INTRODUCTION IFRS

OBJECTIVES

1. To understand the purpose of financial reporting and the role of reporting standards
2. To describe the status of global convergence of accounting standards
3. To see ongoing barriers in developing one universal accepted set of financial reporting standards
Porpose of financial reporting

Introduction to IFRS (International Financial Reporting Standards)

What is IFRS?

International Financial Reporting Standards (IFRS) are a set of global accounting standards
developed and issued by the International Accounting Standards Board (IASB). IFRS aims to
provide a consistent framework for financial reporting, making financial statements comparable
across international borders. This ensures transparency, accountability, and efficiency in the
financial markets worldwide.

Purpose of IFRS:

The primary goal of IFRS is to standardize financial reporting practices across different countries
and regions. This helps investors, regulators, and other stakeholders compare financial
performance and financial position of companies from different countries on an equal footing.

Key Features of IFRS:

1. Global Consistency: IFRS seeks to harmonize accounting standards globally. While

different countries may have their own local accounting rules (e.g., Generally Accepted
Accounting Principles - GAAP), IFRS provides a unified set of rules.
2. Transparency: By following a standardized approach to accounting, IFRS ensures that
financial statements are clear, transparent, and can be easily understood by investors,
analysts, and regulators.
3. Comparability: With IFRS, companies in different parts of the world use the same
accounting standards, making it easier for investors to compare financial performance.
4. Principles-Based Approach: Unlike rules-based standards (such as U.S. GAAP), IFRS
is principles-based. This means that it focuses on broad accounting principles and
concepts rather than on detailed, specific rules. This allows for greater flexibility in
financial reporting while maintaining consistency.
5. Global Adoption: IFRS has been adopted in over 140 countries, including the European
Union, Canada, Australia, and many others. However, some countries, such as the United
States, still use their own standards, although the U.S. Securities and Exchange
Commission (SEC) has been working towards convergence with IFRS.

History of IFRS:
The development of IFRS began in the 1970s with the establishment of the International
Accounting Standards Committee (IASC). This committee was later replaced by the
International Accounting Standards Board (IASB) in 2001. The IASB is responsible for
issuing IFRS and updating them to reflect changes in the global business environment.

The transition to IFRS has been a gradual process, with many countries choosing to align their
national accounting standards with IFRS over time.

Structure of IFRS:

IFRS consists of:

 IFRS Standards: These include the main rules for how specific transactions should be
reported (e.g., IFRS 9 for Financial Instruments, IFRS 15 for Revenue from Contracts
with Customers).
 IAS (International Accounting Standards): These are the earlier standards developed
by the IASC. Some of these standards are still in use today, though many have been
replaced or updated by newer IFRS.
 Interpretations: The IFRS Interpretations Committee (IFRIC) provides interpretations
on the application of IFRS standards.

Major IFRS Standards:

1. IFRS 1: First-time Adoption of International Financial Reporting Standards

2. IFRS 9: Financial Instruments
3. IFRS 15: Revenue from Contracts with Customers
4. IFRS 16: Leases
5. IFRS 17: Insurance Contracts
6. IAS 1: Presentation of Financial Statements
7. IAS 7: Statement of Cash Flows
8. IAS 12: Income Taxes

Benefits of IFRS:

1. Improved Comparability: Investors and other stakeholders can compare financial

statements from companies around the world more easily.
2. Access to Capital: Companies that follow IFRS may have easier access to global capital
markets as investors are familiar with the standards and can assess the company's
financial health more effectively.
3. Cost Savings: Multinational companies can save costs on maintaining multiple sets of
financial reports for different countries or regions.
4. Enhanced Credibility: Companies reporting under IFRS are often viewed as more
transparent and reliable, boosting investor confidence.

