IFRS Summaries

8/13/2019 IFRS Summaries

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What is IFRS & ITS IMPORTANCE

International Financial Reporting Standards (IFRS) is a set of accounting standards,

developedbythe InternationalAccountingStandardsBoard(IASB)that isbecomingthe

globalstandardforthepreparationofpubliccompanyfinancialstatements.The IASB is

anindependentaccountingstandardsbody,basedinLondon.

THEPURPOSEOFIFRS

While converting to IFRS is a complex process, these standards have important and

positiveimplicationsfororganizationsandindividualsthatadoptthem

1. Forcompanies: reduced cost of capital and the ease of using one consistent reporting

standardfromsubsidiariesinmanydifferentcountries.

2. For investors: better information for decision making, leading to broader investment

opportunities.

3. For national regulatory bodies: better information for market participants in a

disclosurebasedsystem.

IMPORTANCEOFIFRS

TheobjectivebehindtheIFRSistomakeacommonplatformforbetterunderstandingof

accounting,internationally. Synchronizationofaccountingstandardsacrosstheglobeis

gaining importance day by dayasbusinesses are crossing their nationalboundaries. By

adopting IFRS, a business can present its financial statements on the same basis as its

foreign competitors, making comparisons easier. Furthermore, companies with

subsidiaries incountriesthatrequireorpermit IFRSmaybeabletouseoneaccounting

language

companywide.

Companies

also

may

need

to

convert

to

IFRS

if

they

are

a

subsidiaryofaforeigncompanythatmustuseIFRS,oriftheyhaveaforeigninvestorthat

must use IFRS. Its goal is to create comparable, reliable, and transparent financial

statementsthatwillfacilitategreatercrossbordercapitalraisingandtrade.


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ITSTIMETOLEARNIFRS

ICAIhasannouncedconvergencetoIFRSby2011whichisnotfaraway,sincefirmswould

needtostartpreparingthemselvesrightnowtoadoptthischange.

Itistimetoprepareforthechange,whichwillbringsubstantialandsignificantbusiness

transfiguration. Like inothercountriessuchasAustralia,NewZealandandcountries in

the European Union, the IFRSs will be adopted for the listed entities and other public

interestentitiessuchasbanks,insurancecompaniesandlargesizedentities.

More than12,000companies inalmost100nationshaveadopted IFRS, including listed

companies in the European Union. Some estimate that the number of countries

requiring or accepting IFRS could grow to 150 in the next few years. Other countries,

suchasJapanandMexico,haveplanstoconverge(eliminatesignificantdifferences)their

national

standards.

The

convergence

with

IFRS

is

an

important

decision

for

all

the

countriesstandingwithopenarmstowelcomenewbusinessfromallovertheworld.

The quicker the country's business organizations will move to working within this

framework,thequickertheinvestmentwillflowintotheirbusinesses.Inanincreasingly

competitivearena, thosewithout IFRS, looking for investment,have tostruggleagainst

thosethathavealreadytakenthewisedecisiontoenteredintotheframework.

So,let'sprepareourbusinessesforthisinevitableandfavorablechange,beforeitistoo

late.

IFRS1FIRSTTIMEADOPTIONOF

INTERNATIONALFINANCIALREPORTING

STANDARDS

1. Theobjective

of

this

IFRS

is

that

an

entitys

first

IFRS

financial

statements,

and

its

interim

financial reports for part of the period covered by those financial statements, contain

highqualityinformationthat:

a. istransparentforusersandcomparableoverallperiodspresented;

b. providesasuitablestartingpointforaccountingunder InternationalFinancialReporting

Standards(IFRSs);


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b. cashsettled sharebased payment transactions, in which the entity acquires goods or

servicesbyincurringliabilitiestothesupplierofthosegoodsorservicesforamountsthat

arebasedontheprice(orvalue)oftheentityssharesorotherequityinstrumentsofthe

entity;

c. transactionsin

which

the

entity

receives

or

acquires

goods

or

services

and

the

terms

of

thearrangementprovideeithertheentityorthesupplierofthosegoodsorserviceswith

a choice of whether the entity settles the transaction in cash or by issuing equity

instruments.

FOREQUITYSETTLEDSHAREBASEDPAYMENTTRANSACTIONS,

1. The IFRS requires an entity to measure the goods or services received, and the

corresponding increase in equity, directly, at the fair value of the goods or services

received,unlessthatfairvaluecannotbeestimatedreliably.

2. Iftheentitycannotestimatereliablythefairvalueofthegoodsorservicesreceived,theentity is required to measure their value, and the corresponding increase in equity,

indirectly,byreferencetothefairvalueoftheequityinstrumentsgranted.

FORCASHSETTLEDSHAREBASEDPAYMENTTRANSACTIONS

1. The IFRS requires an entity to measure the goods or services acquired and the liability

incurredatthefairvalueoftheliability.Untiltheliabilityissettled,theentityisrequired

to remeasure the fair value of the liability at each reporting date and at the date of

settlement,with

any

changes

in

value

recognized

in

profit

or

loss

for

the

period.

FORSHAREBASEDPAYMENTTRANSACTIONS

1. The terms of the arrangement provide either the entity or the supplier of goods or

serviceswithachoiceofwhethertheentitysettlesthetransaction incashorby issuing

equityinstruments,theentityisrequiredtoaccountforthattransaction.

IFRSDISCLOSURES:

a. the nature and extent of sharebased payment arrangements that existed during the

period;

b. how the fair value of the goods or services received, or the fair value of the equity

instrumentsgranted,duringtheperiodwasdetermined;

c. the effect of sharebased payment transactions on the entitys profit or loss for the

periodandonitsfinancialposition.


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IFRS 3 BUSINESS COMBINATIONS

Theobjectiveistoenhancetherelevance,reliabilityandcomparabilityoftheinformation

thatanentityprovides in its financialstatementsaboutabusinesscombinationand its

effects.

PRINCIPLE

Anacquirerofabusinessrecognizestheassetsacquiredand liabilitiesassumedattheir

acquisitiondatefairvaluesanddiscloses informationthatenablesuserstoevaluatethe

natureandfinancialeffectsoftheacquisition.

APPLYINGTHEACQUISITIONMETHOD

1. A business combination must be accounted for by applying the acquisition method,

unlessitisacombinationinvolvingentitiesorbusinessesundercommoncontrol.Oneof

thepartiestoabusinesscombinationcanalwaysbeidentifiedastheacquirer,beingthe

entitythatobtainscontroloftheotherbusiness(theacquiree).

2. The IFRS establishes principles for recognizing and measuring the identifiable assets

acquired, the liabilities assumed and any noncontrolling interest in the acquiree. Any

classifications or designations made in recognizing these items must be made in

accordance with the contractual terms, economic conditions, acquirers operating or

accountingpoliciesandotherfactorsthatexistattheacquisitiondate.

3. a.Eachidentifiableassetandliabilityismeasuredatitsacquisitiondatefairvalue.

b. Any noncontrolling interest in an acquiree is measured at fair value or as the non

controllinginterestsproportionateshareoftheacquireesnetidentifiableassets.

IFRSEXCEPTIONS

a. Leases and insurance contracts are required to be classified on the basis of the

contractualterms.

b. Contingentliabilities

that

are

apresent

obligation.

c. Specialrequirementsformeasuringareacquiredright.

d. Indemnificationassetsarerecognizedandmeasuredonabasisthatisconsistentwiththe

itemthatissubjecttotheindemnification,evenifthatmeasureisnotfairvalue.


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DISCLOSURE

a. Requires the acquirer to disclose information that enables users of its financial

statements

to

evaluate

the

nature

and

financial

effect

of

business

combinations

that

occurredduringthecurrentreportingperiodorafterthereportingdatebutbeforethe

financialstatementsareauthorisedforissue.

b. Afterabusinesscombination,theacquirermustdiscloseanyadjustmentsrecognised in

the current reporting period that relate to business combinations that occurred in the

currentorpreviousreportingperiods.

IFRS 4 INSURANCE CONTRACTS

1. TheobjectiveofthisIFRSrequires:

a. limitedimprovementstoaccountingbyinsurersforinsurancecontracts.

b. disclosure that identifies and explains the amounts in an insurers financial statements

arising from insurance contracts and helps users of those financial statements

understand the amount, timing and uncertainty of future cash flows from insurance

contracts.

2. TheIFRS

applies

to

all

insurance

contracts

(including

reinsurance

contracts)

that

an

entity

issuesandtoreinsurancecontractsthat itholds,exceptforspecifiedcontractscovered

by other IFRSs. It does not apply to other assets and liabilities of an insurer, such as

financialassetsandfinancialliabilitieswithinthescopeofIAS39

3. Exempts an insurer temporarily from some requirements of other IFRSs, including the

requirement to consider the Framework in selecting accounting policies for insurance

contracts.However,theIFRS:

a. prohibitsprovisions

for

possible

claims

under

contracts

that

are

not

in

existence

at

the

endofthereportingperiod

b. requiresatestfortheadequacyofrecognizedinsuranceliabilitiesandanimpairmenttest

forreinsuranceassets


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c. requiresaninsurertokeepinsuranceliabilitiesinitsstatementoffinancialpositionuntil

they are discharged or cancelled, or expire, and to present insurance liabilities without

offsettingthemagainstrelatedreinsuranceassets.

