Table of Contents

Title Page

Copyright Page

Foreword

FOREWORD TO THE FIRST EDITION

PREFACE

Acknowledgments

ABOUT THE AUTHORS

Chapter 1 - INTRODUCTION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

1. INTRODUCTION

2. WORLDWIDE ADOPTION OF IFRS

3. REMAINING EXCEPTIONS

4. THE INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE

5. THE INTERNATIONAL ACCOUNTING STANDARDS BOARD

Chapter 2 - IASB FRAMEWORK

1. INTRODUCTION

2. OBJECTIVE OF FINANCIAL STATEMENTS

3. UNDERLYING ASSUMPTIONS

4. QUALITATIVE CHARACTERISTICS OF FINANCIAL STATEMENTS

5. ELEMENTS OF FINANCIAL STATEMENTS

6. CONCEPTS OF CAPITAL AND CAPITAL MAINTENANCE

Chapter 3 - PRESENTATION OF FINANCIAL STATEMENTS (IAS 1)

1. INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS

4. PURPOSE OF FINANCIAL STATEMENTS

5. COMPONENTS OF FINANCIAL STATEMENTS

6. OVERALL CONSIDERATIONS

7. STRUCTURE AND CONTENT

9. RECENT AMENDMENTS TO IAS 1 EFFECTIVE IN 2009

Chapter 4 - INVENTORIES (IAS 2)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS

4. MEASUREMENT OF INVENTORIES

5. COST OF INVENTORIES

6. TECHNIQUES OF MEASUREMENT OF COSTS

7. COST FORMULAS

8. NET REALIZABLE VALUE

9. RECOGNITION OF EXPENSE

10. DISCLOSURE

11. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 5 - CASH FLOW STATEMENTS (IAS 7)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 7, paragraph 6)

4. BENEFITS OF PRESENTING A CASH FLOW STATEMENT

5. CASH AND CASH EQUIVALENTS

6. PRESENTATION OF THE CASH FLOW STATEMENT

7. OPERATING ACTIVITIES

8. INVESTING ACTIVITIES

9. FINANCING ACTIVITIES

10. NONCASH TRANSACTIONS

11. DIRECT VERSUS INDIRECT METHOD

12. REPORTING CASH FLOWS ON A GROSS BASIS VERSUS A NET BASIS

13. FOREIGN CURRENCY CASH FLOWS

14. REPORTING FUTURES, FORWARD CONTRACTS, OPTIONS, AND SWAPS

15. RECONCILIATION OF CASH AND CASH EQUIVALENTS

16. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND OTHER BUSINESS UNITS

17. OTHER DISCLOSURES REQUIRED AND RECOMMENDED BY IAS 7

19. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 6 - ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS ...

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 8)

3. ACCOUNTING POLICIES

4. SELECTION AND APPLICATION OF ACCOUNTING POLICIES

5. CONSISTENCY OF ACCOUNTING POLICIES

6. FACTORS GOVERNING CHANGES IN ACCOUNTING POLICIES

7. APPLYING CHANGES IN ACCOUNTING POLICIES

8. LIMITATIONS OF RETROSPECTIVE APPLICATION

9. DISCLOSURES WITH RESPECT TO CHANGES IN ACCOUNTING POLICIES

10. CHANGES IN ACCOUNTING ESTIMATES

11. CORRECTION OF PRIOR-PERIOD ERRORS

12. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 7 - EVENTS AFTER THE BALANCE SHEET DATE (IAS 10)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS

4. AUTHORIZATION DATE

5. ADJUSTING AND NONADJUSTING EVENTS (after the balance sheet date)

6. DIVIDENDS PROPOSED OR DECLARED AFTER THE BALANCE SHEET DATE

7. GOING CONCERN CONSIDERATIONS

8. DISCLOSURE REQUIREMENTS

9. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS BARLOWORLD

Chapter 8 - CONSTRUCTION CONTRACTS (IAS 11)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 11)

3. COMBINING AND SEGMENTING CONSTRUCTION CONTRACTS

4. CONTRACT REVENUE

5. CONTRACT COSTS

6. RECOGNITION OF CONTRACT REVENUE AND EXPENSES

7. FIXED COST CONTRACT

8. COST-PLUS CONTRACT

9. PERCENTAGE OF COMPLETION METHOD

10. IFRIC 12

11. DISCLOSURES

Chapter 9 - INCOME TAXES (IAS 12)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS

