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  • 1. WELCOME
  • 2. INTERNATIONAL FINANCIAL REPORTING STANDARDS (I F R S)
  • 3. WHY IFRS ? A single set of accounting standards wouldA single set of accounting standards would enable internationally to standardizeenable internationally to standardize training and assure better quality on atraining and assure better quality on a global screen, it would also permitglobal screen, it would also permit international capital to flow more freely,international capital to flow more freely, enabling companies to develop consistentenabling companies to develop consistent global practices on accounting problems.global practices on accounting problems. It would be beneficial to regulators too, asIt would be beneficial to regulators too, as a complexity associated with needing toa complexity associated with needing to understand various reporting regimesunderstand various reporting regimes would be reduced.would be reduced.
  • 4. OBJECTIVES OF IFRS  to developto develop, in the public interest, a single set of high quality, understandable and, in the public interest, a single set of high quality, understandable and enforceableenforceable global accounting standardsglobal accounting standards that require high quality, transparent andthat require high quality, transparent and comparable information in financial statements and other financial reporting to helpcomparable information in financial statements and other financial reporting to help participants in the world's capital markets and other users make economicparticipants in the world's capital markets and other users make economic decisions;decisions;  toto promotepromote the usethe use and rigorous applicationand rigorous application of those standards;of those standards;  in fulfilling the objectives associated with (1) and (2in fulfilling the objectives associated with (1) and (2),), to take account ofto take account of,, asas appropriate, the special needs ofappropriate, the special needs of small and medium-sized entitiessmall and medium-sized entities and emergingand emerging economies.economies.  to bringto bring about convergenceabout convergence of national accounting standards and Internationalof national accounting standards and International Accounting standards and IFRS to high quality solutions.Accounting standards and IFRS to high quality solutions.
  • 5. SCOPE OF IFRS1.1. IASB Standards areIASB Standards are known asknown as International Financial Reporting Standards (IFRSs).International Financial Reporting Standards (IFRSs). 2.2. All International Accounting Standards (IASs) and Interpretations issued by the formerAll International Accounting Standards (IASs) and Interpretations issued by the former IASC (International Accounting Standard Committee) and SIC (Standard InterpretationIASC (International Accounting Standard Committee) and SIC (Standard Interpretation Committee) continue to beCommittee) continue to be applicableapplicable unless and until they are amended or withdrawn.unless and until they are amended or withdrawn. 3.3. IFRSsIFRSs apply toapply to the general purpose financial statements and other financial reporting bythe general purpose financial statements and other financial reporting by profit-oriented entitiesprofit-oriented entities -- those engaged in commercial, industrial, financial, and similar-- those engaged in commercial, industrial, financial, and similar activities, regardless of their legal form.activities, regardless of their legal form. 4.4. EntitiesEntities other than profit-oriented business entitiesother than profit-oriented business entities may also find IFRSs appropriate.may also find IFRSs appropriate.
  • 6. SCOPE OF IFRS 5.5. General purpose financial statementsGeneral purpose financial statements are intended to meet the common needsare intended to meet the common needs of shareholders, creditors, employees, and the public at large for informationof shareholders, creditors, employees, and the public at large for information about an entity's financial position, performance, and cash flows.about an entity's financial position, performance, and cash flows. 6.6. Other financial reporting includesOther financial reporting includes information provided outside financialinformation provided outside financial statements that assists in the interpretation of a complete set of financialstatements that assists in the interpretation of a complete set of financial statements or improves users' ability to make efficient economic decisions.statements or improves users' ability to make efficient economic decisions. 7.7. IFRSIFRS apply toapply to individual company and consolidated financial statements.individual company and consolidated financial statements. 8.8. A complete set ofA complete set of financial statements includesfinancial statements includes a balance sheet, an incomea balance sheet, an income statement, a cash flow statement, a statement showing either all changes instatement, a cash flow statement, a statement showing either all changes in equity or changes in equity other than those arising from investments by andequity or changes in equity other than those arising from investments by and distributions to owners, a summary of accounting policies, and explanatorydistributions to owners, a summary of accounting policies, and explanatory notes.notes.
  • 7. SCOPE OF IFRS 9.9. If an IFRS allows both aIf an IFRS allows both a 'benchmark' and an 'allowed alternative'benchmark' and an 'allowed alternative' treatment' treatment,, financial statements may be described as conforming to IFRS whichever treatmentfinancial statements may be described as conforming to IFRS whichever treatment is followed.is followed. 10.10. In developing Standards, IASB intendsIn developing Standards, IASB intends not to permit choicesnot to permit choices in accountingin accounting treatmenttreatment. Further, IASB intends to reconsider the choices in existing IASs with a. Further, IASB intends to reconsider the choices in existing IASs with a view to reducing the number of those choices.view to reducing the number of those choices. 11.11. IFRS willIFRS will present fundamental principles in bold face typepresent fundamental principles in bold face type and other guidance inand other guidance in non-bold type (the 'black-letter'/'grey-letter' distinction). Paragraphs of both typesnon-bold type (the 'black-letter'/'grey-letter' distinction). Paragraphs of both types have equal authority.have equal authority. 12.12. TheThe provision ofprovision of IAS 1IAS 1 that conformity with IAS requires compliance with everythat conformity with IAS requires compliance with every applicable IAS and Interpretation requiresapplicable IAS and Interpretation requires compliance with all IFRSs as well.compliance with all IFRSs as well.
  • 8. LIST OF IFRS  IFRS 1IFRS 1 First-time Adoption of International Financial Reporting StandardsFirst-time Adoption of International Financial Reporting Standards  IFRS 2IFRS 2 Share-based PaymentShare-based Payment  IFRS 3IFRS 3 Business CombinationsBusiness Combinations  IFRS 4IFRS 4 Insurance ContractsInsurance Contracts  IFRS 5IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsNon-current Assets Held for Sale and Discontinued Operations  IFRS 6IFRS 6 Exploration for and evaluation of Mineral ResourcesExploration for and evaluation of Mineral Resources  IFRS 7IFRS 7 Financial Instruments: DisclosuresFinancial Instruments: Disclosures  IFRS 8IFRS 8 Operating SegmentsOperating Segments
  • 9. FRAMEWORK FOR THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS TheThe IASB FrameworkIASB Framework was approved bywas approved by IASC BoardIASC Board in April, 1989 for publicationin April, 1989 for publication in July 1989, and adopted by the IASB in April, 2001.in July 1989, and adopted by the IASB in April, 2001. This Framework sets out the concepts that underlie the preparation and presentationThis Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users.of financial statements for external users. TheThe FrameworkFramework deals with:deals with: – TheThe objectiveobjective of financial statements;of financial statements; – TheThe qualitative characteristicsqualitative characteristics that determine the usefulness of information inthat determine the usefulness of information in financial statement;financial statement; – The Definition, recognition and measurement of theThe Definition, recognition and measurement of the elementselements from whichfrom which financial statements are constructed; andfinancial statements are constructed; and – Concept ofConcept of capitalcapital and capital maintenance.and capital maintenance.
