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VAS- IFRS conversion: Financial instrument
Under IFRS, Financial instrument is regulated by four accounting standards. But for the FY 2012, only
three standards have applied as following :
IAS 39: Recognition and Measurement (superseded by IFRS 9 effective 01 January 2015)
IAS 32: Presentation (disclosure provisions superseded by IFRS 7 effective 2007)
IFRS 7: Disclosure
Under VAS, there is only guideline about Disclosures of financial instruments that regulated by No.
210/2009/TT-BTC effective 2011. However, scope of this IFRS coversion has converted reports which
are only related to converting BS and PL and does not involve disclosure.
Therefore, only IAS 39 is applicable in this engagement.
Note:
FA : Financial assets
FL : Financial liabilities
FVTPL: Fair value through profit and loss

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# Account
balance
VAS IFRS Conclusion
Classificati
on
Accounting treatment
Initial
recogniti
on
Subsequ
ent
recogniti
on
1 Cash Historic
al cost
Loan and
receivable –
amortised
cost
Fair value Amortised
cost using
the
effective
interest
method
(EIR)
No difference
2 Short-term
investment
(There are all
deposit
accounts)
Historic
al cost
Loan and
receivable –
amortised
cost
Fair value Amortised
cost using
the
effective
interest
method
(EIR)
No difference
3 Trade account
receivable/Adva
nce to supplier
(All account
receivable is
short maturity
and no state
interest)
Historic
al cost
Loan and
receivable –
amortised
cost
Fair value Amortised
cost using
the
effective
interest
method
(EIR)
The Gap:
- Account receivable
may be impaired
- Amortised cost may
differ historical cost
Procedure:
- Test impairment and
evaluate the amount of
account receivable
using amortised cost
(if any)
4 Other account
receivable
(Receivable
from customers
for provided
goods and
services )
Historic
al cost
Loan and
receivable –
amortised
cost
Fair value Amortised
cost using
the
effective
interest
method
(EIR)
The Gap and
procedure as Account
receivable above
5 Investment in
associates/Joint
-ventures
Historic
al cost
Out of
scope of
IAS 39
Out of
scope of
IAS 39
Out of
scope of
IAS 39
Refer to other IAS (IAS
28, IAS 31)
6 Other long-term
investment
(Contribute
capital to some
companies and
a project as a
Joint
Arrangement)
Historic
al cost
Out of
scope of
IAS 39
Out of
scope of
IAS 39
Out of
scope of
IAS 39

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7 Loan (Long-
term loan and
Current
proportion of
long-term loan)
-)
Historic
al cost
FL -
Amortised
cost
Fair value Amortised
cost using
the
effective
interest
method
(EIR)
The Gap:
- Initial measurement
may not be at FV
- Effective interest rate
differs interest rate on
loan
contract/convenants
The procedure
- Check the intial
record of this loan
- Subsequently
measure this loan
using EIR
8 Trade payable
(All trade
payable is short
maturity and no
state interest)
Historic
al cost
FL -
Amortised
cost
Fair value Amortised
cost using
the
effective
interest
method
(EIR)
All trade payable is
short maturity and no
state interest .
Therefore, no
difference in measure
under IFRS or under
VAS.
9 Accrued
expenses
Historic
al cost
FL -
Amortised
cost
Fair value Amortised
cost using
the
effective
interest
method
(EIR)
It is short-term accrual
payable without
interest implication. It
should be measured at
cost. Therefore, no
difference in measure
under IFRS or under
VAS.
10 Provision cost Historic
al cost
Out of
scope of
IAS 39
Out of
scope of
IAS 39
Out of
scope of
IAS 39
11 Owners'
contributed
capital
Historic
al cost
Equity
instruments
IAS 39 does not
address accounting for
equity instruments
issued by the reporting
enterprise but it does
deal with accounting
for financial liabilities,
classification of an
instrument as liability
or as equity is critical
There are no active
market or observable
to measure. These
items should be
measure at cost
There is a fund that
not probally settlement
by cash need to adjust
3276
13 Other funds Historic
al cost
Equity
instruments
Technical literature
1. Embedded derivatives
An embedded derivative is a feature within a contract, such that the cash flows associated with that
feature behave in a similar fashion to a stand-alone derivative. In the same way that derivatives must
be accounted for at fair value on the balance sheet with changes recognised in the income statement,
so must some embedded derivatives. IAS 39 requires that an embedded derivative be separated from
its host contract and accounted for as a derivative when: [IAS 39.11]
 the economic risks and characteristics of the embedded derivative are not closely related to
those of the host contract
 a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative, and
 the entire instrument is not measured at fair value with changes in fair value recognised in the
income statement
>> > At ABC there are no contracts with embedded derivatives.

