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International GAAP 2013: Generally Accepted Accounting Principles under International Financial Reporting Standards

Book Description

International GAAP 2013 goes much further than explanation. It provides a comprehensive guide to interpreting and implementing IFRS, sets IFRS in a relevant business context and provides insights into how complex practical issues should be resolved in the real world of global financial reporting. This book is an essential tool for anyone applying, auditing, interpreting, regulating, studying or teaching international financial reporting.

Written by financial reporting professionals from the International Financial Reporting Group of Ernst & Young, this three-volume guide to reporting under IFRS provides a global perspective on the real-world interpretation and practical application of IFRS. Complex technical accounting issues are explained clearly and IFRS is set in a practical context with numerous worked examples and hundreds of illustrations from the published financial reports of major listed companies from around the world.

The 2013 edition of International GAAP has been fully revised and updated in order to:

  • Address all new, revised and amended authoritative pronouncements and interpretations including, for many entities, the mandatory adoption in 2013 of IFRS 10 (Consolidated Financial Statements), IFRS 11 (Joint Arrangements), IFRS 12 (Disclosure of Interests in Other Entities), IFRS 13 (Fair Value Measurement) and IAS 19 Revised (Employee Benefits).

  • Explain the many initiatives and discussions that are currently being pursued by the IASB and by the IFRS Interpretations Committee and the potential consequential changes to accounting requirements. In particular, projects on Financial Instruments, Revenue Recognition, Leases and Insurance Contracts may all significantly change current accounting practice.

  • Provide insight and guidance from a truly global perspective on the many issues relating to the interpretation and practical application of IFRS, based on the extensive experience of the book's authors in dealing with recent day-to-day practical issues.

  • www.igaap.info

    Table of Contents

    1. Cover
    2. Title Page
    3. Copyright
    4. About this book
    5. Preface
    6. TOC
    7. Abbreviations
    8. Authoritative Literature
    9. Volume 1: Chapters 1 to 21
      1. Chapter 1: International GAAP
        1. 1 Why International Financial Reporting Standards matter
        2. 2 The IFRS Foundation and the IASB
        3. 3 The IASB’s technical agenda and global convergence
        4. 4 The adoption of IFRS around the world
        5. 5 Summary
      2. Chapter 2: The IASB’s Conceptual Framework
        1. 1 Introduction
        2. 2 The IASB's conceptual framework
        3. 3 Convergence and the IASB-FASB framework project
        4. 4 Conclusion
      3. Chapter 3: Presentation of financial statements and accounting policies
        1. 1 Introduction
        2. 2 The purpose and composition of financial statements
        3. 3 The structure of financial statements
        4. 4 Accounting policies
        5. 5 Disclosure requirements
        6. 6 Future developments
      4. Chapter 4: Non-current assets held for sale and discontinued operations
        1. 1 Introduction
        2. 2 Non-current assets (and disposal groups) held for sale
        3. 3 Discontinued Operations
        4. 4 Comparative Information
        5. 5 Disclosure requirements
        6. 6 Future developments
      5. Chapter 5: First-time adoption
        1. 1 Introduction
        2. 2 Who is a first-time adopter?