  • 10. TheThe ObjectiveObjective of Financial statements is to provide useful information toof Financial statements is to provide useful information to users of financial statements in making economic decision.users of financial statements in making economic decision. Financial Statements areFinancial Statements are preparedprepared to provide information on Financialto provide information on Financial Position, Operating Performance and changes in financial position of anPosition, Operating Performance and changes in financial position of an entityentity Financial Statements are normally prepared on theFinancial Statements are normally prepared on the assumptionassumption that entity isthat entity is a going concern and will continue in operation for the foreseeable future,a going concern and will continue in operation for the foreseeable future, and prepared on accrual basis of accounting.and prepared on accrual basis of accounting. The fourThe four Qualitative characteristicsQualitative characteristics are Understandability, relevance,are Understandability, relevance, reliability and comparability are the attributes that make the financialreliability and comparability are the attributes that make the financial information useful to users.information useful to users. TheThe elementselements directly related to the measurement of financial position aredirectly related to the measurement of financial position are assets, liabilities and equity.assets, liabilities and equity.
  • 11. An item that meets the definition of an element should be recognized if:An item that meets the definition of an element should be recognized if: – it is probable that any future economic benefit associated the item will flow to orit is probable that any future economic benefit associated the item will flow to or from the entity.from the entity. – the item has a cost or value that can be measured with reliability.the item has a cost or value that can be measured with reliability. MeasurementMeasurement is the process of determining the monetary amounts at which eachis the process of determining the monetary amounts at which each element in the financial statements are to be recognized and carried in the Balanceelement in the financial statements are to be recognized and carried in the Balance Sheet and Income statement.Sheet and Income statement. The concept ofThe concept of capital maintenancecapital maintenance is concerned with how an entity defines theis concerned with how an entity defines the capital that it seeks to maintain. It provides the linkage between the concepts ofcapital that it seeks to maintain. It provides the linkage between the concepts of capital and the concepts of profit because it provides the point of reference by whichcapital and the concepts of profit because it provides the point of reference by which profit is measured.profit is measured.
  • 12. OBJECTIVE OF THE STANDARD:OBJECTIVE OF THE STANDARD: – The objective of this IFRS is to ensure that an entity’sThe objective of this IFRS is to ensure that an entity’s first IFRSfirst IFRS financial statementsfinancial statements,, and itsand its interim financial reportsinterim financial reports for part of thefor part of the period covered by those financial statements, contain high qualityperiod covered by those financial statements, contain high quality information that:information that: – it isit is transparentransparentt for users andfor users and comparablecomparable over all the periods presented.over all the periods presented. – Provides aProvides a suitable starting pointsuitable starting point for accounting under Internationalfor accounting under International Financial Reporting Standards (IFRS); andFinancial Reporting Standards (IFRS); and – Can be generated at aCan be generated at a coscostt that does notthat does not exceed the benefits to users.exceed the benefits to users. IFRS -1 : FIRST TIME ADOPTION OF I F R S
  • 13. POINTS:POINTS:  An entity shall prepare and present anAn entity shall prepare and present an opening IFRS statement of financial positionopening IFRS statement of financial position at theat the date of transition to IFRSsdate of transition to IFRSs. This is the starting point for its accounting under. This is the starting point for its accounting under IFRSs.IFRSs.  An entity shall prepare anAn entity shall prepare an opening IFRS balance sheetopening IFRS balance sheet at the date of transition toat the date of transition to IFRSs. This is the starting point for its accounting under IFRSs. An entityIFRSs. This is the starting point for its accounting under IFRSs. An entity need notneed not presentpresent its opening IFRS balance sheet in its first IFRS financial statements.its opening IFRS balance sheet in its first IFRS financial statements.  In general, the IFRS requires an entity toIn general, the IFRS requires an entity to comply with each IFRScomply with each IFRS effective at the endeffective at the end of its first IFRS reporting period. In particular, the IFRS requires an entity to do theof its first IFRS reporting period. In particular, the IFRS requires an entity to do the following in the opening IFRS statement of financial position that it prepares as afollowing in the opening IFRS statement of financial position that it prepares as a starting point for its accounting under IFRSs:starting point for its accounting under IFRSs:  recognize all assets and liabilities whose recognition is required by IFRSs.recognize all assets and liabilities whose recognition is required by IFRSs.  not to recognize items as assets or liabilities if IFRSs do not permit such recognition;not to recognize items as assets or liabilities if IFRSs do not permit such recognition; IFRS-1
  • 14. IFRS-1  reclassify items that it recognized under previous GAAP as one type of asset,reclassify items that it recognized under previous GAAP as one type of asset, liability or component of equity, but are different type of asset, liability orliability or component of equity, but are different type of asset, liability or component of equity under IFRSs.component of equity under IFRSs.  Apply IFRSs in measuring all recognized assets and liabilities.Apply IFRSs in measuring all recognized assets and liabilities.  The IFRS grantsThe IFRS grants limited exemptionslimited exemptions from these requirements in specifiedfrom these requirements in specified areas where the cost of complying with them would be likely to exceed theareas where the cost of complying with them would be likely to exceed the benefits to users of financial statements.benefits to users of financial statements.  The IFRS alsoThe IFRS also prohibits retrospective applicationprohibits retrospective application of IFRSs in some areas;of IFRSs in some areas; particularly where retrospective application would require judgments byparticularly where retrospective application would require judgments by management about past conditions after the outcome of a particularmanagement about past conditions after the outcome of a particular transaction is already known.transaction is already known.  The IFRS requiresThe IFRS requires disclosuresdisclosures that explain how the transition from previousthat explain how the transition from previous GAAP to IFRSs affected the entities reported financial position, financialGAAP to IFRSs affected the entities reported financial position, financial performance and cash flows.performance and cash flows.