4. IFRSpermitsaninsurertochangeitsaccountingpoliciesforinsurancecontractsonlyif,as

a result, its financial statements present information that is more relevant and no less

reliable,ormorereliableandnolessrelevant.

5. IFRS permits the introduction of an accounting policy that involves remeasuring

designated insurance liabilities consistently in each period to reflect current market

interestrates.

6. TheIFRSrequiresdisclosuretohelpusersunderstand:

a. theamountsintheinsurersfinancialstatementsthatarisefrominsurancecontracts.

b. theamount,timinganduncertaintyoffuturecashflowsfrominsurancecontracts.

IFRS 5 NONCURRENT ASSETS HELD

FOR SALE AND DISCONTINUED

OPERATIONS

1. Theobjective is tospecify theaccounting forassetsheldforsale,and thepresentation

anddisclosureofdiscontinuedoperations.Inparticular,theIFRSrequires:

a. assetsthatmeetthecriteriatobeclassifiedasheldforsaletobemeasuredatthelower

of carrying amount and fair value less costs to sell, and depreciation on such assets to

cease;and

b. assetsthatmeetthecriteriatobeclassifiedasheldforsaletobepresentedseparatelyin

the

statement

of

financial

position

and

the

results

of

discontinued

operations

to

be

presentedseparatelyinthestatementofcomprehensiveincome.

2. IFRS:

a. adoptstheclassificationheldforsale.

b. introducesconceptofdisposalgroup,beingagroupofassetstobedisposedof,bysaleor

otherwise,togetherasagroupinsingletransaction,&liabilitiesdirectlyassociatedwith

thoseassetsthatwillbetransferredintransaction.


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c. classifiesanoperationasdiscontinuedatthedatetheoperationmeetsthecriteriatobe

classifiedasheldforsaleorwhentheentityhasdisposedoftheoperation.

3. An entity shall classify a noncurrent asset (or disposal group) as held for sale if its

carrying amount will be recovered principally through a sale transaction rather than

throughcontinuing

use.

4. Forthistobethecase,theasset(ordisposalgroup)mustbeavailableforimmediatesale

in itspresentconditionsubjectonly to terms thatare usualandcustomary for salesof

such assets (or disposal groups) and its sale must be highly probable.

Adiscontinuedoperation isacomponentofanentitythateitherhasbeendisposedof,

orisclassifiedasheldforsale

5. A component of an entity comprises operations and cash flows that can be clearly

distinguished, operationally and for financial reporting purposes, from the rest of the

entity.Inotherwords,acomponentofanentitywillhavebeenacashgeneratingunitor

agroup

of

cash

generating

units

while

being

held

for

use.

IFRS 6 EXPLORATION FOR AND

EVALUATION OF MINERAL

RESOURCES

1. Theobjective

is

to

specify

the

financial

reporting

for

the

exploration

for

and

evaluation

of

mineralresources.

2. Exploration and evaluation expenditures are expenditures incurred by an entity in

connection with the exploration for and evaluation of mineral resources before the

technical feasibility and commercial viability of extracting a mineral resource are

demonstrable.

3. Exploration and evaluation assets are exploration and evaluation expenditures

recognizedasassetsinaccordancewiththeentitysaccountingpolicy.IFRS:

a. permitsan

entity

to

develop

an

accounting

policy

for

exploration

and

evaluation

assets

withoutspecificallyconsideringtherequirementsofparagraphs11and12ofIAS8.

b. requiresentitiesrecognizingexplorationandevaluationassetstoperformanimpairment

teston thoseassetswhenfactsandcircumstancessuggest thatthecarryingamountof

theassetsmayexceedtheirrecoverableamount.


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4. Anentityshalldetermineanaccountingpolicyforallocatingexplorationandevaluation

assets to cashgenerating units or groups of cashgenerating units for the purpose of

assessing such assets for impairment. Each cashgenerating unit or group of units to

which an exploration and evaluation asset is allocated shall not be larger than an

operatingsegment

determined

in

accordance

with

IFRS

8Operating

Segments.

5. Exploration and evaluation assets shall be assessed for impairment when facts and

circumstances suggest that the carrying amountofanexploration andevaluation asset

may exceed its recoverable amount. When facts and circumstances suggest that the

carryingamountexceedstherecoverableamount,anentityshallmeasure,presentand

discloseanyresultingimpairmentlossinaccordancewithIAS36.

6. Anentityshalldisclose informationthat identifiesandexplainstheamountsrecognised

in its financial statements arising from the exploration for and evaluation of mineral

resources.

IFRS 7 FINANCIAL INSTRUMENTS:

DISCLOSURES

1.

The

objective

enable

users

to

evaluate:

a. the significance of financial instruments for the entitys financial position and

performance;and

b. the nature and extent of risks arising from financial instruments to which the entity is

exposed during the period and at the end of the reporting period, and how the entity

managesthoserisks.

2. TheIFRSappliestoallentities,includingentitiesthathavefewfinancialinstrumentsand

thosethathavemanyfinancialinstruments.

3. WhenthisIFRSrequiresdisclosuresbyclassoffinancialinstrument,anentityshallgroup

financialinstruments

into

classes

that

are

appropriate

to

the

nature

of

the

information

disclosedandthattakeintoaccountthecharacteristicsofthosefinancialinstruments.

4. The principles in this IFRS complement the principles for recognising, measuring and

presenting financial assets and financial liabilities in IAS 32 Financial Instruments:

PresentationandIAS39FinancialInstruments:RecognitionandMeasurement.


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IFRS 8 OPERATING SEGMENTS

1. Core

principleAn

entity

shall

disclose

information

to

enable

users

of

its

financial

statementstoevaluatethenatureandfinancialeffectsofthebusinessactivitiesinwhich

itengagesandtheeconomicenvironmentsinwhichitoperates.IFRSshallapplyto:

a. theseparateorindividualfinancialstatementsofanentity:

i. whose debtorequity instrumentsare traded inapublicmarket (a domestic or foreign

stockexchangeoranoverthecountermarket,includinglocalandregionalmarkets),or

ii. that files, or is in the process of filing, its financial statements with a securities

commission or other regulatory organization for the purpose of issuing any class of

instrumentsinapublicmarket;and

b. theconsolidatedfinancialstatementsofagroupwithaparent:

i. whose debtorequity instrumentsare traded inapublicmarket (a domestic or foreign

stockexchangeoranoverthecountermarket,includinglocalandregionalmarkets),or

ii. that files, or is in the process of filing, the consolidated financial statements with a

securities commission or other regulatory organization for the purpose of issuing any

classofinstrumentsinapublicmarket.

2. TheIFRSspecifieshowanentityshouldreportinformationaboutitsoperatingsegments

in annual financial statements and, as a consequential amendment to IAS 34 Interim

FinancialReporting,requiresanentitytoreportselectedinformationaboutitsoperatingsegmentsininterimfinancialreports.

3. The IFRS requires an entity to report financial and descriptive information about its

reportable segments. Reportable segments are operating segments or aggregations of

operatingsegmentsthatmeetspecifiedcriteria.Operatingsegmentsarecomponentsof

an entity about which separate financial information is available that is evaluated

regularlybythechiefoperatingdecisionmakerindecidinghowtoallocateresourcesand

inassessingperformance?

4. TheIFRS

requires

an

entity

to

report

ameasure

of

operating

segment

profit

or

loss

and

of

segmentassets. Italsorequiresanentitytoreportameasureofsegment liabilitiesand

particularincomeandexpenseitemsifsuchmeasuresareregularlyprovidedtothechief

operating decision maker. It requires reconciliations of total reportable segment

revenues, total profit or loss, total assets, liabilities and other amounts disclosed for

reportablesegmentstocorrespondingamountsintheentitysfinancialstatements.


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5. The IFRS requires an entity to report information about the revenues derived from its

productsorservices(orgroupsofsimilarproductsandservices),aboutthecountries in

which it earns revenues and holds assets, and about major customers, regardless of

whetherthatinformationisusedbymanagementinmakingoperatingdecisions.

6. The IFRS also requires an entity to give descriptive information about the way the

operating segments were determined, the products and services provided by the

segments, differences between the measurements used in reporting segment

information and those used in the entitys financial statements, and changes in the

measurementofsegmentamountsfromperiodtoperiod.

IAS 1 PRESENTATION OF

FINANCIAL STATEMENTS

This Standard prescribes the basis for presentation of general purpose financial

statements to ensure comparability both with the entitys financial statements of

previous periods and with the financial statements of other entities. It sets out overall

requirementsforthepresentationoffinancialstatements,guidelinesfortheirstructure

andminimumrequirementsfortheircontent.