3. CURRENT TAX LIABILITIES AND ASSETS

4. ACCOUNTING FOR DEFERRED TAX

5. CONSOLIDATED FINANCIAL STATEMENTS

6. TEMPORARY DIFFERENCES NOT RECOGNIZED FOR DEFERRED TAX

7. DEFERRED TAX ASSETS

8. TAX RATES

9. DISCOUNTING

10. CURRENT AND DEFERRED TAX RECOGNITION

11. DIVIDENDS

12. DISCLOSURE: KEY ELEMENTS

13. SICs

14. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 10 - SEGMENT REPORTING (IAS 14)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS

3. IDENTIFYING BUSINESS AND GEOGRAPHICAL SEGMENTS

4. REPORTABLE SEGMENTS

5. SEGMENT INFORMATION

6. DISCLOSURE

7. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

APPENDIX

Chapter 11 - PROPERTY, PLANT, AND EQUIPMENT (IAS 16)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 16)

4. RECOGNITION OF AN ASSET

5. DEPRECIATION

6. DERECOGNITION

7. IFRIC INTERPRETATION 1

8. DISCLOSURE

9. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 12 - LEASES (IAS 17)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 17)

4. CLASSIFICATION OF LEASES

5. LEASES IN THE FINANCIAL STATEMENTS OF LESSEES

6. LEASES IN THE FINANCIAL STATEMENTS OF LESSORS

7. SALE AND LEASEBACK TRANSACTIONS AND OTHER TRANSACTIONS INVOLVING THE LEGAL ...

8. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS BARLOWORLD

Chapter 13 - REVENUE (IAS 18)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 18)

4. MEASUREMENT OF REVENUE

5. IDENTIFICATION OF A TRANSACTION

6. SALE OF GOODS

7. RENDERING OF SERVICES

8. INTEREST, ROYALTIES, AND DIVIDENDS

9. DISCLOSURES

10. IFRIC 13, Customer Loyalty Programs

11. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 14 - EMPLOYEE BENEFITS (IAS 19)

1. SCOPE

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 19)

3. DEFINED CONTRIBUTION PLANS AND DEFINED BENEFIT PLANS—CLASSIFICATION

4. DEFINED BENEFIT PLANS

5. DEFINED CONTRIBUTION PLANS

6. CONTRASTING DEFINED BENEFIT AND DEFINED CONTRIBUTION

7. ACCOUNTING FOR DEFINED CONTRIBUTION SCHEMES

8. ACCOUNTING FOR DEFINED BENEFIT PLANS

9. KEY INFORMATION: DEFINED BENEFIT PLANS

10. BALANCE SHEET

11. INCOME STATEMENT

12. MEASURING THE DEFINED BENEFIT OBLIGATION

13. PLAN ASSETS

14. PENSION ASSETS AND LIABILITIES

15. CURTAILMENTS AND SETTLEMENTS

16. ACTUARIAL GAINS AND LOSSES—DEFINED BENEFIT PLANS

17. IFRIC 14, IAS 19—THE LIMIT ON A DEFINED BENEFIT ASSET, MINIMUM FUNDING ...

18. DISCLOSURE

19. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 15 - ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ...

1. INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 20)

4. GOVERNMENT GRANTS

5. RECOGNITION OF GOVERNMENT GRANTS

6. NONMONETARY GRANTS

7. PRESENTATION OF GRANTS RELATED TO ASSETS

8. REPAYMENT OF GOVERNMENT GRANTS

9. GOVERNMENT ASSISTANCE

10. DISCLOSURES

11. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS ACERINOX, S.A., Annual Report 2006

Chapter 16 - THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES (IAS 21)

1. OBJECTIVES

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 21)

3. FUNCTIONAL CURRENCY

4. RECORDING FOREIGN CURRENCY TRANSACTIONS USING THE FUNCTIONAL CURRENCY

5. RECOGNITION OF EXCHANGE DIFFERENCES

6. TRANSLATION TO THE PRESENTATION CURRENCY FROM THE FUNCTIONAL CURRENCY

7. TRANSLATION OF A FOREIGN OPERATION

8. DISPOSAL OF A FOREIGN ENTITY

9. DISCLOSURE

10. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 17 - BORROWING COSTS (IAS 23)

1. BACKGROUND

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 23)

