2. 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
3. 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
4. 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
5. • 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 insurer's 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
6. 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
7. 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
8. 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
9. 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
10. 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
• entity's 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 entity's 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
11. 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
12. 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
13. 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.
14. IFRS 12
• Disclosure of Interest in Other Entities (revised June 28, 2012)
• IFRS 12 provides the guidance on the disclosure of information
• --> about an entity's 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.
15. 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.
•
