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IFRS Essentials

Book Description

Gain a deeper understanding of financial reporting under IFRS through clear explanations and extensive practical examples.

IFRS can be a complex topic, and books on the subject often tackle its intricacies through dense explanation across thousands of pages. Others seek to provide an overview of IFRS and these, while useful for the general reader, lack the depth required by practitioners and students.

IFRS Essentials strikes a balance between the two extremes, offering concise interpretation of the crucial facts supported by a wealth of examples. Problems and their solutions are demonstrated in a manner which is short, straightforward and simple to understand, avoiding complex language; jargon and redundant detail.

This book is suitable for students and lecturers at universities and other educational institutions, auditing and accounting trainees, and employees in the area of accounting and auditing who seek to develop their practical skills and deepen their knowledge of IFRS.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Preface
  5. Abbreviations
  6. The Conceptual Framework for Financial Reporting
    1. 1 Introduction
    2. 2 The objective of general purpose financial reporting
    3. 3 Going Concern
    4. 4 Qualitative Characteristics of Useful Financial Information
    5. 5 The cost constraint on useful financial reporting
    6. 6 The elements of financial statements
    7. 7 Examples with solutions
  7. IAS 1 Presentation of Financial Statements
    1. 1 Introduction and scope
    2. 2 Going concern
    3. 3 Fair presentation of the financial statements and compliance with IFRSs
    4. 4 General principles relating to presentation
    5. 5 Components of the financial statements
    6. 6 Structure and content of the components of the financial statements
    7. 7 Examples with solutions
  8. IAS 2 Inventories
    1. 1 Scope
    2. 2 Measurement
    3. 3 Presentation and derecognition
    4. 4 Examples with solutions
  9. IAS 7 Statement of Cash Flows
    1. 1 Introduction
    2. 2 Preparation of the statement of cash flows
    3. 3 Special topics
    4. 4 Consolidated statements of cash flows
    5. 5 Examples with solutions
  10. IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors
    1. 1 Introduction
    2. 2 Accounting policies
    3. 3 Changes in accounting estimates
    4. 4 Correction of prior period errors
    5. 5 Examples with solutions
  11. IAS 10 Events after the Reporting Period
    1. 1 Overview
    2. 2 Examples with solutions
  12. IAS 11 Construction Contracts
    1. 1 Introduction
    2. 2 Contract revenue
    3. 3 Contract costs
    4. 4 Percentage of completion method
    5. 5 When the outcome of a contract cannot be estimated reliably
    6. 6 Examples with solutions
  13. IAS 12 Income Taxes
    1. 1 Introduction
    2. 2 Current tax
    3. 3 Deferred tax
    4. 4 Tax (or Tax Rate) Reconciliation
    5. 5 Examples with solutions
  14. IAS 16 Property, Plant, and Equipment
    1. 1 Introduction
    2. 2 Recognition
    3. 3 Measurement at recognition
    4. 4 Measurement after recognition
    5. 5 Derecognition
    6. 6 Examples with solutions
  15. IAS 17 Leases
    1. 1 Introduction and scope
    2. 2 Definitions relating to time
    3. 3 Classification of leases as finance leases or operating leases
    4. 4 Accounting of leases by lessees
    5. 5 Accounting of leases by lessors
    6. 6 Sale and leaseback transactions
    7. 7 Examples with solutions
  16. IAS 18 Revenue
    1. 1 Introduction and scope
    2. 2 Measurement of revenue
    3. 3 Sale of goods
    4. 4 Rendering of services
    5. 5 Interest, royalties, and dividends
    6. 6 Multiple element transactions and linked transactions
    7. 7 Examples with solutions
  17. IAS 19 Employee Benefits and IAS 26 Accounting and Reporting by Retirement Benefit Plans
