lOMoARcPSD|28933146

Full PFRS vs PFRS for SMEs

BS Accountancy (New Era University)

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DIFFERENCES: FULL PFRS VS PFRS FOR SMEs

FULL PFRS PFRS FOR SMEs

Qualitative Characteristics
 Relevance  Relevance
 Faithful Representation  Comparability
 Verifiability  Understandability
 Comparability  Timeliness
 Understandability  Reliability
 Timeliness  Substance over Form
 Prudence
 Completeness
 Materiality
 Balance b/w Benefit and Cost
 Full PFRS and PFRS for SMEs have the same provisions on the GENERAL
FEATURES in the preparation and of financial statements.
Measurement Basis
 Historical Cost  Historical Cost
 Current Cost  Fair Value
 Realizable Value
 Present Value
Financial Statements
 The components of financial statements of an SME are similar to those provided by
Full PFRS.
FULL PFRS PFRS FOR SMEs
Statement of Financial Position
Line Items  Total assets classified as  Total assets classified as
held held for sale
for sale  Total liabilities included
 Total liabilities included in disposal group
in disposal group classified as held for
classified as held for sale
sale  Investment in Associate
 Investment in Associate  Investment in Joint
 Investment in Joint Venture
Venture
Classifications  Full PFRS and PFRS for SMEs have the same
provisions on the current and noncurrent
presentation, and the definition of current assets,
noncurrent assets, current liabilities and
noncurrent liabilities.
Statement of Comprehensive Income
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Components of OCI  Gain or loss from  Gain or loss from

translation of the FS translating of the FS
of a foreign operation of a foreign
 Re-measurements of operation
defined benefit plan  Actuarial gain or
 Unrealized gain or loss on defined
loss from derivative benefit plan
contracts designated  Change in fair value
as cash flow hedge of hedging
 Unrealized gain or instrument that was
loss on equity effective in
investment measured offsetting the change
at fair value through in the fair value or
OCI expected cash flow
 Unrealized gain or of the hedge item
loss on debt  Revaluation surplus
investment measure from the revaluation
at fair value through of property, plant
OCI and equipment under
 Revaluation surplus the amended
during the year paragraph 17.15 of
 The change in fair PFRS for SMEs
value attributable to
credit risk of a
financial liability
designated at fair
value through profit
or loss
Presentation of OCI Line items for OCI that will OCI that will be reclassified
be classified subsequently to to retained earnings
Profit or Loss include the o Gain or loss from
following: translating of the FS
o Gain or loss from of a foreign
translating FS of a operation
foreign operation o Actuarial gain or
o Unrealized gain or loss on defined
loss on derivative benefit plan in the
contracts designated entity elected to
as cash flow hedge present such item in
o Unrealized gain or OCI

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DIFFERENCES: FULL PFRS VS PFRS FOR SMEs

loss on debt o Revaluation surplus

investment measured during the year
at fair value through related to
OCI revaluation of
Line items for OCI that will property, plant and
be reclassified subsequently equipment
to retained earnings include OCI that will be reclassified
the following o profit or loss includes
o Re-measurements of changes in fair value of
defined benefit plan, hedging instruments
including actuarial
gain or loss on
projected benefit
obligation
o Unrealized gain or
loss on equity
investment measured
at fair value through
OCI
o Changes in
revaluation surplus
o Changes in the fair
value attributable to
credit risk of
financial liability
designated at fair
value through profit
or loss
FULL PFRS and PFRS for SMEs have the same provisions on the presentation of the
following:
a) Statement of comprehensive income
b) Statement of changes in equity
c) Statement of cash flows
Notes to Financial Statements
 The FULL PFRS and PFRS for SMEs are the same in the matter of presenting
the notes to the financial statements
Related and Unrelated Parties
 The FULL PFRS and PFRS for SMEs share the same principles with respect to
related party disclosures
Events after the End of Reporting Period
 The FULL PFRS and PFRS for SMEs share the same provisions for accounting
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DIFFERENCES: FULL PFRS VS PFRS FOR SMEs

and reporting events after the end of reporting period

Accounting Changes
FULL PFRS and PFRS for SMEs have the same provisions and requirements with respect to
the following:
a) Selection of accounting policies  If the PFRS for
b) Consistency of accounting policies SMEs specifically
c) Changes in accounting policies addresses a
d) Changes in accounting estimates transaction, other
e) Correction of prior period error event or condition,
Under Full PFRS, in addition For SMEs,
the SMEif there is no
shall apply
to the hierarchy of guidance relevantthe PFRS for guidance,
SMEs
for an SME, management management shall
 If the PFRS for consider
may consider the following: the following
SMEs does sources
not in
a. Most recent descending order: address
specifically
pronouncement of other a) aThe requirements
transaction, other
standard setting bodies event or condition,in
and guidance
b. Other accounting PFRS on shall
management similar
literature and its
use related issues in
judgement
c. Accepted industry The
b) developing definition,
and
practice applying an criteria
recognition
and measurement
accounting policy of
assets,
that result inliabilities,
income
information that isand
expenses
Inventories
 Full PFRS and PFRS for SMEs have practically the same provisions related to
definition, measurement, cost of purchase, cost of conversion, other cost and cost
formulas for inventories.
Loss on Inventory Write  Component of  The excess of the
down cost of goods sold carrying amount
rather than an over the selling
impairment loss price less cost to
complete and
dispose shall be
recognized as
impairment loss.
Investment in Associate
 Accounted for using the equity  Can choose one among the following
method only method:
 Cost Model
 Equity method
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DIFFERENCES: FULL PFRS VS PFRS FOR SMEs