  • 15. OBJECTIVE OF THIS STANDARD:OBJECTIVE OF THIS STANDARD: The objective of this IFRS is toThe objective of this IFRS is to specifyspecify the financial reporting by an entitythe financial reporting by an entity when it undertakes a share-based payment transaction.when it undertakes a share-based payment transaction.  In particular, it requires an entity toIn particular, it requires an entity to reflectreflect in its profit or loss and financialin its profit or loss and financial position the effects of share-based payment transactions, including expensesposition the effects of share-based payment transactions, including expenses associated with transactions in whichassociated with transactions in which share optionsshare options are granted toare granted to employees.employees. IFRS -2 : SHARE-BASED PAYMENTS
  • 16. POINTS:POINTS:  The IFRS requires an entity toThe IFRS requires an entity to recognizerecognize share-based paymentshare-based payment transactions in its financial statements, including transactionstransactions in its financial statements, including transactions with employees or other parties to be settled in cash, otherwith employees or other parties to be settled in cash, other assets, or equity instruments of the entity.assets, or equity instruments of the entity.  There areThere are no exceptionsno exceptions to the IFRS, other than forto the IFRS, other than for transactions to which other Standards apply.transactions to which other Standards apply.  ThisThis also appliesalso applies to transfers of equity instruments of theto transfers of equity instruments of the entity’s parent, or equity instruments of another entity in theentity’s parent, or equity instruments of another entity in the same group as the entity, to parties that have supplied goods orsame group as the entity, to parties that have supplied goods or services to the entity.services to the entity. IFRS-2
  • 17.  The IFRSThe IFRS sets outsets out measurement principlesmeasurement principles andand specificspecific requirementsrequirements forfor three typesthree types of share-based paymentof share-based payment transactions:transactions: (a)(a) equity-settledequity-settled share-based payment transactions, in which the entityshare-based payment transactions, in which the entity receives goods or services as consideration for equity instruments ofreceives goods or services as consideration for equity instruments of the entity (including shares or share options);the entity (including shares or share options); (b)(b) cash-settledcash-settled share-based payment transactions, in which the entityshare-based payment transactions, in which the entity acquires goods or services by incurring liabilities to the supplier ofacquires goods or services by incurring liabilities to the supplier of those goods or services forthose goods or services for amounts that are based on the priceamounts that are based on the price (or(or value)value) of the entity’s shares or other equity instruments of the entity;of the entity’s shares or other equity instruments of the entity; andand (c) t(c) transactionsransactions in which the entity receives or acquires goods or servicesin which the entity receives or acquires goods or services and the terms of the arrangement provide either the entity or theand the terms of the arrangement provide either the entity or the supplier of those goods or services with a choice of whether the entitysupplier of those goods or services with a choice of whether the entity settles the transaction in cash or by issuing equitysettles the transaction in cash or by issuing equity instruments.instruments. IFRS-2
  • 18.  For equity-settled share-based payment transactions, the IFRS requires an entity toFor equity-settled share-based payment transactions, the IFRS requires an entity to measuremeasure the goods or services received,the goods or services received, and the corresponding increase in equity,and the corresponding increase in equity, directly, at the fairdirectly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably.value of the goods or services received, unless that fair value cannot be estimated reliably.  If the entityIf the entity cannot estimate reliablycannot estimate reliably the fair value of the goods or services received, the entitythe fair value of the goods or services received, the entity is required tois required to measure their valuemeasure their value, and the, and the corresponding increase in equitycorresponding increase in equity,, indirectlyindirectly, by, by reference to the fair value of the equity instruments granted. Furthermore:reference to the fair value of the equity instruments granted. Furthermore: (a)(a) forfor transactions with employeestransactions with employees andand othersothers providing similar services, the entity isproviding similar services, the entity is required torequired to measure the fair value of the equity instruments granted,measure the fair value of the equity instruments granted, because it isbecause it is typically not possible to estimate reliably the fair value of employee services received.typically not possible to estimate reliably the fair value of employee services received. The fair value of the equity instruments granted is measuredThe fair value of the equity instruments granted is measured at grant date.at grant date. (b)(b) for transactions withfor transactions with parties other than employeesparties other than employees (and those providing similar services),(and those providing similar services), there is a rebut table presumption that the fair value of the goods or services received canthere is a rebut table presumption that the fair value of the goods or services received can be estimated reliably. That fair value is measured at thebe estimated reliably. That fair value is measured at the date the entity obtainsdate the entity obtains the goodsthe goods or the counterparty renders service. In rare cases, if the presumption is rebutted, theor the counterparty renders service. In rare cases, if the presumption is rebutted, the transaction is measured by reference to the fair value of the equity instruments granted,transaction is measured by reference to the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterpartymeasured at the date the entity obtains the goods or the counterparty renders service.renders service. IFRS-2
  • 19. (a)(a) for goods or services measured by reference to the fair value of the equityfor goods or services measured by reference to the fair value of the equity instruments granted, the IFRS specifies thatinstruments granted, the IFRS specifies that vesting conditions,vesting conditions, other thanother than market conditionsmarket conditions, are not taken into account, are not taken into account when estimating the fair valuewhen estimating the fair value of the shares or options atof the shares or options at the relevant measurement datethe relevant measurement date (as specified above).(as specified above). Instead, vesting conditions are taken into account by adjusting the number ofInstead, vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount soequity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognized for goods or services received asthat, ultimately, the amount recognized for goods or services received as consideration for the equity instruments granted is based on the number ofconsideration for the equity instruments granted is based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, noequity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognized for goods or services received if the equity instrumentsamount is recognized for goods or services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition (othergranted do not vest because of failure to satisfy a vesting condition (other than a market condition).than a market condition). (d)(d) the IFRS requires thethe IFRS requires the fair value of equity instrumentsfair value of equity instruments granted to begranted to be based onbased on market pricesmarket prices, if available, and to take into account the terms and conditions, if available, and to take into account the terms and conditions upon which those equity instruments were granted.upon which those equity instruments were granted. In the absenceIn the absence of marketof market prices, fair value is estimated, using a valuation technique to estimate whatprices, fair value is estimated, using a valuation technique to estimate what the price of those equity instruments would have been on the measurementthe price of those equity instruments would have been on the measurement date in an arm’s length transaction between knowledgeable,date in an arm’s length transaction between knowledgeable, willingwilling parties.parties. IFRS-2
