COPYRIGHTED MATERIAL. INDEX. 12-month expected credit losses 621, 655,

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1 INDEX 12-month expected credit losses 621, 655, absences 434, 471 absorption (full) costing 140, AC see IFRS Advisory Council accelerated depreciation 167 accounting bases 50, accounting consolidation 311 accounting estimates changes in , comparability consistency definition of change in 121 definitions of terms future developments PPE disclosures 182 scope of standards 121 US GAAP comparisons 138 accounting mismatches 631, 643 accounting models 28, accounting policies amortisation method applying changes changes in 121, comparability consistency 122 3, 298 consolidated statements 268 definition of change in 121 definition of 121 definitions of terms disclosures 130, financial instruments financial statements 55 6 first-time adoption future developments IAS 28, consistency under 298 impracticability exception 128, 131 indirect effects of change interim financial reporting retrospective application 122, 125 7, 128 scope of standards segment policies 823 selection US GAAP comparisons 138 accounting profit or loss 768 Accounting Regulatory Committee (ARC) Accounting Standards Advisory Forum (ASAF) 3, 14 Accounting Standards Codification (ASC) 138 accounts payable 421 accounts receivable 621 accrual accounting basis 50, accrued benefit obligation 450, accrued benefit valuation methods 450 accrued liabilities 422 accrued pension cost 450 accrued post-retirement benefit obligation 450 accumulated depreciation definition 158 intangible assets 219 PPE 158, 173, 175 6, 183 acquirees 311 acquirers 311, 320 1, 340, acquisition date 311, acquisition method acquisition-related costs 337 bargain purchases boundaries of exchange transactions business combinations , 774 consideration transferred contingent liabilities definition 311 exceptions exit activities 325 goodwill measurement 322 5, 331 3, new information non-controlling interests post-combination accounting COPYRIGHTED MATERIAL

2 968 Index acquisition method (Continued ) recognition 322 3, restructuring 325 acquisition-related costs 311, 337 acquisitions business combinations definition 311 equity method footnote disclosures joint operations residual values 574 reverse acquisitions 315 statement of cash flows 112 step acquisitions subsidiaries 270 active markets agriculture 863, 868 definition 195 fair value 739, actuarial gains and losses 451, 459 actuarial present value 451, 853, actuarial valuation 451 additional comparative information 85 additional contributed capital 367, adjusted net asset method 763, 765 adjusting events after reporting period 418, agency liabilities 422 agents 504 aggregated disclosures aggregated exposure aggregated items in statements 50 1, 95 6 agriculture activity 863, 865 definitions of terms disclosures 870, examples of disclosures exclusions from IAS identification IFRS for SMEs 23 intangible assets land 863, 874 measurement 865, presentation produce 863, 865 6, 868, 870 recognition 865, scope of standards US GAAP comparisons 875 AICPA see American Institute of Certified Public Accountants alternative transition method American Institute of Certified Public Accountants (AICPA) 2, 4, 5, 24 amortisation amortisation period definition 195 depreciation 236 interim periods methods 130 1, revenue-based 206 7, 211 revenue recognition 498 amortised cost business models 633, 637 cash flow characteristics changes to contractual terms definition 621 financial assets 621, 629, 632 5, 637, 716, 724 financial instruments financial liabilities 621, 642 Anglo-Saxon reporting approach 4 annual costs 915 antidilution 804, , 816, 818 see also dilution ARC see Accounting Regulatory Committee arm s length transactions 848 artistic-related intangible assets 341 ASAF see Accounting Standards Advisory Forum ASC see Accounting Standards Codification ask price 756 asset ceiling 451 assets acquirer plans to idle 340 alternative use biological , 964 business combinations 322 carried at fair value contingent 419, contract 476, 621, corporate 159, 195, 236, 240 1, 822 current 73 4, 76, 159, 248

3 Index 969 customer control of 492 deferred tax definitions 67, 195 depreciation , disposal employers 460 exchanges of 165 extractive industries 877, fair value measurement 742, government grants 517, , identifiable 313, 322, 327, 822 IFRS 6, subject to indemnification 323 insurance 888 leases 339, long-lived 157 8, 161 monetary 160, 195, 625 net 86, 854, non-depreciable 520 non-monetary 160, 294 subject to operating leases 339 ownership transfers plan assets 451, 452 3, 459 qualifying 161, 185 7, research and development 343 returns at termination revaluation 173 segment 823, 830 1, 834 self-constructed similar productive 161 statement of financial position 67, 68 9, 73 5, 76, 77 tangible 157, 161, 322, 881 transfers 181, with uncertain cash flows 339 see also financial assets; impairment of assets; intangible assets; non-current assets... assets held for sale acquisition method 324 definition 158 impairments 241 see also non-current assets held for sale assignment of lease to third party associates , accounting for acquiring in stages 296 definition of 259 definitions of terms disclosures 297 9, 301 3, 845 equity method examples of disclosures 297 first-time adoption IAS 28 requirements 258, 287, 296, identification income taxes increasing stake in 296 interests in 302 related party disclosures 845 US GAAP comparisons attribution 451 authorisation date 418, awards 324, 348 balance sheet see statement of financial position bargain purchase option (BPO) 528 bargain purchases acquisition method business combinations 311, 313, 331 5, definition 311 gains from 313, 331 5, bearer plants 158, 164 5, benefits business combinations 323, 792 deferred taxes economic 199, 426, guaranteed 888 simultaneous receipt/consumption of 492 see also employee benefits; retirement benefit plans bid price 756 bill-and-hold binomial model biological assets , 964 biological transformation 864, 866 Black Scholes Merton (BSM) model , 415, 702 bonuses 433, 915 book value see carrying amounts borrowing costs capitalisation

