Wiley Interpretation and Application of IFRS Standards

998 Pages·2018·36.179 MB·English

by  PKF International Ltd

FFIRS 03/06/2018 15:46:21 Pagei
2018
Interpretation and
Application of
IFRS
S
tandards
FFIRS 03/06/2018 15:46:21 Pageii
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FFIRS 03/06/2018 15:46:21 Pageiii
2018
Interpretation and
Application of
IFRS
S
tandards
Salim Alibhai Christopher Naidoo
Erwin Bakker Edward Rands
T V Balasubramanian Darshan Shah
Kunal Bharadva Candice Unsworth
Asif Chaudhry Minette van der Merwe
Danie Coetsee Santosh Varughese
Chris Johnstone Paul Yeung
Patrick Kuria
FFIRS 03/06/2018 15:46:21 Pageiv
This editioncontains interpretations andapplication of theIFRS Standards, asapproved by the
InternationalAccountingStandardsBoard(Board)forissueupto31December2017,thatarerequired
tobe applied foraccounting periodsbeginning on1 January 2018.
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FTOC 03/21/2018 15:21:42 Pagev
CONTENTS
AbouttheAuthors vii
1 IntroductiontoInternationalFinancialReportingStandards 1
2 ConceptualFramework 27
3 PresentationofFinancialStatements 45
4 StatementofFinancialPosition 65
5 StatementsofProfitorLossandOtherComprehensiveIncome,
andChangesinEquity 81
6 StatementofCashFlows 101
7 AccountingPolicies,ChangesinAccountingEstimates,andErrors 119
8 Inventories 139
9 Property,PlantandEquipment 157
10 BorrowingCosts 185
11 IntangibleAssets 193
12 InvestmentProperty 221
13 ImpairmentofAssetsandNon-CurrentAssetsHeldforSale 235
14 Consolidations,JointArrangements,AssociatesandSeparateFinancial
Statements 257
15 BusinessCombinations 309
16 Shareholders’Equity 361
17 Share-BasedPayment 383
18 CurrentLiabilities,Provisions,ContingenciesandEventsAfterthe
ReportingPeriod 417
19 EmployeeBenefits 449
20 RevenuefromContractswithCustomer 475
21 GovernmentGrants 515
22 Leases 527
23 ForeignCurrency 583
24 FinancialInstruments 615
25 FairValue 737
v
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vi Contents
26 IncomeTaxes 767
27 EarningsperShare 803
28 OperatingSegments 821
29 RelatedPartyDisclosures 839
30 AccountingandReportingbyRetirementBenefitPlans 853
31 Agriculture 861
32 ExtractiveIndustries 877
33 AccountingforInsuranceContracts 887
34 InterimFinancialReporting 905
35 Hyperinflation 925
36 First-TimeAdoptionofInternationalFinancialReportingStandards 935
Index 967
FLAST 03/06/2018 16:3:16 Pagevii
ABOUT THE AUTHORS
Salim Alibhai, FCCA, CPA (K), is an audit partner at PKF Kenya and heads the IT
assurance including methodology function across the Eastern Africa PKF member firms.
ErwinBakker,RA,isinternationalauditpartnerofPKFWallastintheNetherlands,and
actsasauditpartner,mainlyforinternational(group)audits.Heservesaschairmanofthe
IFRS working group of PKF Wallast and is a member of the Technical Bureau of PKF
Wallast in the Netherlands.
T V Balasubramanian, FCA, CFE, CFIP, is a senior partner in PKF Sridhar &
Santhanam LLP, Chartered Accountants, India, and previously served as a member of
theAuditingandAssuranceStandardsBoardoftheICAI,India.Heisapartofthetechnical
team of the firm engaged in transition to Ind AS (the converged IFRS Standards).
Kunal Bharadva, FCCA, CPA (K), ACA, is a senior manager at PKF Kenya and is
responsible for technical training across the Eastern Africa PKF member firms.
AsifChaudhry,FCCA,CPA(K),MBA,isanauditpartneratPKFKenyaandheadsthe
technicalandqualitycontrolfunctionsacrosstheEasternAfricaPKFmemberfirms.Heis
also a member of the Kenyan Institute’s Professional Standards Committee and the PKF
International Africa Professional Standards Committee.
DanieCoetsee,CA(SA),isProfessorofAccountingattheUniversityofJohannesburg,
specializing in financial accounting. He is the chair of the Financial Reporting Technical
Committee of the Financial Reporting Standards Council of South Africa.
ChrisJohnstoneisamemberoftheICAEWandalsoholdsICAEW’sDiplomainIFRS.
She is the Audit Senior Technical Manager at Johnston Carmichael. She joined Johnston
Carmichael in 2014 having previously worked at Baker Tilly and MacIntyre Hudson in
London.SheisalsoamemberoftheAccountingandAuditingTechnicalCommitteeofthe
PKF firms in the United Kingdom and Republic of Ireland.