  • 20. (e)(e) the IFRS also sets out requirements if the terms and conditions of anthe IFRS also sets out requirements if the terms and conditions of an optionoption or share grant are modifiedor share grant are modified (e.g. an option is reprised) or if a grant is(e.g. an option is reprised) or if a grant is cancelled, repurchased or replaced with another grant of equity instruments.cancelled, repurchased or replaced with another grant of equity instruments. For example, irrespective of any modification, cancellation or settlement of aFor example, irrespective of any modification, cancellation or settlement of a grant of equity instruments to employees, the IFRS generally requires thegrant of equity instruments to employees, the IFRS generally requires the entity to recognizeentity to recognize, as a minimum, the services received measured at the, as a minimum, the services received measured at the grant date fair value of the equity instruments granted.grant date fair value of the equity instruments granted.  For cash-settled share-based payment transactions, the IFRS requires an entity toFor cash-settled share-based payment transactions, the IFRS requires an entity to measure the goods or services acquired and the liability incurred at the fair valuemeasure the goods or services acquired and the liability incurred at the fair value of the liability. Until the liability is settled, the entity is required toof the liability. Until the liability is settled, the entity is required to re measurere measure the fair value of the liability at each reporting datethe fair value of the liability at each reporting date and at the date of settlement,and at the date of settlement, with any changes in value recognized in profit or loss for the period.with any changes in value recognized in profit or loss for the period. IFRS-2
  • 21.  For share-based payment transactions in which the terms of the arrangementFor share-based payment transactions in which the terms of the arrangement provide either the entity or the supplier of goods or services with a choice ofprovide either the entity or the supplier of goods or services with a choice of whether the entity settles the transaction in cash or by issuing equity instruments,whether the entity settles the transaction in cash or by issuing equity instruments, the entity is required to account for that transaction, or the components of thatthe entity is required to account for that transaction, or the components of that transaction, as a cash-settled share-based payment transaction if, and to the extenttransaction, as a cash-settled share-based payment transaction if, and to the extent that, the entity has incurred a liability to settle in cash (or other assets), or as anthat, the entity has incurred a liability to settle in cash (or other assets), or as an equity-settled share-based payment transaction if, and to the extent that, no suchequity-settled share-based payment transaction if, and to the extent that, no such liability has been incurred.liability has been incurred.  The IFRS prescribesThe IFRS prescribes various disclosure requirementsvarious disclosure requirements to enable users of financialto enable users of financial statements to understand:statements to understand:  the nature and extent of share-based payment arrangements thatthe nature and extent of share-based payment arrangements that existedexisted duringduring the period;the period;  how thehow the fair valuefair value of the goods or services received, or the fair value of theof the goods or services received, or the fair value of the equity instruments granted, during the period was determined; andequity instruments granted, during the period was determined; and  the effectthe effect of share-based payment transactions on the entity’s profit or loss forof share-based payment transactions on the entity’s profit or loss for the period and on its financial position.the period and on its financial position. IFRS-2
  • 22. OBJECTIVE OF THIS STANDARD:OBJECTIVE OF THIS STANDARD: The objective of the IFRS is toThe objective of the IFRS is to enhance the relevance, reliability andenhance the relevance, reliability and comparabilitycomparability of the information that an entity provides in its financial statementsof the information that an entity provides in its financial statements about aabout a business combination and its effectsbusiness combination and its effects. It does that by establishing principles. It does that by establishing principles and requirements forand requirements for how an acquirerhow an acquirer:: – (a) recognizes and measures in its financial statements the identifiable(a) recognizes and measures in its financial statements the identifiable assetsassets acquired, the liabilitiesacquired, the liabilities assumedassumed and any non-controlling interest in theand any non-controlling interest in the acquire;acquire; – (b) recognizes and measures the(b) recognizes and measures the goodwillgoodwill acquired in the business combinationacquired in the business combination or a gain from a bargain purchase; andor a gain from a bargain purchase; and – (c) determines what(c) determines what information to discloseinformation to disclose to enable users of theto enable users of the financial statements to evaluate the nature and financial effectsfinancial statements to evaluate the nature and financial effects of the business combination.of the business combination. IFRS -3 : BUSINESS COMBINATIONS
  • 23. POINTS:POINTS: Core principleCore principle An acquirer of a businessAn acquirer of a business recognisesrecognises the assets acquired and liabilitiesthe assets acquired and liabilities assumed at theirassumed at their acquisition-dateacquisition-date fair values and discloses information thatfair values and discloses information that enables users to evaluate the nature and financial effects of the acquisition.enables users to evaluate the nature and financial effects of the acquisition. Applying the acquisition methodApplying the acquisition method A business combination must beA business combination must be accountedaccounted for by applying thefor by applying the acquisitionacquisition methodmethod, unless it is a combination involving entities or businesses under, unless it is a combination involving entities or businesses under common control. One of the parties to a business combination can always becommon control. One of the parties to a business combination can always be identified as the acquirer, being the entity that obtains control of the otheridentified as the acquirer, being the entity that obtains control of the other business (the acquiree). Formations of a joint venture or the acquisition of anbusiness (the acquiree). Formations of a joint venture or the acquisition of an asset or a group of assets that does not constitute a business are not businessasset or a group of assets that does not constitute a business are not business combinations.combinations. IFRS-3
  • 24. TheThe IFRS establishes principlesIFRS establishes principles for recognising and measuring thefor recognising and measuring the identifiable assets acquired, the liabilities assumed and any non-controllingidentifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. Any classifications or designations made ininterest in the acquiree. Any classifications or designations made in recognising these items must be made in accordance with the contractualrecognising these items must be made in accordance with the contractual terms, economic conditions, acquirer’s operating or accounting policies andterms, economic conditions, acquirer’s operating or accounting policies and other factors that exist at the acquisition date.other factors that exist at the acquisition date. EachEach identifiable asset and liability is measured at its acquisition-dateidentifiable asset and liability is measured at its acquisition-date fairfair valuevalue. Any non-controlling interest in an acquiree is measured at fair value. Any non-controlling interest in an acquiree is measured at fair value or as the non-controlling interest’s proportionate share of the acquiree’sor as the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.net identifiable assets. IFRS-3
  • 25. The IFRS providesThe IFRS provides limited exceptionslimited exceptions to these recognition and measurementto these recognition and measurement principles:principles: a)a) Leases and insurance contractsLeases and insurance contracts are required to be classified on the basis ofare required to be classified on the basis of the contractual terms and other factors at the inception of the contract (or whenthe contractual terms and other factors at the inception of the contract (or when the terms have changed) rather than on the basis of the factors that exist at thethe terms have changed) rather than on the basis of the factors that exist at the acquisition date.acquisition date. b)b) Only thoseOnly those contingent liabilitiescontingent liabilities assumed in a business combination that are aassumed in a business combination that are a present obligation and can be measured reliably are recognized.present obligation and can be measured reliably are recognized. c)c) Some assets and liabilities are required to be recognised or measured inSome assets and liabilities are required to be recognised or measured in accordance withaccordance with other IFRSsother IFRSs, rather than at fair value. The assets and, rather than at fair value. The assets and liabilities affected are those falling within the scope of IAS 12liabilities affected are those falling within the scope of IAS 12 Income TaxesIncome Taxes,, IAS 19IAS 19 Employee BenefitsEmployee Benefits, IFRS 2, IFRS 2 Share-based PaymentShare-based Payment and IFRS 5and IFRS 5 Non-Non- current Assets Held for Sale and Discontinued Operationscurrent Assets Held for Sale and Discontinued Operations.. IFRS-3
