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IFRS

The document discusses International Financial Reporting Standards (IFRS) which were developed by the International Accounting Standards Board (IASB) to provide a common global language for business affairs. It summarizes several key IFRS standards including IFRS 1 on first-time adoption, IFRS 2 on share-based payments, and IFRS 3 on business combinations. The standards are intended to improve transparency and comparability of financial reporting around the world.

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202 views2 pages

IFRS

The document discusses International Financial Reporting Standards (IFRS) which were developed by the International Accounting Standards Board (IASB) to provide a common global language for business affairs. It summarizes several key IFRS standards including IFRS 1 on first-time adoption, IFRS 2 on share-based payments, and IFRS 3 on business combinations. The standards are intended to improve transparency and comparability of financial reporting around the world.

Uploaded by

parikshitshiv
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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International Financial Reporting Standards

International Accounting Standards (IASs) were issued by the IASC from 1973 to 2000.
The IASB replaced the IASC in 2001. Since then, the IASB has amended some IASs and
has proposed to amend others, has replaced some IASs with new International Financial
Reporting Standards (IFRSs), and has adopted or proposed certain new IFRSs on topics
for which there was no previous IAS. Through committees, both the IASC and the IASB
also have issued Interpretations of Standards. Financial statements may not be
described as complying with IFRSs unless they comply with all of the requirements of
each applicable standard and each applicable interpretation.

IFRS 1 First-time Adoption of International Financial Reporting Standards -


sets out the procedures that an entity must follow when it adopts IFRSs for the
first time as the basis for preparing its general purpose financial statements.

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 3 Business Combinations - A business combination is the bringing


together of separate entities or businesses into one reporting entity. IFRS 3
applies to all business combinations except combinations of entities under
common control, combinations of mutual entities, combinations by contract
without exchange of ownership interest, and formations of joint ventures. [IFRS
3.3]

IFRS 4 Insurance Contracts - IFRS 4 is the first guidance from the IASB on
accounting for insurance contracts – but not the last. A Second Phase of the
IASB's Insurance Project is under way. The Board issued IFRS 4 because it
saw an urgent need for improved disclosures for insurance contracts, and modest
improvements to recognition and measurement practices, in time for the adoption
of IFRS by listed companies throughout Europe and elsewhere in 2005. The
improvements to recognition and measurement are ones that will not likely have
to be reversed when the IASB completes the second phase of the project.

Scope. IFRS 4 applies to virtually all insurance contracts (including reinsurance


contracts) that an entity issues and to reinsurance contracts that it holds. 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
policyholders.

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - IFRS
5 achieves substantial convergence with the requirements of US SFAS 144
Accounting for the Impairment or Disposal of Long-Lived Assets with
respect to the timing of the classification of operations as discontinued operations
and the presentation of such operations. With respect to long-lived assets that are
not being disposed of, the impairment recognition and measurement standards in
SFAS 144 are significantly different from those in IAS 36 Impairment of Assets.
However those differences have not been addressed in the short-term
convergence project.

IFRS 6 Exploration for and Evaluation of Mineral Assets - IFRS 6 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 Accounting Policies, Changes in Accounting Estimates and Errors. 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.

• IFRS 7 Financial Instruments: Disclosures - An entity must group its


financial instruments into classes of similar instruments and, when
disclosures are required, make disclosures by class. [IFRS 7.6]
• The two main categories of disclosures required by IFRS 7 are:

1. Information about the significance of financial instruments.

2. Information about the nature and extent of risks arising from financial
instruments.

IFRS 8 Operating Segments- 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.

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