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Frequently Asked Questions on IFRS

Book Description

A concise FAQ guide to IFRS principles and practices

Co-written by Steven Collings, winner of Accounting Technician of the Year at the British Accountancy Awards 2011, this book is a comprehensive guide to International Financial Reporting Standards (IFRS) which became mandatory in the EU in 2005, and they will almost certainly be adopted by most other developed countries in the near future. Unlike US-GAAP and other sets of standards, the IFRS are principles-based rather than rules-based, putting the onus of interpretation more on users than has previously been the case. Under IFRS users must understand the economic substance of operations, and they must be able to make assumptions, hypotheses, and estimations leading to an accounting treatment consistent with the general objectives of and principles behind IFRS financial reporting. In a handy, easy-to-navigate Q&A format, Frequently Asked Questions on IFRS provides accounting and finance professionals with the answers to some of the most commonly asked questions on the new standards. Covering the often complicated areas of accounting for financial instruments, tangible and intangible assets, provisions, and revenue recognition, the book also contains a valuable overview of the standards and the thinking behind them.

  • Includes a comprehensive section on the new IFRS for small and medium enterprises

  • Contains real-world examples from financial reports; a glossary of commonly used terms; and a 'Test Your Knowledge' section

  • Provides a simple way to get up to speed on these often confusing, principles-based standards

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. About the Author
  6. Acknowledgements
  7. Preface
  8. Foreword
  9. Frequently Asked Questions
  10. Introduction—What is IFRS?
    1. What exactly is IFRS?
  11. Chapter 1: What is the Role of the International Accounting Standards Board (IASB)?
    1. What exactly does the IASB do and what are its objectives?
  12. Chapter 2: Frequently Asked Questions
    1. 1. What is the Conceptual Framework?
    2. 2. What are the qualitative characteristics of financial statements?
    3. 3. What are the elements of the financial statements?
    4. 4. Can you change accounting policies and, if so, how do you do it?
    5. 5. What are accounting estimates and how are these accounted for?
    6. 6. What is defined as current and non-current under IFRS?
    7. 7. What happens when an entity adopts IFRS for the first time?
    8. 8. What happens when one company acquires another company?
    9. 9. What are step acquisitions?
    10. 10. What are deemed disposals in business combinations?
    11. 11. Why are consolidated financial statements prepared and how do these differ from separate financial statements?
    12. 12. How is an associate defined under IFRS?
    13. 13. How do you account for an associate under IFRS?
    14. 14. What are joint arrangements and joint ventures?
    15. 15. How do you account for a joint venture under IFRS?
    16. 16. How does an entity deal with exchange rate differences?
    17. 17. How and when does an entity recognize a non-current tangible asset?
    18. 18. What is the accounting treatment for non-current assets held for sale?
    19. 19. Can internally generated goodwill be recognized on the statement of financial position?
    20. 20. What are intangible non-current assets, other than goodwill?
    21. 21. How does an entity deal with investment property in the statement of financial position?
    22. 22. What is an impairment test?
    23. 23. How does an entity account for borrowing costs (interest) incurred whilst constructing an asset?
    24. 24. What is the difference between a revaluation of property, plant and equipment, and the revaluation model for investment property?
    25. 25. What distinguishes whether an asset to be disposed of is classified as held for sale?
    26. 26. What are the accounting principles under IFRS for inventories?
    27. 27. If a company enters into construction contracts, how does it account for these?
    28. 28. What are the rules where leases are concerned?
    29. 29. Are there any changes planned for lease accounting?
    30. 30. When a company receives a government grant, how does it account for this?
    31. 31. What are the different categories of revenue under IFRS and how do they differ from gains?
    32. 32. How does a company recognize revenue in its income statement/statement of profit or loss?
    33. 33. What is the difference between current and deferred tax?
    34. 34. How do you work out deferred tax under IFRS?
    35. 35. How does an entity recognize a deferred tax asset?
    36. 36. What are the different types of share-based payment transactions?
    37. 37. How are share-based payments accounted for under IFRS?
    38. 38. What is the difference between a defined contribution pension plan and a defined benefit pension plan?
    39. 39. How are short-term employee benefits accounted for under IFRS?
    40. 40. What are operating segments?
    41. 41. What are the disclosure requirements for operating segments?
    42. 42. Why does a company have to report earnings per share and how are these calculated?
    43. 43. What are events after the reporting period and how do you differentiate between an adjusting and non-adjusting event?
    44. 44. What is the difference between a provision and a contingent liability?
    45. 45. How is a provision accounted for under IFRS?
    46. 46. What disclosures are needed for contingent liabilities?
    47. 47. Why is a statement of cash flows produced as part of the primary financial statements under IFRS?
    48. 48. What is the prescribed method for preparing a statement of cash flows?
    49. 49. How are agricultural and biological assets accounted For?
    50. 50. If a company operates in a hyperinflationary economy, how should the financial statements be prepared?
    51. 51. What is an audit of a company's financial statements and are there any ethical issues that affect auditors?
    52. 52. What are the basics with regards to financial instruments?
    53. 53. How are financial assets and financial liabilities accounted for?
    54. 54. What is the IFRS for SMEs and how is it structured?
  13. Chapter 3: Test Your Knowledge
  14. Chapter 4: Answers
  15. Chapter 5: Additional Recommended Reading
    1. IFRS for Dummies
    2. Interpretation and Application of International Standards on Auditing
    3. International GAAP 2012
  16. Appendix: The Differences Between Full IFRS and IFRS for SMEs
  17. Index