Acomplete

set

of

financial

statements

comprises:

(a) astatementoffinancialpositionasattheendoftheperiod;

(b) astatementofcomprehensiveincomefortheperiod;

(c) astatementofchangesinequityfortheperiod;

(d) astatementofcashflowsfortheperiod;

(e) notes,comprisingasummaryofsignificantaccounting policiesandother

explanatoryinformation;and

(f) a statement of financial position as at the beginning of the earliest

comparativeperiod

when

an

entity

applies

an

accounting

policy

retrospectively or makes a retrospective restatement of items in it s financial

statements,or whenit reclassifiesitemsinitsfinancialstatements.

An entity whose financial statements comply with IFRSs shall make an explicit and

unreserved statement of such compliance in the notes. An entity shall not describe


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financial statements as complying with IFRSs unless they comply with all the

requirements of IFRSs. The application of IFRSs, with additional disclosure when

necessary, is presumed to result in financial statements that achieve a fair

presentation.

When preparing financial statements, management shall make an assessment of an

entitys ability to continue as a going concern. An entity shall prepare financial

statementsonagoingconcernbasisunlessmanagementeitherintendstoliquidatethe

entity or to cease trading, or has no realistic alternative but to do so. When

management is aware, in making its assessment, of material uncertainties related to

events or conditions that may cast significant doubt upon the entitys ability to

continueasagoingconcern,theentityshalldisclosethoseuncertainties.

An entity shall present separately each material class of similar items. An entity shall

presentseparately itemsofadissimilarnatureorfunctionunlesstheyare immaterial.

Anentityshallnotoffsetassetsandliabilitiesorincomeandexpenses,unlessrequired

orpermittedbyanIFRS.

An entity shall present a complete set of financial statements (including comparative

information)atleastannually.

IAS 2 INVENTORIES

TheobjectiveofthisStandardistoprescribetheaccountingtreatmentforinventories.

Aprimaryissueinaccountingforinventoriesistheamountofcosttoberecognisedas

anasset andcarried forwarduntil therelatedrevenuesarerecognised.This Standard

provides guidance on the determination of cost and its subsequent recognition as an

expense, includinganywritedowntonetrealizablevalue. Italsoprovidesguidance

onthe

cost

formulas

that

are

used

to

assign

costs

to

inventories.

Inventories shall be measured at the lower of cost and net realizable value.

Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusinessless

theestimatedcostsofcompletionandtheestimatedcostsnecessarytomakethesale.


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The cost of inventories shall comprise all costs of purchase, costs of conversion and

othercostsincurredinbringingtheinventoriestotheirpresentlocationandcondition.

The cost of inventories shall be assigned by using the firstin, firstout (FIFO) or

weighted

average

cost

formula.

An

entity

shall

use

the

same

cost

formula

for

all

inventories having a similar nature and use to the entity. For inventories with a

differentnatureoruse,differentcostformulasmaybejustified.However,thecostof

inventories of items that are not ordinarily interchangeable and goods or services

produced and segregated for specific projects shall be assigned by using specific

identificationoftheirindividualcosts.

When inventories are sold, the carrying amount of those inventories shall be

recognisedasanexpense in theperiod inwhich therelatedrevenue isrecognised.

Theamount

of

any

write

down

of

inventories

to

net

realizable

value

and

all

losses

of

inventories shall be recognised as an expense in the period the writedown or loss

occurs. The amount of any reversal of any writedown of inventories, arising from an

increase in net realizable value, shall be recognised as a reduction in the amount of

inventoriesrecognisedasanexpenseintheperiodinwhichthereversaloccurs.IAS 8 ACCOUNTING POLICIES,

CHANGES IN ACCOUNTING

ESTIMATES AND ERRORS

The objective of this Standard is to prescribe the criteria for selecting and changing

accountingpolicies,togetherwiththeaccountingtreatmentanddisclosureofchanges

in accounting policies, changes in accounting estimates and corrections of errors.

The

Standard

is

intended

to

enhance

the

relevance

and

reliability

of

an

entitys

financialstatementsandthecomparabilityofthosefinancialstatementsovertimeand

withthefinancialstatementsofotherentities.


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Accountingpolicies

Accountingpolicies are the specific principles, bases, conventions, rules and practices

applied by an entity in preparing and presenting financial statements. When an IFRS

specificallyapplies

to

atransaction,

other

event

or

condition,

the

accounting

policy

or

policiesapplied to that item shallbedetermined by applying the IFRS and considering

anyrelevantImplementationGuidanceissuedbytheIASBfortheIFRS.

In the absence of a Standard or an Interpretation that specifically applies to a

transaction, other event or condition, management shall use its judgement in

developing and applying an accounting policy that results in information that is

relevant and reliable. In making the judgement management shall refer to, and

considertheapplicabilityof,thefollowingsourcesindescendingorder:

(a) the requirements and guidance in IFRSs dealing with similar and related issues;

and

(b) the definitions, recognition criteria and measurement concepts for assets,

liabilities,incomeandexpensesintheFramework.

An entity shall select and apply its accounting policies consistently for similar

transactions, other events and conditions, unless an IFRS specifically requires or

permits categorisation of items for which different policies may be appropriate. If an

IFRS requires or permits such categorisation, an appropriate accounting policy shall

be

selected

and

applied

consistently

to

each

category.

Anentityshallchangeanaccountingpolicyonlyifthechange:

(a) isrequiredbyanIFRS;or

(b) results in the financial statements providing reliable and more relevant information

abouttheeffectsoftransactions,othereventsorconditionsontheentitysfinancial

position,financialperformanceorcashflows.

An entity shall account for a change in accounting policy resulting from the initial

applicationofanIFRSinaccordancewiththespecifictransitionalprovisions,ifany,in

thatIFRS.

When

an

entity

changes

an

accounting

policy

upon

initial

application

of

an

IFRS that does not include specific transitional provisions applying to that change, or

changes an accounting policy voluntarily, it shall apply the change retrospectively.

However, a change in accounting policy shall be applied retrospectively except to the

extent that it is impracticable to determine either the periodspecific effects or the

cumulativeeffectofthechange.


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Changeinaccountingestimate

(c) Theuse

of

reasonable

estimates

is

an

essential

part

of

the

preparation

of

financial

statementsanddoesnotunderminetheirreliability.Achangeinaccountingestimate

isanadjustmentofthecarryingamountofanassetoraliability,ortheamountofthe

periodic consumption of an asset, that results from the assessment of the present

status of, and expected future benefits and obligations associated with, assets and

liabilities. Changes in accounting estimates result from new information or new

developmentsand,accordingly,arenotcorrectionsoferrors.Theeffectofachange

inanaccountingestimate,shallberecognisedprospectivelybyincludingitinprofitor

lossin:

(a) theperiodofthechange,ifthechangeaffectsthatperiodonly;or

(b)

the

period

of

the

change

and

future

periods,

if

the

change

affects

both.

Priorperioderrors

Prior period errors are omissions from, and misstatements in, the entitys financial

statements for one or more prior periods arising from a failure to use, or misuse of,

reliableinformationthat:

(a) was available when financial statements for those periods were authorised

for issue;and

(b) could reasonably be expected to have been obtained and taken into account in

thepreparation

and

presentation

of

those

financial

statements.

Such errors include the effects of mathematical mistakes, mistakes in applying

accountingpolicies,oversightsormisinterpretationsoffacts,andfraud.

Except to the extent that it is impracticable to determine either the periodspecific

effects or the cumulative effect of the error, an entity shall correct material prior

period errors retrospectively in the first set of financial statements authorised for issue

aftertheirdiscoveryby:

(a) restatingthecomparativeamountsforthepriorperiod(s)presentedinwhichthe

erroroccurred;or

(b) ifthe erroroccurredbeforethe earliest priorperiodpresented,restatingthe

opening balances of assets, liabilities and equity for the earliest prior period

presented.


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Omissions or misstatements of items are material if they could, individually or

collectively, influence the economic decisions of users taken on the basis of the

financialstatements.

IAS 10 Events after the Reporting

Period

TheobjectiveofthisStandardistoprescribe:

(a) when an entity should adjust its financial statements for events after the

reportingperiod;and

(b) the disclosures that an entity should give about the date when the

financial statements were authorized for issue and about events after the reporting

period.

TheStandardalsorequiresthatanentityshouldnotprepareitsfinancialstatementson

a going concern basis if events after the reporting period indicate that the going

concernassumptionisnotappropriate.

Events after the reportingperiod are those events, favourable and unfavourable, that

occur

between

the

end

of

the

reporting

period

and

the

date

when

the

financial

statementsareauthorizedforissue.Twotypesofeventscanbeidentified:

(a) those that provide evidence of conditions that existed at the end of the

reportingperiod(adjustingeventsafterthe reportingperiod);and

(b) thosethatareindicativeofconditionsthataroseafterthereportingperiod(nonadjustingeventsafterthereporting period).