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2. Classification of financial assets
For the purpose of measuring a financial asset after initial recognition, this Standard classifies financial
assets into the following four categories [IAS 39.45]
 Financial assets at fair value through profit or loss
 Available-for-sale financial assets
 Loans and receivables
 Held-to-maturity investments
>>> In ABC, financial instruments are not classified to measurement, therefore it is necessary to
classify and compute subsequent measurement of financial assets.
3. Classification of financial liabilities
IAS 39 recognises two classes of financial liabilities: [IAS 39.47]
 Financial liabilities at fair value through profit or loss
 Other financial liabilities measured at amortised cost using the effective interest method
>>> In ABC, there is only financial liabilities measured at amortised cost using the effective
interest method.
4. Initial measurement
Initially, financial assets and liabilities should be measured at fair value (including transaction costs, for
assets and liabilities not measured at fair value through profit or loss). [IAS 39.43]
>>> In ABC, all transaction costs were made up the cost of investment.
5. Measurement subsequent to initial recognition
Subsequently, financial assets and liabilities (including derivatives) should be measured at fair value,
with the following exceptions: [IAS 39.46-47]
 Loans and receivables, held-to-maturity investments, and non-derivative financial liabilities
should be measured at amortised cost using the effective interest method.
 Investments in equity instruments with no reliable fair value measurement (and derivatives
indexed to such equity instruments) should be measured at cost.
 Financial assets and liabilities that are designated as a hedged item or hedging instrument
are subject to measurement under the hedge accounting requirements of the IAS 39.
 Financial liabilities that arise when a transfer of a financial asset does not qualify for
derecognition, or that are accounted for using the continuing-involvement method, are subject
to particular measurement requirements.
>>> In ABC, all financial instruments were measured at cost, therefore it is necessary to evaluate the
appropriate to measure subsequently at cost or fair value and make adjustment.
6. IAS 39 fair value option [IAS 39.9]
IAS 39 permits entities to designate, at the time of acquisition or issuance, any financial asset or
financial liability to be measured at fair value, with value changes recognised in profit or loss.
>>> It is not applicable to ABC.

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7. Impairment [IAS 39.63]
A financial asset or group of assets is impaired, and impairment losses are recognised, only if there is
objective evidence as a result of one or more events that occurred after the initial recognition of the
asset. An entity is required to assess at each balance sheet date whether there is any objective
evidence of impairment.
>>> ABC has not tested impairment of financial instrument. But all receivable accounts and
investment classified under IAS 39 has not impaired.
8. Financial guarantees
A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.
[IAS 39.9]
>>> It is not applicable to ABC
9. Derecognition of a financial asset
The basic premise for the derecognition model in IAS 39 is to determine whether the asset under
consideration for derecognition is: [IAS 39.16]
 an asset in its entirety or
 specifically identified cash flows from an asset or
 a fully proportionate share of the cash flows from an asset or
 a fully proportionate share of specifically identified cash flows from a financial asset
>>> In ABC, there are no financial asset/financial liabilities that meet the conditions for derecognition
for FY 2012
10. Derecognition of a financial liability
A financial liability should be removed from the balance sheet when, and only when, it is extinguished,
that is, when the obligation specified in the contract is either discharged or cancelled or expires.
[IAS 39.39]
>>> In ABC, there are no financial asset/financial liabilities that meet the conditions for derecognition
for FY 2012
11. Hedge accounting [IAS 39.71]
>>> It is not applicable to ABC
Analysis
Accounting
Standards
• IFRS International Accounting Standard 39 (IAS 39)
Balance sheet • Recognise all financial instruments at cost
• Not perform test impairment
• Transaction cost of investment (measure at FVTPL) include in cost of
investment

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Income Statement • Not record impairment los s
Impact • The amount of financial assets and liabilities on balance sheet may be
fairly presented under IAS 39 rather than VAS.
• The amount of financial expense and income were fairly recorded.
To test measure of financial instruments we follow these steps:
- Obtain all information related to the instruments; company’s policies about financial instruments.
- Determine whether the applicable interest rate is market rate, if not, re-determine market rate to
fair value the instrument.
- Identify whether there is discount/premium, transaction fee, special payment structure leading to
the nominal interest rate be different from EIR for purpose of amortized cost application.
- Identify any potential embedded derivatives
- Identify those with indicators of specific impairment (such as: overdue , restructured, subject to
adverse information) to perform impairment test investment/account receivable.
In case of some available measures (Ex: independent model/guidance or the Company's itself) to
compute fair value, fair value was calculate base on whichever is more prudent.