Full Pfrs vs. Pfrs for Smes
-
Upload
allen-ancero -
Category
Documents
-
view
1.854 -
download
51
Transcript of Full Pfrs vs. Pfrs for Smes
1
Diaz Murillo Dalupan
and Company
Full IFRS vs. PFRS for Full IFRS vs. PFRS for Full IFRS vs. PFRS for Full IFRS vs. PFRS for
SMEsSMEsSMEsSMEs
Atty. Bethuel V. TanupanAtty. Bethuel V. TanupanAtty. Bethuel V. TanupanAtty. Bethuel V. TanupanCPA, CMA, CPA, CMA, CPA, CMA, CPA, CMA, DipIFRSDipIFRSDipIFRSDipIFRS, MM, MM, MM, MM
Partner for Technical StandardsPartner for Technical StandardsPartner for Technical StandardsPartner for Technical Standards
Diaz Murillo Dalupan
and Company
Seminar Outline
• Full IFRS vs IFRS for SMEs
– Accounting Framework and first-time
adoption
– Financial Statements
– Income and Expenses
– Financial Assets & Liabilities
– Non-financial assets
– Non-financial liabilities and equity
– Other Topics
2
Diaz Murillo Dalupan
and Company Accounting
Framework and first-
time adoption
Apply to all
entities that issue
general purpose
FS.
No public
accountability
Small listed
entities not
included.
Scope
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company
• Publicly accountable entities
– Files or is in the process of filing FS with SEC
or other regulatory organizations for the
purpose of issuing any class of instrument in a
public market
– Holds assets in a fiduciary capacity for a
broad group of outsiders
• (banks, insurance companies, securities brokers
and dealers, pension funds.
Accounting
Framework and
first-time adoption
3
Diaz Murillo Dalupan
and Company
Accounting
Framework and
first-time adoption
Include historical
cost, current
cost, realizable
value, present
value.
Usually historical
cost subject to
impairment.
Fair Value on
certain accounts.
Measure-
ment
bases
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company
• Fair Value Measurement
– IFRS for SMEs• Certain categories of financial instruments
• Investments in associates and joint ventures
• Investment property and agricultural assets
– FULL IFRS• Investment Property, biological assets and certain categories of financial instruments
Accounting
Framework and
first-time adoption
4
Diaz Murillo Dalupan
and Company
Accounting
Framework and
first-time adoption
Presents its first
annual FS that
conform to IFRS.
Presents its first
annual FS that
conform with IFRS
for SMEs
regardless of
whether its
previous
framework was full
IFRS.
First time
adopter
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company
Accounting
Framework and
first-time adoption
The beginning of
the earliest
period for which
full comparative
information is
presented in
accordance with
full IFRS.
The beginning of
the earliest period
for which full
comparative
information is
presented in
accordance with
IFRS for SMEs
Date of
transition
Full IFRSIFRS for SMEs
5
Diaz Murillo Dalupan
and Company
• Reconciliation required– Equity reported under its previous financial reporting framework to its equity under IFRS for SMEs for both the transition date and end of the latest period presented in the entity’s most recent annual FS under its previous financial reporting framework
– Profit or loss reported under its previous financial reporting framework for the latest period in its most recent annual FS to its profit or loss under IFRS for SMEs for the same period.
Accounting
Framework and
first-time adoption
Diaz Murillo Dalupan
and Company
• Mandatory exceptions from retrospective
application (no change in accounting
policy)
– Derecognition of financial assets and
liabilities
– Hedge accounting
– Estimates
– Discontinued operations
– Measuring non-controlling interests
Accounting
Framework and
first-time adoption
6
Diaz Murillo Dalupan
and Company
• Some optional exemptions from
retrospective application (See IFRS
FOR SMEs 35.10)
– FV or revaluation as deemed cost for
PPE, investment property or intangible
assets.
– Deferred income tax
– Arrangements containing a lease
Accounting
Framework and
first-time adoption
Diaz Murillo Dalupan
and Company
• General exemption from
retrospective application –
– On the ground of impracticability.
• Impracticable is defined as when the entity
cannot apply it after making every
reasonable effort to do so.
Accounting
Framework and
first-time adoption
7
Diaz Murillo Dalupan
and Company Financial
Statements
Not allowed.Allowed if the only
changes to equity
of an entity are a
result of profit or
loss, payment of
dividends,
correction of prior
period errors or
change in
accounting policy
Combined
statement
of income
and
retained
earnings
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Income and
Expenses
Borrowing costs
that are directly
attributable to the
acquisition,
construction or
production of
qualifying asset
as part of the cost
of that asset are
capitalized.
All borrowing
costs are
expensed.
Borrowing
costs
Full IFRSIFRS for SMEs
8
Diaz Murillo Dalupan
and Company Income and
Expenses
May be
recognized
immediately or
amortized into P/L
over a period not
exceeding the
expected
remaining
working lives of
participating
employees
Recognized in
FULL in profit or
loss or in other
comprehensive
income (without
recycling) in the
period in which
they occur.