Challenges of IFRS:
 1. Transition Costs: Switching from local accounting standards to IFRS can be costly,
especially for companies that need to train staff, upgrade systems, and audit previous
financial statements.
2. Complexity: Some IFRS standards can be complex and difficult to apply, especially for
smaller businesses.
3. Differences with Local Standards: Countries that have not adopted IFRS may still use
their own national standards, which can create confusion and hinder comparability.

Major IFRS Standards:

1. IFRS 1: First-time Adoption of International Financial Reporting Standards

o Purpose: IFRS 1 provides guidance on how companies should adopt IFRS for the
first time. It sets out the procedures for transitioning from national accounting
standards to IFRS, ensuring that the first-time adoption of IFRS is transparent and
consistent.
o Key Aspects:
 The company must apply IFRS as of the date of transition.
 Previous financial statements must be restated in accordance with IFRS.
 It allows some exemptions to avoid retroactive application of certain IFRS
standards.
 Ensures comparability between financial statements for both first-time
adopters and companies already using IFRS.
2. IFRS 9: Financial Instruments
o Purpose: IFRS 9 addresses the classification, measurement, and impairment of
financial instruments. It replaces the older standard IAS 39.
o Key Aspects:
 Classification and Measurement: Defines categories for financial assets
(amortized cost, fair value through profit or loss, and fair value through
other comprehensive income).
 Impairment: Introduces an expected credit loss model for impairment of
financial assets, improving the timeliness of recognizing losses.
 Hedge Accounting: Provides a more principles-based approach for hedge
accounting, aligning it with risk management practices.
3. IFRS 15: Revenue from Contracts with Customers
o Purpose: IFRS 15 establishes a comprehensive framework for recognizing
revenue. It provides a single, principles-based approach for recognizing revenue
from contracts with customers across all industries.
o Key Aspects:
 5-Step Model: Identifying contracts with customers, identifying
performance obligations, determining the transaction price, allocating the
price to performance obligations, and recognizing revenue when the
performance obligation is satisfied.
 Focuses on the transfer of control, rather than the transfer of risks and
rewards.
 Enhanced disclosures about revenue and cash flows from contracts.
4. IFRS 16: Leases
 o Purpose: IFRS 16 introduces significant changes in the accounting for leases,
requiring lessees to recognize most leases on their balance sheet.
o Key Aspects:
 Lessee Accounting: Requires lessees to recognize assets and liabilities for
all leases, with some exceptions (e.g., short-term leases and leases of low-
value assets).
 Right-of-Use Asset: Lessees must recognize a right-of-use asset
representing their right to use the leased asset and a lease liability
representing the obligation to make lease payments.
 Lessor Accounting: Lessor accounting remains largely unchanged,
continuing with the classification of leases as operating or finance leases.
5. IFRS 17: Insurance Contracts
o Purpose: IFRS 17 provides a comprehensive model for the accounting of
insurance contracts, aiming to improve the transparency, consistency, and
comparability of financial statements in the insurance industry.
o Key Aspects:
 Measurement: Requires the recognition of the insurance contract
liabilities based on the current value of future cash flows, including an
explicit risk adjustment.
 Profit Recognition: Profit is recognized over the life of the insurance
contract as the insurer provides insurance coverage and services, rather
than when premiums are received.
 Enhanced disclosures to provide users with a better understanding of the
insurer's financial position and performance.
6. IAS 1: Presentation of Financial Statements
o Purpose: IAS 1 sets out the general requirements for the presentation of financial
statements, ensuring that they are comparable both over time and with other
entities.
o Key Aspects:
 Defines the components of financial statements (e.g., balance sheet,
income statement, statement of changes in equity, and cash flow
statement).
 Specifies the requirements for fair presentation, going concern
assumptions, and the consistency of presentation.
 Requires that financial statements present fairly the financial position,
financial performance, and cash flows of an entity.
7. IAS 7: Statement of Cash Flows
o Purpose: IAS 7 provides guidelines on how to prepare and present the statement
of cash flows, which reports the cash inflows and outflows during a period.
o Key Aspects:
 Classifies cash flows into three categories: operating, investing, and
financing activities.
 Requires the use of either the direct or indirect method for reporting
operating cash flows.
 Emphasizes the importance of disclosing non-cash transactions that affect
the financial position.
 8. IAS 12: Income Taxes
o Purpose: IAS 12 sets out the accounting treatment for income taxes, including
both current tax and deferred tax.
o Key Aspects:
 Current Tax: Requires the recognition of the amount of income tax
payable or recoverable for the period.
 Deferred Tax: Requires recognition of deferred tax liabilities and assets
for the future tax consequences of temporary differences between the
carrying amounts of assets and liabilities and their tax bases.
 Addresses the treatment of tax losses and tax credits, and provides
guidance on how to account for changes in tax rates and laws.