4 970 Index borrowing costs (Continued ) definition of definitions of terms disclosures 191 first-time adoption future developments 191 measurement recognition US GAAP comparisons BP example BPO see bargain purchase option brands 194 breaches 714 brokered markets brokers 140 BSM see Black Scholes Merton model buildings 533, 567 9, 571 see also property... business, definition 311 business combinations acquisition method , 774 background bargain purchases 311, 313, 331 5, consideration transferred 312, consolidations 316 contingent payments deferred tax definition of 312 definitions of terms determining parts of transactions disclosures employee benefits 323 event accounted for as combination 317 examples of disclosures exchange transactions fair value 310, , 328 9, first-time adoption footnote disclosures future developments 360 gain from bargain purchase 331 5, goodwill 310, 331 3, 340, identifiable assets 322, 327 income taxes 323, 774, indemnification assets 323 intangible assets 322, leases 573 measurement 322 5, 331 3, non-controlling interests pension plans 465 post-combination accounting qualifying as a business recognition replacement awards 348 step acquisitions structuring techniques 319 tangible assets 322 tax benefit recoverability 792 temporary differences 774 US GAAP comparison 360 business models 630 2, 633, 636 8, 694 business units 112 buyouts by-products 140, 149 C&F (cost and freight) contracts 143 call options 508 capital additional contributed 367, concept of 37 conceptual framework 37 donated 374, 511 see also share capital capitalisation of borrowing costs capitalised interest costs 189 costs in excess of recoverable amounts how much to capitalise when to start when to stop 190 capitalisation method 765 capital maintenance 37 Capital Markets Advisory Committee (CMAC) 8 career-average-pay formula 451 carrying amounts definitions 158, 186, 195, 222, 236, 864 gross 623, PPE 158, 179, 183 cash basis of accounting 108 cash/cash equivalents cash alternatives components contract settlement

5 Index 971 current assets 74 definitions 102, 621 derivatives settled for cash 670 reconciliations 112 share-based payments 384, cash dividends cash flow hedges 673, 686 7, cash flow per share 111 cash flows DCF method 765 effective interest rate 649 expected flows 739 financial assets 630 1, future flows government grants 522 hedged items hedging disclosures modification of contractual 650 operating activities uncertain 339, see also statement of cash flows cash-generating units definitions 159, 195, 236, 248 E&E assets 879 impairment of assets 236, 239, 241, 244 impairment losses non-current assets held for sale 248, 252 cash-settled contracts cash-settled derivatives 670 cash-settled share-based payments definition 384 measurement 398 modifications to terms/conditions with net settlement features vesting/non-vesting conditions 398 withholding tax obligations cash shortfall 621 cedant 887, 891 chief operating decision makers (CODMs) 822, 826, , CIF (cost, insurance and freight) contracts 143 close members of family of individual 841 closing date 312 closing rate 584 CMAC see Capital Markets Advisory Committee CMOs see collateralised mortgage obligations CODMs see chief operating decision makers collateral 666, 714, collateralised mortgage obligations (CMOs) 755 collectability of consideration 479 combined contracts 480 commencement of lease term 528 commercial substance 159, 200 commodity broker-traders 140 common costs 822 comparability comparative financial statements , 930 comparative information additional 85 first-time adoption 956, 964 Meikles Group case study 964 minimum 85 presentation of financial statements 52 3 related party disclosures 849 statement of profit or loss and OCI 85, 91 see also financial information; information comparative interim financial statements compensated absences 434, 471 compensation 841, 849 complex capital structure, EPS compliance 49 50, 55, component depreciation 159 component of entity 85, 159, 248 compound financial instruments accounting by acquirer accounting by issuer classification definition 621 financial instrument disclosures 714 financial instrument presentation 699, first-time adoption 953 income taxes shareholders equity 370, see also financial instruments