        3. 3 Opening IFRS statement of financial position
        4. 4 Exceptions to retrospective application of other IFRSs
        5. 5 Optional exemptions from the requirements of certain IFRSs
        6. 6 Presentation and disclosure
        7. 7 Accounting policies and practical application issues
        8. 8 Regulatory issues
      6. Chapter 6: Consolidated financial statements (IAS 27)
        1. 1 Introduction
        2. 2 Definitions in IAS 27 (2012)
        3. 3 Requirement to prepare consolidated financial statements
        4. 4 Scope of consolidated financial statements
        5. 5 Disclosure in consolidated financial statements
      7. Chapter 7: Consolidated financial statements (IFRS 10)
        1. 1 Introduction
        2. 2 Effective date, objective and scope of IFRS 10
        3. 3 Control
        4. 4 Power over an investee
        5. 5 Exposure to variable returns
        6. 6 Link between power and returns: principal-agency situations
        7. 7 Related parties and de facto agents
        8. 8 Control of specified assets
        9. 9 Continuous assessment
        10. 10 Consolidation procedures
        11. 11 Disclosure requirements
        12. 12 Transitional arrangements
        13. 13 Future developments
      8. Chapter 8: Consolidation procedures and non-controlling interests
        1. 1 Introduction
        2. 2 Consolidation procedures
        3. 3 Changes in ownership interests
        4. 4 Non-controlling interests
        5. 5 Call and put options over non-controlling interests
        6. 6 IAS 27 (2012) – Consolidated and Separate Financial Statements
        7. 7 Transitional arrangements on applying IFRS 10
      9. Chapter 9: Separate and individual financial statements
        1. 1 Separate And Individual Financial Statements
        2. 2 Requirements Of Separate Financial Statements
        3. 3 Disclosure
        4. 4 Individual Financial Statements
      10. Chapter 10: Business combinations
        1. 1 Introduction
        2. 2 Scope of IFRS 3
        3. 3 Identifying a business combination
        4. 4 Acquisition method of accounting
        5. 5 Recognition and measurement of assets acquired, liabilities assumed and non-controlling interests
        6. 6 Recognising and measuring goodwill or a gain in a bargain purchase
        7. 7 Consideration transferred
        8. 8 Recognising and measuring non-controlling interests
        9. 9 Business combinations achieved in stages (‘step acquisitions’)
        10. 10 Bargain purchase transactions
        11. 11 Pre-existing relationships: Assessing what is part of the exchange for the acquiree
        12. 12 Measurement period
        13. 13 Subsequent measurement and accounting
        14. 14 Reverse acquisitions
        15. 15 Push down accounting
        16. 16 Disclosures
        17. 17 Effective dates and transitional arrangements
      11. Chapter 11: Common control business combinations
        1. 1 Introduction
        2. 2 The IFRS 3 exemption
        3. 3 Accounting for business combinations involving entities or businesses under common control
        4. 4 Group reorganisations
      12. Chapter 12: Investments in associates and joint ventures
        1. 1 Introduction
        2. 2 Effective date, objective and scope of IAS 28
        3. 3 Definitions
        4. 4 Significant influence
        5. 5 Exemptions from applying the equity method
        6. 6 Classification as held for sale (IFRS 5)
        7. 7 Application of the equity method
        8. 8 Impairment losses
        9. 9 Separate financial statements
        10. 10 Presentation and disclosures
        11. 11 IAS 28 – Investments in Associates
        12. 12 Transitional issues
        13. 13 Future developments
      13. Chapter 13: Joint ventures (IAS 31)
        1. 1 Introduction
        2. 2 Scope of IAS 31
        3. 3 Jointly controlled operations
        4. 4 Jointly controlled assets
        5. 5 Jointly controlled entities
        6. 6 Transactions between a venturer and a joint venture
        7. 7 Operators of joint ventures
        8. 8 Variable profit share
        9. 9 Related party disclosures
        10. 10 Presentation and disclosure
        11. 11 Transitional issues
      14. Chapter 14: Joint arrangements (IFRS 11)
        1. 1 Introduction
        2. 2 Effective date, objective and scope of IFRS 11
        3. 3 Joint arrangement
        4. 4 Joint control
        5. 5 Classification of a joint arrangement: joint operations and joint ventures
        6. 6 Accounting for joint operations
        7. 7 Accounting for joint ventures
        8. 8 Continuous assessment
        9. 9 Disclosures
        10. 10 Transition
      15. Chapter 15: Disclosure of interests in other entities
        1. 1 Introduction
        2. 2 Objective, scope and effective date of IFRS 12
        3. 3 Disclosure of significant estimates and judgements
