US ACCA, American Institute, JNU University New Delhi
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Course
ACCA45072
Institution
JNU University
Thi documents I prepared for those students who is studying in Accounts and finance department, this is belongs to US ACCA course and institute, it will help you to finalize and crack your exams any international and professional national course.
IFRS standards:
IFRS 1 - First-time Adoption of International Financial Reporting Standards
IFRS 2 - Share-based Payment
IFRS 3 - Business Combinations
IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations
IFRS 6 - Exploration for and Evaluation of Mineral Resources
IFRS 7 - Financial Instruments: Disclosures
IFRS 8 - Operating Segments
IFRS 9 - Financial Instruments
IFRS 10 - Consolidated Financial Statements
IFRS 11 - Joint Arrangements
IFRS 13 - Fair Value Measurement
IFRS 15 - Revenue from Contracts with Customers
IFRS 16 - Leases
IAS Standards
IAS 1 - Presentation of Financial Statements
IAS 2 - Inventories
IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 - Events after the Reporting Period
IAS 12 - Income Taxes
IAS 16 - Property, Plant and Equipment
IAS 19 - Employee Benefits
IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 - The Effects of Changes in Foreign Exchange Rates
IAS 23 - Borrowing Costs
IAS 24 - Related Party Disclosures
IAS 28 - Investments in Associates and Joint Ventures
IAS 32 - Financial Instruments: Presentation
IAS 33 - Earnings per Share
IAS 36 - Impairment of Assets
IAS 37 - Provisions Contingent Liabilities and Contingent Assets
IAS 38 - Intangible Assets
IAS 40 - Investment Property
IAS 41 - Agriculture
IAS 1 – Presentation of financial statements
,IAS1 covers the form and content of financial statements. The main components are:
▪ Statement of financial position ‘SOFP’
(Statements of financial performance
▪ Statement of profit or loss and other comprehensive income ‘P&L and OCI’
▪ Statement of changes in equity
▪ Statement of cash flows
▪ Notes to the financial statements
The entity should identify each financial statement and the notes very clearly. IAS1 also requires the entity to display the
following information:
1. The name of the reporting entity
2. Whether the financial statements are of an individual entity or a group of entities
3. the date of the end of the reporting period or the period covered
4. the presentation currency
5. the level of rounding used
there are 8 overall considerations to present the financial statements:
(1) Fair presentation and compliance with IFRS
(2) Going-concern
(3) Accrual basis
(4) Materiality and aggregation
(5) Frequency of reporting
(6) Offsetting
(7) Comparability
(8) consistency
statement of financial position:
an entity must present current and non-current assets as separate classifications in the statement of financial position. A
presentation based on liquidity should only be used where it provides more relevant and reliable information, in which
case all assets and liabilities must be presented broadly in order of liquidity.
IAS1 distinguish between current and non- current assets(liabilities) by identifying the term current asset (liability):
1) Current Assets:
I. Assets expected to be realized in or is intended for sale and consumption in the entity’s normal
operating cycle
II. Held primarily for trading
III. Due to be realized within 12 months
IV. Cash or cash equivalent that are not subject to exchange restriction
2) Current liabilities:
I. Expected to be settled in the entity’s normal operating cycle
II. Held primarily for trading
III. Due to be settled within 12 months
IV. The entity does not have the right at end of the reporting period to defer settlement of the liability for
at least 12 months
All other assets (liabilities) are classified as non-current.
Statement of profit or loss:
IAS1 allows income and expense items to be presented either:
, - in a single statement of profit or loss and other comprehensive income, or
- in two statements: a separate statement of profit or loss and a separate statement of other comprehensive
income
“Memorize”
“The principals underpinning the overall presentation of financial statements are set out in IAS 1 – presentation of
financial statements.
IAS 1 requires that all income and expenses are presented in a statement of profit or loss and other comprehensive
income.