PatrickKuria,CPA(K),isanauditpartneratPKFKenyaandspecializesintheauditsof
financial services and the not-for-profit sector.
Christopher Naidoo, CA (SA), member of the South African Institute of Chartered
Accountants,servesastheinternationalaccountingandassurancetechnicalspecialistatPKF
InternationalLtd.HealsoservesonPKF’sInternationalProfessionalStandardsCommittee
(IPSC)andPKF’sAssuranceStrategyGroup(ASG)onaccountingandassuranceprojects.
Edward Rands, FCA, is the Risk and Professional Standards partner at PKF Cooper
Parry.Heleadsthefirm’stechnicalteam,whichisresponsibleformaintainingandupdating
accountingknowledgeandfordealingwithcomplexproblemsandqueriesastheyarise.He
alsochairstheAccountingandAuditingTechnicalCommitteeofthePKFfirmsintheUnited
Kingdom and Republic of Ireland.
DarshanShah,FCCA,CPA(K),CPA(U),ACA,isanauditpartneratPKFKenyaand
heads the technical training function across the Eastern Africa PKF member firms.
CandiceUnsworth,CA(SA),isatechnicalmanageratPKFInternationalLtdandserves
on PKF’s International Professional Standards Committee (IPSC). She qualified at PKF
Durban before moving to the technical division of PKF International in 2015.
MinettevanderMerwe,CA(SA),isPKFSouthAfrica’sIFRStechnicalexpertresponsible
fortheinterpretationandapplicationofIFRSwithintheSouthernAfricanregion.
vii
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viii AbouttheAuthors
SantoshVarughese,CA(Germany),Tax Advisor (Germany),CPA (US),isone of the
seniorpartnersatPKFGermanyandisbasedinFrankfurt.HeistheheadoftheIFRSCenter
ofExcellenceofPKFinGermany.Oneofhisoperativefocusesisonauditsforlargelisted
companies.
Paul Yeung, CPA, served as the Technical Writer of the Education and Training
DepartmentoftheHongKongInstituteofCertifiedPublicAccountantsandisaTechnical
Director of PKF Hong Kong.
Wiley2018InterpretationandApplicationofIFRSStandards.SalimAlibhaietal.
2018JohnWiley&Sons,Ltd.Published2018byJohnWiley&Sons,Ltd.
1
INTRODUCTION TO
INTERNATIONAL FINANCIAL
REPORTING STANDARDS
Introduction 1 AppendixC:IFRSforSMEs 17
OriginsandEarlyHistoryoftheIASB 3 DefinitionofSMEs 18
TheCurrentStructure 6 IFRSforSMEsisaComplete,Self-
ProcessofIFRSStandardSetting 7 ContainedSetofRequirements 19
ModificationsofFullIFRSmadein
Convergence:TheIASBandFinancial
IFRSforSMEs 19
ReportingintheUS 9
DisclosureRequirementsunderIFRS
TheIASBandEurope 12
forSMEs 23
AppendixA:CurrentInternational
MaintenanceoftheIFRSforSMEs 24
FinancialReportingStandards
SMEImplementationGroup 24
(IAS/IFRS)andInterpretations ImplicationsoftheIFRSforSMEs 24
(SIC/IFRIC) 14 ApplicationoftheIFRSforSMEs 25
AppendixB:ProjectsCompletedSince
PreviousIssue(July2016toJune2017) 16
INTRODUCTION
ThemissionoftheIFRSFoundationandtheInternationalAccountingStandardsBoard
(IASB)istodevelopInternationalFinancialReportingStandards(IFRS)thatbringtranspar­
ency,accountabilityandefficiencytofinancialmarketsaroundtheworld.Theyseektoservethe
publicinterestbyfosteringtrust,growthandlong-termstabilityintheglobaleconomy.
The motivation for the convergence of historically dissimilar financial reporting stan­
dardshasbeen,inthemain,tofacilitatethefreeflowofcapitalsothat,forexample,investors
in the US would become more willing to finance business in, say, China or the Czech
Republic.Accesstofinancialstatementswhicharewritteninthesame“language”wouldhelp
to eliminate a major impediment to induce investor confidence, sometimes referred to as
“accounting risk,” which adds to the more tangible risks of making such cross-border
investments. Additionally, permission to list a company’s equity or debt securities on an
exchangehasgenerallybeenconditionalonmakingfilingswithnationalregulatoryauthori­
ties. These regulators tend to insist either on conformity with local Generally Accepted
AccountingPractice(GAAP)oronaformalreconciliationtolocalGAAP.Theseprocedures
aretediousandtime-consuming,andthehumanresourcesandtechnicalknowledgetocarry
them out are not always widely available, leading many would-be registrants to forgo the
opportunityofbroadeningtheirinvestorbasesandpotentiallyloweringtheircostsofcapital.
Therewereoncescoresofuniquesetsoffinancialreportingstandardsamongthemore
developednations(“nationalGAAP”).Theyear2005sawthebeginningofanewerainthe
1