These standards are designed to improve financial transparency, consistency, and comparability
across different industries and jurisdictions. They help organizations comply with global
financial reporting requirements and provide stakeholders with clearer, more reliable financial
information.

You said:

WHAT ARE THE BASIC PRINCIPLES OF IFRS

ChatGPT said:

ChatGPT

The basic principles of IFRS are designed to ensure that financial statements are transparent,
consistent, and comparable across different countries and industries. These principles guide how
financial transactions should be recognized, measured, presented, and disclosed in a way that
reflects the economic reality of a business. The key principles of IFRS include the following:

1. Relevance

 Financial information must be relevant to the users of financial statements. This means
that the information should have the ability to influence the economic decisions of users.
 For information to be relevant, it must help users evaluate past, present, or future events
or confirm or correct their past evaluations.
 Materiality: This is a key aspect of relevance, meaning that information is material if
omitting or misstating it could influence decisions made by users.

2. Faithful Representation

 Financial statements must faithfully represent the underlying transactions and events they
purport to represent.
 This means that financial information should be:
o Complete: All necessary information must be provided.
 o Neutral: Information should be free from bias.
o Free from Error: The information should reflect accurate and reasonable
estimates.

3. Comparability

 Financial statements should be comparable over time and across different entities. This
allows users to identify trends and make better-informed decisions.
 Consistency in applying accounting policies and standards is essential for comparability.
 IFRS encourages consistency in the presentation of financial statements, though there
may be occasional changes or updates in standards that need to be disclosed.

4. Verifiability

 Information must be verifiable to ensure that it faithfully represents the economic

phenomena it claims to represent.
 Verifiability is achieved when independent observers, using the same methods, can reach
the same conclusions about the information presented.

5. Timeliness

 Financial information should be available in time to influence the decision-making

process of users. Delayed information loses its relevance.
 Companies must ensure that their financial reports are produced and published within a
reasonable time frame.

6. Understandability

 Financial information should be presented in a manner that is clear and easy to

understand for users who have a reasonable knowledge of business and economic
activities.
 IFRS encourages the use of plain language and clear presentation, ensuring that financial
statements are comprehensible without sacrificing the necessary technical details.

7. Accrual Basis of Accounting

 IFRS relies on the accrual basis of accounting, which means that transactions and other
events are recognized when they occur, not when cash is received or paid.
 This principle ensures that financial statements reflect the economic reality of
transactions rather than just cash flow movements.

8. Going Concern
  The going concern assumption is a fundamental principle in IFRS. It assumes that an
entity will continue to operate in the foreseeable future and will not be liquidated or
significantly reduced in scale.
 Financial statements are prepared based on the assumption that the entity will continue its
operations unless there is evidence to the contrary.

9. Substance over Form

 Under IFRS, the economic substance of a transaction or event should take precedence
over its legal form.
 This means that financial statements should reflect the underlying reality of a transaction,
even if it differs from its legal form. For example, a lease that transfers substantially all
the risks and rewards of ownership should be treated as a finance lease, even if the
contract is legally a rental agreement.

10. Consistency in Presentation

 The principle of consistency ensures that once a company chooses an accounting

treatment, it should apply that treatment consistently from one period to the next.
 This principle facilitates comparability over time, as users can more easily track trends
and changes in financial performance.