4. BORROWING COSTS

5. QUALIFYING ASSETS

6. RECOGNITION

7. BORROWINGS ELIGIBLE FOR CAPITALIZATION

8. EXCESS OF CARRYING AMOUNT OF THE QUALIFYING ASSET OVER THE RECOVERABLE AMOUNT

9. COMMENCEMENT OF CAPITALIZATION

10. SUSPENSION OF CAPITALIZATION

11. CESSATION OF CAPITALIZATION

12. DISCLOSURE

Chapter 18 - RELATED-PARTY DISCLOSURES (IAS 24)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 24)

4. EXPLANATION AND FURTHER ELABORATION OF THE DEFINITIONS

5. SCOPE EXCLUSIONS

6. DISCLOSURES

7. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS BARLOWORLD, Annual Report 2006

Chapter 19 - ACCOUNTING AND REPORTING BY RETIREMENT BENEFIT PLANS (IAS 26)

1. INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 26)

4. DEFINED CONTRIBUTION PLANS

5. DEFINED BENEFIT PLANS

6. ADDITIONAL DISCLOSURES REQUIRED BY THE STANDARD

Chapter 20 - CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (IAS 27)

1. SCOPE

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 27)

3. PRESENTATION OF FINANCIAL STATEMENTS

4. CONSOLIDATED FINANCIAL STATEMENTS

5. ACCOUNTING PROCEDURES

6. DISCLOSURES

7. RECENT AMENDMENTS TO IAS 27, EFFECTIVE FOR ANNUAL PERIODS BEGINNING ON OR ...

8. OVERVIEW OF AMENDMENTS IN IAS 27 (REVISED 2008)

9. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 21 - INVESTMENTS IN ASSOCIATES (IAS 28)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 28)

3. SIGNIFICANT INFLUENCE

4. Equity Method

5. EXCEPTIONS TO THE EQUITY METHOD

6. INVESTOR CEASES TO HAVE SIGNIFICANT INFLUENCE

7. ACQUISITION OF AN ASSOCIATE AND ACCOUNTING TREATMENT

8. IMPAIRMENT LOSSES

9. DISCLOSURES

10. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 22 - FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES (IAS 29)

1. SCOPE

2. DEFINITION OF HYPERINFLATION

3. CEASING TO BE HYPERINFLATIONARY

4. FUNCTIONAL CURRENCY AND HYPERINFLATION

5. RESTATEMENT OF FINANCIAL STATEMENTS: BALANCE SHEET

6. INCOME STATEMENT

7. SUNDRY POINTS

8. DISCLOSURE

Chapter 23 - INTERESTS IN JOINT VENTURES (IAS 31)

1. SCOPE

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 31)

3. DIFFERENT FORMS OF JOINT VENTURE

4. JOINTLY CONTROLLED OPERATIONS

5. JOINTLY CONTROLLED ASSETS

6. JOINTLY CONTROLLED ENTITIES

7. PROPORTIONATE CONSOLIDATION

8. EQUITY METHOD

9. EXCEPTION TO THE USE OF THE EQUITY METHOD AND PROPORTIONATE CONSOLIDATION

10. FINANCIAL STATEMENTS OF AN INVESTOR

11. DISCLOSURE

12. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS BARLOWORLD

Chapter 24 - FINANCIAL INSTRUMENTS: PRESENTATION (IAS 32)

1. INTRODUCTION

2. SCOPE AND DEFINITIONS OF KEY TERMS (in accordance with IAS 32)

3. PRESENTATION OF LIABILITIES AND EQUITY

4. PRESENTATION OF INTEREST, DIVIDENDS, LOSSES, AND GAINS

5. EXCERPTS FROM FINANCIAL STATEMENTS

Chapter 25 - FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT (IAS 39)

1. INTRODUCTION

2. SCOPE

3. CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES INTO CATEGORIES

4. RECOGNITION

5. DERECOGNITION

6. MEASUREMENT

7. DERIVATIVES

8. HEDGE ACCOUNTING

9. EXCERPTS FROM FINANCIAL STATEMENTS

Chapter 26 - EARNINGS PER SHARE (IAS 33)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 33)

3. ORDINARY SHARES

4. PRESENTATION OF EARNINGS PER SHARE

5. BASIC EARNINGS PER SHARE

6. RIGHTS ISSUES

7. DILUTED EARNINGS PER SHARE

8. PRESENTATION

9. DISCLOSURES

10. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 27 - INTERIM FINANCIAL REPORTING (IAS 34)