  • 26. (d) There are special requirements for measuring(d) There are special requirements for measuring a reacquired righta reacquired right.. (e)(e) Indemnification assetsIndemnification assets are recognised and measured on a basis that isare recognised and measured on a basis that is consistent with the item that is subject to the indemnification, even if thatconsistent with the item that is subject to the indemnification, even if that measure is not fair value.measure is not fair value. The IFRS requires the acquirer, having recognised the identifiable assets, theThe IFRS requires the acquirer, having recognised the identifiable assets, the liabilities and any non-controlling interests,liabilities and any non-controlling interests, to identify any differenceto identify any difference between:between: a)a) the aggregate of the consideration transferred, any non-controlling interestthe aggregate of the consideration transferred, any non-controlling interest in the acquiree and, in a business combination achieved in stages, thein the acquiree and, in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest inacquisition-date fair value of the acquirer’s previously held equity interest in the acquiree; andthe acquiree; and b) the net identifiable assets acquired.b) the net identifiable assets acquired. The difference will, generally, beThe difference will, generally, be recognised as goodwillrecognised as goodwill. If the acquirer. If the acquirer has made a gain from a bargain purchase that gain is recognisedhas made a gain from a bargain purchase that gain is recognised in profit or loss.in profit or loss. IFRS-3
  • 27. TheThe considerationconsideration transferred in a business combination (including any contingenttransferred in a business combination (including any contingent consideration)consideration) is measured at fair valueis measured at fair value.. In general, an acquirer measures and accounts for assets acquired and liabilitiesIn general, an acquirer measures and accounts for assets acquired and liabilities assumed or incurred in a business combination after the business combination hasassumed or incurred in a business combination after the business combination has been completed in accordance with other applicable IFRSs. However, the IFRSbeen completed in accordance with other applicable IFRSs. However, the IFRS provides accounting requirements for reacquired rights, contingent liabilities,provides accounting requirements for reacquired rights, contingent liabilities, contingent consideration and indemnification assets.contingent consideration and indemnification assets. DisclosureDisclosure The IFRS requires the acquirer to disclose information that enables users of itsThe IFRS requires the acquirer to disclose information that enables users of its financial statements to evaluate thefinancial statements to evaluate the nature and financial effect of businessnature and financial effect of business combinationscombinations that occurred during the current reporting period or after thethat occurred during the current reporting period or after the reporting date but before the financial statements are authorised for issue.reporting date but before the financial statements are authorised for issue. After a business combination, the acquirer mustAfter a business combination, the acquirer must disclose any adjustmentsdisclose any adjustments recognisedrecognised in the current reporting period that relate to businessin the current reporting period that relate to business combinations that occurred in the current or previous reportingcombinations that occurred in the current or previous reporting periods.periods. IFRS-3
  • 28. OBJECTIVE OF STANDARD:OBJECTIVE OF STANDARD: The objective of this IFRS is toThe objective of this IFRS is to specifyspecify the financial reportingthe financial reporting forfor insurance contractsinsurance contracts by anyby any entity that issues such contractsentity that issues such contracts (described in this IFRS as an(described in this IFRS as an insurerinsurer) until the Board completes the) until the Board completes the second phase of its project on insurance contracts. In particular, thissecond phase of its project on insurance contracts. In particular, this IFRS requires:IFRS requires:  limitedlimited improvements to accountingimprovements to accounting by insurers for insuranceby insurers for insurance contracts.contracts.  disclosuredisclosure that identifies and explains thethat identifies and explains the amountsamounts in an insurer’sin an insurer’s financial statements arising from insurance contracts and helpsfinancial statements arising from insurance contracts and helps users of those financial statementsusers of those financial statements understand the amount, timingunderstand the amount, timing and uncertainty of future cash flowsand uncertainty of future cash flows fromfrom insurance contracts.insurance contracts. IFRS -4 : INSURANCE CONTRACTS
  • 29. POINTS:POINTS: AnAn insurance contractinsurance contract is a contract under which one party (the insurer)is a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) byaccepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future eventagreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.(the insured event) adversely affects the policyholder. The IFRSThe IFRS appliesapplies to all insurance contracts (including reinsurance contracts)to all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds, except forthat an entity issues and to reinsurance contracts that it holds, except for specified contracts covered by other IFRSs. Itspecified contracts covered by other IFRSs. It does not applydoes not apply to other assetsto other assets and liabilities of an insurer, such as financial assets and financial liabilitiesand liabilities of an insurer, such as financial assets and financial liabilities within the scope of IAS 39within the scope of IAS 39 Financial Instruments: Recognition andFinancial Instruments: Recognition and MeasurementMeasurement. Furthermore, it does not address accounting by policyholders.. Furthermore, it does not address accounting by policyholders. IFRS-4
  • 30. The IFRSThe IFRS exempts an insurer temporarilyexempts an insurer temporarily (ie during phase I of this(ie during phase I of this project) from some requirements of other IFRSs, including theproject) from some requirements of other IFRSs, including the requirement to consider therequirement to consider the FrameworkFramework in selecting accounting policiesin selecting accounting policies for insurance contracts. However, the IFRS:for insurance contracts. However, the IFRS: a.a. prohibits provisionsprohibits provisions for possible claims underfor possible claims under contracts that are notcontracts that are not inin existenceexistence at the end of the reporting period (such as catastrophe andat the end of the reporting period (such as catastrophe and equalisation provisions).equalisation provisions). b.b. requires arequires a testtest for the adequacy of recognised insurance liabilities andfor the adequacy of recognised insurance liabilities and an impairment test for reinsurance assets.an impairment test for reinsurance assets. c.c. requires an insurer torequires an insurer to keep insurance liabilitieskeep insurance liabilities in its statement ofin its statement of financial position until they are discharged or cancelled, or expire, andfinancial position until they are discharged or cancelled, or expire, and to present insurance liabilities without offsetting them against relatedto present insurance liabilities without offsetting them against related reinsurance assets.reinsurance assets. IFRS-4
  • 31. IFRS-4 The IFRS permits an insurer toThe IFRS permits an insurer to change its accounting policieschange its accounting policies forfor insurance contracts only if, as a result, its financial statements presentinsurance contracts only if, as a result, its financial statements present information that isinformation that is more relevant and no less reliable, or more reliablemore relevant and no less reliable, or more reliable and no less relevantand no less relevant. In particular, an. In particular, an insurer cannot introduce any of theinsurer cannot introduce any of the following practicesfollowing practices, although it may continue using accounting policies, although it may continue using accounting policies that involve them:that involve them: a.a. measuring insurance liabilitiesmeasuring insurance liabilities on an undiscounted basis.on an undiscounted basis. b.b. measuring contractual rightsmeasuring contractual rights to future investment managementto future investment management feesfees at an amount that exceeds their fair value as implied by a comparisonat an amount that exceeds their fair value as implied by a comparison with current fees charged by other market participants for similarwith current fees charged by other market participants for similar services.services. a.a. using non-uniform accounting policiesusing non-uniform accounting policies for the insurance liabilities offor the insurance liabilities of subsidiaries.subsidiaries.
