IFRS Guidebook Edition. Steven M. Bragg

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1 IFRS Guidebook 2017 Edition Steven M. Bragg

2 Chapter 1 Introduction... 1 Learning Objectives... 1 Introduction... 1 What is IFRS?... 1 The IFRS Conceptual Framework... 2 How This Book is Organized... 4 How to Use This Book... 4 Accounting Principles... 4 Chapter Summary... 6 Review Questions... 7 Review Answers... 8 Chapter 2 Presentation of Financial Statements... 9 Learning Objectives... 9 Introduction... 9 IFRS Source Documents... 9 Overview of the Financial Statements... 9 The Statement of Financial Position The Standard Balance Sheet Format The Common Size Balance Sheet How to Construct a Balance Sheet Overview of the Statement of Profit or Loss Presentation by Nature or Function The Single-Step Income Statement The Multi-Step Income Statement The Contribution Margin Income Statement The Multi-Period Income Statement How to Construct the Income Statement Overview of the Statement of Changes in Equity Income Statement Disclosures Chapter Summary Review Questions Review Answers Chapter 3 Statement of Cash Flows Learning Objectives Introduction IFRS Source Documents Overview of the Statement of Cash Flows The Direct Method The Indirect Method How to Prepare the Statement of Cash Flows Disclosures for the Statement of Cash Flows Chapter Summary Review Questions Review Answers Chapter 4 Consolidated and Separate Financial Statements Learning Objectives Introduction IFRS Source Documents The Control Concept Consolidation Accounting Separate Financial Statements... 43

3 Chapter Summary Review Questions Review Answers Chapter 5 Accounting Policies, Estimate Changes and Errors Learning Objectives Introduction IFRS Source Documents Accounting Policies Changes in Accounting Estimates Errors Impracticability of Application Disclosures for Policies, Estimate Changes, and Errors Accounting Policies Changes in Accounting Estimates Errors Chapter Summary Review Questions Review Answers Chapter 6 Financial Reporting in Hyperinflationary Economies Learning Objectives Introduction IFRS Source Documents Overview of Hyperinflationary Reporting Net Monetary Position Comparative Information Initial Restatement Consolidation Issues Termination of Hyperinflationary Period Historical Presentation Hyperinflationary Reporting Disclosures Chapter Summary Review Questions Review Answers Chapter 7 Earnings per Share Learning Objectives Introduction IFRS Source Documents Basic Earnings per Share Diluted Earnings per Share Disclosure of Earnings per Share Chapter Summary Review Questions Review Answers Chapter 8 Interim Financial Reporting Learning Objectives Introduction IFRS Source Documents Overview of Interim Financial Reporting Content of an Interim Financial Report Reduced Information Requirements General Interim Reporting Rule Goodwill Impairment Losses Interim Period Restatements The Integral View ii

4 Chapter Summary Review Questions Review Answers Chapter 9 Operating Segments Learning Objectives Introduction IFRS Source Documents Overview of Segment Reporting Segment Disclosure Segment Disclosure Revenue Disclosure Geographic Area Disclosure Chapter Summary Review Questions Review Answers Chapter 10 Joint Arrangements Learning Objectives Introduction IFRS Source Documents Overview of Joint Arrangements Financial Statement Presentation of Joint Arrangements Chapter Summary Review Questions Review Answers Chapter 11 Investments in Associates and Joint Ventures Learning Objectives Introduction IFRS Source Documents Investments in Associates and Joint Ventures Significant Influence The Equity Method Members Shares in Cooperative Entities Disclosures Chapter Summary Review Questions Review Answers Chapter 12 Disclosure of Interests in Other Entities Learning Objectives Introduction IFRS Source Documents Overview of Interests in Other Entities Interests in Subsidiaries Interests in Joint Arrangements and Associates Interests in Unconsolidated Structured Entities Chapter Summary Review Questions Review Answers Chapter 13 Inventories Learning Objectives Introduction IFRS Source Documents Overview of Inventory The Periodic Inventory System iii

5 The Perpetual Inventory System Inventory Costing The First In, First Out Method The Last In, First Out Method The Weighted Average Method Standard Costing The Retail Inventory Method The Gross Profit Method Overhead Allocation Net Realizable Value Accounting for Obsolete Inventory Work in Process Accounting Inventory Measurement by Commodity Broker-Traders Inventory Disclosures Chapter Summary Review Questions Review Answers Chapter 14 Property, Plant and Equipment Learning Objectives Introduction IFRS Source Documents Recognition of Property, Plant and Equipment Subsequent Fixed Asset Recognition The Cost Model The Revaluation Model Depreciation Straight-Line Method Sum-of-the-Years Digits Method Double-Declining Balance Method Depletion Method Units of Production Method Land Depreciation Land Improvement Depreciation Depreciation Accounting Entries Derecognition of Property, Plant and Equipment Compensation for Impaired Assets Decommissioning Liabilities Decommissioning Funds Property, Plant and Equipment Disclosures Chapter Summary Review Questions Review Answers Chapter 15 Intangible Assets Learning Objectives Introduction IFRS Source Documents Overview of Intangible Assets Accounting for Intangible Assets Intangible Assets Acquired in a Business Combination Internally Developed Intangible Assets Other Forms of Intangible Asset Acquisition Subsequent Intangible Asset Recognition The Cost Model The Revaluation Model Intangible Asset Derecognition iv