11. Neutrality

 Financial statements should be neutral, meaning that they should not favor any particular
set of stakeholders or influence decisions in a biased way.
 IFRS requires that information should not be overly optimistic or pessimistic, and should
reflect the true financial position and performance of an entity.

12. Prudence (Conservatism)

 While IFRS is less conservative than some other accounting systems (such as US
GAAP), it still incorporates a degree of prudence.
 This principle encourages cautious judgment when there is uncertainty, ensuring that
assets and income are not overstated, and liabilities and expenses are not understated.
 It emphasizes avoiding the overstatement of financial position or performance, ensuring
that estimates are reasonable and conservative when appropriate.

Summary:

The basic principles of IFRS aim to enhance the transparency, consistency, and reliability of
financial statements, providing users with the information necessary to make informed decisions.
These principles include relevance, faithful representation, comparability, verifiability,
timeliness, understandability, accrual basis, going concern, substance over form,
consistency, neutrality, and prudence. These principles work together to ensure that financial
information is both useful and trustworthy for a wide range of stakeholders, including investors,
regulators, and management.

IFRS: Principle-Based Approach

A principle-based approach means that IFRS focuses on broad guidelines, objectives, and
concepts for financial reporting, giving companies more flexibility in their accounting decisions.
This approach allows for professional judgment and interpretation in specific situations.

Here are some core principles of IFRS that guide this approach:

1. Relevance
o Financial information must be useful for decision-making by investors and other
stakeholders.
o The focus is on providing material information that could affect users' decisions.
2. Faithful Representation
o Information must faithfully represent the economic reality of transactions and
events.
o It should be complete, neutral, and free from error.
3. Accrual Basis of Accounting
o Transactions are recorded when they occur, not when cash is received or paid.
o This principle ensures that financial statements reflect the true economic
performance of a company.
4. Going Concern
o Financial statements are prepared under the assumption that the company will
continue its operations in the foreseeable future.
5. Substance Over Form
o Financial reporting should reflect the underlying economic reality of a
transaction, rather than just its legal form.
6. Comparability
o Financial statements should allow for meaningful comparisons across different
time periods and among different companies.
7. Consistency
o Once an accounting policy is adopted, it should be applied consistently from one
period to the next to ensure comparability.
8. Prudence (Conservatism)
o While IFRS is less conservative than GAAP, it still advises caution when making
estimates and judgments, particularly when there is uncertainty.
9. Understandability
o Financial statements should be presented in a manner that is clear and easy to
understand for users with a reasonable knowledge of business and financial
matters.
GAAP: Rule-Based Approach

In contrast, GAAP is a rule-based system that provides very specific, detailed instructions and
requirements on how to account for various transactions. GAAP tends to be more prescriptive,
leaving less room for interpretation. This approach aims to provide clarity and uniformity in
accounting practices, but it can be seen as less flexible than IFRS.

Here are some key rules under GAAP that illustrate this more rigid approach:

