The Asian financial crisis of the 1990s demonstrated the central role that accounting plays in the globalization of capital markets and its potential destructiveness. These include a full understanding of the terms used in their particular context and the differences in language.
Preface
The third section, the Glossary, is a comprehensive reference to words and phrases used in the global business world. Definitions are included for specific terms used in the international standards and are cross-referenced to that standard.
Acknowledgments
INTERNATIONAL FINANCIAL
Part One
OVERVIEW
STANDARD SETTING NATIONALLY
The Growth of National Standards
The following brief review of the very slow development of the accounts will help to explain the changes that are now taking place. However, the content of the standards issued by different national bodies has contained significant differences.
Developing
International Accounting
It is a tribute to the effectiveness of the IASC that it received significant support and encouragement. Second, a significant weakness in the operation of the IASC was that it had no enforcement powers or mechanisms to achieve compliance.
The International Accounting
Other duties of the Trustees include reviewing external events that affect the accounting standards and strategy of the IASB and its operational effectiveness. The Foundation also approves the annual budget of the IASB and determines the basis of funding.
Internationalization and the G4+1
The Public Sector Accounting Standards Board (PSASB) is one of the Foundation's boards. It is therefore possible, albeit in rare cases, to override the requirements of a standard to "give a true and fair view". In the United States, "present fairly" is used in conjunction with the phrase "in accordance with generally accepted accounting principles." The governing criterion in the US is therefore conformity with GAAP.
Different Views of Convergence
Although the accounting and financial infrastructure is improving, it is at a rudimentary stage in some parts of the country. There are the remnants of the FASB-based standards and the philosophy of a rules-based approach attached to them.
Responding to Internationalization
The burden then falls on the preparer of the financial statements and the accountants to ensure that the financial statements are not misleading. The future of national accounting standard setters is uncertain as the IASB's influence increases.
The Role of the Accountant
The section of the Act that received the most publicity at the time related to corporate responsibility. Finally, examine the possible future effects of the adoption of IFRS on financial measures.
Bibliography
Impact of the IASC comparability project and recent international developments.” Journal of International Accounting, Auditing, and Taxation no. The evolution of the G4+1 and its impact on the international harmonization of accounting standards.” Journal of International Accounting, Auditing, and Taxation no.
Part Two
GUIDE TO INTERNATIONAL
FINANCIAL REPORTING
Introduction to the Guide
We have significantly reduced this large amount of material to provide a concise overview of the main points of the standards in effect on 1 January 2005. The main requirements of the standard and the main disclosures required by organizations are highlighted. .
Framework for the Preparation
Presentation of Financial
With the first, expenses are aggregated in the income statement according to their nature (for example, depreciation, material purchases and employee benefits). The presentation and classification of items in the financial statements shall be consistent from one financial period to another.
Inventories
If circumstances arise where a reversal of the impairment is justified, then this should be treated as a reduction of expenditure in the period in which the reversal occurs. In subsequent periods, new estimates of net realizable value will be made until the inventories are sold.
Cash Flow Statements
An example of a cash flow statement for a financial institution is also illustrated in the standard. The purpose of a cash flow statement is to analyze changes in cash and cash equivalents during an accounting period.
Accounting Policies, Changes in
Prior period errors, if material, must be adjusted in the financial statement of the prior period where the error occurred. This is a change in the accounting estimate of the amount he expects to recover from accounts receivable.
Events after the Balance
Events can occur between the balance sheet date and the date on which the annual accounts are approved for publication. Non-adjusting events do not provide new evidence of the conditions at the balance sheet date, but of events that occurred after that date.
Construction Contracts
The first is the stage-of-completion method, also known as the percentage-of-completion method, where the outcome of the contract can be reliably estimated. This will allow profit attributable to the completion phase to be reported at the end of a financial period.
Income Taxes
Deferred tax assets and liabilities arise where there is a difference between the accounting value of assets and liabilities on the balance sheet and the tax value of assets and liabilities. A deferred tax asset should only be recognized to the extent that it is probable that a future tax benefit will arise.
Segment Reporting
An entity should make extensive disclosures for the primary segment with less complex disclosures required for the secondary segment. The standard requires an accounting policy that entities must prepare segment information in accordance with the accounting policies adopted for the preparation and presentation of consolidated financial statements.
Property, Plant, and Equipment
Property, plant and equipment must be recognized as assets when the future economic benefits associated with the asset flow to the business and the cost of the asset can be reliably measured. Routine servicing should be charged as an expense, but if the asset is improved so that additional economic benefits will flow, the additional cost may be recognized as part of the asset.
Leases
Finance lease payments must be allocated between finance costs and the reduction of the outstanding liability. Gross rental investment adjusted to the present value of minimum rents.
Revenue
In some accounting systems, revenue is referred to as sales or revenue, but the IASB uses the term revenue. The main issue when accounting for revenue is to determine the accounting period in which the revenue is to be recognized. The costs incurred or to be incurred in connection with the transaction can be reliably measured.