    1. 1 Introduction
    2. 2 Financial reporting without early application of the amendments to IAS 19 issued in June 2011
    3. 3 The amendments to IAS 19 issued in June 2011
  18. IAS 20 Government Grants
    1. 1 Introduction and scope
    2. 2 Recognition and measurement
    3. 3 Presentation
    4. 4 Repayment of Government Grants
    5. 5 Examples with solutions
  19. IAS 21 The Effects of Changes in Foreign Exchange Rates
    1. 1 Scope
    2. 2 Monetary vs. non-monetary items
    3. 3 Translation of foreign currency transactions
    4. 4 Translation of financial statements of foreign operations when preparing the consolidated financial statements
    5. 5 Examples with solutions
  20. IAS 23 Borrowing Costs
    1. 1 Introduction
    2. 2 Specific and general borrowings
    3. 3 Period of capitalization
    4. 4 Examples with solutions
  21. IAS 24 Related Party Disclosures
    1. 1 Introduction
    2. 2 Related parties and relationships with them
    3. 3 Disclosures
    4. 4 Application of IAS 24 in the consolidated financial statements
    5. 5 Examples with solutions
  22. IAS 26 Accounting and Reporting by Retirement Benefit Plans
  23. IAS 27 (2008) Consolidated and Separate Financial Statements, IAS 27 (2011) Separate Financial Statements, and IFRS 10 (2011) Consolidated Financial Statements
    1. 1 Introduction
    2. 2 Financial reporting without early application of IFRS 10 and IAS 27 (2011)
    3. 3 IFRS 10 (issued in May 2011)
    4. 4 The new version of IAS 27 (issued in May 2011)
  24. IAS 28 Investments in Associates and IAS 28 (2011) Investments in Associates and Joint Ventures
    1. 1 Introduction
    2. 2 Financial reporting without early application of the amendments to IAS 28 issued in May 2011
    3. 3 The amendments to IAS 28 issued in May 2011
  25. IAS 29 Financial Reporting in Hyperinflationary Economies
    1. 1 Introduction
    2. 2 Application of IAS 29 relating to foreign operationsthe “7-step-approach”
    3. 3 Reporting period in which an entity identifies hyperinflation when the currency was not hyperinflationary in the prior period
    4. 4 Example with solution
  26. IAS 31 Interests in Joint Ventures and IFRS 11 Joint Arrangements
    1. 1 Introduction
    2. 2 IAS 31 “Interests in Joint Ventures”
    3. 3 IFRS 11 “Joint Arrangements” (issued in May 2011)
  27. IAS 32 Financial InstrumentsPresentation
    1. 1 The term “financial instrument”
    2. 2 Scope
    3. 3 Differentiation between equity and liabilities
    4. 4 Accounting for a convertible bond after recognition by the issuer
    5. 5 Treasury shares
    6. 6 Costs of an equity transaction
    7. 7 Offsetting
    8. 8 Examples with solutions
  28. IAS 33 EARNINGS PER SHARE
    1. 1 Introduction and scope
    2. 2 Ordinary shares and potential ordinary shares
    3. 3 Basic earnings per share
    4. 4 Diluted earnings per share
    5. 5 Presentation and disclosure
    6. 6 Examples with solutions
  29. IAS 34 Interim Financial Reporting
    1. 1 Introduction
    2. 2 Content of an interim financial report
    3. 3 Materiality
    4. 4 Recognition and measurement
    5. 5 Examples with solutions
  30. IAS 36 Impairment of Assets
    1. 1 Introduction and scope of IAS 36
    2. 2 When to test for impairment
    3. 3 When to reverse an impairment loss
    4. 4 Determining the recoverable amount for an individual asset or for an asset's CGU?
    5. 5 Determining the recoverable amount
    6. 6 Determining the carrying amount of a CGU
    7. 7 Goodwill
    8. 8 Corporate assets
    9. 9 Recognizing and reversing an impairment loss
    10. 10 Non-controlling interests
    11. 11 Examples with solutions
  31. IAS 37 Provisions, Contingent Liabilities, and Contingent Assets
    1. 1 Scope
    2. 2 Definition and recognition of provisions
    3. 3 Contingent liabilities
    4. 4 Contingent assets
    5. 5 Measurement
    6. 6 Reimbursements