1. Revenue Recognition (Specific Guidelines)

o GAAP provides detailed rules for revenue recognition, including specific
guidance on how to account for contracts, percentage-of-completion, and the
treatment of returns, warranties, and multiple-element arrangements.
2. Inventory Valuation (LIFO vs. FIFO)
o Under GAAP, companies can use the Last-In, First-Out (LIFO) method for
inventory valuation, whereas IFRS does not permit LIFO.
o GAAP also offers detailed guidance on the treatment of inventory write-downs,
lower of cost or market, and impairments.
3. Leases (Finance vs. Operating)
o GAAP has specific rules for classifying leases as operating or capital (finance)
leases, with distinct accounting treatments for each.
o Unlike IFRS, where IFRS 16 mandates nearly all leases to be on the balance
sheet, GAAP has more detailed rules for operating leases that allow for off-
balance-sheet treatment under certain conditions.
4. Depreciation Methods
o GAAP provides detailed guidelines on how to calculate depreciation, specifying
acceptable methods such as straight-line or declining balance, and offering rules
on useful life and residual value.
5. Impairment of Assets (Specific Rules)
o GAAP provides detailed steps for testing the impairment of assets, including
long-lived assets and goodwill. The rules outline the two-step impairment test
for goodwill, which is different from IFRS's one-step approach.
6. Financial Statement Presentation
o GAAP includes specific rules on the format of financial statements, such as the
order in which items should appear on the balance sheet (assets, liabilities, equity)
and income statement (revenues, expenses).
7. Complexity of Financial Instruments
o GAAP has a more detailed and complex set of rules for financial instruments,
derivatives, and hedging activities. IFRS, on the other hand, tends to be more
principles-based, with broader concepts that may require more judgment.
8. Contingent Liabilities and Losses
o GAAP has highly specific rules for recognizing and disclosing contingent
liabilities. For example, if the likelihood of a loss is deemed probable, it must be
accrued; if it is only reasonably possible, it should be disclosed.
Comparison of IFRS and GAAP:

Aspect IFRS (Principle-Based) GAAP (Rule-Based)

Broad principles and guidelines. Detailed, specific rules for various
Approach
Flexibility in judgment. situations.
Revenue Focuses on a broad model (e.g., Very specific rules for recognizing
Recognition IFRS 15). revenue (e.g., industry-specific).
Nearly all leases are capitalized Operating leases can be off-balance-
Leases
on the balance sheet (IFRS 16). sheet (no capitalizing).
Inventory Allows LIFO (Last-In, First-Out) for
Prohibits the use of LIFO.
Valuation inventory valuation.
Goodwill One-step impairment test for
Two-step impairment test for goodwill.
Impairment goodwill.
Financial Broad, principles-based Detailed, rules-based treatment,
Instruments guidelines. especially for derivatives and hedging.
Requires disclosure if probable, Highly specific rules for when and how
Contingencies
with estimation of the amount. to recognize contingencies.
Presentation of Highly detailed rules for how statements
More flexible presentation format.
Statements should be structured and presented.

Advantages and Disadvantages:

Advantages of IFRS (Principle-Based):

 Flexibility: Allows for professional judgment in cases where detailed rules might not
apply.
 Adaptability: Better suited for global operations as it can be applied across different
industries and countries.
 Transparency: Encourages a true and fair view of financial performance based on
economic reality.

Disadvantages of IFRS:

 Subjectivity: Greater reliance on judgment can lead to inconsistencies or lack of

comparability.
 Complexity: In some cases, broad principles can lead to uncertainty in application,
especially for companies transitioning to IFRS for the first time.

Advantages of GAAP (Rule-Based):

 Clarity: Provides detailed guidance on specific transactions, leaving less room for
interpretation.
 Consistency: The detailed rules ensure uniformity across companies and industries,
enhancing comparability.
Disadvantages of GAAP:

 Inflexibility: The rigid rules can lead to financial statements that do not always reflect
the true economic situation.
 Complexity: The large number of detailed rules can be overwhelming and difficult to
apply, especially for companies with diverse operations.

Conclusion:

The principle-based nature of IFRS allows for more flexibility and professional judgment,
while the rule-based nature of GAAP provides more detailed and prescriptive guidance,
reducing ambiguity in accounting practices. While IFRS is more adaptable and focused on the
economic substance of transactions, GAAP emphasizes clear, specific rules that aim for
consistency and comparability, especially in the U.S. market.

IAS 1 to IAS 41 refer to specific International Accounting Standards (IAS) issued by the
International Accounting Standards Board (IASB). These standards address various aspects of
financial reporting and accounting for different areas in a company's operations. Below is an
overview of the key standards from IAS 1 to IAS 41:

IAS 1 - Presentation of Financial Statements

 Objective: To establish the overall framework for financial statement presentation,

ensuring consistency in the presentation of financial statements.
 Key Points:
o Requires a complete set of financial statements to include: a statement of financial
position, income statement (or statement of profit or loss), statement of changes in
equity, statement of cash flows, and notes.
o The financial statements must present a "true and fair view" of the company’s
financial position and performance.
o Emphasizes the concept of going concern (assuming the company will continue to
operate).
o Outlines the presentation of assets and liabilities in order of liquidity.