1. OBJECTIVE

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 34)

3. FORM AND CONTENT OF INTERIM REPORTS

4. EXPLANATORY NOTES

5. DISCLOSURE OF COMPLIANCE WITH IFRS

6. PERIODS TO BE PRESENTED BY INTERIM FINANCIAL STATEMENTS

7. MEASUREMENT

8. SUNDRY POINTS

9. IFRIC INTERIM FINANCIAL REPORTING AND IMPAIRMENT

10. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS NESTLÉ

Chapter 28 - IMPAIRMENT OF ASSETS (IAS 36)

1. SCOPE

2. DEFINITION OF KEY TERMS (in accordance with IAS 36)

3. IDENTIFYING AN IMPAIRMENT LOSS

4. DETERMINATION OF A RECOVERABLE AMOUNT

5. FAIR VALUE LESS COSTS TO SELL

6. VALUE-IN-USE

7. FUTURE CASH FLOWS

8. DISCOUNT RATE

9. RECOGNITION AND MEASUREMENT OF AN IMPAIRMENT LOSS

10. CASH-GENERATING UNITS

11. GOODWILL

12. TIMING OF IMPAIRMENT TEST

13. GROUP OR DIVISIONAL ASSETS (CORPORATE ASSETS)

14. ALLOCATION OF IMPAIRMENT LOSS

15. REVERSAL OF AN IMPAIRMENT LOSS

16. DISCLOSURE REQUIREMENTS

17. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 29 - PROVISIONS, CONTINGENT LIABILITIES, AND CONTINGENT ASSETS (IAS 37)

1. BACKGROUND AND INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 37)

4. PROVISIONS

5. CONTINGENT LIABILITIES

6. CONTINGENT ASSETS (Possible Assets)

7. INTERPRETATION OF IAS 37 (IFRIC)

8. DISCLOSURES

9. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 30 - INTANGIBLE ASSETS (IAS 38)

1. INTRODUCTION AND BACKGROUND

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IAS 38)

4. ELABORATION AND INTERPRETATION OF THE DEFINITIONS

5. RECOGNITION AND MEASUREMENT

6. INTERNALLY GENERATED INTANGIBLE ASSETS

7. RECOGNITION OF AN EXPENSE

8. WEB SITE DEVELOPMENT COSTS

9. MEASUREMENT AFTER RECOGNITION

10. USEFUL LIFE

11. AMORTIZATION

12. IMPAIRMENT

13. RETIREMENTS AND DISPOSALS

14. DISCLOSURES

15. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 31 - INVESTMENT PROPERTY (IAS 40)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 40)

3. INVESTMENT PROPERTY

4. RECOGNITION

5. MEASUREMENT

6. DISPOSALS

7. DISCLOSURES

8. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS MARKS AND SPENCER GROUP plc

Chapter 32 - AGRICULTURE (IAS 41)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS (in accordance with IAS 41)

3. RECOGNITION AND MEASUREMENT

4. GAINS AND LOSSES

5. FAIR VALUE RELIABILITY

6. GOVERNMENT GRANTS

7. ISSUES IN IAS 41

8. DISCLOSURES

9. EXCERPTS FROM PUBLISHED FINANCIAL STATEMENTS RAINBOW CHICKEN, Annual Report 2007

Chapter 33 - FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ...

1. BACKGROUND

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IFRS 1)

4. DEEMED EXCEPTIONS TO THE “FIRST-TIME ADOPTER” RULE

5. OPENING IFRS BALANCE SHEET

6. ADJUSTMENTS REQUIRED IN PREPARING THE OPENING IFRS BALANCE SHEET (or in ...

7. ACCOUNTING POLICIES

8. REPORTING PERIOD

9. RATIONALE BEHIND USING THE “CURRENT VERSION OF IFRS”

10. TRANSITIONAL PROVISIONS IN OTHER IFRS

11. TARGETED EXEMPTIONS FROM OTHER IFRS

12. BUSINESS COMBINATIONS

13. FAIR VALUE OR REVALUATION AS DEEMED COST

14. EMPLOYEE BENEFITS

15. CUMULATIVE TRANSLATION DIFFERENCES

16. COMPOUND FINANCIAL INSTRUMENTS

17. ASSETS AND LIABILITIES OF SUBSIDIARIES, ASSOCIATES, AND JOINT VENTURES

18. EXCEPTIONS TO RETROSPECTIVE APPLICATION OF OTHER IFRS

19. PRESENTATION AND DISCLOSURE

20. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 34 - SHARE-BASED PAYMENTS (IFRS 2)

