IFRS 1• First-time adoption of International Financial Reporting Standards • If the first IFRS financial statements cover• IFRS 1 applies • two annual periods• --> only when an entity adopts IFRSs • ending December 31, 2009• --> first time • • Required financial statements:•• First IFRS financial statements • (1) opening statement of financial position (under IFRS)• --> first annual financial statements • --> at January 1, 2008 (date of transition to IFRSs)• --> (in which) •• --> an entity adopts IFRSs • (2) statement of financial position• • --> at December 31, 2009 and 2008• IF the first IFRS financial statements cover •• two annual periods • (3) statement of comprehensive income• ending December 31, 2009 • --> for the years ending December 31, 2009 and 2008 •• (comparative information is required by IAS 1) • (4) statement of changes in equity• • --> for the years ending December 31, 2009 and 2008• --> first IFRS reporting period •• = January 1, 2009 - December 31, 2009 • (5) statement of cash flows• • --> for the years ending December 31, 2009 and 2008• --> earliest period in IFRS financial statements •• = January 1, 2008 - December 31, 2008 • Opening IFRS statement of financial position:• •• --> date of transition to IFRSs • (1) recognises all assets and liabilities (required by IFRSs) • (2) does not recognise assets and liabilities (not permitted by IFRSs)• = beginning of the earliest period • (3) reclassifies assets, liabilities, and equity items (as required by IFRSs)• (in IFRS financial statements) • (4) measures assets and liabilities (as required by IFRSs)• = January 1, 2008 • • Adjustments • • --> from the transactions (before the date of transition to IFRSs) • --> due to different accounting policies under IFRS and previous GAAP • • --> recognised directly in retained earnings • --> at the date of transition to IFRSs
IFRS 2• Share-based Payment• Share-based payment transactions are recognized in the financial statements.• Three types:• (1) equity-settled share-based payment transactions• (2) cash-settled share-based payment transactions• (3) share-based payment transactions with a choice of settlement•• Equity-settled share-based payment transactions• --> increase in equity• (1) measured by fair value of goods or services• (2) if fair value of goods or services cannot be estimated reliably,• --> fair value of equity instruments is used• (3) fair value of equity instruments• --> based on market prices•• Cash-settled share-based payment transactions• --> increase in liability• (1) measured by fair value of liability•• Share-based payment transactions with a choice of settlement• (1) to the extent that a liability is incurred• --> treat as a cash-settled share-based payment transaction• (2) to the extent that no liability is incurred• --> treat as an equity-settled share-based payment transaction
IFRS 3• Business Combinations• Acquisition method for business combinations• One of the entities in business combination is identified as the acquirer.• Acquirer gains control of the acquiree.• Others have non-controlling interest in the acquiree.•• Assets acquired and liabilities assumed• --> measured at fair value on acquisition date•• If (1) > (2) --> paid more for goodwill• Goodwill = (1) - (2)• (1) Consideration paid to acquire net assets• (2) Fair value of net assets (assets - liabilities) acquired•• If (1) < (2) --> paid less, so gain• Gain on bargain purchase = (2) - (1)• (1) Consideration paid to acquire net assets• (2) Fair value of net assets (assets - liabilities) acquired•• Gain on bargain purchase• --> recognized in profit or loss (current period earnings)• --> on acquisition date
• Insurance Contracts IFRS 4 • Unbundling rules• What is an insurance contract? •• --> a contract • (Q1) can an insurer measure the deposit component separately?• --> the insurer accepts insurance risk • (Q2) do the insurers accounting policies require to• --> from the policyholder recognise• • all obligations and rights from the deposit component?• --> the insurer pays the policyholder• --> if the insured event affects the policyholder (adversely) • (1) if the answer to (Q1)=no,• • --> unbundling is prohibited• Deposit component •• --> if an insurance contract has both • (2) if the answer to (Q1)=yes,• (1) an insurance component • and the answer to (Q2)=yes,• and • --> unbundling is permitted,• (2) a deposit component, • --> but not required •• --> unbundling rules apply. • (3) if the answer to (Q1)=yes, • and the answer to (Q2)=no,• Liability adequacy test • --> unbundling is required• --> at the end of each reporting period, •• --> insurer assesses • Unbundling an insurance contract• --> whether insurance liabilities are adequate • --> insurer applies• (to cover the estimated future cash flows) • (1) IFRS 4 to the insurance component• • (2) IAS 39 to the deposit component• If the carrying amount of insurance liabilities• --> is inadequate,• --> recognise the (entire) deficiency in profit or loss
IFRS 5• Non-current Assets Held for Sale and Discontinued Operations• What is a disposal group of assets?• --> a group of assets• (1) to be disposed of• (2) together as a group• (3) in a single transaction•• Non-current assets (or disposal groups)• --> are classified as held for sale• if• --> carrying amount is expected to be recovered• (1) principally through a sale transaction• (2) not through continuing use•• Non-current assets (or disposal groups) classified as held for sale•• --> reported separately (from other assets)• in the statement of financial position•• Measurement•• Non-current assets (or disposal groups) held for sale are measured• --> at the lower of (1) and (2):• (1) carrying amount• (2) fair value less costs to sell