Fair Value Model 

 Goodwill included in the carrying 
Any implied goodwill included in the
amount of the investment is not carrying amount of the investment is
amortized amortized
Investment Property
 Either fair value model or cost model  Fair value model


Cost-depreciation-impairment model
if FV cannot be measured reliably
Property, Plant and Equipment
 FULL PFRS and PFRS for SMEs are now the same with respect to matters related to
property, plant and equipment, such as measurement, depreciation method, useful life,
residual value, depreciation of significant components, revaluation, impairment and de-
recognition.
Government Grant
 Government grant is recognized when  A government grant is recognized
there is a reasonable assurance that when the conditions are actually
the entity will comply with the satisfied.
specified conditions.
 A government grant is recognized as  Does not allow an entity to match the
income over the periods necessary to grant with the related expense or cost
match the grant with the related
expense or cost
 The government grant related to asset  The government grant is a deferred
is treated either as deferred income or income until the conditions are
a reduction in the cost of the asset actually satisfied.

Borrowing Costs
 Borrowing costs that are directly  Recognized all borrowing costs as
attributable to the acquisition, expense of the period when incurred
construction or production of a
qualifying asset shall be capitalized as
part of the cost of the asset
 Borrowing costs that are not directly
attributable to a qualifying asset shall
be expensed when incurred
Intangible Asset
 Research costs are expensed when  All research and development costs
incurred. are recognized as expenses when
 However, development cost may be incurred.
capitalized when specific criteria are

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DIFFERENCES: FULL PFRS VS PFRS FOR SMEs

met, particularly when technological

feasibility has already been
established
 Measured using either cost model or  Measured subsequently using cost
revaluation model model only
 Useful life of an Intangible Asset is  Useful life of an Intangible Asset is
considered finite or indefinite considered to be finite
 If useful life cannot be established
reliably, useful life shall be the best
estimate of management but not
exceeding 10 years
 Intangible Assets with finite useful  All Intangible Assets are amortized
life are amortized and tested for and tested for impairment when there
impairment when there is an is an indication that the asset may be
indication that the asset may be impaired
impaired

 Intangible Assets with indefinite

useful life are not amortized but
tested for impairment annually and
whenever there is an indication that
the asset may be impaired

Impairment of Asset
Full PFRS and PFRS for SMEs are practically the same with respect to the following:
a. Recognition and measurement of impairment loss
b. Definition of fair value less cost of disposal and value in use
c. Internal and external indicators of impairment
d. Reversal of impairment
 Asset with a finite useful life are  Assets, including goodwill, are
tested for impairment when there is tested for impairment when there is
an indication that the asset may be an indication that the asset may be
impaired. impaired.
 However, the following asset are
tested for impairment annually and
when there is an indication that the
asset may be impaired:
a) Goodwill
b) Intangible assets with an indefinite
useful life or an intangible asset not
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DIFFERENCES: FULL PFRS VS PFRS FOR SMEs

yet available for use.

Provisions and Contingencies
 There are no significant differences between PFRS for SMEs and full PFRS with
respect to provisions and contingencies.
 The PFRS for SMEs and full PFRS share the same principles for accounting and
reporting provision and for disclosing contingent liabilities and contingent assets.
Leases
 The PFRS for SMEs and Full PFRS are practically the same with respect to the
accounting and reporting for leases.
The PFRS for SMEs applies to all leases, except the following:
 Leases in the exploration industry
 Licensing agreements for such items as motion picture films, video recordings, plays,
manuscripts, patents and copyrights.
 Investment property
 Biological assets
 Leases that could result in a loss to either party as a result of contractual terms that are
unrelated to changes in the price of leased assets, changes in lease payments based on
variable market interest rate, changes in foreign exchange rate or a default by one of the
counterparties
 Onerous operating leases
Employee Benefit
 Full PFRS and PFRS for SMEs share the same principles for the recognition
and measurement of the following:
a) Short-term employee benefits
b) Defined contribution plans
c) Other long-term employee benefits
d) Termination benefits
Income Tax
 FULL PFRS and the amended PFRS for SMEs are now the same in the matter
of accounting for income tax
Equity
The PFRS for SMEs and FULL PFRS are practically the same with respect to:
a) Recording of equity instrument
b) Treasury shares
c) Compound financial instrument
d) Equity swap or extinguishment of financial liability by issuing equity instrument
e) Dividends
f) Other related equity matters
Shared-Based Transaction
 The share options shall be measured at  The share options must be measured
fair value on the date of grant at fair value on the date of grant
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DIFFERENCES: FULL PFRS VS PFRS FOR SMEs

 However, if the FV of the share

options cannot be measured reliably,
the intrinsic value of the share options
is used
Specialized Activities
 PFRS for SMEs and FULL PFRS practically have the same principles for the
recognition and measurement of biological assets and agricultural produce
Exploration and Evaluation Asset
 Whether classified as tangible or  Tangible exploration and evaluation
intangible asset shall be measured asset shall be subsequently measured
subsequently using cost model or using cost model or revaluation model
revaluation model
 However, the intangible exploration
and evaluation asset shall be measured
subsequently using cost model only
Service Concession
 Full PFRS and PFRS for SMEs have similar provisions on the recognition and
measurement of a service concession
The financial asset is subsequently measured  The operator shall initially measure
at: the asset at fair value.
a) Amortized cost  Subsequently measured at amortized
b) Fair value through profit or loss cost
c) Fair value through OCI
Hyperinflation
 PFRS for SMEs and FULL PFRS are the same in all aspects of accounting for an
entity whose functional currency is the currency of a hyperinflationary economy

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