1. BACKGROUND AND INTRODUCTION

2. DEFINITION OF KEY TERM (in accordance with IFRS 2)

3. RECOGNITION OF SHARE-BASED PAYMENT

4. EQUITY-SETTLED TRANSACTIONS

5. CASH-SETTLED TRANSACTIONS

6. TRANSACTIONS THAT CAN BE SETTLED FOR SHARES OR CASH

7. DEFERRED TAX IMPLICATIONS

8. DISCLOSURE

9. RECENT AMENDMENTS TO IFRS 2 EFFECTIVE FOR ANNUAL PERIODS BEGINNING ON OR ...

10. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 35 - BUSINESS COMBINATIONS (IFRS3)

1. BACKGROUND AND INTRODUCTION

2. DEFINITIONS OF KEY TERMS

3. IDENTIFYING AN ACQUIRER

4. COST OF ACQUISITION

5. NET ASSETS ACQUIRED

6. GOODWILL

7. PIECEMEAL ACQUISITION

8. INITIAL ACCOUNTING

9. DISCLOSURES

10. RECENT AMENDMENTS TO IFRS 3 EFFECTIVE FOR ANNUAL PERIODS BEGINNING ON OR ...

11. EFFECTIVE DATE AND TRANSITIONAL REQUIREMENTS

12. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 36 - INSURANCE CONTRACTS (IFRS 4)

1. BACKGROUND AND INTRODUCTION

2. DEFINITION OF KEY TERM (in accordance with IFRS 4)

3. FIRST PHASE

4. CHANGES IN ACCOUNTING POLICIES

5. CONCESSIONS IN IFRS 4

6. ACCOUNTING UNDER IFRS 4

7. DISCLOSURES

8. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS BARLOWORLD

Chapter 37 - NONCURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (IFRS 5)

1. SCOPE

2. DEFINITIONS OF KEY TERMS (in accordance with IFRS 5)

3. EXTENSION OF PERIOD BEYOND ONE YEAR

4. SUNDRY POINTS

5. MEASUREMENT OF NONCURRENT ASSETS THAT ARE HELD FOR SALE

6. CHANGE OF PLANS

7. DISCLOSURE: NONCURRENT ASSETS

8. DISCONTINUED OPERATIONS: PRESENTATION AND DISCLOSURE

9. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS

Chapter 38 - EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES (IFRS 6)

1. INTRODUCTION

2. SCOPE

3. DEFINITIONS OF KEY TERMS (in accordance with IFRS 6)

4. RECOGNITION

5. MEASUREMENT

6. IMPAIRMENT

7. DISCLOSURE

8. EXCERPTS FROM FINANCIAL STATEMENTS

Chapter 39 - FINANCIAL INSTRUMENTS: DISCLOSURES (IFRS 7)

1. INTRODUCTION

2. SCOPE

3. SIGNIFICANCE OF FINANCIAL INSTRUMENTS FOR FINANCIAL POSITION AND PERFORMANCE

4. NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS

5. EXCERPTS FROM FINANCIAL STATEMENTS

Index

Portions of this book have their origins in copyrighted materials from the International Accounting Standards Board. These are noted by reference to the specific pronouncements, except for certain of the definitions introduced in bold type, which appear in a separate section at the beginning of each chapter. Complete copies of the international standards are available from the IASB. Copyright © International Accounting Standards Board, 30 Cannon Street, London EC4M 6XH, United Kingdom.

This book is printed on acid-free paper.

Copyright © 2008 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978)750-8400, fax (978)750-4470, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201)748-6011, fax (201)748-6008, or online at http://www.wiley.com/go/permission.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services, please contact our Customer Care Department within the US at 800-762-2974, outside the US at 317-572-3993 or fax 317-572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our Web site at www.wiley.com.

ISBN: 978-0470-17022-9

FOREWORD TO THE FIRST EDITION

by the Chairman of IASB

I and my fellow Board members at the International Accounting Standards Board (IASB) are committed to developing high quality, understandable, and enforceable global accounting standards that meet the demands for comparable and transparent information in the world’s capital markets. Recently we completed a work program to develop and issue a stable platform of such standards. Those standards, the International Financial Reporting Standards (IFRS), are now being implemented in a large number of countries around the world. This is a major achievement on the road towards the global acceptance of a single set of accounting standards.