6 972 Index comprehensive income 81 2, 522 total 47, 85, 88 9 see also other comprehensive income; statement of comprehensive income... computer software costs conceptual framework framework 30 1 accounting model 28 general-purpose financial statements 28 9 purpose and status 28 qualitative characteristics of information conceptual framework for financial reporting hierarchy of standards IFRS Practice Statement Management Commentary 40 2 project 31 9 conceptual framework project Discussion Paper 31 2 Exposure Draft 32 9 concessions 491 see also service concessions consideration collectability of 479 payable to customer transferred 312, variable 484 5, 491 consignments definition 140 examples inventories 140, revenue recognition 509 sales consistency 53 4, 122 3, 908 consolidated financial statements , accounting policy 268 cash flows consolidation procedures definitions of 259, 312 definitions of terms disclosures 277 9, examples of disclosures financial position 72 fund managers 265 hyperinflation 930 income taxes 792 indirect interest investment entities measurement 268 non-controlling interests 259, ownership changes ownership interest 268 9, power reporting dates 268 rights scope of standards subsidiaries 260, 261, temporary differences 792 transition guidance US GAAP comparisons voting rights consolidated reporting 909 consolidations , 301 7, 316, constant-growth DDM 765 constructive obligation contingencies 312, 447 contingent assets 419, 438 9, 446 contingent consideration 312, 331 contingent issuance of ordinary shares 804, contingent lease arrangements 915 contingent liabilities acquisition method definitions 322, 419, 436 disclosure under IAS financial guarantee contracts 438 future developments 446 likelihood of events 437 litigation 438 remote contingent losses 437 see also liabilities contingent payments contingent rentals 529 contingent settlement provisions contingent share agreement 804 contract assets definition 476, 621 impairment of financial instruments intangible assets 341 2

7 Index 973 contract liability 476 contracts amortisation 498, changes to terms combined 480 costs definition 476 derivatives 672 favourable 313, 345 financial guarantees 438, 623, 666, 888 financing components fulfilment costs hybrid 695 identification impairment incremental costs 497 insurance modifications 480 2, 650 non-financial items onerous 419, 428, 432 performance obligations revenue model settled in cash unfavourable 315, 344 variable consideration see also insurance contracts contributions 373 4, 451, control consolidated statements 262 5, definitions of 312, 621 of an investee 259 conversion, definition 584 conversion costs 147 convertible instruments 374 5, 699, co-operative entities 379, 698 copyrights 212 corporate assets 159, 195, 236, 240 1, 822 corporations 583, correction of errors cost approaches 739, 757 cost of goods sold 94 5 cost method 287, 312 cost model extractive industries 880 intangible assets 207 investment property 226 8, costs/costing acquisition-related costs 311, 337 annual costs incurred unevenly 915 C&F/CIF contracts 143 common costs 822 computer software contracts conversion costs 147 deemed costs 936, 950 2, definitions 140, 159, 195, 222 development costs 206, , 961 direct costing 140, disposal costs 159 dry-docking costs 431 employee benefits 455, 457, 458 executory costs 529 fair value less costs to sell 154, 160, 238 government grants 519 IAS 38 recognition criteria incremental costs 497 initial direct costs intangible assets , 203 7, inventories 141 2, 147, past service costs 452, 454, post-employment benefit plans prepaid pension costs 453 replacement costs 173 service costs 452, 454, standard costs 141, 154 stripping costs 82 4 subsequent to purchase/self-construction transaction costs 625, 627, 740, transport costs 740, 759 website development see also amortised costs; borrowing costs; decommissioning costs costs to sell 159, 236, 248, 864 coterminous year-end dates 298 creator of SPE 312 credit adjustment effective interest rate credit enhancements 752 credit-impaired financial assets 621, 650, credit losses 621 2, 624, 654 6, 665 6,

8 974 Index credit risk collateral credit-impaired financial assets 650 definition 622 disclosures 707, effects of changes in 644 expected credit losses exposure 728 financial liabilities hedge effectiveness impairment of financial instruments 654, insurance contracts liquidity risk disclosures low at reporting date 659 management practices quantitative/qualitative information responsiveness to changes in significant increases in credits, tax 773, 775, 788, cumulative preference dividends cumulative preferred shares 298 cumulative translation differences 952 currency see foreign currency currency risk 707, current assets 73 4, 76, 159, 248 current cost reporting current liabilities amount and payee known classification 420 definition 419 long-term debt measurement nature of offsetting 421 payee known payee unknown provisions recognition short-term obligations statement of financial position 75 6 types of 421 current service cost 454, 458 current tax 768, current use, example curtailment of benefit plan 454 customers acceptance asset control 492 assets transferred from 181 consideration payable to intangible assets 341 major customers 832 3, 836, 838 operating segments 832 3, 836, 838 simultaneous receipt/consumption of benefits 492 unexercised rights cyclic revenues 916 DaimlerChrysler case study date of transition to IFRS 936 DCF see discounted cash flow method DDM see dividend discount model dealer markets 743 decision makers chief operating 822, 826, , consolidated statements definition 259 decommissioning costs changes in 164 definition 159 examples initial measurement 163 PPE 159, provisions decommissioning liabilities 954 decommissioning provisions 427 deductible differences 768, 780 deemed cost 936, 950 2, defaults 714 deferred stripping deferred taxes 769, assets 769, benefit becoming recoverable business combinations definition 799 disclosures 797, examples of disclosures exemptions fair value adjustments hyperinflation IFRS for SMEs 23 intercompany transactions 294