An entity shall adjust the amounts recognised in its financial statements to reflect

adjustingevents

after

the

reporting

period.

Anentityshallnotadjusttheamountsrecognised in itsfinancialstatementstoreflect

nonadjusting events after the reporting period. If nonadjusting events after the

reporting period are material, nondisclosure could influence the economic decisions

of users taken on the basis of the financial statements. Accordingly, an entity shall


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disclose the following for each material category of nonadjusting event after the

reportingperiod:

(a) thenatureoftheevent;and

(b) anestimate

of

its

financial

effect,

or

astatement

that

such

an

estimate

cannot

be

made.

If an entity receives information after the reporting period about conditions that

existed at theend of the reporting period, itshall update disclosures thatrelate to

thoseconditions,inthelightofthenewinformation.

IAS 16 PROPERTY, PLANT AND

EQUIPMENT

TheobjectiveofthisStandardistoprescribetheaccountingtreatmentforproperty,

plantandequipmentsothatusersofthefinancialstatementscandiscern information

aboutanentitysinvestmentinitsproperty,plantandequipmentandthechangesin

such investment. The principal issues in accounting for property, plant and equipment

are the recognition of the assets, the determination of their carrying amounts and the

depreciationcharges

and

impairment

losses

to

be

recognised

in

relation

to

them.

Property,plantandequipmentaretangibleitemsthat:

(a) are held for use in the production or supply of goods or services, for rental to

others,orforadministrativepurposes;and

(b) areexpectedtobeusedduringmorethanoneperiod.

Thecostofanitemofproperty,plantandequipmentshallberecognisedasanassetif,

andonly

if:

(a) itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowto

theentity;and

(b) thecostoftheitemcanbemeasuredreliably.


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Measurementatrecognition:An itemofproperty,plantandequipmentthatqualifies

for recognition as an asset shall be measured at its cost. The cost of an item of

property,plantandequipmentisthecashpriceequivalentattherecognitiondate.

Ifpaymentisdeferredbeyondnormalcreditterms,thedifferencebetweenthecash

priceequivalentand the totalpayment isrecognisedas interestovertheperiod of

credit unless such interest is recognised in the carrying amount of the item in

accordancewithIAS23.

Thecostofanitemofproperty,plantandequipmentcomprises:

(a) its purchase price, including import duties and nonrefundable purchase taxes,

afterdeductingtradediscountsand rebates.

(b) any costs directly attributable to bringing the asset to the location and condition

necessaryforittobecapableofoperatinginthemannerintendedbymanagement.

(c) the

initial

estimate

of

the

costs

of

dismantling

and

removing

the

item

and

restoring the site on which it is located, the obligation for which an entity incurs

eitherwhentheitemisacquiredorasaconsequenceofhavingusedtheitemduringa

particularperiodforpurposesotherthantoproduceinventoriesduringthatperiod.

Measurement after recognition: An entity shall choose either the cost model or the

revaluation model as its accounting policy and shall apply that policy to an entire

classofproperty,plantandequipment.

Cost model: After recognition as an asset, an item of property, plant and equipment

shall

be

carried

at

its

cost

less

any

accumulated

depreciation

and

any

accumulated

impairment losses. Revaluation model: After recognition as an asset, an item of

property, plant and equipment whose fair value can be measured reliably shall be

carriedatarevaluedamount,beingitsfairvalueatthedateoftherevaluationlessany

subsequentaccumulateddepreciationandsubsequentaccumulatedimpairmentlosses.

Revaluations shall be made with sufficient regularity to ensure that the carrying

amount does not differ materially from that which would be determined using fair

valueattheendofthereportingperiod.

If

an

assets

carrying

amount

is

increased

as

a

result

of

a

revaluation,

the

increase

shall be recognised in other comprehensive income and accumulated in equity under

theheadingofrevaluationsurplus.However,theincreaseshallberecognisedinprofitor

loss to the extent that it reverses a revaluation decrease of the same asset previously

recognisedinprofitorloss.


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Ifanassetscarryingamountisdecreasedasaresultofarevaluation,thedecreaseshallbe

recognised in profit or loss. However, the decrease shall be recognised in other

comprehensive income to the extent of any credit balance existing in the revaluation

surplusinrespectofthatasset.

Depreciation is the systematic allocation of the depreciable amount of an asset over its

useful life.Depreciableamount is thecostofanasset,orotheramountsubstituted for

cost,lessitsresidualvalue.Eachpartofanitemofproperty,plantandequipmentwith

acost that issignificant inrelation to the totalcost of the itemshallbe depreciated

separately.Thedepreciationchargeforeachperiodshallberecognisedinprofitor loss

unless it is included in the carrying amount of another asset. Thedepreciation

methodusedshallreflectthepattern inwhichtheassetsfutureeconomicbenefitsare

expectedtobeconsumedbytheentity.

The residualvalue of an asset is the estimated amount that an entity would currently

obtain from disposal of the asset, after deducting the estimated costs of disposal, if the

assetwerealreadyoftheageandintheconditionexpectedattheendofitsusefullife.

To determine whetheran itemof property,plantandequipment is impaired,anentity

appliesIAS36ImpairmentofAssets.

The carrying amount of an item of property, plant and equipment shall be

derecognised:

(a) ondisposal;or

(b) whennofutureeconomicbenefitsareexpectedfromitsuseordisposal.

IAS 17 LEASES

The objective of this Standard is to prescribe, for lessees and lessors, the appropriate

accounting policies and disclosure to apply in relation to leases. The classification of

leases adopted in this Standard is based on the extent to which risks and rewards

incidentaltoownershipofaleasedassetliewiththelessororthelessee.

A lease is classified as a finance lease if it transfers substantially all the risks and

rewardsincidentaltoownership.Aleaseisclassified asanoperatingleaseifitdoes

nottransfersubstantiallyalltherisksandrewardsincidentaltoownership.


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Leasesinthefinancialstatementsoflessees

OperatingLeases

Leasepayments

under

an

operating

lease

shall

be

recognised

as

an

expense

on

a

straightline basis over the lease term unless another systematic basis is more

representativeofthetimepatternoftheusersbenefit.

FinanceLeases

At the commencement of the lease term, lessees shall recognize finance leases as

assets and liabilities in their balance sheets at amounts equal to the fair value of the

leased property or, if lower, the present value of the minimum lease payments, each

determinedattheinceptionofthelease.Thediscountratetobeusedincalculating

thepresent

value

of

the

minimum

lease

payments

is

the

interest

rate

implicit

in

the

lease, ifthis ispracticabletodetermine; ifnot, the lessees incrementalborrowingrate

shallbeused.Any initialdirectcostsofthelesseeareaddedtotheamountrecognised

asanasset.

Minimum lease payments shall be apportioned between the finance charge and the

reductionoftheoutstanding liability.Thefinancechargeshallbeallocated toeach

periodduringthe leasetermsoastoproduceaconstantperiodicrateof interestonthe

remainingbalanceof the liability.Contingentrentsshallbechargedasexpenses in

theperiodsinwhichtheyareincurred.

A finance lease gives rise to depreciation expense for depreciable assets as well as

finance expense for each accounting period. The depreciation policy for depreciable

leasedassetsshallbeconsistentwiththatfordepreciableassetsthatareowned,and

the depreciation recognised shall be calculated in accordance with IAS 16 Property,

PlantandEquipment and IAS 38 IntangibleAssets. If there is no reasonable certainty

thatthelesseewillobtainownershipbytheendoftheleaseterm,theassetshallbe

fullydepreciatedovertheshorteroftheleasetermanditsusefullife.

Leasesin

the

financial

statements

of

lessors

OperatingLeases

Lessors shall present assets subject to operating leases in their statements of financial

position according to the nature of the asset. The depreciation policy for depreciable

leased assets shall be consistent with the lessors normal depreciation policy for


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similarassets,anddepreciationshallbecalculatedinaccordancewithIAS16andIAS

38.Lease income fromoperating leasesshallberecognised in incomeonastraight

linebasisoverthe leaseterm,unlessanothersystematicbasis ismorerepresentativeof

thetimepatterninwhichusebenefitderivedfromtheleasedassetisdiminished.

Finance Leases

Lessors shall recognise assets held under a finance lease in their statements of

financial position and present them as a receivable at an amount equal to the net

investment in the lease. The recognition of finance income shall be based on a pattern

reflecting a constant periodic rate of return on the lessors net investment in the

financelease.

Manufacturer or dealer lessors shall recognise selling profit or loss in the period, in

accordancewiththepolicyfollowedbytheentityforoutrightsales.Ifartificiallylowrates

of interest are quoted, selling profit shall be restricted to that which would apply if a

marketrateofinterestwerecharged.Costsincurredbymanufacturerordealerlessorsin

connectionwithnegotiatingandarrangingaleaseshallberecognisedasanexpensewhen

thesellingprofitisrecognised.

Saleandleasebacktransactions

Asaleandleasebacktransactioninvolvesthesaleofanassetandtheleasingbackofthe

sameasset.

