GLIMPSE OF A CPA'S MIND

Summary of IAS 19 Objective of IAS 19 Note: For the updated/ amended IAS 19 please click the link here . The objective of IAS 19 is to prescribe the accounting and disclosure for employee benefits (that is, all forms of consideration given by an entity in exchange for service rendered by employees). The principle underlying all of the detailed requirements of the Standard is that the cost of providing employee benefits should be recognised in the period in which the benefit is earned by the employee, rather than when it is paid or payable. Scope IAS 19 applies to (among other kinds of employee benefits): wages and salaries compensated absences (paid vacation and sick leave) profit sharing plans bonuses medical and life insurance benefits during employment housing benefits free or subsidised goods or services given to employees pension benefits post-employment medical and life insurance benefits long-service or sabbatical leave 'jubilee' benefi

Summary of IAS 18 Objective of IAS 18 The objective of IAS 18 is to prescribe the accounting treatment for revenue arising from certain types of transactions and events. Key definition Revenue: the gross inflow of economic benefits (cash, receivables, other assets) arising from the ordinary operating activities of an entity (such as sales of goods, sales of services, interest, royalties, and dividends). [IAS 18.7] Measurement of revenue Revenue should be measured at the fair value of the consideration received or receivable. [IAS 18.9] An exchange for goods or services of a similar nature and value is not regarded as a transaction that generates revenue. However, exchanges for dissimilar items are regarded as generating revenue. [IAS 18.12] If the inflow of cash or cash equivalents is deferred, the fair value of the consideration receivable is less than the nominal amount of cash and cash equivalents to be received, and discounting is appropriate. This

Summary of IAS 18 Objective of IAS 18 The objective of IAS 18 is to prescribe the accounting treatment for revenue arising from certain types of transactions and events. Key definition Revenue: the gross inflow of economic benefits (cash, receivables, other assets) arising from the ordinary operating activities of an entity (such as sales of goods, sales of services, interest, royalties, and dividends). [IAS 18.7] Measurement of revenue Revenue should be measured at the fair value of the consideration received or receivable. [IAS 18.9] An exchange for goods or services of a similar nature and value is not regarded as a transaction that generates revenue. However, exchanges for dissimilar items are regarded as generating revenue. [IAS 18.12] If the inflow of cash or cash equivalents is deferred, the fair value of the consideration receivable is less than the nominal amount of cash and cash equivalents to be received, and discounting is appropriate. This

Summary of IAS 17 Objective of IAS 17 The objective of IAS 17 (1997) is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosures to apply in relation to finance and operating leases. Scope IAS 17 applies to all leases other than lease agreements for minerals, oil, natural gas, and similar regenerative resources and licensing agreements for films, videos, plays, manuscripts, patents, copyrights, and similar items. [IAS 17.2] However, IAS 17 does not apply as the basis of measurement for the following leased assets: [IAS 17.2] property held by lessees that is accounted for as investment property for which the lessee uses the fair value model set out in IAS 40 investment property provided by lessors under operating leases (see IAS 40) biological assets held by lessees under finance leases (see IAS 41) biological assets provided by lessors under operating leases (see IAS 41) Classification of leases A lease is classified

IAS 16 Property, Plant and Equipment outlines the accounting treatment for most types of property, plant and equipment. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over its useful life. IAS 16 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005. History of IAS 16 August 1980 Exposure Draft E18 Accounting for Property, Plant and Equipment in the Context of the Historical Cost System March 1982 IAS 16 Accounting for Property, Plant and Equipment 1 January 1983 Effective date of IAS 16 (1982) May 1992 Exposure Draft E43 Property, Plant and Equipment December 1993 IAS 16 Accounting for Property, Plant and Equipment (revised as part of the 'Comparability of Financial Statements' project) 1 January 1995 Effective date of IAS 16 (1993) Property,

Summary of IAS 15 In October 1989 IAS 15 Was Made Optional In October 1989, the IASC issued a Board Statement making IAS 15 optional, not mandatory. IASC granted that exemption because of the failure to reach an international consensus on the disclosure of information reflecting the effects of changing prices. However, enterprises are encouraged to disclose information reflecting the effects of changing prices and, where they do so, to disclose the items required by IAS 15. In December 2003, the IASB withdrew IAS 15 as part of its Improvements Project , effective 1 January 2005. Objective of IAS 15 The objective of IAS 15 is to specify disclosures reflecting the effects of changing prices on the measurements used in the determination of an enterprise's results of operations and its financial position. Applicability IAS 15 applies to enterprises whose levels of revenue, profit, assets or employment are significant in the economic environment

Summary of IAS 14 Objective of IAS 14 The objective of IAS 14 (Revised 1997) is to establish principles for reporting financial information by line of business and by geographical area. It applies to entities whose equity or debt securities are publicly traded and to entities in the process of issuing securities to the public. In addition, any entity voluntarily providing segment information should comply with the requirements of the Standard. Applicability IAS 14 must be applied by entities whose debt or equity securities are publicly traded and those in the process of issuing such securities in public securities markets. [IAS 14.3] If an entity that is not publicly traded chooses to report segment information and claims that its financial statements conform to IFRSs, then it must follow IAS 14 in full. [IAS 14.5] Segment information need not be presented in the separate financial statements of a (a) parent, (b) subsidiary, (c) equity method associate, or (d) equi

Summary of IAS 12 Objective of IAS 12 The objective of IAS 12 (1996) is to prescribe the accounting treatment for income taxes. Key definitions [IAS 12.5] Temporary difference: a difference between the carrying amount of an asset or liability and its tax base. Taxable temporary difference: a temporary difference that will result in taxable amounts in the future when the carrying amount of the asset is recovered or the liability is settled. Deductible temporary difference: a temporary difference that will result in amounts that are tax deductible in the future when the carrying amount of the asset is recovered or the liability is settled. Current tax Current tax for the current and prior periods is recognised as a liability to the extent that it has not yet been settled, and as an asset to the extent that the amounts already paid exceed the amount due. [IAS 12.12] The benefit of a tax loss which can be carried back to recover current tax of a prior per

Summary of IAS 11 Objective of IAS 11 The objective of IAS 11 is to prescribe the accounting treatment of revenue and costs associated with construction contracts. What is a construction contract? A construction contract is a contract specifically negotiated for the construction of an asset or a group of interrelated assets. [IAS 11.3] Under IAS 11, if a contract covers two or more assets, the construction of each asset should be accounted for separately if (a) separate proposals were submitted for each asset, (b) portions of the contract relating to each asset were negotiated separately, and (c) costs and revenues of each asset can be measured. Otherwise, the contract should be accounted for in its entirety. [IAS 11.8] Two or more contracts should be accounted for as a single contract if they were negotiated together and the work is interrelated. [IAS 11.9] If a contract gives the customer an option to order one or more additional assets, construction of each ad