9 Index 975 liabilities 769, limitation on asset recognition measurement offsetting differences 780 planning to realise assets recognition 770 1, 775 revaluation tax law changes temporary differences 772 4, 776, unused tax losses/credits 775 defined benefit plans 451, 853, defined contribution plans 451, 853 5, deposit component 887 depreciable amount 159, 195, 236 depreciable assets depreciation accumulated 158, 173, 175 6, 183, 219 component depreciation 159 definitions 159, 236 intangible assets 195, 219 interim periods leases methods , partial-year PPE 158 9, , 172 3, 175 6, 183 replacement costs 173 residual value 170 revaluation 172 3, tax methods 170 units of production method 169 derecognition conceptual framework 35 6, 38 definition 622 financial assets 638, , 946 financial instruments , financial liabilities 644 6, 946 first-time adoption 944, 946 IFRS for SMEs 23 intangible assets 215 investment property 229 PPE transfers of assets derivatives definition 622 embedded 23, 622, 645 8, 895 forwards loans qualifying as 668 not based on financial instruments options 671 settled for cash 670 swaps 671 transactions involving development activities 203 costs 206, , 961 definition 195 intangible assets 195, 202 3, 206, , , 220 phase websites dilution convertible instruments EPS 804, , , losses options sequencing of effects US GAAP comparisons warrants direct (variable) costing 140, direct financing leases direct insurance contracts 888 direct method 102, , 116 disclosures accounting policies 130 agriculture 870, alternative transition method associates 297 9, 301 3, 845 borrowing costs 191 BP example business combinations conceptual framework 36 7, 38 9 consolidated statements 277 9, contingent liabilities 439 credit risk 707, deferred taxes 797, discontinued operations earnings per share employee benefits errors 137 events after reporting period 445 extractive industries 881 2, fair value 720 4,

10 976 Index disclosures (Continued ) financial instruments first-time adoption foreign currency 607 8, 612 goodwill 218 government grants hedge accounting hyperinflation 930 IFRS 9 301, 734 6, 897 9, 902 IFRS IFRS for SMEs 23 4 impairment of assets income taxes 784 5, 796, insurance contracts intangible assets interim financial reporting inventories investment property joint arrangements leases non-current assets held for sale operating segments overlay approach post-employment benefit plans PPE presentation of financial statements 57 provisions , related parties reporting period, events after 445 retirement benefit plans revenue recognition , 512 separate financial statements share-based payments share capital 78, shareholders equity 363 8, statement of cash flows statement of changes in equity 100 statement of profit or loss and OCI 89 90, 93 discontinuation definitions 85, 160, 248 disclosures equity method examples of disclosures hedge accounting operating segments 826 operations PPE 160, 182 presentation statement of profit or loss and OCI 85, 93, 95, 100 US GAAP comparisons 255 discounted cash flow method (DCF) 765 discounts/discounting discount rates impairment of assets non-controlling discounts 764 performance obligations 490 provisions 427 revenue model trade discounts volume discounts 486 discretionary participation 888, Discussion Papers 31 2, disposals costs 159 derecognition disposal groups 160, 248, 250, 252 foreign operations investment property non-current assets held for sale 248, 250, 252 PPE 160, provisions 427 subsidiaries 270 distinct goods or services dividend discount model (DDM) 765 dividends cash dividends current liabilities 422 definition 622 events after reporting period 445 financial instruments 622, 704 income tax 378, liquidating dividends 378 share capital shareholders equity donated capital 374, 511 DPOC see Due Process Oversight Committee dry-docking costs 431 Due Process Oversight Committee (DPOC) 7 8

11 Index 977 E&E see exploration and evaluation early adoption of IFRS earnings from investments retained 78, 134 6, 367 8, earnings per share (EPS) complex capital structure concepts/rules/examples contingent issuances of ordinary shares 804, contracts settled in shares/cash definitions of terms dilution 804, 809, , , disclosures examples of disclosures 817 interim financial reporting 911 presentation 816 scope of standards simple capital structure US GAAP comparisons EC see European Commission economic benefits 199, 426, economic life of leased property 529 education material supporting IFRS effective interest method 622, 648 9, 717 effective interest rate 622, EFRAG see European Financial Reporting Advisory Group elections by corporations electronic equipment 432 embedded derivatives definition 622 financial instruments IFRS for SMEs 23 insurance contracts 895 employee benefits acquisition method 323 background basic principles of IAS business combinations 323 definition of 451 definitions of terms disclosures employer liabilities/assets 460 examples of disclosures funding practices 457 importance of accounting 454 liabilities 460, 463 measurement minimum funding requirement need for accounting rules 455 objectives of cost accounting 455 other long-term benefits 452, 456, 472 other post-retirement benefits 472 plan types short-term 454, 456, 471 termination benefits 454, 456, 472 US GAAP comparison 473 see also pensions; post-employment benefit plans; retirement benefit plans employees contingent payments contributing to pension plans share-based payments 384 5, 391, share options 396 7, see also employee benefits employer liabilities/assets 460 Employment Retirement and Income Security Act (ERISA) entry price, definition 739 environmental damage EPS see earnings per share equipment 569 see also property, plant and equipment equity classification definition 68 financial instruments see also shareholders equity; statement of changes in equity equity instrument granted 362, 385 equity instruments definitions 362, 385, 622 fair value measurement 748, financial assets held by third parties marketable 625 not held by third parties restrictions preventing transfers 752 settled in entity s own unquoted 695

