The full form of IFRS is International Financial Reporting Standards. IFRSs have been implemented in more than 110 countries in the world, many are still considering adopting them.

  • IFRS 3 business combinations

    IFRS 3 – Business Combinations, Scope and Disclosure Requirements

    Overview IFRS 3 Business Combinations describes how an acquirer accounts for the purchase of control of a business (e.g. an acquisition or merger). These business combinations are accounted for using the ‘acquisition method,’ which usually requires the purchase of assets and the assumption of liabilities to be valued at their fair values at the acquisition date. In January 2008, a new version of IFRS 3 was released. It applies to business combinations that occur in an entity’s first year period commencing on or after 1 July 2009. Background IFRS 3 (2008) aims to improve the relevance, trustworthiness, and comparability of information concerning business combinations (such as acquisitions and mergers) and their impacts. It establishes the rules for recognising and measuring acquired assets and liabilities, determining goodwill, and making required disclosures. Scope IFRS 3 must be used to account for business combinations, however, it does not apply to the following: Joint venture creation Acquisition of a…

    Read More »
  • share based payment

    IFRS 2 – Share-Based Payment | Meaning and Scope

    Overview IFRS 2 Share-based Payment requires a company to account for share-based payment transactions (such as granted shares, stock options, or share appreciation rights) in its financial statements, including payments to employees or other parties in cash, other assets, or equity instruments of the entity. Specific criteria apply to equity- and cash-settled share-based payment transactions, as well as to transactions in which the entity or supplier may choose between cash and stock instruments. IFRS 2 was initially published in February 2004 and became effective for fiscal years beginning on or after 1 January 2005. Definition of share-based payment A share-based payment is a transaction in which an entity receives goods or services in exchange for its equity instruments or incurs liabilities depending on the price of the entity’s shares or other equity instruments. Accounting requirements for share-based payments vary according to how the transaction will be paid, namely through the issuing of equity, cash, or…

    Read More »
  • IFRS 1

    IFRS 1 — First-time Adoption of International Financial Reporting Standards

    IFRS 1 First time Adoption of International Financial Reporting Standards sets out the processes that a company must take when it adopts IFRSs for the first time as the foundation for compiling its general purpose financial statements. The IFRS offers certain exemptions from the general obligation to comply with each IFRS effective at the conclusion of its initial IFRS reporting period. A revised version of IFRS 1 was released in November 2008 and applies if an entity’s first IFRS financial statements are for a period beginning on or after 1 July 2009. Definition of first-time adoption A first-time adopter is an organisation that declares explicitly and unequivocally for the first time that its general purpose financial statements comply with IFRSs. A business may be a first-time adopter if it created IFRS financial statements for internal management use in the prior year and did not make such IFRS financial statements available to owners or external parties…

    Read More »
  • why should India adopt IFRS

    Why India should adopt IFRS? – An Analysis

    Introduction The remarkable acceptance of IFRS by 140+ countries across the globe indicates that it will become a ‘de-facto’ language for financial reporting globally. A global, uniform standard in financial reporting is much required to achieve definite reporting structure, sustainable reporting of the business affairs, reduce redundancy, enhance comprehensiveness and comparability. However, while talking about global harmonisation in financial reporting, it should be noted that the disparities in accounting standards are not just inter-economy but intra-economy as well. Within a country, gradation in the standards exists. Thus, it is important to evaluate whether sustainable reporting by adopting a common global standard like IFRS will ensure holistic sustainability in financial reporting. Also, the current and potential usefulness of such reporting should be evaluated. Further, the current and potential usefulness of sustainable reporting standard is evaluated for the chosen country India. Why IFRS? The adoption of IFRS by different countries is either in the form of integration…

    Read More »
  • ifrs versus gaap

    Differences between International Financial Reporting Standards and GAAP

    IFRS Versus GAAP There are two sets of accounting rules accepted for international use: U.S. standards referred to as Generally Accepted Accounting Principles (GAAP), and international standards known as International Financial Reporting Standards (IFRS). The first is developed by the Financial Accounting Standards Board (FASB), whose power is derived from the United States Securities and Exchange Commission (SEC). The second is developed by the International Accounting Standard Boards (IASB), an independent London-based accounting standard-setting body. Although GAAP and IFRS share some similarities in presenting their financial statements, they do not agree on every issue. Differences do exist in reporting and classifying elements of Income Statements and Balance Sheets between these two sets of rules. Differences between International Financial Reporting Standards and GAAP Unlike the more detailed GAAP rule-based standard, IFRS principle-based tends to be simpler in its accounting and disclosure requirements. The Income Statement is a required statement under IFRS as it is under GAAP…

    Read More »
  • GAAP and Ifrs impact of globalisation

    GAAP and IFRS: Effects of Globalization

    GAAP and IFRS Globalisation has considerably influenced the way accounting is being practised worldwide. The reason for this is that laws are diverse throughout every country. U.S. accountants are required to follow the Generally Accepted Accounting Principles (GAAP). Worldwide, there are currently over 115 countries using the International Financial Reporting Standards. Due to globalisation, the Securities and Exchange Commission (SEC) has planned to have all U.S. companies using IFRS by 2015. Accountants understand that global business will profit best from a single set of accounting standards. The Financial Accounting Standards Board, a significant source of the documents found within GAAP, and the International Accounting Standards Board, whom IFRS was issued by, have both stated that they will begin to merge GAAP and IFRS by issuing a memorandum of understanding. This is usually referred to as the Norwalk agreement and asserts that the two Boards will: make their existing financial reporting standards entirely harmonious as soon…

    Read More »
  • accounting for revenue recognition

    IFRS Accounting for Revenue Recognition and Long Term Contracts

    The general concepts and principles used for revenue recognition are similar between GAAP and IFRS. They differ in the details. GAAP provides specific guidelines for revenue recognition for many different industries whereas IFRS does not. The International Accounting Standards Board illustrates revenue as including both gains and revenues. When working under GAAP, revenues and gains have completely separate definitions. Generally, the International Financial Reporting Standards principle for revenue recognition is based essentially on the probability that the economically achievable benefits associated with the transaction will flow through to the company that is selling the goods etc. The costs and revenues must be capable of being reliably measured. The concepts used by GAAP such as realised, realisable, and earned are a basis for revenue recognition. The International Financial Reporting Standards has only one basic standard on revenue recognition. It is titled IAS 18. On the other hand, GAAP has many standards that are related to revenue…

    Read More »
  • pros and cons of adopting ifrs

    The Pros and Cons of Adopting IFRS

    International Financial Reporting Standards (IFRS) is a set of accounting standards developed by the International Accounting Standards Board (IASB). IFRS has been adopted by more than 12,000 organisations in over 100 countries and is becoming the global standard for the preparation of financial statements of public companies throughout the world. However, in the U.S., GAAP (General Accepted Accounting Principles) is applied. Recently, the G20 leaders have called for significant progress towards moving to one set of high-quality global accounting standards. Now SEC is working on an updated “roadmap” that will lay out a schedule and major milestones for moving the U.S. towards its adoption by all U.S. public companies. There are advantages and disadvantages of converting to IFRS, and various arguments have made for and against its adoption. Pros of IFRS A single set of accounting standards will render comparability and enable companies from different segments of the world to apply the same standards. It increases…

    Read More »
Back to top button