        4. 4 Disclosure of interests in subsidiaries
        5. 5 Disclosure of interests in joint arrangements and associates
        6. 6 Disclosure of interests in unconsolidated structured entities
        7. 7 Future developments
      16. Chapter 16: Fair value measurement
        1. 1 Introduction and background
        2. 2 Scope
        3. 3 Definitions
        4. 4 The fair value framework
        5. 5 The asset or liability
        6. 6 The principal (or most advantageous) market
        7. 7 Market participants
        8. 8 The transaction
        9. 9 The price
        10. 10 Application to non-financial assets
        11. 12 Financial assets and liabilities with offsetting positions
        12. 13 Fair value at initial recognition
        13. 14 Valuation techniques
        14. 15 Inputs to valuation techniques
        15. 16 The fair value hierarchy
        16. 17 Level 1 inputs
        17. 18 Level 2 inputs
        18. 19 Level 3 inputs
        19. 20 Disclosures
      17. Chapter 17: Foreign exchange
        1. 1 Introduction
        2. 2 IAS 21: Objective, scope and definitions
        3. 3 Summary of the approach required by IAS 21
        4. 4 Determination of an entity' functional currency
        5. 5 Reporting foreign currency transactions in the functional currency of an entity
        6. 6 Use of a presentation currency other than the functional currency
        7. 7 Change of presentation currency
        8. 8 Introduction of the euro
        9. 9 Tax effects of all exchange differences
        10. 10 Disclosure requirements
        11. 11 Future developments
      18. Chapter 18: Hyperinflation
        1. 1 ntroduction
        2. 2 The requirements of IAS 29
        3. 3 Selection of a general price index
        4. 4 Analysis and restatement of balance sheet items
        5. 5 Analysis and restatement of items in other primary financial statements
        6. 6 nterim reporting
        7. 7 Transition
        8. 8 Translation to a different presentation currency
        9. 9 Disclosures
      19. Chapter 19: Intangible assets
        1. 1 Introduction
        2. 2 Objective and scope of IAS 38
        3. 3 Recognition and measurement
        4. 4 Separate acquisition
        5. 5 Acquisition as part of a business combination
        6. 6 Acquisition by way of government grant
        7. 7 Exchanges of assets
        8. 8 Internally generated intangible assets
        9. 9 Recognition of an expense
        10. 10 Measurement after initial recognition
        11. 11 Amortisation of intangible assets
        12. 12 Disclosure
        13. 13 Specific issues regarding intangible assets
      20. Chapter 20: Property, plant and equipment
        1. 1 Introduction
        2. 3 Recognition
        3. 4 Measurement at recognition
        4. 5 Measurement after recognition: Cost model
        5. 6 Measurement after recognition: Revaluation model
        6. 7 Derecognition and disposal
        7. 8 IAS 16 disclosure requirements
      21. Chapter 21: Investment property
        1. 1 Introduction
        2. 2 Definitions and scope
        3. 3 Recognition
        4. 4 Initial measurement
        5. 5 Measurement after initial recognition
        6. 6 The fair value model
        7. 7 The cost model
        8. 8 IFRS 5 and investment property
        9. 9 Transfer of assets into or from investment property
        10. 10 Disposal of investment property
        11. 11 Interim reporting and IAS 40
        12. 12 The disclosure requirements of IAS 40
        13. 13 Future developments
    10. Volume 2: Chapters 22 to 41
      1. Chapter 22: Impairment of fixed assets and goodwill
        1. 1 Introduction
        2. 2 The requirements of IAS 36
        3. 3 Fair value less costs of disposal
        4. 4 Determining value in use (VIU)
        5. 5 Impairment of goodwill
        6. 6 Recognising and reversing impairment losses
        7. 7 Disclosures required by IAS 36
        8. 8 Testing for impairment: group issues
      2. Chapter 23: Capitalisation of borrowing costs
        1. 1 Introduction
        2. 2 The requirements of IAS 23
        3. 3 Qualifying assets
        4. 4 Definition of borrowing costs
        5. 5 Borrowing costs eligible for capitalisation
        6. 6 Commencement, suspension and cessation of capitalisation
        7. 7 Disclosure requirements
      3. Chapter 24: Inventories
        1. 1 Introduction
        2. 2 The scope of IAS 2
        3. 3 Measurement
        4. 4 Real estate inventory
        5. 5 Recognition in profit or loss
        6. 6 Disclosure requirements of IAS 2
      4. Chapter 25: Construction contracts
        1. 1 Introduction
        2. 2 Combination and segmentation of contracts
        3. 3 Contract revenue, costs and expenses
        4. 4 Disclosure requirements of IAS 11
      5. Chapter 26: Leases
        1. 1 Introduction
        2. 2 What Is A Lease?