  • 32. The IFRS permits theThe IFRS permits the introduction of an accounting policyintroduction of an accounting policy that involvesthat involves rere measuring designated insurance liabilities consistentlymeasuring designated insurance liabilities consistently in each period toin each period to reflect current market interest rates (and, if the insurer so elects, otherreflect current market interest rates (and, if the insurer so elects, other current estimates and assumptions). Without this permission, an insurercurrent estimates and assumptions). Without this permission, an insurer would have been required to apply the change in accounting policieswould have been required to apply the change in accounting policies consistently to all similar liabilities.consistently to all similar liabilities. The IFRS requiresThe IFRS requires disclosuredisclosure to help users understand:to help users understand:  thethe amountsamounts in the insurer’s financial statements thatin the insurer’s financial statements that arisearise from insurancefrom insurance contracts.contracts.  the amount, timing and uncertainty ofthe amount, timing and uncertainty of future cash flowsfuture cash flows from insurancefrom insurance contractscontracts IFRS-4
  • 33. OBJECTIVE OF STANDARD:OBJECTIVE OF STANDARD: The objective of this IFRS is toThe objective of this IFRS is to specify the accountingspecify the accounting for assets held forfor assets held for sale, and thesale, and the presentation and disclosurepresentation and disclosure of discontinued operations. Inof discontinued operations. In particular, the IFRS requires:particular, the IFRS requires: a.a. assets that meet theassets that meet the criteria to be classifiedcriteria to be classified as held for sale to beas held for sale to be measured at themeasured at the lowerlower of carrying amount and fair value less costs toof carrying amount and fair value less costs to sell, and depreciation on such assets to cease; andsell, and depreciation on such assets to cease; and b.b. assets that meet the criteria to be classified as held for sale to beassets that meet the criteria to be classified as held for sale to be presented separatelypresented separately in the statement of financial position and thein the statement of financial position and the results of discontinued operationsresults of discontinued operations to be presented separately in theto be presented separately in the statement of comprehensive income.statement of comprehensive income. IFRS -5 : NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
  • 34. POINTS:POINTS: The IFRS:The IFRS: a)a) adoptsadopts the classificationthe classification ‘held for sale’.‘held for sale’. b)b) introduces the concept of aintroduces the concept of a disposal groupdisposal group, being a group of assets to be, being a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction,disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred inand liabilities directly associated with those assets that will be transferred in the transaction.the transaction. c)c) classifies an operationclassifies an operation as discontinued at the date the operation meets theas discontinued at the date the operation meets the criteria to be classified as held for sale or when the entity has disposed ofcriteria to be classified as held for sale or when the entity has disposed of the operation.the operation. An entity shallAn entity shall classifyclassify a non-current asset (or disposal group) as helda non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through afor sale if its carrying amount will be recovered principally through a salesale transaction rather than through continuing use.transaction rather than through continuing use. IFRS-5
  • 35. present condition subject only to terms that are usual and customary forpresent condition subject only to terms that are usual and customary for sales of such assets (or disposal groups)sales of such assets (or disposal groups) and its sale must beand its sale must be highlyhighly probableprobable.. For theFor the sale to be highly probablesale to be highly probable, the appropriate level of management, the appropriate level of management must be committed to a plan to sell the asset (or disposal group), and anmust be committed to a plan to sell the asset (or disposal group), and an active program to locate a buyer and complete the plan must have beenactive program to locate a buyer and complete the plan must have been initiated. Further, the asset (or disposal group) must be actively marketedinitiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. Infor sale at a price that is reasonable in relation to its current fair value. In addition, theaddition, the sale should be expected to qualify for recognition as asale should be expected to qualify for recognition as a completed salecompleted sale within one yearwithin one year from the date of classificationfrom the date of classification, except as, except as permitted by paragraph 9, and actions required to complete the plan shouldpermitted by paragraph 9, and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be madeindicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.or that the plan will be withdrawn. IFRS-5
  • 36. AA discontinued operationdiscontinued operation is a component of an entityis a component of an entity that either has beenthat either has been disposed of, or is classified as held for sale, anddisposed of, or is classified as held for sale, and a)a) represents a separate major line of business or geographical area ofrepresents a separate major line of business or geographical area of operations,operations, b)b) is part of a single co-ordinated plan to dispose of a separate major line ofis part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations orbusiness or geographical area of operations or c)c) is a subsidiary acquired exclusively with a view to resale.is a subsidiary acquired exclusively with a view to resale. A component of an entity comprisesA component of an entity comprises operations and cash flowsoperations and cash flows that can bethat can be clearly distinguishedclearly distinguished, operationally and for financial, operationally and for financial reporting purposes, from the rest of the entity. In other words, areporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit or a groupcomponent of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use.of cash-generating units while being held for use. An entity shallAn entity shall not classifynot classify as held for saleas held for sale a non-current asset (ora non-current asset (or disposal group) that is to be abandoneddisposal group) that is to be abandoned. This is because its. This is because its carrying amount will be recovered principallycarrying amount will be recovered principally through continuing use.through continuing use. IFRS-5
  • 37. OBJECTIVE OF STANDARD:OBJECTIVE OF STANDARD: The objective of this IFRS is to specify theThe objective of this IFRS is to specify the financial reportingfinancial reporting for the exploration for andfor the exploration for and evaluation of mineral resources.evaluation of mineral resources. POINTS:POINTS: Exploration and evaluation expendituresExploration and evaluation expenditures are expenditures incurred by an entity in connectionare expenditures incurred by an entity in connection with the exploration for and evaluation of mineral resourceswith the exploration for and evaluation of mineral resources beforebefore the technical feasibilitythe technical feasibility and commercial viability of extracting a mineral resource are demonstrable.and commercial viability of extracting a mineral resource are demonstrable. Exploration for and evaluation of mineral resources is the search for mineral resources,Exploration for and evaluation of mineral resources is the search for mineral resources, including minerals, oil, natural gas and similar non-regenerative resourcesincluding minerals, oil, natural gas and similar non-regenerative resources after the entity hasafter the entity has obtained legal rightsobtained legal rights to explore in a specific area, as well as the determination of the technicalto explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource.feasibility and commercial viability of extracting the mineral resource. Exploration and evaluation assets are exploration and evaluation expendituresExploration and evaluation assets are exploration and evaluation expenditures recognized as assetsrecognized as assets in accordance with the entity’s accounting policy.in accordance with the entity’s accounting policy. IFRS-6 : EXPLORATION FOR AND EVALUATION OF MINERALS