The responsibility for achieving high quality financial reporting, however, does not rest solely with IASB. Our role is limited to providing the set of standards that entities should apply to achieve high quality, comparable, and transparent financial reporting. For IFRS to be properly understood, implemented, and applied in practice, education and training of all relevant parties—including financial statement preparers, auditors, regulators, financial analysts, and other users of financial statements as well as accounting students—is essential.

This book should be a helpful tool in this regard. The approach of the book is to discuss core concepts and other key elements of the standards and to provide training material in the form of worked case studies and questions to support successful learning of the material. Consequently, the book should be useful for students who prepare for professional exams and for financial statement preparers, auditors, regulators, financial analysts, and other users of financial statements who in their work need to be familiar with the standards. The book should help practitioners and students alike understand, implement, and apply the key elements of the standards.

Sir David Tweedie
Chairman of IASB
December 2005

FOREWORD TO THE FIRST EDITION

by the Secretary General of IOSCO

In recent years much has been written about International Financial Reporting Standards (IFRS) so it is opportune that a publication such as this would be released at this time particularly since this initiative helps to bring such clarity and focus to the debate.

Globalization is taking place at an ever more rapid pace. As cross-border financial activity increases, capital markets become more dependent on each other. As financial markets become ever more interdependent, there is a greater need for the development of internationally recognized and accepted standards dealing with capital market regulation.

The development of IFRS can be seen within this broader framework. They represent an especially useful instrument designed to promote a stable and more secure international regulatory environment. At the same time, IFRS deliver on accounting and disclosure objectives as well as the pursuit of improved transparency of global financial reporting.

For the International Organization of Securities Commissions (IOSCO), the development and subsequent progress of IFRS represents a priority outcome. The organization has been a key stakeholder with an active involvement in the process of setting the standards and in continually assessing their quality.

This involvement reflects a long history of commitment by IOSCO to efforts aimed at strengthening the integrity of international markets through the promotion of high quality accounting standards, including rigorous application and enforcement.

At the same time, there is an obligation of international standard setters to be responsive to concerns over the application and interpretation of the standards. This is a key complement to the success of IFRS and one which we take seriously.

Ultimately, accounting standards setting is a continuous process that must respond to changes and developments in the markets and the information needs of investors. Indeed, it has always been the case that effective financial reporting is fundamental to investor confidence as well as good corporate governance.

In the long term, the adoption of IFRS in many countries and their use in numerous cross-border transactions will help to bring about these high quality global accounting standards by providing transparent and comparable information in financial reports.

Although as an international standards setter IOSCO is not in position to endorse external publications, we have always recognized that by helping to promote clear information about the IFRS, publications such as this one serve a particularly useful function both as an educational opportunity and also to encourage confidence in these standards. On that basis it is most welcome.

Philippe Richard
IOSCO Secretary General
March 2006

PREFACE

This is indeed an exciting time to prepare an updated and expanded edition of this book. Since the issuance of the first edition, International Financial Reporting Standards (IFRS) have continued to extend its reach as the recognized set of accounting standards in an increasing number of jurisdictions around the globe. This trend is set to continue. More countries have announced their intention to adopt IFRS in the next few years. Furthermore, the November 15, 2007 announcement by the US Securities and Exchange Commission (SEC) to allow foreign private issuers to enter the US capital market using IFRS-compliant financial statements (without reconciling to US GAAP) came as a surprise to many in international financial circles and was considered a historic move on the part of the US SEC; this favorable nod by the US SEC to the IASB standards may undoubtedly result in even greater momentum for further acceptance of IFRS globally. With such extraordinary achievements to its credit the IASB feels confident that more and more global players will sooner or later convert to IFRS. In fact, major economic players such as Canada and India have already announced their plans to go the “IFRS route” by 2011. Commenting on how many more countries are expected to adopt IFRS by 2011, Sir David Tweedie, chairman of the IASB, remarked, “we reckon by about 2011 there’ll be 150—all the major economies” (Accountancy, January 2008).