The

lease

payment

and

the

sale

price

are

usually

interdependent

because

they are negotiated as a package. The accounting treatment of a sale and leaseback

transactiondependsuponthetypeofleaseinvolved.

IAS 18 REVENUE

The primary issue in accounting for revenue is determining when to recognise

revenue.Revenue

is

recognised

when

it

is

probable

that

future

economic

benefits

will

flow to the entity and these benefits can be measured reliably. This Standard

identifies thecircumstances inwhich thesecriteriawillbe metand, therefore, revenue

will be recognised. It also provides practical guidance on the application of these

criteria.


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Revenue is the gross inflow of economic benefits during the period arising in the

courseof theordinaryactivitiesofanentitywhen those inflowsresult in increases in

equity,otherthanincreasesrelatingtocontributionsfromequityparticipants.

This

Standard

shall

be

applied

in

accounting

for

revenue

arising

from

the

following

transactionsandevents:

(a) thesaleofgoods;

(b) therenderingofservices;and

(c) theusebyothersofentityassetsyieldinginterest,royaltiesanddividends.

The recognition criteria in this Standard are usually applied separately to each

transaction. However, in certain circumstances, it is necessary to apply the

recognition criteria to the separately identifiable components of a single transaction in

orderto

reflect

the

substance

of

the

transaction.

For

example,

when

the

selling

price

ofaproduct includesan identifiable amount forsubsequentservicing, thatamount is

deferred and recognised as revenue over the period during which the service is

performed. Conversely, the recognition criteria are applied to two or more

transactions together when they are linked in such a way that the commercial effect

cannot be understood withoutreference to theseries of transactions as a whole. For

example, an entity may sell goods and, at the same time, enter into a separate

agreement to repurchase the goods at a later date, thus negating the substantive

effectofthetransaction;insuchacase,thetwotransactionsaredealtwithtogether.

Revenue shall be measured at the fair value of the consideration received or

receivable. Fair value is the amount for which an asset could be exchanged, or a

liability settled, between knowledgeable, willing parties in an arms length

transaction.

The amount of revenue arising on a transaction is usually determined by agreement

betweentheentityandthebuyeroruseroftheasset.Itismeasuredatthefairvalueof

the consideration received or receivable taking into account the amount of any trade

discounts

and

volume

rebates

allowed

by

the

entity.

Saleofgoods

Revenuefromthesaleofgoodsshallberecognisedwhenallthefollowingconditionshave

beensatisfied:

(a) theentityhastransferredto thebuyerthesignificantrisksandrewardsof


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ownershipofthegoods;

(b) the entity retains neither continuing managerial involvement to the degree

usuallyassociatedwithownershipnoreffective controloverthegoodssold;

(c) theamountofrevenuecanbemeasuredreliably;

(d) itis

probable

that

the

economic

benefits

associated

with

the

transaction

will

flow

totheentity;and

(e)the costs incurred or to be incurred in respect of the transaction can be measured

reliably.

Renderingofservices

When the outcome of a transaction involving the rendering of services can be

estimated reliably, revenue associated with the transaction shall be recognised by

reference to the stage of completion of the transaction at the end of the reporting

period.

The

outcome

of

a

transaction

can

be

estimated

reliably

when

all

the

followingconditionsaresatisfied:

(a) theamountofrevenuecanbemeasuredreliably;

(b) itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflow

totheentity;

(c) thestageofcompletionofthetransactionattheendofthereportingperiodcanbe

measuredreliably;and

(d) thecosts incurredforthetransactionandthecoststocompletethetransaction

canbemeasuredreliably.

Therecognition

of

revenue

by

reference

to

the

stage

of

completion

of

atransaction

is

often

referred to as the percentage of completion method. Under this method, revenue is

recognised in th e accounting periods in which the services ar e rendered. The

recognitionofrevenueonthisbasisprovidesusefulinformationontheextentofservice

activityandperformanceduringaperiod.

When the outcome of the transaction involving the rendering of services cannot be

estimated reliably, revenue shall be recognised only to the extent of the expenses

recognisedthatarerecoverable.

Interest,royaltiesanddividends

Revenueshallberecognisedonthefollowingbases:

(a) interestshallberecognisedusingthe effectiveinterestmethodassetout in

IAS39,paragraphs9andAG5AG8;

(b) royaltiesshallberecognisedonanaccrualbasisinaccordancewiththesubstance


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oftherelevantagreement;and

(c) dividendsshallberecognisedwhentheshareholdersrighttoreceivepaymentis

established.

IAS 19 EMPLOYEE BENEFITS

Employeebenefits are all forms of consideration given by an entity in exchange for

servicerenderedbyemployees.

The

objective

of

this

Standard

is

to

prescribe

the

accounting

and

disclosure

for

employeebenefits.TheStandardrequiresanentitytorecognise:

(a) a liabilitywhenanemployeehasprovidedservice inexchangeforemployee

benefitstobepaidinthefuture;and

(b) anexpensewhentheentityconsumestheeconomicbenefitarisingfromservice

providedbyanemployeeinexchangeforemployeebenefits.

This Standard shall be applied by an employer in accounting for all employee

benefits,exceptthosetowhichIFRS2SharebasedPaymentapplies.

Shortterm

employee

benefits

Shorttermemployeebenefitsareemployeebenefits(otherthanterminationbenefits)

which fall due wholly within twelve months after the end of the period in which the

employeesrendertherelatedservice.

Whenanemployeehasrenderedservicetoanentityduringanaccountingperiod,the

entity shall recognise the undiscounted amount of shortterm employee benefits

expectedtobepaidinexchangeforthatservice:

(a) asaliability

(accrued

expense),

after

deducting

any

amount

already

paid.

If

the

amountalreadypaidexceedstheundiscounted amount of the benefits, an entity

shall recognize that excess as an asset (prepaid expense) to the extent that the

prepayment will lead to, for example, a reduction in future payments or a cash

refund;and

(b) asanexpense,unlessanotherStandardrequiresorpermitstheinclusionofthe


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benefitsinthecostofanasset(see,forexample,IAS2InventoriesandIAS16Property,

PlantandEquipment).

Postemploymentbenefits

Postemployment benefits are employee benefits (other than termination benefits)

which are payable after the completion of employment. Postemployment benefit

plans are formal or informal arrangements under which an entity provides post

employmentbenefits foroneormoreemployees.Postemploymentbenefitplansare

classifiedaseitherdefinedcontribution plansordefinedbenefitplans,dependingon

theeconomicsubstanceoftheplanasderivedfromitsprincipaltermsandconditions.

Postemploymentbenefits:definedcontributionplans

Definedcontribution

plans

are

post

employment

benefit

plans

under

which

an

entity

pays fixed contributions into a separate entity (a fund) and will have no legal or

constructive obligation to pay further contributions if the fund does not hold sufficient

assets to pay all employee benefits relating to employee service in the current and

priorperiods.Underdefinedcontributionplans:

(a) theentityslegalorconstructive obligationislimitedtotheamountthatitagreesto

contribute to the fund. Thus, the amount of the postemployment benefits received

by the employee is determined by the amount of contributions paid by an entity (and

perhaps also the employee) to a postemployment benefit plan or to an insurance

company,together

with

investment

returns

arising

from

the

contributions;

and

(b) in consequence, actuarial risk (that benefits will be less than expected) and

investmentrisk(thatassets investedwillbe insufficienttomeetexpectedbenefits)fall

ontheemployee.

When an employee has rendered service to an entity during a period, the entity shall

recognise the contribution payable to a defined contribution plan in exchange for that

service:

(a)asa liability(accruedexpense),afterdeductinganycontributionalreadypaid. If

thecontributionalreadypaidexceedsthecontributiondueforservicebeforetheendof

thereportingperiod,anentityshallrecognisethatexcessasanasset (prepaid

expense) to the extent that the prepayment will lead to, for example, a reduction in

futurepaymentsoracashrefund;

(b) as an expense, unless another Standard requires or permits the inclusion of thecontributionin the costofanasset(see,for example, IAS 2 Inventories and IAS

16Property,PlantandEquipment).


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Post-employment benefits: defined benefit plans

Defined benefit plans are postemployment benefit plans other than defined

contributionplans.Underdefinedbenefitplans:

(a) the entitys obligation is to provide the agreed benefits to current and former

employees;and

(b) actuarialrisk(thatbenefitswillcostmorethanexpected)andinvestmentriskfall,in

substance,ontheentity.Ifactuarialorinvestmentexperienceareworsethanexpected,

theentitysobligationmaybeincreased.