IFRS 5 cont• What is a discontinued operation? • Disclosure requirements • either in the notes or in the statement of comprehensive income• --> A component of an entity that • • --> an analysis of the sum of (1) and (2), from the previous disclosure requirement• (1) has been disposed of• or • (3) revenue, expenses and pre-tax profit or loss• (2) is classified as held for sale • of discontinued operations • (4) income tax expense related with (3)• --> and satisfies one of the following conditions: • (5) gain or loss recognised on (5a) or (5b):• (3) represents • (5a) the measurement to fair value less costs to sell• a separate major line of business or • (5b) the disposal of the assets (or disposal groups) of discontinued operation• geographical area of operations • (6) income tax expense related with (5) •• (4) is part of a single plan to dispose of • --> net cash flows of discontinued operations• a separate major line of business or • (attributable to the• geographical area of operations • operating, investing and financing activities)•• (5) is a subsidiary • --> the amount of income from continuing operations and• acquired exclusively for the purpose of resale • the amount of income from discontinued operations• • (attributable to the owners of the parent)• Disclosure requirement• in the statement of comprehensive income•• --> the sum of (1) and (2) is reported as a single amount• in the statement of comprehensive income•• (1) the profit or loss (post-tax basis)• of discontinued operations• (2) the gain or loss (post-tax basis) recognised on (2a) or (2b):• (2a) the measurement to fair value less costs to sell• (2b) the disposal of the assets (or disposal groups) of discontinued operation
IFRS 6• Exploration for and Evaluation of Mineral Resources • Revaluation model• What is an exploration and evaluation expenditure? • --> carrying amount• --> an expenditure incurred • = revalued amount• --> for the exploration and evaluation of •• --> mineral resources • Revalued amount• • = fair value at the date of revaluation• Such expenditures recognised as an asset • - subsequent accumulated depreciation• --> is called an exploration and evaluation asset • - subsequent accumulated impairment losses• •• Measurement at recognition • Exploration and evaluation assets• --> exploration and evaluation assets are measured • --> classified as tangible or intangible• --> at cost • --> reflecting the nature of assets• •• Measurement after recognition • Indication of impairment• --> choose one of the following models: • --> rules of IFRS 6 are different from those of IAS 36• (1) cost model •• (2) revaluation model • Impairment test• • --> rules of IAS 36 are applied• Cost model •• --> carrying amount • Recognition of impairment loss• = cost • --> rules of IAS 36 are applied• - accumulated depreciation• - accumulated impairment losses
IFRS 7• Financial Instruments: Disclosures • Part 1A: statement of financial position• Disclosures required by IFRS 7 help users evaluate: • 1A-1: categories of financial assets and financial liabilities• • 1A-2: financial assets and financial liabilities at fair value• (1) significance of financial instruments • 1A-3: reclassification• --> for performance and financial position • 1A-4: derecognition • 1A-5: collateral• (2) nature and extent of risks • 1A-6: allowance for credit losses• --> from financial instruments • 1A-7: compound financial instruments• • 1A-8: defaults and breaches• Part 1: Significance of financial instruments •• --> for performance and financial position • Part 1B: statement of comprehensive income• • 1B-1: income, expense, gains or losses• Part 1A: statement of financial position •• Part 1B: statement of comprehensive income • Part 1C: other disclosures• Part 1C: other disclosures • 1C-1: accounting policies• • 1C-2: hedge accounting• Part 2: Nature and extent of risks • 1C-3: fair value• --> from financial instruments •• • Part 2A: quantitative disclosures• Part 2A: quantitative disclosures • 2A-1: credit risk• Part 2B: qualitative disclosures • 2A-2: liquidity risk • 2A-3: market risk • • Part 2B: qualitative disclosures • 2B-1: exposures to risk • 2B-2: how to measure and manage the risk • 2B-3: changes in 2B-1, 2B-2
IFRS 8• Operating Segments • 75% Rule:• What is an operating segment?• --> a component of an entity with the following characteristics: • If total external revenue (of reported segments) < 75% of• entitys revenue• (1) discrete financial information is available • --> additional segments are reported• (2) engages in business activities (earns revenue, incurs • --> even if they do not meet 10% Rule expenses) •• (3) operating results are regularly reviewed • until total external revenue (of reported segments) ≥ 75% of• --> to assess performance entitys revenue• --> to make resource allocation decisions (to the segment) • • Information to be disclosed:• •• Quantitative thresholds (10% Rule): • (1) general information • (2) segment revenues, segment profit or loss,• (1) assets are 10% or more of the combined assets • segment assets, segment liabilities, basis of measurement• (2) revenue is 10% or more of the combined revenue • (3) reconciliations• (3) profit or loss (in absolute amount) is 10% or more of • (of the segment totals of following items)• the greater of (3a) and (3b), in absolute amount: • to corresponding entity amounts:• (3a) combined profit of all operating segments • segment revenues, segment profit or loss,• --> that did not report a loss • segment assets, segment liabilities, other material segment• (3b) combined loss of all operating segments items• --> that reported a loss •• • Entity-wide disclosures:• If an operating segment meets any of the quantitative thresholds, • (1) geographical areas• --> information about the operating segment • (2) major customers• --> is reported separately • (3) products and services