Compared with the first edition, we have expanded the book by including extracts from published financial statements illustrating the application of IFRS. This will help readers better understand how the principles may be applied in practice. Additionally, we have updated the book to incorporate brief explanations of new and revised pronouncements, in particular IFRS 8, Operating Segments, and the revised IFRS 2, IFRS 3, IAS 1, IAS 23, IAS 27, and IAS 32 as well as IFRICs 10 to 14.

We received a good deal of positive feedback and praise from readers of the first edition. With the changes to this second edition, we hope that readers will find this edition even more useful in navigating the complex and changing landscape of IFRS. We continue to invite suggestions and comments for future editions. As with the first edition, any views expressed in this publication are ours alone and do not necessarily represent those of the firms or organizations of which we are part.

Abbas Ali Mirza
Magnus Orrell
Graham Holt
February 2008

ACKNOWLEDGMENTS

This book would not have seen the light of the day without the help of so many wonderful people around the globe who have helped us to put it together. This IFRS workbook project was conceived and conceptualized way back in 1998, but due to certain unanticipated issues that surfaced later, the project was dropped, only to be revived in 2005. We would be remiss in our duties if we did not thank the editors at John Wiley & Sons, Inc., USA, who had implicit faith in our abilities and greatly helped us in giving shape to this creative endeavor. In particular, we wish to place on record our sincere appreciation of the help provided to us by the following individuals of John Wiley & Sons: Robert Chiarelli, for his patronage of this book project; John De Remigis, for his stewardship of this book project from its incubation stages in 1998 to its completion in 2006 and for his perseverance for these many years; Judy Howarth and Brandon Dust, for their able guidance and patience; Natasha Andrews-Noel and Pam Reh and their editorial staff, for their creative and valuable editorial comments and assistance; and the staff of the marketing department for their outstanding marketing plans and ideas.

We also wish to place on record our sincere appreciation of the untiring efforts of Ms. Liesel Knorr, the current president of the German Accounting Standards Board and formerly technical director of the International Accounting Standards Committee (IASC), the predecessor body to the IASB, for her thorough technical review of the entire manuscript. Her invaluable comments have all been taken into account in writing this book.

We are also grateful to all our friends and colleagues who helped us during the preparation of this book.

Abbas Ali Mirza wishes to place on record his sincere gratitude for all the constructive suggestions offered to him by his friends in conceptualizing the idea of such a workbook on IFRS during its formative stages. Furthermore, for their unstinting support, creative ideas, and invaluable contributions, he also wishes to thank his peers and mentors, in particular: Omar Fahoum, chairman and managing partner, Deloitte & Touche (M.E.); Graham Martins, partner, Pannell Kerr Forster, United Arab Emirates; Dr. Barry J. Epstein, partner, Russell Novak & Co., LLP, USA, his longtime coauthor of the other IFRS book published by John Wiley & Sons, Inc., (Wiley: IFRS); and all his partners and colleagues from Deloitte & Touche (M.E.), including but not limited to Joe El Fadl, Graham Lucas, Anis Sadek, Musa Dajani, Ghassan Jaber, Indika Wijayarathne, Vikas Takhtani, Hala Khalid, Shivani Agarwal, Nisreen Ghulam and Umme Kulsoom Soni.

Magnus Orrell extends his special thanks to his wife, Kristin Orrell, as well as to Andrew Spooner of Deloitte & Touche LLP in the United Kingdom and Bengt-Allan Mettinger, accounting consultant in Thailand, who all read earlier versions of the material in this book relating to financial instruments and provided many valuable comments and suggestions.

Graham Holt wishes to thank all the special people who have directly and indirectly helped him in preparing this book. (They know he is grateful.)

ABOUT THE AUTHORS

Abbas Ali Mirza is a partner at Deloitte & Touche (M.E.) based in Dubai and handles audits of major international and local clients of the firm. At Deloitte he is also responsible for regional functions, such as technical consultation on complex accounting and auditing issues. Abbas heads the Learning function for Deloitte, Middle East, and is a member of the Global firm’s EMEA Learning Executive. He has had a distinguished career in accounting, auditing, taxation, and business consulting and has worked for international audit and consulting firms in the United States of America, the Middle East, and India. Abbas is a frequent principal/keynote speaker at major global conferences on International Financial Reporting Standards (IFRS) and has chaired world-class events on accounting, such as the World Accounting Summit held in Dubai under the auspices of the United Nations Conference on Trade and Development (UNCTAD). He has coauthored another book on IFRS published by John Wiley & Sons, Inc., Wiley: IFRS. He holds or has held many positions of repute in the accounting profession globally including