Accountingbyanentityfordefinedbenefitplansinvolvesthefollowingsteps:

(a) using actuarial techniques to make a reliable estimate of the amount of benefit that

employeeshaveearnedinreturnfortheir service inthecurrentandpriorperiods.This

requiresan

entity

to

determine

how

much

benefit

is

attributable

to

the

current

and

prior

periods and to make estimates (actuarial assumptions) about demographic variables

(suchasemployee turnover and mortality) and financial variables (such as future

increasesinsalariesandmedicalcosts)thatwillinfluencethecostofthe benefit

(b) discounting that benefit using the Projected Unit Credit Method in order to

determinethepresentvalueofthedefinedbenefit

(c) obligationandthecurrentservicecost

(d)determiningthefairvalueofanyplanassets

(e)determining the total amount of actuarial gains and losses and the amount of those

actuarialgainsandlossestoberecognised

(f) where a plan has been introduced or changed, determining the resulting past

servicecostand

(g) whereaplanhasbeencurtailedorsettled,determiningtheresultinggainorloss

Where an entity has more than one defined benefit plan, the entity applies these

proceduresfor

each

material

plan

separately.

Otherlongtermemployeebenefits

Other longterm employee benefits are employee benefits (other than post

employment benefits and termination benefits) which do not fall due wholly within


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twelve months after the end of the period in which the employees render the related

service.

The Standard requires a simpler method of accounting for other longterm employee

benefits

than

for

postemployment

benefits:

actuarial

gains

and

losses

and

past

servicecostarerecognisedimmediately.

Terminationbenefits

Terminationbenefitsareemployeebenefitspayableasaresultofeither:

(a)an entitys decision to terminate an employees employment before the normal

retirementdate;or

(b)an employees decision to accept voluntary redundancy in exchange for those

benefits.

An entity shall recognise termination benefits as a liability and an expense when, and

onlywhen,theentityisdemonstrablycommittedtoeither:

(a)terminate the employment of an employee or group of employees before the

normalretirementdate;or

(b)provide termination benefits as a result of an offer made in order to encourage

voluntaryredundancy.

Where termination benefits fall due more than 12 months after the end of the

reportingperiod,theyshallbediscounted.

In the case of an offer made to encourage voluntary redundancy, the measurement of

terminationbenefitsshallbebasedonthenumberofemployeesexpectedtoacceptthe

offer.


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IAS 21 THE EFFECTS OF CHANGES

IN FOREIGN EXCHANGE RATES

Anentitymaycarryonforeignactivitiesintwoways.Itmayhavetransactionsinforeign

currencies or it may have foreignoperations. In addition,an entity may present its

financialstatementsinaforeigncurrency.TheobjectiveofthisStandardistoprescribe

how to include foreign currency transactions and foreign operations in the financial

statementsofanentityandhowtotranslatefinancialstatements intoapresentation

currency. The principal issues are which exchange rate(s) to use and how toreport

theeffectsofchangesinexchangeratesinthefinancialstatements.

This Standard does not apply to hedge accounting for foreign currency items,

including the hedging of a net investment in a foreign operation. IAS 39 applies to

hedgeaccounting.

ThisStandarddoesnotapplytothepresentation inastatementofcashflowsofthe

cashflowsarisingfromtransactionsinaforeigncurrency,ortothetranslationofcash

flowsofaforeignoperation(seeIAS7StatementofCashFlows).

Functional currency

Functionalcurrency is the currency of the primary economic environment in which

theentityoperates.Theprimaryeconomicenvironmentinwhichanentityoperatesis

normallytheoneinwhichitprimarilygeneratesandexpendscash.

Anentityconsidersthefollowingfactorsindeterminingitsfunctionalcurrency:

(a) the currency: that mainly influences sales prices for goods and services (this

will often be the currency in which sales prices for its goods and services are

denominatedandsettled);andofthecountrywhosecompetitiveforcesandregulations

mainlydeterminethesalespricesofitsgoodsandservices.

(b) thecurrencythatmainlyinfluenceslabour,materialandothercostsofproviding


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goods or services (this will often be the currency in which such costs are

denominatedandsettled).

Reportingforeigncurrencytransactionsinthefunctionalcurrency

Foreign currency is a currency other than the functional currency of the entity. Spot

exchangerateistheexchangerateforimmediatedelivery.

Exchangedifference is the difference resulting from translating a given number of

unitsofonecurrencyintoanothercurrencyatdifferentexchangerates.

Netinvestmentinaforeignoperationistheamountofthereportingentitysinterestin

the net assets of that operation.A foreign currency transaction shall be recorded,

on initialrecognition inthe functionalcurrency,byapplyingtotheforeigncurrency

amount

the

spot

exchange

rate

between

the

functional

currency

and

the

foreign

currencyatthedateofthetransaction.

Attheendofeachreportingperiod:

(a) foreigncurrencymonetaryitemsshallbetranslatedusingtheclosingrate;

(b) nonmonetary items that are measured in terms of historical cost in a foreign

currencyshallbetranslatedusingtheexchangerateatthedateofthetransaction;and

(c) nonmonetaryitemsthataremeasuredatfairvalueinaforeigncurrencyshallbe

translatedusingtheexchangeratesatthedatewhenthefairvaluewasdetermined.

Exchange differences arising on the settlement of monetary items or on translating

monetary items at rates different from those at which they were translated on initial

recognitionduringtheperiodorinpreviousfinancialstatementsshallberecognisedin

profitorlossintheperiodinwhichtheyarise.

However, exchange differences arising on a monetary item that forms part of a

reporting entitys net investment in a foreign operation shall be recognised in profit or

loss in the separate financial statements of the reporting entity or the individual

financial statements of the foreign operation, as appropriate. In the financial

statements

that

include

the

foreign

operation

and

the

reporting

entity

(e.g.

consolidated

financial statements when the foreign operation is a subsidiary), such exchange

differences shall be recognised initially in other comprehensive income and

reclassifiedfromequitytoprofitorlossondisposalofthenetinvestment.


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Furthermore, when a gain or loss on a nonmonetary item is recognised in other

comprehensive income, any exchange component of that gain or loss shall be

recognised in other comprehensive income. Conversely, when a gain or loss on a non

monetary item is recognised in profit or loss, any exchange component of that gain or

lossshallberecognisedinprofitorloss.

Translationtothepresentationcurrency/Translationofaforeignoperation

The Standard permits an entity to present its financial statements in any currency (or

currencies). For this purpose, an entity could be a standalone entity, a parent

preparing consolidated financial statements or a parent, an investor or a venturer

preparing separate financial statements in accordance with IAS 27 Consolidated and

Separate Financial Statements. If the presentation currency differs from the entity's

functional

currency,

it

translates

its

results

and

financial

position

into

the

presentation

currency.Forexample,whenagroupcontainsindividualentitieswithdifferentfunctional

currencies,theresultsandfinancialpositionofeachentityareexpressed inacommon

currencysothatconsolidatedfinancialstatementsmaybepresented.

An entity is required to translate its results and financial position from its functional

currency into a presentation currency (or currencies) using the method required for

translating a foreign operation for inclusion in the reporting entitys financial

statements.

The results and financial position of an entity whose functional currency is not the

currency of a hyperinflationary economy shall be translated into a different

presentationcurrencyusingthefollowingprocedures:

(a) assets and liabilities for each statement of financial position presented (ie

including comparatives) shall be translated at the closing rate at the date of that

statementoffinancialposition;

(b) incomeandexpensesforeachstatementofcomprehensive incomeorseparate

incomestatementpresented(ieincludingcomparatives)shallbetranslatedatexchange

ratesat

the

dates

of

the

transactions;

and

(c)allresultingexchangedifferencesshallberecognisedinothercomprehensiveincome.

Any goodwill arising on the acquisition of a foreign operation and any fair value

adjustmentstothecarryingamountsofassetsand liabilitiesarisingontheacquisition

of that foreign operation shall be treated as assets and liabilities of the foreign


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IAS 23 BORROWING COSTS

Coreprinciple

Borrowing costs that are directly attributable to the acquisition, construction or

productionofaqualifyingassetformpartofthecostofthatasset.Otherborrowing

costsarerecognisedasanexpense.

Borrowingcostsare interestandothercoststhatanentity incurs inconnectionwith

theborrowingoffunds.

Recognition

An entity shall capitalise borrowing costs that are directly attributable to the

acquisition, construction or production of a qualifying asset as part of the cost of that

asset. An entity shall recognize other borrowing costs as an expense in the period in

whichitincursthem.

Aqualifyingasset isanassetthatnecessarilytakesasubstantialperiodoftimetoget

readyforitsintendeduseorsale.

To the extent that anentity borrows fundsspecifically for the purpose of obtaininga

qualifying asset, the entity shall determine the amount of borrowing costs eligible for

capitalisation as the actual borrowing costs incurred on that borrowing during the

periodlessanyinvestmentincomeonthetemporaryinvestmentofthoseborrowings.

Totheextentthatanentityborrowsfundsgenerallyandusesthemforthepurposeof

obtainingaqualifyingasset,theentityshalldeterminetheamountofborrowingcosts

eligible for capitalisation by applying a capitalisation rate to the expenditures on that

asset. The capitalisation rate shall be the weighted average of the borrowing costs

applicabletotheborrowingsoftheentitythatareoutstandingduringtheperiod,other

than borrowings made specifically for the purpose of obtaining a qualifying asset.