IAS 2 - Inventories

 Objective: To prescribe the accounting treatment for inventories, including their

measurement and valuation.
 Key Points:
o Inventories should be valued at the lower of cost and net realizable value.
o Cost can be determined using specific identification, FIFO (first in, first out), or
weighted average methods.
 o Includes guidance on inventory write-downs and reversals.

IAS 7 - Statement of Cash Flows

 Objective: To prescribe the presentation of information about the historical changes in

cash and cash equivalents.
 Key Points:
o Requires a cash flow statement that classifies cash flows into operating, investing,
and financing activities.
o Provides guidance on the treatment of interest and dividend payments.
o Direct or indirect methods can be used to present operating cash flows.

IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

 Objective: To set out the criteria for selecting and applying accounting policies,
accounting for changes in accounting estimates, and correcting errors.
 Key Points:
o Requires retrospective application of changes in accounting policies unless
impractical.
o Changes in estimates are applied prospectively.
o Provides guidance on the correction of errors by restating prior periods.

IAS 10 - Events After the Reporting Period

 Objective: To address how to account for events occurring after the reporting period.
 Key Points:
o Events that provide additional information about conditions existing at the
reporting date should be reflected in the financial statements.
o Events that occur after the reporting period but do not affect the financial position
should be disclosed.

IAS 11 - Construction Contracts (Replaced by IFRS 15 - Revenue)

 Objective: To prescribe the accounting for construction contracts, including revenue

recognition.
 Key Points:
o Revenue from long-term construction contracts is recognized using the percentage
of completion method.
 o Covers costs to be included in contract work and how to handle contract
variations.

IAS 12 - Income Taxes

 Objective: To prescribe the accounting for income taxes, including how to account for
current and deferred taxes.
 Key Points:
o Requires recognition of deferred tax assets and liabilities, based on temporary
differences.
o Taxes are recognized in the period in which they occur, and deferred tax is
recognized for future tax consequences of events.

IAS 16 - Property, Plant, and Equipment

 Objective: To prescribe the accounting treatment for property, plant, and equipment
(PPE), including the determination of their cost and depreciation.
 Key Points:
o PPE should be recognized at cost, including any necessary installation or
dismantling costs.
o Depreciation should be recognized systematically over the useful life of the asset.
o PPE should be reviewed for impairment and adjusted as necessary.

IAS 17 - Leases (Replaced by IFRS 16 - Leases)

 Objective: To establish the accounting for leases, distinguishing between operating and
finance leases.
 Key Points:
o Lessees recognize an asset and liability for finance leases, while operating leases
are not recognized on the balance sheet.
o Leases are classified based on the risks and rewards of ownership.

IAS 19 - Employee Benefits

 Objective: To prescribe the accounting for employee benefits, including pensions,

vacation, and other post-employment benefits.
 Key Points:
 o Requires the recognition of employee benefits expenses in the period in which
they are incurred.
o Includes provisions for post-employment benefits, such as pensions, and the
recognition of actuarial gains and losses.

IAS 20 - Accounting for Government Grants and Disclosure of Government

Assistance

 Objective: To prescribe the accounting for government grants and assistance.

 Key Points:
o Government grants should be recognized when there is reasonable assurance that
the grant will be received and conditions are met.
o Grants related to assets are recognized as deferred income and amortized over the
asset's useful life.