12 978 Index equity interests 312 equity method accounting at acquisition acquiring associate in stages 296 application basic principles complex example definition 259 dilution losses discontinuance impairment of investment value increasing stake in associate 296 intercompany transactions non-monetary assets 294 ownership interest scope of standards simple example equity price risk 733, 734 equity-settled share-based payments cancellations definitions 362, 385 employees 391 fair value measurement goods and services 391 market performance conditions 392 modifications non-market performance conditions service conditions 391 2, settlements see also share-based payments ERISA see Employment Retirement and Income Security Act errors , comparability consistency correction definitions of terms disclosures 137 examples future developments impracticability exception scope of standards 121 US GAAP comparisons 138 estimates exceptions to IFRS interim periods 923 obligations 426 provisions see also accounting estimates EU see European Union Europe 3, European Commission (EC) 6, 12 European Financial Reporting Advisory Group (EFRAG) European Union (EU) 2, 6, 12 IASB and Europe IFRS for SMEs 18 presentation of financial statements 55 WE&EE 432 evaluation, see also exploration and evaluation events after reporting period adjusting/non-adjusting events authorisation date definition 419 disclosures dividends proposed/declared 445 examples of disclosures 446 going concerns 445 exchange differences 584, 603 exchange markets 743 exchange rates 584 exchanges business combinations definition 160 foreign exchange non-monetary PPE assets 165 see also transaction... executory costs 529 exit activities/strategies 274 5, 325 exit price, definition 739 expected cash flows 739 expected credit losses amounts arising from definition 621 financial instruments 621, 624, 654 5, 665 6, lifetime 624, twelve-month 621, 655, expected post-retirement benefit obligation 451 expected return on plan assets 451

13 Index 979 expected value expenditures 225 6, expenses definition 84 general corporate 822 offsetting items 96 7 prepaid 74 segment 823 statement of changes in equity 84, 87 statement of profit or loss and OCI 84, 87, 91 3 temporary differences 773 see also prepaid expenses experience adjustments 451 explicit and unreserved statements of compliance exploration and evaluation (E&E) assets 877, expenditures extractive industries 877, mineral resources Exposure Drafts 32 9 extensions of leases 531, extinguishment of debt Extractive Activities Discussion Paper extractive industries assets subject to IFRS definitions of terms disclosures 881 2, Discussion Paper E&E examples of disclosures 881 2, future developments mineral resources US GAAP comparisons extraordinary items fairness exception 56 7 fair presentation of financial statements fair valuation gains and losses fair value agriculture 864, assets carried at business combinations 310, , 328 9, debate over measurement decrease in 396 deferred tax definitions of 160, 195, 222, 236, 248, 312, 362, 451, 584, 622, 739, 864, 888, 936 definitions of terms disclosures 720 4, education material financial instruments first-time adoption 936, foreign currency 584, 603 future developments 765 hedges 673, 685 6, hierarchy 722 4, 739, 754 6, 759 increase in initial recognition insurance contracts 888, 898 leased assets measurement 722 4, 737 8, Meikles Group case study revaluation 172 scope of standards share-based payments 393 6, US GAAP comparisons fair value hierarchy 722 4, 739, 754 6, 759 Level 1 739, 754 5, 759 Level 2 739, 754, 755, 759 Level 3 739, 754, 756, 759 fair value of leased property (FMV) 529 fair value less costs to sell 154, 160, 238 fair value measurement 737 8, equity instruments 748, equity-settled share-based payments fair value for net exposures financial instruments financial liabilities 752, 954 first-time adoption 954 inability to measure reliably inputs 742, 753 6, 759 investment entities 275 investment property item identification 741, 742 liabilities held/not held by third parties market participants 740, 742, 744 7

14 980 Index fair value measurement (Continued ) measurement considerations most advantageous market 742, principal market 742, principles/methodologies risk assumptions when measuring liabilities 742, shareholders equity 752 significant decrease in activity level 746 third parties transfer restrictions 752 typology of markets valuation 742, 747 9, fair value model 226 9, fair value through OCI (FVTOCI) business models 694 effective interest method 648 fair valuation gains/losses financial assets 629, 631, 634 5, 637 8, 716, financial instrument disclosures , , 723, 735 hedge accounting 686, 690 IFRS 9 requirements 693, 735 impairment of financial instruments transaction costs 627 unquoted equity instruments 695 fair value through profit or loss (FVTPL) business models 694 derivatives not settled for cash 670 embedded derivatives financial assets , 635, 637 8, , financial instrument disclosures , , 723, financial liabilities 623, 641 3, 695 foreign exchange 653 hedge accounting 667, 670, 674, 684 IFRS 9 requirements 618, IFRS 9 vs IAS loan commitments 620 farm gate prices 866 FAS see free alongside FASB see Financial Accounting Standards Board favourable contracts 313, 345 fees 649 FIFO see first-in, first-out final-pay plan 451 finance leases accounting for , 543 definition 529 direct financing leases IFRS for SMEs 23 lessee disclosures lessor disclosures leveraged leases 551, sales-type leases types Financial Accounting Standards Board (FASB) 2 5, 12, 24 conceptual framework 27 8 fair value measurement 738 FASB Framework 42 IASB and financial reporting 9 10 leases 577 revenue recognition 513 statement of financial position 65 6 financial aid financial assets accounting mismatches 631 amortised cost 621, 629, 632 5, 637, 716, 724 business models 630 2, 633, cash flows 630 1, changes to contractual terms classification credit-impaired 621, 625, 650, 663, definition derecognition 638, , 946 equity instruments evaluating performance 631 fair value measurement 954 financial instrument disclosures , , financial instrument presentation first-time adoption 946, 954 FVTOCI 629, 631, 634 5, 637 8, 716, FVTPL , 635, 637 8, , government grants 526