The amount of borrowing costs that an entity capitalises during a period shall not

exceedtheamountofborrowingcostsitincurredduringthatperiod.


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An entity shall begin capitalising borrowing costs as part of the cost of a qualifying

assetonthecommencementdate.Thecommencementdateforcapitalisation isthe

datewhentheentityfirstmeetsallofthefollowingconditions:

(a) itincursexpendituresfortheasset;

(b) itincursborrowingcosts;and

(c) itundertakesactivitiesthatarenecessarytopreparetheassetforitsintendeduse

orsale.

An entity shall suspend capitalisation of borrowing costs during extended periods in

whichitsuspendsactivedevelopmentofaqualifyingasset.

An entity shall cease capitalising borrowing costs when substantially all the activities

necessarytopreparethequalifyingassetforitsintendeduseorsalearecomplete.

Disclosure

Anentityshalldisclose:

(a) theamountofborrowingcostscapitalisedduringtheperiod;and

(b)thecapitalisationrateusedtodeterminetheamountofborrowingcostseligiblefor

capitalization.

IAS 27 CONSOLIDATED AND

SEPARATE FINANCIAL

STATEMENTS

Theobjective

of

IAS

27

is

to

enhance

the

relevance,

reliability

and

comparability

of

theinformationthataparententityprovidesinitsseparatefinancialstatementsandin

it s consolidated financial statements fo r a group of entities under it s control.

TheStandardspecifies:

(a) thecircumstances inwhichanentitymustconsolidatethefinancialstatementsof

anotherentity(beingasubsidiary);


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(b) theaccountingforchangesinthelevelofownershipinterestinasubsidiary;

(c) theaccountingforthelossofcontrolofasubsidiary;and

(d) the information that an entity must disclose to enable users of the financial

statements

to

evaluate

the

nature

of

the

relationship

between

the

entity

and

its

subsidiaries.

Consolidatedfinancialstatementsarethefinancialstatementsofagrouppresentedas

thoseofasingleeconomic entity.Agroupis aparentandallit ssubsidiaries.A

subsidiaryisanentity,includinganunincorporatedentitysuchasapartnership,thatis

controlled by anotherentity (knownas the parent). Control is thepower togovern

the financial and operating policies of an entity so as to obtain benefits from its

activities.

Presentation of consolidated financial statements

A parent must consolidate its investments in subsidiaries. There is a limited exception

available to some nonpublic entities. However, that exception does not relieve

venture capital organisations, mutual funds, unit trusts and similar entities from

consolidatingtheirsubsidiaries.

Consolidationprocedures

A group must use uniform accounting policies for reporting like transactions and

other events in similar circumstances. The consequences of transactions, and

balances,betweenentitieswithinthegroupmustbeeliminated.

In preparing consolidated financial statements, an entity combines the financial

statementsoftheparentanditssubsidiarieslinebylinebyaddingtogetherlikeitems

of assets, liabilities, equity, income and expenses. In order that the consolidated

financial

statements

present

financial

information

about

the

group

as

that

of

a

single

economicentity,thefollowingstepsarethentaken:

(a)thecarryingamountoftheparents investment ineachsubsidiaryandtheparents

portion of equity of each subsidiary are eliminated (see IFRS 3, which describes the

treatmentofanyresultantgoodwill);


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(b)noncontrolling interests in the profit or loss of consolidated subsidiaries for the

reportingperiodareidentified;and

(c) noncontrolling interests in the net assets of consolidated subsidiaries are

identified separately from the parents ownership interests in them. Non

controllinginterests

in

the

net

assets

consist

of:

(i) the amount of those non controlling interests at the date of the original

combinationcalculatedinaccordancewith IFRS3;and

(ii) the noncontrolling interests share of changes in equity since the date of the

combination.

Noncontrollinginterests

Noncontrolling

interests

must

be

presented

in

the

consolidated

statement

of

financial

position within equity, separately from the equity of the owners of the parent. Total

comprehensive income must be attributed to the owners of the parent and to the non

controlling interests even if this results in the noncontrolling interests having a deficit

balance.

Changesintheownershipinterests

Changesinaparentsownershipinterestinasubsidiarythatdonotresultinthelossof

controlareaccountedforwithinequity.Whenanentity losescontrolofasubsidiary it

derecognises the assets and liabilities and related equity components of the former

subsidiary.Anygainorlossisrecognisedinprofitorloss.Anyinvestmentretainedinthe

formersubsidiaryismeasuredatitsfairvalueatthedatewhencontrolislost.

Separatefinancialstatements

When an entity elects, or is required by local regulations, to present separate financial

statements,investmentsinsubsidiaries,jointlycontrolledentitiesandassociatesmustbe

accountedforatcostorinaccordancewithIAS39FinancialInstruments:Recognitionand

Measurement.

Disclosure

An entity must disclose information about the nature of the relationship between the

parententityanditssubsidiaries.


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IAS 28 INVESTMENTS IN

ASSOCIATES

ThisStandardshallbeapplied inaccountingfor investments inassociates.However,

itdoesnotapplytoinvestmentsinassociatesheldby:

(a) venturecapitalorganisations,or

(b) mutual funds, unit trusts an d similar entities including investmentlinked

insurancefundsthatuponinitialrecognitionaredesignatedasatfairvaluethroughprofit

or loss or are classified as held for trading and accounted for in accordance with IAS 39

FinancialInstruments:

Recognition

and

Measurement.

Such

investments

shall

be

measured at fair value in accordance with IAS 39, with changes in fair value

recognisedinprofitorlossintheperiodofthechange.

Significant influence is the power to participate in the financial and operating policy

decisionsoftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.

If an investor holds, directly or indirectly (eg through subsidiaries), 20 per cent or

more of the voting power of the investee, it is presumed that the investor has

significant influence, unless it can be clearly demonstrated that this is not the case.

Conversely, if the investor holds, directly or indirectly (eg through subsidiaries), less

than 20 per cent of the voting power of the investee, it is presumed that the

investor does not have significant influence, unless such influence ca n be

clearly demonstrated. A substantial or majority ownership by another investor does

notnecessarilyprecludeaninvestorfromhavingsignificantinfluence.

Undertheequitymethod,theinvestmentinanassociateisinitiallyrecognisedatcost

andthecarryingamountisincreasedordecreasedtorecognisetheinvestorsshareof

theprofitorlossoftheinvesteeafterthedateofacquisition.Theinvestorsshareof

the

profit

or

loss

of

the

investee

is

recognised

in

the

investors

profit

or

loss.

Distributions received from an investee reduce the carrying amount of the investment.

Adjustments to the carrying amount may also be necessary for changes in the

investorsproportionate interestintheinvesteearisingfromchanges inthe investees

other comprehensive income. Such changes include those arising from the

revaluation of property, plant and equipment and from foreign exchange translation


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differences. The investors share of those changes is recognised in other

comprehensive income of the investor (see IAS 1 Presentation of Financial

Statements(asrevisedin2007)).

The

investors

financial

statements

shall

be

prepared

using

uniform

accounting

policiesforliketransactionsandeventsinsimilarcircumstances.

After application of the equity method, including recognising the associates losses,

the investor applies the requirements of IAS 39 to determine whether it is necessary to

recogniseanyadditionalimpairmentlosswithrespecttotheinvestorsnetinvestment

intheassociate.

Separatefinancialstatements

When

separate

financial

statements

are

prepared,

investments

in

subsidiaries,

jointly

controlledentitiesandassociatesthatarenotclassifiedasheldforsale(orincludedina

disposalgroupthatisclassifiedasheldforsale)inaccordancewithIFRS5shallbeaccounted

foreither:

(a) atcost,or

(b) inaccordancewithIAS39.

Thesameaccountingshallbeappliedforeachcategoryof investments. Investments in

subsidiaries,jointlycontrolledentitiesandassociatesthatareclassifiedasheldforsale(or

included inadisposalgroupthat isclassifiedasheldforsale) inaccordancewith IFRS5

shallbeaccountedforinaccordancewiththatIFRS.

Investments in jointly controlled entities and associates that are accounted for in

accordancewithIAS39intheconsolidatedfinancialstatementsshallbeaccountedforin

thesamewayintheinvestorsseparatefinancialstatements.

IAS 31 INTERESTS IN JOINTVENTURES

This Standard shall be applied in accounting for interests in joint ventures and the

reporting of joint venture assets, liabilities, income and expenses in the financial


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statements of venturers and investors, regardless of the structures or forms under

which thejoint venture activities take place. However, it does not apply to venturers

interestsinjointlycontrolledentitiesheldby:

(a) venturecapital

organisations,

or

(b) mutual funds, unit trusts an d similar entities including investmentlinked

insurancefundsthatuponinitialrecognitionaredesignatedasatfairvaluethroughprofit

or loss or are classified as held for trading and accounted for in accordance with IAS 39

FinancialInstruments:RecognitionandMeasurement.