        3. 3 Scope and Definitions of Ias 17
        4. 4 Accounting for Finance Leases
        5. 5 Accounting for Operating Leases
        6. 6 Modifying The Terms of Leases
        7. 7 Sale and Leaseback Transactions
        8. 8 Sub-Leases and Back-To-Back Leases
        9. 9 Disclosures Required by Ias 17
        10. 10 Updating Lease Accounting: Exposure Draft – Leases
      6. Chapter 27: Government grants
        1. 1 Introduction
        2. 2 Requirements of IAS 20
        3. 3 Presentation of grants
        4. 4 Disclosures
      7. Chapter 28: Service concession arrangements
        1. 1 Introduction
        2. 2 Scope of IFRIC 12
        3. 3 The control model
        4. 4 Accounting for the infrastructure asset: the financial asset and intangible asset models
        5. 5 Revenue and expenditure during the operations phase of the concession agreement
        6. 6 Current disclosure requirements: SIC-29
      8. Chapter 29: Provisions, contingent liabilities and contingent assets
        1. 1 Introduction
        2. 2 Objective and scope of IAS 37
        3. 3 Recognition
        4. 4 Measurement
        5. 5 Cases in which no provision should be recognised
        6. 6 Specific examples of provisions and contingencies
        7. 7 Disclosure requirements
      9. Chapter 30: Revenue recognition
        1. 1 The nature of revenue
        2. 2 The timing of revenue recognition
        3. 3 The requirements of IAS 18
        4. 4 Revenue recognition under US GAAP
        5. 5 The IASB/FASB joint revenue recognition project
        6. 6 Practical issues
      10. Chapter 31: Income taxes
        1. 1 Introduction
        2. 2 Objective and scope of IAS 12
        3. 3 Definitions
        4. 4 Scope
        5. 5 Current tax
        6. 6 Deferred tax – Tax bases and temporary differences
        7. 7 Deferred tax – Recognition
        8. 8 Deferred tax – Measurement
        9. 9 Uncertain tax positions
        10. 10 Allocation of tax charge or credit
        11. 11 Consolidated tax returns and offset of taxable profits and losses within groups
        12. 12 Business combinations
        13. 13 Presentation
        14. 14 Disclosure
        15. 15 Possible future developments
      11. Chapter 32: Share-based payment
        1. 1 Introduction
        2. 2 The Objective and Scope of Ifrs 2
        3. 3 General Recognition Principles
        4. 4 Equity-Settled Transactions – Overview
        5. 5 Equity-Settled Transactions – Cost of Awards
        6. 6 Equity-Settled Transactions – Allocation of Expense
        7. 7 Equity-Settled Transactions – Modification, Cancellation and Settlement
        8. 8 Equity-Settled Transactions – Valuation
        9. 9 Cash-Settled Transactions
        10. 10 Transactions With Equity and Cash Alternatives
        11. 11 Replacement Share-Based Payment Awards Issued in A Business Combination
        12. 12 Group Share Schemes
        13. 13 Disclosures
        14. 14 Taxes Related to Share-Based Payment Transactions
        15. 15 Other Practical Issues
        16. 16 First-Time Adoption and Transitional Provisions
      12. Chapter 33: Employee benefits
        1. 1 Introduction
        2. 2 Objective and scope of IAS 19
        3. 3 Pensions and other post-employment benefits – Defined contribution and defined benefit plans
        4. 4 Defined contribution plans
        5. 5 Defined benefit plans