6 Website Costs Additional Intangible Asset Issues Intangible Asset Disclosures Chapter Summary Review Questions Review Answers Chapter 16 Investment Property Learning Objectives Introduction IFRS Source Documents Overview of Investment Property Accounting for Investment Property Investment Property Transfers Investment Property Disposals Investment Property Disclosures: Fair Value Model Investment Property Disclosures: Cost Model Chapter Summary Review Questions Review Answers Chapter 17 Impairment of Assets Learning Objectives Introduction IFRS Source Documents Overview of Asset Impairment Indications of Impairment Timing of the Impairment Test Recoverable Amount The Impairment Test The Cash-Generating Unit Asset Impairment Reversals Other Impairment Topics Corporate Assets Goodwill Allocation to Cash-Generating Units Impairment Testing Efficiencies Asset Impairment Disclosures Chapter Summary Review Questions Review Answers Chapter 18 Assets Held for Sale and Discontinued Operations Learning Objectives Introduction IFRS Source Documents Accounting for Non-Current Assets Held for Sale Disclosure of Non-Current Assets Held for Sale Disclosure of Discontinued Operations Chapter Summary Review Questions Review Answers Chapter 19 Provisions, Contingent Liabilities and Contingent Assets Learning Objectives Introduction IFRS Source Documents Overview of Provisions Accounting for Provisions v

7 The Provision for Restructuring Accounting for Contingent Liabilities Accounting for Contingent Assets Accounting for Reimbursements Accounting for Levies Disclosure of Provisions and Contingent Items Chapter Summary Review Questions Review Answers Chapter 20 Revenue from Contracts with Customers Learning Objectives Introduction IFRS Source Documents The Nature of a Customer Steps in Revenue Recognition Step One: Link Contract to Customer Step Two: Note Performance Obligations Step Three: Determine Prices Step Four: Allocate Prices to Obligations Step Five: Recognize Revenue Consistency Contract Modifications Treatment as Separate Contract Treatment as Continuing Contract Entitlement to Payment Bill-and-Hold Arrangements Consideration Received from a Supplier Customer Acceptance Customer Options for Additional Purchases Licensing Non-Refundable Upfront Fees Principal versus Agent Repurchase Agreements Unexercised Rights of Customers Warranties Contract-Related Costs Costs to Obtain a Contract Costs to Fulfill a Contract Amortization of Costs Impairment of Costs Exclusions Revenue Disclosures Chapter Summary Review Questions Review Answers Chapter 21 Employee Benefits and Retirement Plans Learning Objectives Introduction IFRS Source Documents Short-Term Employee Benefits Post-Employment Benefits Defined Contribution Plans Defined Benefit Plans Projected Unit Credit Method Attribution of Benefits to Periods of Service vi

8 Actuarial Assumptions Past Service Cost Gains and Losses on Settlement Measurement of Plan Assets Defined Benefit Costs Termination Benefits Defined Contribution Plan Disclosures Defined Benefit Plan Disclosures Defined Benefit Plan Financial Statements Chapter Summary Review Questions Review Answers Chapter 22 Share-Based Payment Learning Objectives Introduction IFRS Source Documents Overview of Share-Based Payments Share-Based Payments Settled with Equity Share-Based Payments Settled with Cash Share-Based Payments with Cash Alternatives Counterparty Has Choice of Settlement Issuer Has Choice of Settlement Share-Based Payment Disclosures Chapter Summary Review Questions Review Answers Chapter 23 Income Taxes Learning Objectives Introduction IFRS Source Documents The Tax Base Concept Current Tax Liabilities and Assets Deferred Tax Liabilities and Assets Taxable Temporary Differences Deductible Temporary Differences Unused Tax Losses and Tax Credits Reassessment of Unrecognized Deferred Tax Assets Investments in Other Entities Tax Rates Current and Deferred Tax Recognition Changes in Tax Status Income Tax Presentation Income Tax Disclosures Chapter Summary Review Questions Review Answers Chapter 24 Business Combinations Learning Objectives Introduction IFRS Source Documents The Acquisition Method Identification of a Business Combination Identify the Acquirer Determine the Acquisition Date Recognize Assets, Liabilities, and Non-Controlling Interests vii