Ajointventureisacontractualarrangementwherebytwoormorepartiesundertake

an economic activity that is subject tojoint control.Joint control is the contractually

agreed sharing of control over an economic activity, and exists only when the

strategic financial and operating decisions relating to the activity require the

unanimousconsent

of

the

parties

sharing

control

(the

venturers).

Control

is

the

power

to govern the financial and operating policies of an economic activity so as to obtain

benefitsfromit.

Aventurerisapartytoajointventureandhasjointcontroloverthatjointventure.

Jointventurestakemanydifferentformsandstructures.ThisStandardidentifiesthree

broad typesjointly controlled operations, jointly controlled assets and jointly

controlledentitiesthatarecommonlydescribedas,andmeetthedefinitionof,joint

ventures.

Jointlycontrolledoperations

Theoperationofsomejointventuresinvolvestheuseoftheassetsandotherresources

of the venturers rather than the establishment of a corporation, partnership or

other entity, or a financial structure that is separate from the venturers themselves.

Each venturer uses its own property, plant and equipment and carries its own

inventories. Italso incurs its own expenses and liabilities and raises its own finance,

whichrepresentitsownobligations.

Inrespectofitsinterestsinjointlycontrolledoperations,aventurershallrecognisein

itsfinancialstatements:

(a) theassetsthatitcontrolsandtheliabilitiesthatitincurs;and

(b) theexpensesthatitincursanditsshareoftheincomethatitearnsfromthesaleof

goodsorservicesbythejointventure.


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Jointlycontrolledassets

Somejoint ventures involve thejoint control, and often thejoint ownership, by the

venturersof

one

or

more

assets

contributed

to,

or

acquired

for

the

purpose

of,

the

joint

venture and dedicated to the purposes of thejoint venture. The assets are used to

obtainbenefitsfortheventurers.Eachventurermaytakeashareoftheoutputfrom

theassetsandeachbearsanagreedshareoftheexpensesincurred.

In respect of its interest injointly controlled assets, a venturer shall recognise in its

financialstatements:

(a) its share of thejointly controlled assets, classified according to the nature of the

assets;

(b) anyliabilities

that

it

has

incurred;

(c) its share of any liabilities incurredjointly with the other venturers in relation to the

jointventure;

(d) any income from the sale or use of its share of the output of thejoint venture,

together with its share of an yexpenses incurred by the jo in t venture; an d (e)

anyexpensesthatithasincurredinrespectofits interest in the

jointventure.

Jointlycontrolledentities

A

jointly

controlled

entity

is

a

joint

venture

that

involves

the

establishment

of

a

corporation, partnership or other entity in which each venturer has an interest. The

entity operates in the same way as other entities, except that a contractual arrangement

between the venturers establishesjoint control over the economic activity of the

entity.

A venturer shall recognise its interest in ajointly controlled entity using proportionate

consolidationortheequitymethod.

Proportionateconsolidationisamethodofaccountingwherebyaventurersshareofeach

of the assets, liabilities, income andexpensesofajointlycontrolledentity is combined

line by line with similar items in the venturers financial statements or reported as

separatelineitemsintheventurersfinancialstatements.

The equity method is a method of accounting whereby an interest in ajointly

controlled entity is initially recorded at cost and adjusted thereafter for the post


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acquisition change in the venturers share of net assets of thejointly controlled entity.

Theprofitorlossoftheventurer includestheventurersshareoftheprofitorlossof

thejointlycontrolledentity.

Transactionsbetween

aventurer

and

ajoint

venture

When a venturer contributes or sells assets to ajoint venture, recognition of any

portion of a gain or loss from the transaction shall reflect the substance of the

transaction. While the assets are retained by thejoint venture, and provided the

venturerhas transferred thesignificantrisksandrewardsofownership, the venturer

shallrecogniseonlythatportionofthegainorlossthatisattributabletotheinterests

oftheotherventurers.Theventurershallrecognisethefullamountofanylosswhenthe

contribution or sale provides evidence of a reduction in the net realisable value of

currentassets

or

an

impairment

loss.

When a venturer purchases assets from ajoint venture, the venturer shall not

recognise its share of the profits of thejoint venture from the transaction until it

resells the assets to an independent party. A venturer shall recognise its share of the

losses resulting from these transactions in the same way as profits except that losses

shall be recognised immediately when they represent a reduction in the net realisable

valueofcurrentassetsoranimpairmentloss.

Separatefinancialstatementsofaventurer

When separate financial statements are prepared, investments in subsidiaries, jointly

controlledentitiesandassociatesthatarenotclassifiedasheldforsale(orincludedina

disposalgroupthatisclassifiedasheldforsale)inaccordancewithIFRS5shallbeaccounted

foreither:

(a) atcost,or

(b) inaccordancewithIAS39.

Thesame

accounting

shall

be

applied

for

each

category

of

investments.

Investments

in

subsidiaries,jointlycontrolledentitiesandassociatesthatareclassifiedasheldforsale(or

included inadisposalgroupthat isclassifiedasheldforsale) inaccordancewith IFRS5

shallbeaccountedforinaccordancewiththatIFRS.


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Investments in jointly controlled entities and associates that are accounted for in

accordancewithIAS39intheconsolidatedfinancialstatementsshallbeaccountedfor

inthesamewayintheinvestorsseparatefinancialstatements.

IAS 37 PROVISIONS, CONTINGENT

LIABILITIES AND CONTINGENT

ASSETS

The objective of this Standard is to ensure that appropriate recognition criteria and

measurement bases are applied to provisions, contingent liabilities and contingent

assets and that sufficient information is disclosed in the notes to enable users to

understandtheirnature,timingandamount.

IAS 37 prescribes the accounting and disclosure for all provisions, contingent

liabilitiesandcontingentassets,except:

(a) those resulting from executory contracts, except where the contract is onerous.

Executorycontractsarecontractsunder whichneitherparty has performed any of

itsobligationsorbothpartieshavepartiallyperformedtheirobligationstoanequal

extent;

(b)thosecoveredbyanotherStandard.

Provisions

Aprovision

is

aliability

of

uncertain

timing

or

amount.

Recognition

Aprovisionshouldberecognisedwhen,andonlywhen:

(a) anentityhasapresentobligation(legalorconstructive)asaresultofapastevent;


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(b) it is probable (ie more likely than not) that an outflow of resources embodying

economicbenefitswillberequiredtosettletheobligation;and

(c) a reliable estimate can be made of the amount of the obligation. The Standard

notes that it is only in extremely rare cases that a reliable estimate will not be

possible.

Inrarecasesitisnotclearwhetherthereisapresentobligation.Inthesecases,apast

event is deemed to give rise to a present obligation if, taking account of all available

evidence, it is more likely than not that a present obligation exists at the end of the

reportingperiod.

Measurement

The amount recognised as a provision shall be the best estimate of the expenditure

requiredto

settle

the

present

obligation

at

the

end

of

the

reporting

period.

The

best

estimate of the expenditure required to settle the present obligation is the amount

thatanentitywouldrationallypaytosettletheobligationattheendofthereporting

periodortotransferittoathirdpartyatthattime.

Where the provision being measured involves a large population of items, the

obligation is estimated by weighting all possible outcomes by their associated

probabilities. Where a single obligation is being measured, the individual most likely

outcome may be the best estimate of the liability. However, even in such a case, the

entityconsidersotherpossibleoutcomes.

Contingentliabilities

Acontingentliabilityis:

(a) a possible obligation that arises from past events and whose existence will be

confirmed only by the occurrence or nonoccurrence of one or more uncertain future

eventsnotwhollywithinthecontroloftheentity;or

(b) apresentobligationthatarisesfrompasteventsbutisnotrecognisedbecause:

(i) itisnotprobablethatanoutflowofresourcesembodyingeconomicbenefitswill

berequired

to

settle

the

obligation;

or

(ii) theamountoftheobligationcannotbemeasuredwithsufficientreliability.

An entity should not recognise a contingent liability. An entity should disclose a

contingentliability,unlessthepossibilityofanoutflowofresourcesembodyingeconomic

benefitsisremote.


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Contingentassets

Acontingentassetisapossibleassetthatarisesfrompasteventsandwhoseexistencewill

beconfirmed

only

by

the

occurrence

or

non

occurrence

of

one

or

more

uncertain

future

eventsnotwhollywithinthecontroloftheentity.

Anentityshallnotrecogniseacontingentasset.However,whentherealisationofincome

isvirtuallycertain,thentherelatedasset isnotacontingentassetand itsrecognitionis

appropriate.

IAS 38 INTANGIBLE ASSETSThe objective of this Standard is to prescribe the accounting treatment for intangible

assetsthatarenotdealtwithspecifically inanotherStandard.ThisStandardrequires

an entity to recognise an intangible asset if, and only if, specified criteria are met. The

Standard also specifies how to measure the carrying amount of intangible assets and

requiresspecifieddisclosuresaboutintangibleassets.

Anintangibleasse

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