  • 38. The IFRS:The IFRS: a)a) permits an entity to develop an accounting policypermits an entity to develop an accounting policy for exploration andfor exploration and evaluation assets without specificallyevaluation assets without specifically consideringconsidering the requirements ofthe requirements of paragraphs 11 and 12 of IAS 8. Thus, an entity adopting IFRS 6 mayparagraphs 11 and 12 of IAS 8. Thus, an entity adopting IFRS 6 may continue to use the accounting policies applied immediately beforecontinue to use the accounting policies applied immediately before adopting the IFRS. This includes continuing to use recognition andadopting the IFRS. This includes continuing to use recognition and measurement practices that are part of those accounting policies.measurement practices that are part of those accounting policies. b)b) requires entities recognising exploration and evaluation assets torequires entities recognising exploration and evaluation assets to performperform an impairment testan impairment test on those assets when facts and circumstances suggeston those assets when facts and circumstances suggest that the carrying amount of the assets may exceed their recoverablethat the carrying amount of the assets may exceed their recoverable amount.amount. a)a) varies the recognitionvaries the recognition of impairment from that in IAS 36 but measures theof impairment from that in IAS 36 but measures the impairment in accordance with that Standard once the impairment isimpairment in accordance with that Standard once the impairment is identified.identified. IFRS-6
  • 39. An entity shallAn entity shall determine an accounting policydetermine an accounting policy for allocating explorationfor allocating exploration and evaluation assetsand evaluation assets to cash-generating unitsto cash-generating units oror groupsgroups of cash-generatingof cash-generating units for the purpose ofunits for the purpose of assessing such assets for impairmentassessing such assets for impairment. Each cash-. Each cash- generating unit or group of units to which an exploration and evaluationgenerating unit or group of units to which an exploration and evaluation asset is allocatedasset is allocated shall not be larger than an operating segment determinedshall not be larger than an operating segment determined in accordance with IFRS 8in accordance with IFRS 8 Operating SegmentsOperating Segments.. Exploration and evaluation assets shall be assessed for impairment whenExploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that thefacts and circumstances suggest that the carrying amount of an explorationcarrying amount of an exploration and evaluation asset may exceed its recoverable amountand evaluation asset may exceed its recoverable amount. When facts and. When facts and circumstances suggest that the carrying amount exceeds the recoverablecircumstances suggest that the carrying amount exceeds the recoverable amount, an entity shall measure, present andamount, an entity shall measure, present and disclosedisclose any resultingany resulting impairment loss in accordance withimpairment loss in accordance with IAS 36IAS 36.. IFRS-6
  • 40. One or more of theOne or more of the following facts and circumstances indicatefollowing facts and circumstances indicate that an entity should testthat an entity should test exploration and evaluation assets for impairment (the list is not exhaustive):exploration and evaluation assets for impairment (the list is not exhaustive): a.a. thethe periodperiod for which the entity has the right to explore in the specific area hasfor which the entity has the right to explore in the specific area has expiredexpired during the period or will expire in the near future, and is not expected to be renewed.during the period or will expire in the near future, and is not expected to be renewed. b.b. substantive expendituresubstantive expenditure on further exploration for and evaluation of mineral resources inon further exploration for and evaluation of mineral resources in the specific area isthe specific area is neither budgeted nor plannedneither budgeted nor planned.. c.c. exploration for and evaluation of mineral resources in the specific area have not led toexploration for and evaluation of mineral resources in the specific area have not led to the discovery ofthe discovery of commercially viable quantitiescommercially viable quantities of mineral resources and the entity hasof mineral resources and the entity has decided to discontinue such activities in the specific area.decided to discontinue such activities in the specific area. d.d. sufficient data existsufficient data exist to indicate that, although a development in the specific area is likelyto indicate that, although a development in the specific area is likely to proceed,to proceed, the carrying amountthe carrying amount of the exploration and evaluation asset isof the exploration and evaluation asset is unlikely to beunlikely to be recoveredrecovered in full from successful development or by sale.in full from successful development or by sale. An entity shallAn entity shall disclosedisclose informationinformation that identifies and explains the amounts recognised in itsthat identifies and explains the amounts recognised in its financial statements arising from the exploration for and valuation of mineral resources.financial statements arising from the exploration for and valuation of mineral resources. IFRS-6
  • 41. OBJECTIVE OF STANDARD:OBJECTIVE OF STANDARD: The objective of this IFRS is to require entities to provide disclosures in theirThe objective of this IFRS is to require entities to provide disclosures in their financial statements that enable users to evaluate:financial statements that enable users to evaluate: a)a) thethe significance of financial instrumentssignificance of financial instruments for the entity’s financial position andfor the entity’s financial position and performance; andperformance; and a)a) the nature and extent ofthe nature and extent of risks arising from financial instrumentsrisks arising from financial instruments to which theto which the entity is exposed during the period and at the reporting date, and how the entityentity is exposed during the period and at the reporting date, and how the entity manages those risks. Themanages those risks. The qualitative disclosuresqualitative disclosures describe management’s objectives,describe management’s objectives, policies and processes for managing those risks. Thepolicies and processes for managing those risks. The quantitative disclosuresquantitative disclosures provide information about the extent to which the entity is exposed to risk, basedprovide information about the extent to which the entity is exposed to risk, based on information provided internally to the entity's key management personnel.on information provided internally to the entity's key management personnel. Together, these disclosures provide an overview of the entity's use of financialTogether, these disclosures provide an overview of the entity's use of financial instruments and the exposures to risks they create.instruments and the exposures to risks they create. IFRS-7 : FINANCIAL INSTRUMENTS: DISCLOSURE
