IFRS

IFRS - Int'l Fin Reporting Std

Issued by IASB - Int'l Accounting Std Board (Principle-based/ Judgment vs. Rules-based as GAAP)

Convergence Project: diff b/w GAAP vs IFRS -

• Terminology and definitions
• Recognition - diff criteria used on F/S
• Measurement - diff approaches for measuring F/S
• Presentation - diff in certain items appearing on F/S
• Disclosure - diff in amount and nature of disclosures

Conceptual Framework:

• Reporting entity
• Elements of F/S
• Measurement, Presentation, & Disclosure

Objective of General Purpose Fin Reporting:

Based on Accrual Basis and Going Concern concept:

• Assess amounts, timing, and uncertainty of future cash inflows to evaluate returns
• Prospects for future cash inflows depends on resources available
• Depend on efficiently and effectively management and governance based on economic and business factors

Qualitative Characteristics of Useful Fin Info:

• Relevant:
  • Predictive Value - predict future outcomes
  • Confirmatory Value - provides feedback abt events/ transactions
• Materiality
  • Influence users' decisions
• Faithfully Representation:
  • Freedom From Error
  • Neutrality
  • Completeness
• Enhance the usefulness of Fin Info:
  • Comparability
  • Understandability
  • Timeliness
  • Verifiability
• Constraints: 
  • Cost/Benefit
  • Going Concern - Assumption

5 Basic F/S Elements or Fin Position (Performance):

1. Assets - Resources
2. Liab - Obligation
3. Equity - Residual IR in the assets of entity (after deduct liab)
4. Income - Increases Economic Benefits
5. Expenses - Decrease Economic Benefits

Capital Maintenance Adj:

• Financial or Physical Capital - Gain/Loss to Assets/Liab

IFRS - Profit (NI for GAAP)

Recognition & Measurement:

• Probability of occurrence
• Reliable Measurement 

Measurement Approaches:

• Historical Cost
• Current Costs
• Realizable or Settlement Value
• Present Value

2 Basic concepts of Capital:

• Financial Capital Maintenance 
• Physical Capital Maintenance

FASB (10) vs IASB (5) Framework:

10 FASB Elements: NI

1. Assets
2. Liab
3. Equity or Net Assets
4. Contributions/ Investments by Owners
5. Distributions to Owners
6. Comprehensive Income (DENT)
7. Revenue 
8. Expense
9. Gains
10. Losses

5 IFRS Elements: Profit

1. Assets
2. Liab
3. Equity
4. Income
5. Expenses - capital maintenance adj

Revenue is measured @ FV & Disclosures will include:

• Sales of goods
• Rendering of services
• IR
• Royalties
• Dividends