes a distinction between the handling of market based
performance features from non-market features. Market conditions are those related to the market
price of an entity's equity, such as achieving a specified share price or a specified target based on a
comparison of the entity's share price with an index of share prices of other entities. Market based
performance features should be included in the grant-date fair value measurement. However, the fair
value of the equity instruments should not be reduced to take into consideration non-market based
performance features or other vesting features

CA. Amit Daga Finance Controller CA. CS. CFA.

CIFRS. M.COM. [ Scorecard : 8871] Forum Moderator Posted 4 years ago


IFRS 3 ---Business

A business combination is a transaction or event in which an acquirer obtains control

of one or more businesses.. A business is defined as an integrated set of activities and assets that is
capable of being conducted and managed for the purpose of providing a return directly to investors or
other owners, members or participants Acquirer must be identified. Under IFRS 3, an acquirer must be
identified for all business combinations

Acquisition method. The acquisition method (called the

'purchase method' in the 2004 version of IFRS 3) is used for all business combinations.
applying the acquisition method are:
obtains control of the acquiree.

Steps in

1. Identification of the 'acquirer' - the combining entity that

2. Determination of the 'acquisition date' - the date on which the

acquirer obtains control of the acquiree.

3. Recognition and measurement of the identifiable assets

acquired, the liabilities assumed and any non-controlling interest (NCI, formerly called minority
interest) in the acquiree.
purchase option.

4. Recognition and measurement of goodwill or a gain from a bargain

Measurement of acquired assets and liabilities. Assets and liabilities are measured

at their acquisition-date fair value (with a limited number of specified exceptions).


Goodwill is measured as the difference between: the aggregate of (i) the acquisition-date fair value of
the consideration transferred, (ii) the amount of any NCI, and (iii) in a business combination achieved
in stages , the acquisition-date fair value of the acquirer's previously-held equity interest in the
acquiree; and the net of the acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed (measured in accordance with IFRS 3). If the difference above is negative, the
resulting gain is recognised as a bargain purchase in profit or loss. Total thanks : 2 times CA. Amit
Daga Finance Controller CA. CS. CFA. CIFRS. M.COM. [ Scorecard : 8871] Forum Moderator Posted 4
years ago

IFRS 4 -- 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 IAS 39 Financial
Instruments: Recognition and Measurement. Furthermore, it does not address accounting by

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 cont.. However, the I

a. prohibits provisions for possible claims

under contracts that are not in existence at the end of the reporting period (such as

catastrophe and equalization provisions). b. requires a test for the adequacy of recognized 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.


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. The IFRS permits the introduction of an accounting policy that involves re
measuring designated insurance liabilities consistently in each period to reflect current market interest
rates (and, if the insurer so elects, other current estimates and assumptions). Without this permission,
an insurer would have been required to apply the change in accounting policies consistently to all
similar liabilities

CA. Amit Daga Finance Controller CA. CS. CFA. CIFRS. M.COM. [ Scorecard : 8871]

Forum Moderator Posted 4 years ago


IFRS 5 Non-current Assets Held for Sale and Discontinued

The IFRS: adopts the classification held for sale. a)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. b)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. 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 program 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. A component of an entity comprises operations and cash flows that can be clearly
distinguished, operationally and for financial reporting purposes, from the rest of the entity. In other
words, a component of an entity will have been a cash-generating unit or a group of cash-generating
units while being held for use. An entity shall not classify as held for sale a non-current asset (or
disposal group) that is to be abandoned. This is because
principally through continuing

its carrying amount will be recovered

CA. Amit Daga Finance Controller CA. CS. CFA. CIFRS. M.COM. [

Scorecard : 8871] Forum Moderator Posted 4 years ago

IFRS 6 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 recognized as assets in accordance with the

entitys 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 cash-generating 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.

CA. Amit Daga Finance Controller CA. CS. CFA.

