An Executive Guide to IFRS: Content, Costs and Benefits to Business

Preface ix

Acknowledgements x

About the author xi

1 Worldwide convergence on IFRS 1

Convergence 3

Large company advantages 5

Why governments support IFRS 7

The use of IAS/IFRS in the world 8

Problems with convergence 10

Modified convergence 13

Small and medium-sized business 13

Conclusion 14

2 Content of financial statements 15

IAS 1 presentation of financial statements 18

Statement of Comprehensive Income 19

Statement of Financial Position 23

Statement of Cash Flows 26

Statement of Changes in Equity 30

Accounting policies and changes 30

Fair presentation 33

Conventions 34

Interim financial statements 34

Conclusion 36

Appendix: The IASB Conceptual Framework 37

Qualitative characteristics 39

Assets and liabilities 41

3 Investments in other companies 45

Consolidation 46

Translation of foreign subsidiaries 48

Business combinations 51

Investments in associates 54

Joint ventures 55

Assets held for disposal 56

Equity investments 57

Conclusion 58

Appendix: Fair value measurement 59

The market 60

Measurement hierarchy 61

Highest and best use 62

Liabilities 63

Conclusion 64

4 Income statement items 65

Revenue recognition 66

Agriculture 70

Government grants 71

Pensions 72

Stock options 75

Inventories 78

Income taxes 79

Interest expense 80

Foreign exchange differences 82

Accounting in hyperinflationary economies 83

Conclusion 84

5 Balance sheet items 85

Property, plant and equipment 86

Investment property 89

Leased assets 90

Intangible assets 92

Mineral rights 94

Impairment 95

Assets held for sale 99

Financial instruments 100

Disclosures about financial instruments 105

Defining equity 106

Liabilities 109

Contingent liabilities 112

Conclusion 113

6 Other significant standards 115

First time adoption 115

Related party transactions 118

Segment reporting 120

Concessions 122

Events after balance sheet date 123

Insurance 124

Conclusion 126

7 The IFRS for SMEs 127

Development of the standard 128

Content 131

Conclusion 134

8 Comparison with US GAAP 137

Conceptual Framework 140

Consolidation 142

Financial instruments 143

Offsetting 146

Non-financial assets 147

Impairment 149

Miscellaneous 150

Conclusion 153

9 The IASB’s standard-setting process 155

Due process 157

Discussion paper 159

Exposure draft 160

New standard 163

Interpretations 165

Structure 168

Finance 170

Lobbying the IASB 171

Monitoring the IASB 173

Conclusion 174

10 History of the IASB 175

The start-up phase 176

Steady progress 177

The enhancement phase 180

Transition 185

Global convergence 189

Relations with the US 191

Relations with Europe 192

The financial crisis 195

Conclusion 197

11 Observer notes 199

Standard-setters are people 200

What sort of people? 201

What do they think? 205

Fair value controversies 209

Executory contracts 211

True and fair view 213

Anti-abuse measures 213

Conclusions 216

Further reading 217

Index 221