9 Recognize Goodwill or a Bargain Purchase Gain Additional Acquisition Issues Reverse Acquisitions Subsequent Measurement Business Combination Disclosures Chapter Summary Review Questions Review Answers Chapter 25 Financial Instruments Learning Objectives Introduction IFRS Source Documents Measurement of Financial Assets and Liabilities Initial Measurement Subsequent Measurement Expected Credit Losses Impairment Reclassification Embedded Derivatives Gains and Losses Dividends and Interest Hedging Hedging Instruments Hedged Items Accounting for Hedges Financial Asset and Liability Derecognition Financial Asset Derecognition Financial Liability Derecognition Servicing Assets and Liabilities Valuation of Replacement Financial Asset Collateral Financial Instrument Presentation Financial Instrument Disclosures Chapter Summary Review Questions Review Answers Chapter 26 Fair Value Measurement Learning Objectives Introduction IFRS Source Documents Overview of Fair Value General Concepts Measurement Issues Initial Recognition Measurement of Non-Financial Assets Measurement of Liabilities and Equity Measurement of a Group of Financial Assets and Liabilities Valuation Methods Fair Value Disclosures Chapter Summary Review Questions Review Answers Chapter 27 Effects of Changes in Foreign Exchange Rates Learning Objectives Introduction IFRS Source Documents viii

10 Foreign Exchange Transactions Financial Statement Translation Determination of Functional Currency Translation of Financial Statements Hyperinflationary Effects Derecognition of a Foreign Entity Investment Foreign Currency Disclosures Chapter Summary Review Questions Review Answers Chapter 28 Borrowing Costs Learning Objectives Introduction IFRS Source Documents Overview of Borrowing Costs Borrowing Cost Disclosures Chapter Summary Review Questions Review Answers Chapter 29 Leases Learning Objectives Introduction IFRS Source Documents The Nature of a Lease Lease Components (Lessee) Lease Components (Lessor) The Lease Term Lease Accounting by the Lessee Lease Recognition Initial Lease Measurement Subsequent Lease Measurement Assets Subsequent Lease Measurement Liabilities Lease Modifications Lease Accounting by the Lessor Financing Leases Operating Leases Sale and Leaseback Transactions Presentation of Lease Information Lessee Presentations Lessor Presentations Lease Disclosures by the Lessee Lease Disclosures by the Lessor Chapter Summary Review Questions Review Answers Chapter 30 Related Party Disclosures Learning Objectives Introduction IFRS Source Documents Overview of Related Parties Related Party Disclosures Chapter Summary Review Questions Review Answers ix

11 Chapter 31 Events after the Reporting Period Learning Objectives Introduction IFRS Source Documents Overview of Events after the Reporting Period The Going Concern Issue Disclosure of Events after the Reporting Period Chapter Summary Review Questions Review Answers Chapter 32 Insurance Contracts Learning Objectives Introduction IFRS Source Documents Overview of Insurance Contracts Reporting Issues Liability Adequacy Test Reinsurance Impairment Accounting Policy Changes Acquired Contracts Discretionary Participation Features Disclosure of Insurance Contracts Chapter Summary Review Questions Review Answers Chapter 33 Agriculture Learning Objectives Introduction IFRS Source Documents Accounting for Agriculture Bearer Plants Agriculture Disclosures Chapter Summary Review Questions Review Answers Chapter 34 Government Grants Learning Objectives Introduction IFRS Source Documents Accounting for Government Grants Government Grant Presentation Government Grant Disclosures Chapter Summary Review Questions Review Answers Chapter 35 Regulatory Deferral Accounts Learning Objectives Introduction IFRS Source Documents Accounting for Regulatory Deferral Accounts Regulatory Deferral Account Presentation Regulatory Deferral Account Disclosures Chapter Summary Review Questions Review Answers x

12 Chapter 36 Mineral Resources Learning Objectives Introduction IFRS Source Documents Accounting for Mineral Resources Accounting for Stripping Costs Mineral Resources Presentation Mineral Resources Disclosures Chapter Summary Review Questions Review Answers Chapter 37 Service Concessions Learning Objectives Introduction IFRS Source Documents Overview of Service Concessions Service Concession Disclosures Chapter Summary Review Questions Review Answers Chapter 38 Other Topics Learning Objectives Introduction IFRS Source Documents Liabilities from Waste Electrical and Electronic Equipment Hedges of a Net Investment in a Foreign Operation Distributions of Noncash Assets to Owners Extinguishing Financial Liabilities with Equity Instruments Review Questions Review Answers Glossary Index xi

51A Middle Street Newburyport MA Phone: Fax: Course Information

IFRS Guidebook 2017 51A Middle Street Newburyport MA 01950 Phone: 800-588-7039 Fax: 877-902-4284 contact@bhfe.com www.bhfe.com Course Information Course Title: IFRS Guidebook 2017 #360417 Number of continuing