15 Index 981 gross carrying amount 623 held for trading impairment insurance contracts 898, 900 loss allowances 714 managing performance 631 modified 663 monetary 625 offsetting 704 5, purchased or originated credit-impaired 625, 663 reclassification regular way purchase/sale 625, 629 securitisation 625 subsequent measurement 635 transfers financial guarantee contracts 438, 623, 666, 888 financial information 29 30, 33, 38 see also comparative information; information financial institutions 111 financial instruments accounting policies amortised cost classes of , classification definition of 622 definitions of terms derecognition designation of previously recognised disclosures embedded derivatives evaluating performance 631 examples of disclosures fair valuation gains/losses financial assets , 704 5, , , financial liabilities 641 6, 704 5, , 717, 721, 724, first-time adoption hedge accounting , IAS 39 vs IFRS IFRS , 705 8, 712, , 725, 728, 730 IFRS IFRS for SMEs 22 3 levels of disclosure managing performance 631 measurement , , objectives of standards 618 offsetting 718 presentation recognition risks 707, scope of standards see also compound financial instruments; impairment of financial instruments financial liabilities accounting mismatches 631 amortised cost 621, 642 classification definition 623 with demand features 752 derecognition 644 6, 946 designated as at FVTPL fair value measurement 752, 954 financial instrument disclosures , 717, 721, 724, financial instrument presentation first-time adoption 946, 954 FVTPL 623, 641 4, 695 held for trading IFRS 9 643, 646, 695 liquidity risk monetary 625 offsetting 704 5, reclassification subsequent measurement financially feasible, definition 748 financial position see also statement of financial position financial reporting 122 3, see also interim financial reporting; International Financial Reporting Standards financial risk 888 financial statements business combinations conceptual framework 33 5, 38 elements of 34 5, 38 events after reporting period 446 extractive industries 880 1

16 982 Index financial statements (Continued ) first IFRS 936, 941 foreign currency 584, , 612 interim 909, leases objectives 48 purpose of 48 related party disclosures 846 revenue recognition 499 translations of 594 5, see also consolidated financial statements; presentation of financial statements; separate financial statements; statement of... financing activities 102, 105 6, financing components finished goods 140 firm commitments 160, 248 9, 623 first IFRS financial statements 936, 941 first IFRS reporting period 936 first-in, first-out (FIFO) accounting changes 119, 127, 129 definition 140 inventories 140 2, 151 2, 154, 155 first-time adopter of IFRS 936 first-time adoption accounting policies comparative information 956, 964 DaimlerChrysler case study definitions of terms disclosures explanation of transition guidance IFRS for SMEs 23 interim reporting key dates mandatory exceptions to IFRS Meikles Group case study objective of IFRS opening statement of financial position 936, 941, optional exemptions options with/within standards presentation reconciliations 956 7, 960 1, 964 scope of IFRS steps in transition 940 transition from US GAAP FMV see fair value of leased property FOB see free on board footnote disclosures forecast transactions 623 foreign currency definition of 584 definitions of terms disclosures 607 8, 612 discussion of definitions examples of disclosures 612 fair value 584, 603 financial statements 584, , 612 functional currency 585 7, 593 5, 604 gains and losses goodwill 603 hedging intragroup balances 603 monetary items 585, 587 8, non-controlling interests 603 non-monetary items 585, 587 8, objectives presentation currency 585, 593 4, reporting dates 603 scope of standards special situations statement of cash flows 110 transactions 584 5, , 605 7, US GAAP comparison 613 see also foreign operations; translation foreign currency risk see currency risk foreign entities 584 foreign operations consolidations definition 584 disposal of hedging net investments , 687 inventory reporting net investments 585, 595, , 687, 717, translation differences 952 see also foreign currency forgivable loans forwards 111, 508, 670 1, 690 free alongside (FAS) 143 4

17 Index 983 free on board (FOB) freight 143 fulfilment costs full (absorption) costing 140, functional currency 585 7, 593 5, 604 funding 452, 457, 460 3, 854 fund managers 265 funds, definition 451 future investment margins 893 future operating losses 428 futures 111, 671 FVTOCI see fair value through OCI FVTPL see fair value through profit or loss GAAP see Generally Accepted Accounting Practice gains actuarial 451, 459 bargain purchases 313, 331 5, controlling interest disposal 271 employee benefits 459 error correction 133 fair valuation financial instruments 624 5, 651 3, 704, foreign exchange impairment 624 modification 624 realised 625 sale of biological assets statement of changes in equity 87 8, 100 statement of profit or loss and OCI 87 8, 96, 100 see also profit or loss general borrowings 187, 190 general corporate expenses 822 Generally Accepted Accounting Practice (GAAP) 1, 10 11, 124, 937 see also national GAAP; US GAAP... general-purpose financial reporting 33, 38 general-purpose financial statements 28 9, 47 geographical information 832, Global Preparers Forum (GPF) 8 going concerns 50, 445 goods customer options 505 distinct equity-settled share-based payments 391 revenue recognition 505 in transit 140, see also inventories goodwill acquisition method business combinations 310, 331 3, 340, consolidated statements deferred tax exemptions 774 definitions 195, 313 examples of disclosures 218 first-time adoption 949 foreign currency 603 impairment 23, 246 7, intangible assets 200 1, 340 internally generated government accounting 526 assistance 517, 524 below market rate loans , 952 definitions 517, 841 related party disclosures 841, government grants agriculture 868 related to assets 517, , below-market loans cash flows 522 comprehensive income 522 definition of 517 definitions of terms 517 depreciable assets disclosures financial aid government assistance 517, 524 impairment of assets 524 related to income 517 income taxes 516 intangible assets 201, 526 interim financial reporting 917 non-depreciable assets 520 non-monetary grants 521 presentation recognition repayments scope of standards