Actuarial
Gains and
Losses
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Income and
Expenses
Recognized as an
expense on a SL
basis over the
average period
until the plan
amendments
vest.
Recognized in
FULL in profit or
loss in the period
in which they
occur
Past
Service
Costs
Full IFRSIFRS for SMEs
9
Diaz Murillo Dalupan
and Company Financial Assets
and Liabilities
FVTPL
Held to maturity
investments
Loans and
receivables
Available-for-sale
financial assets
Basic and complex
financial
instruments
Categories
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Financial Assets
and Liabilities
Not applicableBasic: Cash, Trade
accounts and
Notes
receivable/payable
, Loans from
banks/3rd parties,
Commercial
Paper, Bonds
Examples of
basic and
more
complex
financial
instruments
Full IFRSIFRS for SMEs
10
Diaz Murillo Dalupan
and Company Financial Assets
and Liabilities
Not applicableCOMPLEX:
Asset-backed securities and
repurchase agreements.
Options, rights, warrants,
futures, forward contracts
and interest rate swaps that
can be settled in cash or by
exchaging another financial
instrument.
Hedging instrument.
Commitments to make a loan
to another entity.
Investments in another
entity’s equity instrument.
Investment in covertible
debt.
Examples of
basic and
more
complex
financial
instruments
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Financial Assets
and Liabilities
Fair Value plus
transaction cost.
Fair value is normally
the transaction price,
unless part of the
consideration is for
something other than
a financial instrument
or the instrument
bears an off-market
interest rate.
Transaction price
(including transaction
costs unless the
instrument is
measured at FVTPL).
If payment is deferred
or is financed by an
interest rate that is not
a market rate, PV of
the future payments
Initial
measurement
Full IFRSIFRS for SMEs
11
Diaz Murillo Dalupan
and Company Financial Assets
and Liabilities
Held for trading –
FVTPL
Held to maturity and
loans and receivables –
amortized cost.
Financial liabilities
other than FVTPL –
amortized cost.
Available for sale – FV
to equity.
Investment in equity
securities whose FV
cannot be measured –
Cost less impairment.
Basic debt instruments
are measured at
amortized cost using the
effective interest
method.
Investments in non-
convertible and non-
puttable ordinary sahres
or preference shares are
measured at FVTPL if FV
can be measured
reliably, otherwise, cost
less impairment.
Subsequent
measurement
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Financial Assets
and Liabilities
Impairment loss is
measured as the
difference between
the carrying amount
of the financial asset
and the PV of
estimated future cash
flows discounted at
the current market
rate of return for a
similar financial
assets.
Impairment loss is the
difference between
the asset’s carrying
amount and the best
estimate of the amount
that the entity would
receive for the asset if
it were to be sold.
Assets
measured at
cost less
impairment
Full IFRSIFRS for SMEs
12
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Borrowing costs
are included in
the cost of
inventories under
limited
circumstances as
identified in IAS
23.
Borrowing cost is
an expense.
Inventory –
other cost
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Borrowing cost
that are directly
attributable to the
acquisition,
construction or
production of a
qualifying asset
are to be
capitalized.
Borrowing costs
are recognized as
expense.
Investment
property –
initial
measurement
Full IFRSIFRS for SMEs
13
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Borrowing costs
that are directly
attributable to the
acquisition,
construction or
production of a
qualifying asset
are required to be
capitalized as
part of the cost of
that asset
Borrowing cost
are recognized as
an expense.
PPE – initial
measurement
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Cost model or
revaluation
model.
Cost less
accumulated
depreciation and
any impairment
losses (cost
model).
PPE –
subsequent
measurement
Full IFRSIFRS for SMEs
14
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Significant parts
may have
different useful
lives.
Depreciation is
calculated based
on each individual
part’s life.
Cost of an item of
PPE is allocated to
its significant
parts, with each
part depreciated
separately only
when the parts
have significantly
different patterns
of benefit or
consumption.
PPE –
Components
approach
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Review ,
depreciation
method, residual
value and useful life
at least at each
annual reporting
date and amended
if expectations
differ from previous
estimates.
Review depreciation
method, residual
value and useful life
if there is an
indication of change
since the last
reporting date and
amended if
expectations differ
from previous
estimates.
PPE –
Depreciable
amount,
method and
depreciation
period
Full IFRSIFRS for SMEs
15
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Research costs are
expensed as
incurred.
Development costs
are capitalized
when specific
criteria are met.
All research and
development costs
are recognized as
expense.
Intangible
asset –
research and
development
costs
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Cost model or
Revaluation Model.
Cost modelIntangible
asset –
measurement
after initial
recognition
Full IFRSIFRS for SMEs
16
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Either FINITE or
INFINITE
Considered to be
FINITE.