IFRS 9• Financial Instruments • Classification of financial assets• Structure of IFRS 9 •• • IFRS 9: 4.1• Recognition and derecognition • Financial assets are classified as one of the• Classification following:• Measurement • (1) Financial assets subsequently measured at• Recognition of financial assets amortised cost• • (2) Financial assets subsequently measured at• IFRS 9: 3.1.1 fair value• Financial assets are recognised when and only when •• --> the entity becomes a party to the contract • Fair value option• •• Recognition principles of financial assets were moved to IFRS • IFRS 9: 4.5 9: 3.1.1 • Entity has an option to designate financial assets• Recognition principles of financial assets did not change • --> as financial assets measured at fair value• through profit or loss (FVPL)• •• IAS 39.14 (Before the amendments by IFRS 9, November • Such a designation can be made 2009) • --> only at initial recognition• Financial assets and financial liabilities are recognised when • and and only when • --> only if it eliminates accounting• --> the entity becomes a party to the contract mismatch•• IAS 39.14 (After the amendments by IFRS 9, November 2009)• Financial liabilities are recognised when and only when• --> the entity becomes a party to the contract
IFRS 10• Consolidated Financial Statements (revised June 28, 2012)• Consolidated financial statements are prepared• --> when an entity controls other entities.•• Who prepares consolidated financial statements?• --> An entity that is a parent•• A parent is• --> an entity that controls other entities.•• A subsidiary is• --> an entity that is controlled by another entity.•• When does an investor control an investee?• --> When an investor has all of (1), (2) and (3).• (1) power to direct activities of the investee• (2) ability to use power to affect the returns• (3) exposure (or rights) to variable returns from the investment• Definition of control by IAS 27 before the revision in May 2011.• --> Control is the power to govern (A) to obtain benefits.• (A) the financial and operating policies of an entity•• A parent entity prepares consolidated financial statements• --> by applying uniform accounting policies• --> for like transactions•• Non-controlling interests are presented• --> withing equity• --> separately from the equity of (B)• (B) owners of the parent
IFRS 11• Joint Arrangements (revised June 28, 2012)• Joint arrangement is an arrangement• --> that is controlled jointly by two or more parties•• Joint control is contractually agreed sharing of control• --> of an arrangement• Types of joint arrangement• (1) joint operations• (2) joint venture•• Financial statements of a joint venturer• (1) Interest in a joint venture is recognised as an investment.• (2) Equity method is used to measure the investment• --> IAS 28 Investments in associates and joint ventures•• Financial statements of a joint operator• --> Recognise assets, liabilities, revenue, expenses• --> in relation to its interest in a joint operation.
IFRS 12• Disclosure of Interest in Other Entities (revised June 28, 2012)• IFRS 12 provides the guidance on the disclosure of information• --> about an entitys interests in• (1) subsidiaries• (2) joint agreements and associates• (3) unconsolidated structured entities•• IFRS 10 Consolidated Financial Statements• --> A parent entity prepares consolidated financial statements.•• IFRS 11 Joint Arrangements• --> A venturer applies equity method to the investment in a joint venture.•• Joint control is contractually agreed sharing of control• --> of an arrangement• Structured entity is an entity where• --> voting rights are not the dominant factor• --> to decide who controls the entity.•• An example of a structured entity:• --> Administrative tasks are determined by voting rights and• --> other activities are directed by contractual arrangements.
IFRS 13• Fair Value Measurement• Definition of fair value• Fair value of an asset is the price --> an entity would receive when an asset is sold --> in an orderly transaction -- > between market participants.• Fair value of a liability is the price --> an entity would pay when a liability is transferred --> in an orderly transaction --> between market participants.• (1) Fair value is an exit price. --> The price an entity would receive when an asset is sold. --> The price an entity would pay when a liability is transferred.• (2) Fair value is a market based measurement. --> Fair value is not an entity-specific measurement.• (3) Fair value is a price from an orderly transaction. --> A price from a transaction that is not orderly requires adjustments.• If an asset or a liability is initially measured at fair value --> and the transaction price is different from fair value, --> the difference is recognised in profit or loss.• Transaction price is --> the price an entity pays to acquire an asset or --> the price an entity receives to assume a liability.• Transaction price is an entry price. Fair value is an exit price.•