        6. 6 Other employee benefits
        7. 7 Disclosure requirements
        8. 8 Effective date and transitional provisions
        9. 9 Possible future developments
        10. 10 Principal differences between the current standard and its predecessor
      13. Chapter 34: Operating segments
        1. 1 Introduction
        2. 2 Objective and scope of IFRS 8
        3. 3 Identifying a single set of operating segments
        4. 4 Measurement
        5. 5 Information to be disclosed about reportable segments
        6. 6 Transitional provisions
      14. Chapter 35: Earnings per share
        1. 1.1 Definitions
        2. 3 The basic EPS
        3. 4 Changes in outstanding ordinary shares
        4. 5 Matters affecting the numerator
        5. 6 Diluted earnings per share
        6. 7 Presentation, restatement and disclosure
        7. 8 Future developments
        8. 9 Appendix
      15. Chapter 36: Events after the reporting period
        1. 1 Introduction
        2. 2 Requirements of IAS 10
        3. 3 Practical issues
      16. Chapter 37: Related party disclosures
        1. 1 Introduction
        2. 2 Requirements of IAS 24
        3. 3 Future developments
      17. Chapter 38: Statement of cash flows
        1. 1 Introduction
        2. 2 Objective and scope of IAS 7
        3. 3 Cash and cash equivalents
        4. 4 Presentation of the statement of cash flows
        5. 5 Additional IAS 7 considerations for groups
        6. 6 Additional IAS 7 considerations for financial institutions
        7. 7 Requirements of other standards
      18. Chapter 39: Interim financial reporting
        1. 1 Introduction
        2. 2 Objective and scope of IAS 34
        3. 3 Components, form and content of an interim financial report under IAS 34
        4. 4 Disclosures in condensed financial statements
        5. 5 Periods for which interim financial statements are required to be presented
        6. 6 Materiality
        7. 7 Disclosure in annual financial statements
        8. 8 Recognition and measurement
        9. 9 Examples of the recognition and measurement principles
        10. 10 Use of estimates
        11. 11 Restatement of previously reported interim periods
        12. 12 Effective dates and transitional rules
      19. Chapter 40: Agriculture
        1. 1 Introduction
        2. 2 Objective, definitions and scope
        3. 3 Recognition and measurement principles
        4. 4 Measuring fair value less costs to sell
        5. 5 Disclosure
      20. Chapter 41: Extractive industries
        1. 1 Introduction
        2. 2 Mineral reserves and resources
        3. 3 IFRS 6 – Exploration for and evaluation of mineral resources
        4. 4 Practical issues in the extractive industries
        5. 5 Practical Issues In The Oil And Gas Sector
        6. 6 Practical Issues In The Mining Sector
        7. 7 Glossary
    11. Volume 3: Chapters 42 to 53
      1. Chapter 42: Financial instruments: Introduction
        1. 1 Introduction
        2. 2 How financial instruments are dealt with in Chapters 42 to 52
        3. 3 Evolution of a full fair value accounting model
        4. 4 adoption of IFRS in the European Union
        5. 5 Impact of the financial crisis on accounting for financial instruments
      2. Chapter 43: Financial instruments: Definitions and scope
        1. 1 Introduction
        2. 2 What is a financial instrument?