CIFRS. M.COM. [ Scorecard : 8871] Forum Moderator Posted 4 years ago

IFRS 7:-- Financial

Instruments: Disclosures Balance Sheet :--Disclose the significance of financial instruments for an
entity's financial position and performance.This includes disclosures for each of the following
categories: Financial assets & Financial liabilities measured at fair value through profit and loss,
showing separately those held for trading and those designated at initial recognition. Held-tomaturity investments. Loans and receivables. Available-for-sale assets. . Financial liabilities
measured at amortised cost. Special disclosures about financial assets and financial liabilities
designated to be measured at fair value through profit and loss, including disclosures about credit risk

and market risk and changes in fair values Reclassifications of financial instruments from fair value to
amortised cost or vice versa Disclosures about derecognitions, including transfers of financial assets
for which derecogntion accounting is not permitted Information about financial assets pledged as
collateral and about financial or non-financial assets held as collateral Reconciliation of the allowance
account for credit losses (bad debts). Information about compound financial instruments with
multiple embedded derivatives. Breaches of terms of loan agreements. Income Statement and Equity
:-Items of income, expense, gains, and losses,

Held-to-maturity investments. Loans and

receivables. Available-for-sale assets. . Financial liabilities measured at amortised cost. Interest

income and interest expense for those

financial instruments that are not measured at F.V through

P/L Fee income and expense Amount of impairment losses on financial assets Interest income on
impaired financial assets

Other Disclosures Accounting policies for financial instruments

Information about hedge accounting, including: Descripttion of each hedge, hedging instrument,
and fair values of those instruments, and nature of risks being hedged. for cash flow hedges, the
periods in which the cash flows are expected to occur, when they are expected to enter into the
determination of profit or loss, and a descripttion of any forecast transaction for which hedge
accounting had previously been used but which is no longer expected to occur. If a gain or loss on a
hedging instrument in a cash flow hedge has been recognised directly in equity, an entity should
disclose the following: The amount that was so recognised in equity during the period. The amount
that was removed from equity and included in profit or loss for the period. The amount that was
removed from equity during the period and included in the initial measurement of the acquisition cost
or other carrying amount of a non-financial asset or non- financial liability in a hedged highly probable
forecast transaction. For fair value hedges, information about the fair value changes of the hedging
instrument and the hedged item. Hedge ineffectiveness recognised in profit and loss (separately for
cash flow hedges and hedges of a net investment in a foreign operation). Information about the fair
values of each class of financial asset and financial liability, Comparable carrying amounts.
Descripttion of how fair value was determined. Detailed information if fair value cannot be reliably
measured. Note that disclosure of fair values is not required when the carrying amount is a
reasonable approximation of fair value, such as short-term trade receivables and payables, or
for instruments whose fair value cannot be measured reliably.

CA. Amit Daga Finance Controller CA.

CS. CFA. CIFRS. M.COM. [ Scorecard : 8871] Forum Moderator Posted 4 years ago

IFRS 8 Operating

IFRS 8 applies to the separate or individual financial statements of an entity (and to the

consolidated financial statements of a group with a parent): whose debt or equity instruments are
traded in a public market; or that files, or is in the process of filing, its (consolidated) financial
statements with a securities commission or other regulatory organisation for the purpose of issuing
any class of instruments in a public market. However, when both separate and consolidated financial
statements for the parent are presented in a single financial report, segment information need be
presented only on the basis of the consolidated financial statements. Operating Segments IFRS 8
defines an operating segment as follows. An operating segment is a component of an entity: that
engages in business activities from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the same entity); whose
operating results are reviewed regularly by the entity's chief operating decision maker to make

decisions about resources to be allocated to the segment and assess its performance; and for which
discrete financial information is available. Reportable segments IFRS 8 requires an entity to report
financial and descripttive information about its reportable segments. Reportable segments are
operating segments or aggregations of operating segments that meet specified criteria: its reported
revenue, from both external customers and intersegment sales or transfers, is 10 per cent or more of
the combined revenue, internal and external, of all operating segments; or the absolute measure of
its reported profit or loss is 10 per cent or more of the greater, in absolute amount, of (i) the
combined reported profit of all operating segments that did not report a loss and (ii) the combined
reported loss of all operating segments that reported a loss; or its assets are 10 per cent or more of
the combined assets of all operating segments. If the total external revenue reported by operating
segments constitutes less than 75 per cent of the entity's revenue, additional operating segments
must be identified as reportable segments (even if they do not meet the quantitative thresholds set
out above) until at least 75 per cent of the entity's revenue is included in reportable segments