    7. 7 Changes in provisions
    8. 8 Specific issues
    9. 9 Examples with solutions
  32. IAS 38 Intangible Assets
    1. 1 Scope of IAS 38
    2. 2 The Term “Intangible Asset”
    3. 3 Recognition and Initial Measurement
    4. 4 Further prohibitions of capitalization
    5. 5 Measurement after recognition
    6. 6 Derecognition
    7. 7 Examples with solutions
  33. IAS 39 Financial InstrumentsRecognition and Measurement
  34. IAS 40 Investment Property
    1. 1 The concept of “investment property”
    2. 2 Recognition
    3. 3 Measurement at recognition
    4. 4 Measurement after recognition
    5. 5 Derecognition
    6. 6 Presentation
    7. 7 Examples with solutions
  35. IAS 41 Agriculture
    1. 1 Introduction and scope
    2. 2 Recognition
    3. 3 Measurement
    4. 4 Government grants
    5. 5 Examples with solutions
  36. IFRS 1 First-time Adoption of International Financial Reporting Standards
    1. 1. Introduction and Scope
    2. 2 Recognition and Measurement
    3. 3 Presentation and Disclosure
    4. 4 Examples with Solutions
  37. IFRS 2 Share-based Payment
    1. 1 A General Introduction to Employee Share Options
    2. 2 Scope of Ifrs 2
    3. 3 The Accounting of Employee Share Options
    4. 4 Examples with Solutions
  38. IFRS 3 Business Combinations
    1. 1 Introduction and Scope
    2. 2 Acquisition of Shares vs. Acquisition of the Individual Assets
    3. 3 Identifying the Acquirer
    4. 4 Acquisition Date
    5. 5 Acquisition-related Costs
    6. 6 Accounting for a Business Combination on the Acquisition Date
    7. 7 Subsequent measurement and accounting
    8. 8 Deferred tax
    9. 9 Entries necessary in order to prepare the consolidated financial statements
    10. 10 Determining what is part of the business combination transaction
    11. 11 Examples with solutions
  39. IFRS 4 Insurance Contracts
    1. 1 Introduction and scope
    2. 2 Insurance Contracts, Insurance Risk, and the Scope of IFRS 4
    3. 3 Financial reporting for insurance contracts
    4. 4 Example with solution
  40. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
    1. 1 Introduction and overview
    2. 2 Scope
    3. 3 Non-current assets and disposal groups held for sale
    4. 4 Presentation of discontinued operations
    5. 5 Examples with solutions
  41. IFRS 6 Exploration for and Evaluation of Mineral Resources
    1. 1 Introduction and scope
    2. 2 Financial reporting
    3. 3 Stripping costs in the production phase of a surface mine
    4. 4 Example with solution
  42. IFRS 7 Financial InstrumentsDisclosures
    1. 1 Introduction
    2. 2 Significance of financial instruments for financial position and performance
    3. 3 Nature and extent of risks arising from financial instruments
    4. 4 Transfers of financial assets
    5. 5 Examples with solutions
  43. IFRS 8 Operating Segments
    1. 1 Introduction
    2. 2 Scope
    3. 3 Operating Segments and Chief Operating Decision Maker
    4. 4 Reportable Segments
    5. 5 Segment disclosures
    6. 6 Entity-wide disclosures
    7. 7 Examples with solutions
  44. IFRS 9 Financial Instruments and IAS 39 Financial InstrumentsRecognition and Measurement
    1. 1 Introduction
    2. 2 Financial instruments accounting according to IFRS 9 (as issued in 2010) and its consequential amendments to IAS 39
    3. 3 Financial instruments accounting prior to IFRS 9
  45. IFRS 10 Consolidated Financial Statements
  46. IFRS 11 Joint Arrangements
  47. IFRS 12 Disclosure of Interests in Other Entities
    1. 1 Introduction
    2. 2 The term “structured entity”
    3. 3 The individual disclosure requirements of IFRS 12
    4. 4 Examples with solutions
  48. IFRS 13 Fair Value Measurement
    1. 1 Introduction
    2. 2 Scope
    3. 3 The measurement requirements of IFRS 13
    4. 4 Illustration of the application of selected valuation techniques
    5. 5 Examples with solutions
  49. Index