18 984 Index government grants (Continued ) service concessions specific costs 519 US GAAP comparison 526 GPF see Global Preparers Forum grant date 385 see also government grants gross carrying amounts 623, grossing up method gross investment in lease 529 gross reporting 110 groups biological assets 864 definitions 259, 313, 585, 864 hedge accounting 690, 692 share-based payments guarantee contracts, financial 438, 623, 666, 888 guaranteed benefits 888 guaranteed elements 888 guaranteed residual value 529 harvest, definition 864 hedge accounting cash flow hedges 673, changes to hedge ratio components of nominal amount 676, designation of instruments disclosures discontinuation fair value hedges 673, financial items financial position/performance first-time adoption 946 forward element of forwards 690 groups of items 690, 692 hedging relationships IFRS for SMEs 23 net investments in foreign operations 687 objectives qualifying criteria scope of standards time value of options transition see also derivatives hedged items 624, , 692, 719 hedge effectiveness 624, , 720 hedge ratio 623, hedging definition 624 foreign currency instrument definition 624 relationships held-for-sale classification held for trading, definition hierarchy of fair value 722 4, 739, 754 6, 759 hierarchy of GAAP 124 highest and best use 739, highly probable, definition 160, 249 historical cost accounting historical cost reporting hybrid contracts 695 hyperinflation comparative financial statements 930 consolidated statements 930 disclosures 930 first-time adoption 955 hyperinflationary economies monetary vs non-monetary items restatements , severe according to IFRS , 955 US GAAP comparisons 932 see also inflation hyperinflationary economies ceasing to be hyperinflationary financial reporting hyperinflation under IFRS interim financial reporting IASB see International Accounting Standards Board IASC see International Accounting Standards Committee ICAEW see Institute of Chartered Accountants in England and Wales identifiable assets acquisition method 322, 327 business combinations 322, 327 definitions 313, 822 identifiable intangibles 194 IFAC see International Federation of Accountants

19 Index 985 if-converted method 812 IFRIC see IFRS Interpretations Committee IFRS Advisory Council (AC) 6 8 IFRS Foundation 6 7 IFRS Interpretations Committee (IFRIC/IFRSIC) 6 7, 9 current standards leasing guidance 552 IFRIC 1 164, 432 IFRIC IFRIC 4 553, 554, 952 IFRIC IFRIC IFRIC , 923 IFRIC , 525 6, 954 IFRIC , IFRIC IFRIC IFRIC , IFRIC IFRIC IFRIC IFRS Practice Statement Management Commentary 40 2 elements of 41 2 nature and scope 40 presentation 41 principles 40 1 qualitative characteristics 41 IFRSs see International Financial Reporting Standards IFRS for SMEs 6, 7, application 25 as a complete standard 19 definition of SMEs disclosures 23 4 implications of 24 5 maintenance 24 measurement 21 3 modifications of full IFRS omitted topics 20 recognition 21 3 simpler options 20 1 SMEIG 24 impairment accounting estimates 132 contracts equity method financial assets gains 624 goodwill 23, intangible assets 219 impairment of assets accounting for definitions of terms 236 disclosures examples of disclosures government grants 524 IAS 36 requirements 237 identifying impairments insurance 245 interim periods 923 leases 541 recovery 236, 238, reversals of impairments scope of standards US GAAP comparisons 255 impairment of financial instruments , applying probabilities contract assets credit losses 654 6, credit risk 654, general approach impact of collateral 666 lease receivables modified financial assets 663 purchased or originated creditimpaired financial assets 663 reasonable and supportable information trade receivables impairment losses definitions 160, 195, 236, 624 intangible assets , 220 impairment tests/testing 91, 160 impracticability 693 impracticability exception 128, 131, impracticable, definitions 47, Improvements Project 120, 132 inception of lease 529