Employee Benefits
The guiding principle is that the cost of providing employee benefits should be recognized in the period when the employee earns the benefit, not when it is paid or payable. Profit sharing and bonus payments should be recognized when the entity has a legal or constructive obligation as a result of past events and a reliable estimate of the expected cost can be made.
Accounting for Government
Grants and Disclosure of Government Assistance
The Effects of Changes in Foreign
To do this conversion, the spot rate between the functional currency and the foreign currency on the date of the transactions is used. Income and expenses for each income statement (including comparisons) are translated at the exchange rates on the dates of the transactions.
Borrowing Costs
The benchmark treatment is to expense all borrowing costs in the period in which they are incurred. Where funds are part of a common pool, the capitalization rate is the weighted average of the borrowing costs for the common pool.
Related Party Disclosures
Directly or indirectly, through one or more intermediaries, the party controls or is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and other affiliates). It is a post-employment benefit scheme for the benefit of the employees of the economic entity or any of its related parties.
Accounting and Reporting by
The purpose of a defined contribution plan disclosure is to provide information about the execution of the plan and the performance of the investment. The financial statements of a defined contribution plan include a statement of net assets available for benefits and a description of the funding policy.
Consolidated and Separate
The standard focuses on the substance of the relationship between two entities to determine whether consolidated financial statements comply with IAS 27 • 123. Special purpose entities (SPEs) should be consolidated if the substance of the relationship indicates that the SPE is controlled by the reporting entities. company.
Investment in Associates
Explanations of the reasons for using the equity method where the owner has less than 20% of the voting power. Explanation of the reasons for not using the equity method if it has more than 20% of the voting power.
Financial Reporting in
The only quantitative guideline in the standard is a cumulative inflation rate of approximately 100% or more over a three-year period. When an economy is no longer hyperinflationary and the requirements of IAS 29 no longer apply, the amounts expressed in the unit of measure in effect at the end of the previous reporting period should be used for the carrying amounts in subsequent financial statements.
Disclosures in the Financial
An explanation that the accounts have been adjusted to take account of general inflationary increases. Banks play a major role in the economy and have particular characteristics in their operations and financing that are not necessarily well understood by the non-expert.
Interests in Joint Ventures
In these cases, the entrepreneur must recognize in his financial statements the assets he controls, the liabilities and expenses he incurs, and his share of the income from the sale of goods or services. Equity accounting shows the change in the venturer's share of the joint venture for each period.
Financial Instruments: Disclosure
The definition of financial instruments includes both primary instruments (such as cash, receivables, creditors and equity) as well as derivatives (such as options and swaps). The conditions, nature and extent of the use of financial instruments and the business purposes they serve.
Earnings per Share
Any dividends or other items related to dilutive potential ordinary shares deducted to arrive at the profit or loss attributable to ordinary shareholders. The weighted average number of ordinary shares used in the calculation of basic and diluted EPS.
Interim Financial Reporting
Statement of capital movements cumulatively for the current financial year to date, with a comparative statement for the comparable period from the year to the date of the immediately preceding financial year. Statement of cash flows cumulatively for the current financial year to date, with a comparative statement for the comparable period between the year and the date of the immediately preceding financial year.
Impairment of Assets
This is the higher of the asset's net selling price (fair value less costs to sell) and its value in use. If the unit's recoverable amount exceeds the unit's carrying amount, the unit and the goodwill allocated to that unit are not impaired.
Provisions, Contingent Liabilities,
The amount recognized as a provision should be the best estimate of the expenditure required to settle the current obligation at the balance sheet date. An example is a legal claim that an entity is pursuing, but it is uncertain whether the claim will be successful.
Intangible Assets
Research costs are considered an expense, but development costs that meet certain criteria can be recognized as an intangible asset. If an intangible asset does not meet the criteria for recognition as an asset, it must be charged as an expense in the financial period.
Financial Instruments
Recognition and Measurement
Investment Property
Property held for use in the production or supply of goods or services or for administrative purposes. Gains or losses arising from changes in the fair value of the tangible long-term investment asset must be included in net profit or loss for the period in which it arises.
Agriculture
On initial recognition and thereafter, biological assets should be recognized at fair value less estimated point-of-sale costs, unless fair value cannot be measured reliably. Agricultural production should be measured at fair value less estimated point-of-sale costs at the time of harvest.
First-Time Adoption
Reporting Standards
- Share-Based Payment
- Business Combination
- Insurance Contracts
- Non-Current Assets Held for Sale
- Exploration for and Evaluation of
For cash-settled transactions, the fair value of the obligation is used to measure the goods/services received. Exploration and evaluation assets should be disclosed as a separate class of assets and may be intangible assets or tangible assets depending on the nature of the assets.
Part Three
DICTIONARY
How to Use the Dictionary