IAS 1 does not allow entities to choose whether to present income and expense in the P&L section or the OCI section of
the statement.
IAS 1 states that unless required or permitted by a specific IFRS standard, all items of income and expense recognized in
a period shall be included in profit or loss section.
The key implication of an item being presented in OCI other than P&L is that the item would not be taken into account
when measuring the earnings per share.”
“IAS1 states that tax related to OCI is either shown as a separate line in the OCI section of the statement or netted off
against each component of other comprehensive income and disclosed in the notes to the financial statements.”
Circumstances where items may be excluded from profit or loss for the current year include the correction of errors and
the effect of changes in accounting policies (IAS8)
*An analysis of expenses must be shown either in the profit or loss section or by note, using a classification based on
either the nature of the expenses or their function. This sub classification of expenses indicates a range of components
of financial performance; these may differ in terms of stability, potential for gain or loss and predictability
Disclosures:
IAS1 specifies disclosures of certain items in certain ways.
➢ Some items must appear as line items in the statement of financial position or statement of profit or loss and
other comprehensive income
➢ Other items can appear in a note to the financial statements instead
Disclosures in both IAS1 and other IFRS standards must be made either as separate line items in the statement or in
the notes unless otherwise stated, disclosures cannot be made in an accompanying commentary or report.
~IAS1 also requires the disclosure of the amount of dividends paid during the period covered by the financial
statements. This is shown either in the statement of changes of equity or in the notes.
~An entity must disclose the judgements made by management in applying the accounting policies that have the
most significant effect on the amounts of items recognized in the financial statements.
~An entity must disclose in the notes: information regarding key assumptions about the future, and sources of
measurement uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
Statement of changes in equity
IAS1 requires entities to present statement of changes in equity. The statement must show:
» Total comprehensive income for the period, showing amounts attributable to the parent and NCI
, » The effects of any retrospective application of accounting policies or restatements in accordance with IAS8
» A reconciliation of the opening to closing carrying amount for each component of equity
» An analysis of other comprehensive income
Notes to the financial statements
IFRS 13 Fair value
IFRS 13 defines fair value as ‘the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
That price would be described as the ‘exit price’. The market-based current exit price implies an exchange between
unrelated, knowledgeable and willing parties.
Fair value is a market-based measurement, not an entity- specific measurement. It focuses on exit prices of assets and
liabilities and takes into account market conditions at the measurement date. Because it’s a market-based
measurement, fair value is measured using the assumptions that market participants would use when pricing the asset,
taking into account any relevant characteristics of the asset. The transactions take place either at the principal market
for the asset or liability or in the absence of the principal market, in the most advantageous market for the asset or
liability.
The principal market is the market which is the most liquid for that asset or liability. In most cases the principal market
and the most advantageous market are the same
Fair value is not adjusted for transaction costs as these are not a feature of the asset or liability, but may be take into
account when determining the most advantageous market.
*For non-financial assets the fair value measurement looks at how the asset can be used. It takes into account the ability
of a market participant to generate economic benefits by using the asset in its highest and best use.
*Fair value measurement of a liability assumes that the liability is transferred at the measurement date to a market
participant, who is then obliged to fulfill the obligation.
Valuation techniques:
The standard establishes three-level hierarchy for the inputs that valuation techniques used to measure fair value:
Level one: Quoted prices in active markets for identical assets or liabilities that the reportion entity can access at the
measurement date.
Level two: Inputs, other than quoted prices included in level 1, that are observable for the asset or liability.
Level three: Unobservable inputs for the asset or liability
Valuation approaches:
There are three valuation approaches:
(A) Income approach: Valuation techniques that convert future amounts to a single current amount.
(B) Market approach: Valuation technique that uses prices and other relevant information generated by market
transactions.
(C) Cost approach: Valuation technique that reflect the amount that would be required currently to replace the
service capacity of an asset.
Entities may use more than one valuation technique to measure fair value in a given situation
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