20 986 Index income categories concepts of 86 definitions 84, 476 fair value approaches 739, 757, 763, 765 government grants 517 measurement 86 7 recognition 86 7 statements 82 3 unearned finance 531 see also comprehensive income; other comprehensive income income taxes acquisition method 323 assets carried at fair value associates business combinations 323, 351 2, changed circumstances compound financial instruments current tax 768, 770, 771 DaimlerChrysler case study definitions of terms disclosures 784 5, 796, dividends 378, examples of disclosures government grants 516 IAS 12 amendments 801 identification 769 interim financial reporting 916 joint ventures presentation scope of standards 768 share-based payments 796 specific transactions statement of profit or loss and OCI 93, subsidiaries tax rates 785, tax status changes temporary differences 768 9, 772 4, , 791, 792 uncertain tax treatments US GAAP comparisons see also deferred tax incremental borrowing rate 530 incremental costs 497 indemnification assets 323 indirect interest indirect (reconciliation) method 102, , 117 industrial revolution 3 4 inflation 773 see also hyperinflation information 662 3, see also comparative information; financial information initial direct costs initial measurement decommissioning costs 163 financial instruments investment property 225 PPE transaction costs 627 see also measurement initial recognition buying/selling non-financial items deferred tax exemptions 775 fair value 627 8, 758 financial instruments 626 9, first-time adoption 954 impairment of financial instruments intangible assets measurement subsequent to non-financial items PPE see also recognition inputs bid and ask prices 756 definitions fair value , 742, 753 6, 759, 761 hierarchy of fair value diagram 754 input methods 495 Levels , 754 6, 759 valuation techniques Institute of Chartered Accountants in England and Wales (ICAEW) 4 insurance assets 888 liabilities 888, recovery 245 risk 888, insurance contracts accounting principles 892 3

21 Index 987 definition of 888 definition of terms disclosures exemption from IFRS , 902 first-time adoption 950 future developments IFRS 9 with IFRS interaction with other standards 902 measurement overlay approach recognition 890, 894 transitional provisions 902 US GAAP comparisons 903 insured events 888 insurers 888 intangible assets agriculture amortisation period artistic-related 341 asset exchanges at little or no cost 201 business combinations 322, classes of computer software costs contract-based control of assets costs , 203 7, criteria for recognition customer-related 341 definitions of 160, 195, 313 definitions of terms derecognition 215 development 195, 202 3, 206, , , 220 disclosures examples of disclosures extractive industries 881 future economic benefits 199 goodwill 200 1, 340 government grants 201, 526 identifiability requirements IFRS for SMEs 21 internally generated 200 5, 220 marketing-related measurement , 322 nature of PPE 157 8, 160 recognition revaluation scope of standards 194 technology-based US GAAP comparisons 220 intellectual property intercompany profit 316 intercompany transactions 292 4, 296 interest accrued benefit obligation in another entity 259 financial instruments 622, 704 interest rate risk 707 interest rate swaps interest rates 621 2, 622 interim data adjustments 922 interim financial reporting accounting policies alternative concepts consolidated reporting 909 content of reports definitions of terms 906 disclosures discrete view of financial statements first-time adoption hyperinflationary economies integral view of 906 7, 915 interim data adjustments 922 objectives presentation recognition reports 906, scope of standards 906 translation adjustments US GAAP comparisons 924 interim financial statements comparative statements form and content materiality 909 significant transactions interim periods 906, amortisation definition 906 depreciation impairment of assets 923 restatements 922 4

22 988 Index interim periods (Continued ) tax rates/status use of estimates 923 internally generated intangible assets 200 5, 220 computer software costs goodwill other than goodwill International Accounting Standards Board (IASB) 1 4, 6 8 binomial model 414 conceptual framework 27 8, 30 3, 42 Discussion Papers 31 2 entity right to payment 494 Europe Exposure Drafts 32 9 financial reporting in US 9 11 IFRIC IFRS for SMEs revenue recognition 513 International Accounting Standards Committee (IASC) 4 6, 9 International Accounting Standards (IASs) current standards IAS 1 accounting changes 120, 123 agriculture 871 current liabilities 420, 421 first-time adoption 938, 941, hedge accounting income taxes intangible assets 216 interim financial reporting 910, 913 presentation of financial statements 45 6, 48, 54 7 related party disclosures 840 shareholders equity 368 statement of changes in equity 81 5, 88, statement of financial position 66 7, 70 1, 73 6 statement of profit or loss and OCI 81 5, 88 90, 92, 96 7 IAS 2 agriculture 861, 862, 865, 868 extractive industries 883 first-time adoption 941, foreign currency 591 inventories , 147, IAS , 114, 942 IAS 8 accounting changes 120 1, 124 6, 128, 130 3, 136 extractive industries 878 first-time adoption 956 income taxes 782, 784 insurance contracts 892, 900 inventories 142 presentation of financial statements 39 40, 53 IAS , 784, 790, 946 IAS 12 business combinations 323 first-time adoption 944 hyperinflation 931 income taxes 768 9, 771 2, 774 7, , 783, 785 6, interim financial reporting IAS 16 agriculture 862 3, 865, 867 8, 874 extractive industries 878, 880 first-time adoption 942, 951, 959 hyperinflation 927, 931 intangible assets 200, 202, 208, 213, investment property 222 3, PPE 162, , IAS 17 first-time adoption 944 impairment of financial instruments 664 intangible assets 215 investment property 221, 225, leases 531 2, 533, 535, 537 8, 540 1, 544, 548, IAS , 944 IAS 19 consolidated statements 272 employee benefits , , 466, 471, 472 first-time adoption 942, 944 IAS 20 agriculture 862, 868 changes in tax rates/status 788