Intangible
asset – useful
life
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Amortize those with
finite useful life.
Review amortization
method and residual
value at least each
annual reporting
period.
Amortized on a
systematic basis over
the useful life.
Useful life is presumed
to be 10 years if a
reliable estimate
cannot be made.
Review basis of
amortization for any
indication of change.
Intangible
assets – with
finite useful
life
Full IFRSIFRS for SMEs
17
Diaz Murillo Dalupan
and Company Non-Financial
Assets
Not amortized.
Useful life is reviewed
at each annual
reporting period to
determine whether
events and
circumstances
continue to support
an indefinite useful
life assessment.
Not applicable. All
intangible assets are
considered to have
finite lives.
Intangible
assets – with
indefinite
useful life
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Non-Financial
Assets
The following are
tested for impairment
irrespective of
whether there is
indication of
impairment:
1) Intangible asset
with an indefinite
useful life or an
intangible asset not
yet available for use.
2) Goodwill.
Assets (including
goodwill) are tested
for impairment when
there is an indication
that the asset may be
impaired.
The existence of
impairment indicaotrs
is assessed at each
reporting date.
Impairment
of assets –
annual
assessment
of indicators
Full IFRSIFRS for SMEs
18
Diaz Murillo Dalupan
and Company
Non-Financial
Liabilities and
Equity
If the contributions to
a DC Plan do not fall
within 12 months
after the end of the
period, the future
contributions are
discounted.
Contribution payable
for a period to the fund
is recognized as a
liability for a DC plan
after deducting any
amount already paid.
Retirement
benefits –
measurement
of defined
contribution
plans.
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company
Non-Financial
Liabilities and
Equity
Net total of :
PV of the DB obligation
at the end of the
reporting period.
Plus/minus any
actuarial gains/losses
not recognized due to
the corridor method.
Minus any unrecognized
past service cost.
Minus the FV at the
reporting date of the
plan assets out of which
the obligations are to be
settled directly.
Net total of:
PV of the DB obligation
at the end of the
reporting period
Less that FV at the
reporting date of plan
assets (if any) out of
which the obligations
are to be settled
directly.
Defined
benefit
liability
Full IFRSIFRS for SMEs
19
Diaz Murillo Dalupan
and Company
Non-Financial
Liabilities and Equity
Projected unit credit
method is required for
calculating DB
obligations.
This method sees each
period of service as
giving rise to an
additional unit of benefit
entitlement and
measures each unit
separately to build up the
final obligation.
Projected unit credit
method is required if the
information that is needed
to make such a calculation
is already available, or can
be obtained without undue
cost or effort.
If not, an alternative method
is permitted in which future
salary progression, future
service, and possible
mortality during an
employee’s period of
service are not considered.
Actuarial
Valuation
Method
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company
Non-Financial
Liabilities and Equity
Expected return on plan
assets is based on
market expectations at
the beginning of the
period for returns over
the entire life of the
related obligation. It
reflects cahgnes in the
fair value of plan assets
as a result of actual
contributions and
benefits paid. The
difference between
actual and expected
returns on plan assets is
an actuarial gain or loss.
No distinction between
expected and actual
report on plan assets. All
changes in the fair value
of plan assets are
recorded in profit or
loss.
Expected
return on
plan assets
Full IFRSIFRS for SMEs
20
Diaz Murillo Dalupan
and Company
Non-Financial
Liabilities and Equity
The concept of valuation
allowance is not
applicable. Instead, a
deferred tax asset is only
recognized to the extent
that it is probable that
there will be sufficient
future taxable profit to
enable recovery of the
deferred tax asset. The
net carrying amount of
deferred tax asset is
likely the same, but full
IFRS does not require the
disclosure of a valuation
allowance.
Valuation allowance is
recognized so that the
net carrying amount of
the deferred tax asset
equals the highest
amount that is more
likely than not to be
recovered.
Deferred tax
– recognition
and
measurement
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company Agriculture
Exemption from
measurement at FV is
only allowed if the FV
cannot be measured
reliably.
Measure biological
assets at FV less cost to
sell where such FV is
readily determinable
without undue cost or
effort.
Where FV is not used,
the entity may use cost
less any accumulated
depreciation and any
accumulated
impairment loss.
Recognition
and
measurement
Full IFRSIFRS for SMEs
21
Diaz Murillo Dalupan
and Company Agriculture
Exemption from
measurement at FV is
only allowed if the FV
cannot be measured
reliably.
The agricultural
produce harvested
from biological assets is
measured at fair value
less estimated cost to
sell at the point of
harvest.
Gains or losses on
initial recognition and
from change in FV are
recognized in profit or
loss.
Recognition
and
measurement
Full IFRSIFRS for SMEs
Diaz Murillo Dalupan
and Company
• End of presentation.