IAS 21 - The Effects of Changes in Foreign Exchange Rates

 Objective: To prescribe the accounting treatment for foreign currency transactions and
the translation of financial statements into a reporting currency.
 Key Points:
o Functional currency concept is central, determining how transactions in foreign
currencies are accounted for.
o Requires the translation of foreign currency financial statements into the reporting
currency, with foreign exchange differences recognized in other comprehensive
income.

IAS 23 - Borrowing Costs

 Objective: To provide guidance on how to account for borrowing costs.

 Key Points:
o Borrowing costs that are directly attributable to the acquisition or construction of
qualifying assets should be capitalized as part of the cost of those assets.
o Other borrowing costs should be expensed as incurred.

IAS 24 - Related Party Disclosures

 Objective: To require the disclosure of related party transactions and relationships.

 Key Points:
 o Requires disclosure of relationships between entities where one has control over
the other.
o Related party transactions and balances must be disclosed, including the nature of
the transactions and the amounts involved.

IAS 26 - Accounting and Reporting by Retirement Benefit Plans

 Objective: To prescribe the accounting and reporting for retirement benefit plans,
including pension schemes.
 Key Points:
o Requires pension plans to prepare financial statements and disclosures, including
contributions, benefits, and changes in the plan’s assets.

IAS 27 - Separate Financial Statements

 Objective: To outline the requirements for the preparation of separate financial

statements by an entity.
 Key Points:
o Separate financial statements should present investments in subsidiaries, joint
ventures, and associates at cost or fair value.

IAS 28 - Investments in Associates and Joint Ventures

 Objective: To prescribe the accounting for investments in associates and joint ventures.
 Key Points:
o Investments are accounted for using the equity method, which involves
recognizing the investor’s share of the associate’s or joint venture’s profit or loss.

IAS 29 - Financial Reporting in Hyperinflationary Economies

 Objective: To prescribe the financial reporting requirements for entities operating in

hyperinflationary economies.
 Key Points:
o Requires restatement of financial statements using a general price index to
account for the effects of inflation.
IAS 32 - Financial Instruments: Presentation

 Objective: To establish the presentation of financial instruments, including the

distinction between liabilities and equity.
 Key Points:
o Provides guidance on classifying financial instruments as liabilities or equity
based on their substance.
o Defines the requirements for the presentation of financial instruments in financial
statements.

IAS 33 - Earnings Per Share

 Objective: To prescribe the calculation and presentation of earnings per share (EPS).
 Key Points:
o Requires the calculation of both basic and diluted EPS for entities with publicly
traded equity.

IAS 34 - Interim Financial Reporting

 Objective: To provide guidance on the preparation and presentation of interim financial

reports.
 Key Points:
o Interim financial statements should follow the same principles as annual
statements but can be condensed.
o Emphasizes the requirement for disclosures on significant events and changes in
financial position during the interim period.

IAS 36 - Impairment of Assets

 Objective: To prescribe the accounting treatment for impairments of assets.

 Key Points:
o Requires that assets be reviewed for impairment when there are indications that
their carrying amount may not be recoverable.
o If impaired, the asset’s carrying value should be written down to its recoverable
amount.

IAS 37 - Provisions, Contingent Liabilities, and Contingent Assets

  Objective: To prescribe the accounting treatment for provisions, contingent liabilities,
and contingent assets.
 Key Points:
o Requires the recognition of provisions when a present obligation exists and it is
probable that an outflow of resources will be required to settle the obligation.

IAS 38 - Intangible Assets

 Objective: To provide guidance on the recognition and measurement of intangible assets.

 Key Points:
o Intangible assets should be recognized if they are identifiable, and their cost can
be measured reliably.
o Amortization and impairment of intangible assets are required.

IAS 39 - Financial Instruments: Recognition and Measurement (Replaced by

IFRS 9)

 Objective: To prescribe the recognition and measurement of financial instruments.

 Key Points:
o Provides guidance on the classification of financial assets and liabilities and the
measurement of financial instruments at fair value, amortized cost, etc.

IAS 40 - Investment Property

 Objective: To prescribe the accounting treatment for investment property.