• 21st Session Chairman, United Nations’ Intergovernmental Working Group of Experts on International Standards on Accounting & Reporting (ISAR), to which position he was elected at the UNCTAD in Geneva in November 2004

• Member of the Developing Nations Permanent Task of the International Federation of Accountants (IFAC), recently renamed IFAC’s Developing Nations Committee

• Member of the Accounting Standards Committee, Securities and Exchange Board of India (SEBI), India

• Chairman of Auditors’ Group, Dubai Chamber of Commerce and Industry (DCCI)

• Technical Adviser to the Gulf Co-operation Council Accounting and Auditing Organization (GCCAAO)

• Member of the Consultative Group of Experts on Corporate Governance Disclosures, United Nations Conference on Trade & Development (UNCTAD)

• Member of the Consultative Group of Experts on Corporate Social Responsibility, United Nations Conference on Trade & Development (UNCTAD)

Magnus Orrell is a partner at Deloitte & Touche LLP in Wilton, Connecticut (USA). His focus is on financial instrument accounting issues under both IFRS and United States generally accepted accounting principles (GAAP). Prior to joining Deloitte in 2003, he served in various international standard-setting and regulatory roles. For three years, he was a project manager at the International Accounting Standards Board (IASB) in London, the United Kingdom, playing a key role in IASB’s work to develop and improve the international accounting standards for financial instruments. The prior three years, he served as a member of the Secretariat of the Basel Committee on Banking Supervision at the Bank for International Settlements (BIS) in Basel, Switzerland, working with senior central bank and banking regulatory officials from around the world in formulating regulatory views and policies on financial reporting and disclosure issues. Earlier on in his career, he was an official of the European Commission in Brussels, Belgium, and an accounting specialist at the Financial Supervisory Authority (Finansinspektionen) in Stockholm, Sweden, respectively. Apart from being a Certified Public Accountant (CPA) in the State of Connecticut, he also holds the Chartered Financial Analyst (CFA) designation conferred by the CFA Institute (formerly the Association for Investment Management and Research), the Certified Internal Auditor (CIA) designation conferred by the Institute of Internal Auditors (IIA), and the Certified Financial Risk Manager (FRM) designation conferred by the Global Association of Risk Professionals (GARP). Additionally, the IIA has awarded him its William S. Smith Certificate of Excellence for outstanding performance on the CIA exam. He also holds a number of academic degrees, including a Degree and Master of Science in business administration and economics (Sweden), a Degree of Master of Laws (Sweden), and a Master of Accounting and Financial Management (United States). He has been a frequent speaker at seminars, conferences, and executive-level meetings in many countries in the Americas, Europe, and Asia, and has authored articles in both accountancy and finance periodicals.

Graham Holt qualified as a Chartered Accountant (Institute of Chartered Accountants in England & Wales) with Price Waterhouse and is a fellow of the Association of Chartered Certified Accountants (ACCA). He holds B.Com and MA Econ qualifications also. As a current ACCA examiner, he has been prominent in the development of their IFRS stream and their examination scheme. He is a principal lecturer at the Manchester Metropolitan University Business School, where he is director of Professional Courses. Graham has given lectures on IFRS throughout the world and has many publications in the subject area. He has also been involved in running training courses on IFRS.

1

INTRODUCTION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

1. INTRODUCTION

International Accounting Standards (IAS), now renamed International Financial Reporting Standards (IFRS), are gaining acceptance worldwide. This section discusses the extent to which IFRS are recognized around the world and includes a brief overview of the history and key elements of the international standard-setting process.

2. WORLDWIDE ADOPTION OF IFRS

2.1 In the last few years, the international accounting standard-setting process has been able to claim a number of successes in achieving greater recognition and use of IFRS.

2.2 A major breakthrough came in 2002 when the European Union (EU) adopted legislation that requires listed companies in Europe to apply IFRS in their consolidated financial statements. The legislation came into effect in 2005 and applies to more than 8,000 companies in 30 countries, including countries such as France, Germany, Italy, Spain, and the United Kingdom. The adoption of IFRS in Europe means that IFRS has replaced national accounting standards and requirements as the basis for preparing and presenting group financial statements for listed companies in Europe.

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!

Lesen Sie weiter in der vollständigen Ausgabe!