        3. 3 Scope
        4. 4 Contracts to buy or sell commodities and other non-financial items
        5. 5 Future developments
      3. Chapter 44: Financial instruments: Derivatives and embedded derivatives
        1. 1 Introduction
        2. 2 Definition of a derivative
        3. 3 Examples of derivatives
        4. 4 Embedded derivatives
        5. 5 Embedded derivatives: The meaning of ‘closely related’
        6. 6 Identifying the terms of embedded derivatives and host contracts
        7. 7 Reassessment of embedded derivatives
        8. 8 Linked and separate transactions and ‘synthetic’ instruments
      4. Chapter 45: Financial instruments: Financial liabilities and equity
        1. 1 Introduction
        2. 2 Objective and scope
        3. 3 Definitions
        4. 4 Classification of instruments
        5. 5 Contracts settled by delivery of the entity's own equity instruments
        6. 6 Compound financial instruments
        7. 7 Settlement of financial liability with equity instrument
        8. 8 Interest, dividends, gains and losses
        9. 9 Treasury shares
        10. 10 ‘Hedging’ of instruments classified as equity
        11. 11 Derivatives over own equity instruments
        12. 12 Possible future developments
      5. Chapter 46: Financial instruments: Classification (IAS 39)
        1. 1 Introduction
        2. 2 Assets and Liabilities at Fair Value Through Profit or Loss
        3. 3 Held-to-Maturity Investments
        4. 4 Loans and Receivables
        5. 5 Available-for-Sale Assets
        6. 6 Reclassifications
        7. 7 Classification of Financial Instruments in a Business Combination
        8. 8 Future Developments
      6. Chapter 47: Financial instruments: Classification (IFRS 9)
        1. 1 Introduction
        2. 2 Classifying financial assets: An overview
        3. 3 Classifying financial liabilities
        4. 4 Financial assets (and financial liabilities) held for trading
        5. 5 Financial assets: The ‘business model’ test
        6. 16 Financial assets: The ‘contractual characteristics’ test
        7. 7 Designation at fair value through profit or loss
        8. 8 Designation of non‐derivative equity investments at fair value through other comprehensive income
        9. 9 Reclassification of financial assets
        10. 10 Effective date and transition
        11. 11 IASB’s limited scope review of IFRS 9
      7. Chapter 48: Financial instruments: Recognition and initial measurement
        1. 1 Introduction
        2. 2 Recognition
        3. nitial measurement
        4. 4 Effective dates and transitional provisions
      8. Chapter 49: Financial instruments: Subsequent measurement
        1. 1 Overview
        2. 2 Subsequent Measurement and Recognition of Gains and Losses (IAS 39)
        3. 3 Subsequent Measurement and Recognition of Gains and Losses (IFRS 9)
        4. 4 Fair Value Measurement Considerations
        5. 5 Amortised Cost and the Effective Interest Method
        6. 6 Impairment
        7. 7 Foreign Currencies
        8. 8 Effective Dates and Transitional Provisions
        9. 9 Future Developments
      9. Chapter 50: Financial instruments: Derecognition
        1. 1 Introduction
        2. 2 Development of IFRS
        3. 3 Derecognition – Financial Assets
        4. 4 Practical Application of the Derecognition Criteria
        5. 5 Accounting Treatment
        6. 6 Derecognition – Financial Liabilities
      10. Chapter 51: Financial instruments: Hedge accounting
        1. 1 Introduction
        2. 2 Hedging instruments and hedged items
        3. 3 Types of hedging relationships
        4. 4 Accounting for effective hedges
        5. 5 Qualifying conditions for hedge accounting
        6. 6 Portfolio (or macro) hedging
        7. 7 Future developments
      11. Chapter 52: Financial instruments: Presentation and disclosure
        1. 1 Introduction
        2. 2 Scope of IFRS 7
        3. 3 Structuring the disclosures
        4. 4 Significance of financial instruments for an entity’s financial position and performance
        5. 5 Nature and extent of risks arising from financial instruments
        6. 6 Transfers of financial assets
        7. 7 Presentation on the face of the financial statements and related disclosures
        8. 8 Effective dates and transitional provisions
        9. 9 Future developments
      12. Chapter 53: Insurance contracts
        1. 1 Introduction
        2. 2 The objectives and scope of IFRS 4
        3. 3 The definition of an insurance contract
        4. 4 Embedded derivatives
        5. 5 Unbundling of deposit components
        6. 6 Discretionary participation features
        7. 7 Selection of accounting policies
        8. 8 Changes in accounting policies
        9. 9 Insurance contracts acquired in business combinations and portfolio transfers
        10. 10 Disclosure
        11. 11 Future developments in insurance contract accounting
    12. Index of extracts from financial statements
    13. Index of standards
    14. Index