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IFRS Pocket Guide 2011

Dec 23, 2016

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    IFRS p

    ocket guide 2011

    IFRS pocket guide2011

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  • IFRS pocket guide 2011

    Introduction

    Introduction

    This pocket guide provides a summary of the recognition and measurement requirements of International Financial Reporting Standards (IFRS) issued up to August 2011. It does not address in detail the disclosure requirements; these can be found in the PwC publication IFRS disclosure checklist 2011.

    The information in this guide is arranged in six sections: Accountingprinciples. Incomestatementandrelatednotes. Balancesheetandrelatednotes. Consolidatedandseparatefinancialstatements. Othersubjects. Industry-specifictopics.

    More detailed guidance and information on these topics can be found in the IFRS manual of accounting 2012 and other PwC publications. A list of PwCs IFRS publications is provided on the inside front and back covers.

  • IFRS pocket guide 2011

    Contents

    i

    Contents

    Accounting rules and principles 1

    1. Introduction 12. Accounting principles and applicability of IFRS 13. First-timeadoptionofIFRSIFRS1 24. PresentationoffinancialstatementsIAS1 35. Accountingpolicies,accountingestimatesanderrorsIAS8 66. FinancialinstrumentsIFRS9,IFRS7,IAS32,IAS39 87. ForeigncurrenciesIAS21,IAS29 178. InsurancecontractsIFRS4 189. RevenueIAS18,IAS11,IAS20 1910. SegmentreportingIFRS8 2111. EmployeebenefitsIAS19 2212. Share-basedpaymentIFRS2 2513. TaxationIAS12 2614. EarningspershareIAS33 28

    Balancesheetandrelatednotes 29 15. IntangibleassetsIAS38 2916. Property,plantandequipmentIAS16 3017. InvestmentpropertyIAS40 3118. ImpairmentofassetsIAS36 3219. LeaseaccountingIAS17 3420. InventoriesIAS2 3521. ProvisionsandcontingencesIAS37 3522. EventsafterthereportingperiodandfinancialcommitmentsIAS10 3823. Sharecapitalandreserves 38

  • IFRS pocket guide 2011

    Contents

    ii

    Consolidatedandseparatefinancialstatements 40

    24. ConsolidatedandseparatefinancialstatementsIAS27 4024A.ConsolidatedfinancialstatementsIFRS10 4125. BusinesscombinationsIFRS3 4226. Disposalsofsubsidiaries,businessesandnon-currentassetsIFRS5 4427. AssociatesIAS28 4628. JointventuresIAS31 4728A.JointarrangementsIFRS11 48

    Othersubjects 49

    29. Related-partydisclosuresIAS24 4930. CashflowstatementsIAS7 5031. InterimreportsIAS34 5132. ServiceconcessionarrangementsSIC29,IFRIC12 5233. RetirementbenefitplansIAS26 5334. FairvaluemeasurementIFRS13 54

    Industry-specifictopics 55

    35. AgricultureIAS41 5535. ExtractiveindustriesIFRS6 55

    Index by standards and interpretation 57

  • Accounting rules and principles

    1IFRS pocket guide 2011

    Accounting rules and principles

    1 Introduction

    Therehavebeenmajorchangesinfinancialreportinginrecentyears.Mostobvious is the continuing adoption of IFRS worldwide. Many territories have been using IFRS for some years, and more are planning to come on stream from 2012. For the latest information on countries transition to IFRS, visit pwc.com/usifrs and see Interactive IFRS adoption by country map.

    An important recent development is the extent to which IFRS is affected by politics. The issues with Greek debt, the problems in the banking sector and the attempts of politicians to resolve these questions have resulted in pressure onstandard-setterstoamendtheirstandards,primarilythoseonfinancialinstruments. This pressure is unlikely to disappear, at least in the short term. TheIASBisworkinghardtorespondtothis;wecanthereforeexpecta continued stream of changes to the standards in the next few months and years.

    2 Accounting principles and applicability of IFRS

    TheIASBhastheauthoritytosetIFRSsandtoapproveinterpretationsof those standards.

    IFRSsareintendedtobeappliedbyprofit-orientatedentities.Theseentitiesfinancialstatementsgiveinformationaboutperformance,positionandcash flowthatisusefultoarangeofusersinmakingfinancialdecisions.These users include shareholders, creditors, employees and the general public. A completesetoffinancialstatementsincludesa: balancesheet(statementoffinancialposition); statementofcomprehensiveincome; statementofcashflows; adescriptionofaccountingpolicies;and notestothefinancialstatesments.

    Notestothefinancialstatements.Theconceptsunderlyingaccounting practicesunderIFRSaresetoutintheIASBsConceptualFrameworkforFinancial Reporting issued in September 2010 (the Framework). It supersedes theFrameworkforthepreparationandpresentationoffinancialstatements (theFramework(1989)).