  • 42. POINTS:POINTS: TheThe IFRS applies to all entitiesIFRS applies to all entities, including entities that have few financial, including entities that have few financial instruments (eg a manufacturer whose only financial instruments areinstruments (eg a manufacturer whose only financial instruments are accounts receivable and accounts payable) and those that have manyaccounts receivable and accounts payable) and those that have many financial instruments (eg a financial institution most of whose assets andfinancial instruments (eg a financial institution most of whose assets and liabilities are financial instruments).liabilities are financial instruments). When thisWhen this IFRS requires disclosures by classIFRS requires disclosures by class of financial instrument, anof financial instrument, an entity shall group financial instruments into classes that are appropriate toentity shall group financial instruments into classes that are appropriate to the nature of the information disclosed and that take into account thethe nature of the information disclosed and that take into account the characteristics of those financial instruments. An entity shall providecharacteristics of those financial instruments. An entity shall provide sufficient information to permit reconciliation to the line items presented insufficient information to permit reconciliation to the line items presented in the balance sheet.the balance sheet. The principles in this IFRSThe principles in this IFRS complement the principlescomplement the principles for recognising,for recognising, measuring and presenting financial assets and financial liabilities in IAS 32measuring and presenting financial assets and financial liabilities in IAS 32 Financial Instruments: PresentationFinancial Instruments: Presentation and IAS 39and IAS 39 Financial Instruments:Financial Instruments: Recognition and MeasurementRecognition and Measurement.. IFRS-7
  • 43. OBJECTIVE OF STANDARD:OBJECTIVE OF STANDARD: Core principleCore principle—An entity shall disclose information to—An entity shall disclose information to enable users of its financial statements to evaluate theenable users of its financial statements to evaluate the naturenature and financial effects of the business activitiesand financial effects of the business activities in which itin which it engages and the economic environments in which it operates.engages and the economic environments in which it operates. IFRS-8 : OPERATING SEGMENTS
  • 44. POINTS:POINTS: ThisThis IFRS shall applyIFRS shall apply to:to: (a) the(a) the separate or individual financial statementsseparate or individual financial statements of an entity:of an entity: – whose debt or equity instruments are traded in a public market (a domestic orwhose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regionalforeign stock exchange or an over-the-counter market, including local and regional markets), ormarkets), or – that files, or is in the process of filing, its financial statements with a securitiesthat files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class ofcommission or other regulatory organisation for the purpose of issuing any class of instruments in a publicinstruments in a public market; andmarket; and (b) the(b) the consolidated financial statementsconsolidated financial statements of a group with a parent:of a group with a parent: – whose debt or equity instruments are traded in a public market (a domestic or foreignwhose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), orstock exchange or an over-the-counter market, including local and regional markets), or – that files, or is in the process of filing, the consolidated financial statements with athat files, or is in the process of filing, the consolidated financial statements with a securities commission or other regulatory organisation for the purpose of issuing anysecurities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market.class of instruments in a public market. IFRS-8
  • 45. The IFRSThe IFRS specifies how an entity should report informationspecifies how an entity should report information about itsabout its operating segments in annual financial statements and, as a consequentialoperating segments in annual financial statements and, as a consequential amendment to IAS 34amendment to IAS 34 Interim Financial ReportingInterim Financial Reporting, requires an entity to, requires an entity to reportreport selected informationselected information about its operating segments in interimabout its operating segments in interim financial reports. It also sets out requirements for related disclosures aboutfinancial reports. It also sets out requirements for related disclosures about products and services, geographical areas and major customers.products and services, geographical areas and major customers. The IFRS requires an entityThe IFRS requires an entity to report financial and descriptiveto report financial and descriptive information about its reportable segmentsinformation about its reportable segments. Reportable segments are. Reportable segments are operating segments or aggregations of operating segments that meetoperating segments or aggregations of operating segments that meet specified criteria.specified criteria. Operating segments areOperating segments are components of an entity about which separatecomponents of an entity about which separate financial information is available that is evaluated regularly by the chieffinancial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and inoperating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to beassessing performance. Generally, financial information is required to be reported on the same basis as is used internally for evaluating operatingreported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources tosegment performance and deciding how to allocate resources to operating segments.operating segments. IFRS-8
  • 46. The IFRS requires an entity toThe IFRS requires an entity to report a measure of operating segmentreport a measure of operating segment profit or loss and of segment assetsprofit or loss and of segment assets. It also requires an entity to report a. It also requires an entity to report a measure ofmeasure of segment liabilitiessegment liabilities and particular income and expense items ifand particular income and expense items if such measures are regularly provided to the chief operating decisionsuch measures are regularly provided to the chief operating decision maker.maker. It requiresIt requires reconciliationsreconciliations of total reportable segment revenues, total profitof total reportable segment revenues, total profit or loss, total assets, liabilities and other amounts disclosed for reportableor loss, total assets, liabilities and other amounts disclosed for reportable segments to corresponding amounts in the entity’s financial statements.segments to corresponding amounts in the entity’s financial statements. IFRS-8
  • 47. The IFRS requires an entity to report information about theThe IFRS requires an entity to report information about the revenuesrevenues derived from its products or servicesderived from its products or services (or groups of similar products and(or groups of similar products and services), about theservices), about the countries in which it earns revenues and holds assetscountries in which it earns revenues and holds assets,, and about major customers, regardless of whether that information is usedand about major customers, regardless of whether that information is used by management in making operating decisions. However, the IFRS doesby management in making operating decisions. However, the IFRS does not require an entity to report information that is not prepared for internalnot require an entity to report information that is not prepared for internal use if the necessary information is not available and the cost to develop ituse if the necessary information is not available and the cost to develop it would be excessive.would be excessive. The IFRS also requires an entity toThe IFRS also requires an entity to give descriptive information about thegive descriptive information about the way theway the operating segments were determinedoperating segments were determined, the products and services, the products and services provided by the segments, differences between theprovided by the segments, differences between the measurementsmeasurements used inused in reporting segment information and those used in the entity’s financialreporting segment information and those used in the entity’s financial statements, and changes in the measurement of segment amounts fromstatements, and changes in the measurement of segment amounts from period to period.period to period. IFRS-8
  • 48. – CA VENKATA SUNEEL PERUMALLA
  • 49. Thank you