  • Accounting rules and principles

    2 IFRS pocket guide 2011

    3 First-time adoption of IFRS IFRS 1

    An entity moving from national GAAP to IFRS should apply the requirements ofIFRS1.ItappliestoanentitysfirstIFRSfinancialstatementsandtheinterimreportspresentedunderIAS34,Interimfinancialreporting,thatarepart of that period. The basic requirement is for full retrospective application of all IFRSs effective at the reporting date. However, there are a number of optional exemptions and mandatory exceptions to the requirement for retrospective application.

    TheexemptionscoverstandardsforwhichtheIASBconsidersthatretrospectiveapplicationcouldprovetoodifficultorcouldresultinacostlikelytoexceedanybenefitstousers.Theexemptionsareoptional.Any,allornone of the exemptions may be applied.

    The optional exemptions relate to: businesscombinations; deemedcost; employeebenefits; cumulativetranslationdifferences; compoundfinancialinstruments; assetsandliabilitiesofsubsidiaries,associatesandjointventures; designationofpreviouslyrecognisedfinancialinstruments; share-basedpaymenttransactions; fairvaluemeasurementoffinancialassetsorfinancialliabilitiesat

    initial recognition; insurancecontracts; decommissioningliabilitiesincludedinthecostofproperty,plant

    and equipment; leases; serviceconcessionarrangements; borrowingcosts; investmentsinsubsidiaries,jointlycontrolledentitiesandassociates; transfersofassetsfromcustomer; extinguishingfinancialliabilitieswithequityinstruments;and severehyperinflation.

    The exceptions cover areas in which retrospective application of the IFRS requirements is considered inappropriate. The following exceptions are mandatory, not optional:

  • IFRS pocket guide 2011

    Accounting rules and principles

    3

    hedgeaccounting; estimates;and non-controllinginterests.

    Comparative information is prepared and presented on the basis of IFRS. Almostalladjustmentsarisingfromthefirst-timeapplicationofIFRSare againstopeningretainedearningsofthefirstperiodthatispresentedonan IFRS basis.

    Certain reconciliations from previous GAAP to IFRS are also required.

    4 Presentation of financial statements IAS 1

    Theobjectiveoffinancialstatementsistoprovideinformationthatisusefulinmakingeconomicdecisions.IAS1sobjectiveistoensurecomparabilityofpresentationofthatinformationwiththeentitysfinancialstatementsof previousperiodsandwiththefinancialstatementsofotherentities.

    Financial statements are prepared on a going concern basis unless management intends either to liquidate the entity or to cease trading, or has no realistic alternativebuttodoso.Managementpreparesitsfinancialstatements,except for cash flow information, under the accrual basis of accounting.

    Thereisnoprescribedformatforthefinancialstatements.However,there are minimum disclosures to be made in the primary statements and the notes. The implementation guidance to IAS 1 contains illustrative examples of acceptable formats.

    Financial statements disclose corresponding information for the preceding period (comparatives) unless a standard or interpretation permits or requires otherwise.

    Statement of financial position (balance sheet)

    Thestatementoffinancialpositionpresentsanentitysfinancialpositionataspecificpointintime.Subjecttomeetingcertainminimumpresentationanddisclosurerequirements,managementmayuseitsjudgementregardingthe form of presentation, such as whether to use a vertical or a horizontal format, whichsub-classificationstopresentandwhichinformationtodiscloseintheprimary statement or in the notes.

  • Accounting rules and principles

    IFRS pocket guide 20114

    The following items, as a minimum, are presented on the face of the balance sheet: Assetsproperty,plantandequipment;investmentproperty;

    intangibleassets;financialassets;investmentsaccountedforusing the equity method; biological assets; deferred tax assets; current tax assets; inventories; trade and other receivables; and cash and cash equivalents.

    Equityissuedcapitalandreservesattributabletotheparents owners;andnon-controllinginterest.

    Liabilitiesdeferredtaxliabilities;currenttaxliabilities;financial liabilities; provisions; and trade and other payables.

    Assetsandliabilitiesheldforsalethetotalofassetsclassifiedas heldforsaleandassetsincludedindisposalgroupsclassifiedasheld forsale;andliabilitiesincludedindisposalgroupsclassifiedasheld forsaleinaccordancewithIFRS5,Non-currentassetsheldforsale and discontinued operations.

    Currentandnon-currentassetsandcurrentandnon-currentliabilitiesarepresentedasseparateclassificationsinthestatementunlesspresentation based on liquidity provides information that is reliable and more relevant.

    Statement of comprehensive income

    The statement of comprehensive income presents an entitys performance over aspecificperiod.Entitieshaveachoiceofpresentingthisinasinglestatement or as two statements. The statement of comprehensive income under the single-statementapproachincludesallitemsofincomeandexpenseand includeseachcomponentofothercomprehensiveincome.Underthetwo-statementapproach,allcomponentsofprofitorlossarepresentedinan income statement, followed immediately by a statement of comprehensive income.Thisbeginswiththetotalprofitorlossfortheper