Discuss about IFRS

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CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

List of International Financial Reporting Interpretation Commitee (IFRIC)

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

§ IFRIC-1- Changes in existing decommissioning, restoration and similar liabilities

§ IFRIC-2- Members share in cooperatives and similar instruments

§ IFRIC-4- Determining whether an arrangement contains a lease

§ IFRIC-5- rights to interests arising from decommissioning, restoration and similar liabilities

§ IFRIC-6-Liabilities arising from participating in a specific market- waste electrical and electronic equipment

§ IFRIC-7- Applying the restatement approach IAS 29

§ IFRIC-8- Scope of IFRS 2

§ IFRIC-9- reassessment of embedded derivatives

§ IFRIC-10- Interim financial reporting and impairment

§ IFRIC-11- Group and treasury share transactions

§ IFRIC-12- Service concession arrangements

§ IFRIC-13- Customer Loyalty programs

§ IFRIC-14- the limit on a defined benefit asset, minimum funding and their interaction

§ IFRIC 15-Agreements for the construction of real estate

§ IFRIC 16- Hedges of a net investment in a foreign operation

§ IFRIC 17- Distribution of non-cash assets to owners

§ IFRIC 18- Transfers of assets to customers

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

List of Standard Interpretation Commitee (SIC)

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

SIC 7- Introduction of the Euro

SIC 10- Government Assistance-no specific relation to operating activities

SIC 12- Consolidation- SPE’s

SIC 13- Jointly controlled entities-non-monetary contributions by venturers

SIC 15- Operating Leases- incentives

SIC 21- Income taxes-recovery of revalued non-depreciable assets

SIC 25- Income taxes-changes in the tax status of an entity or its shareholders

SIC 27- Evaluating the substance of a transaction involving the legal form of a lease

SIC 29- Service Concession agreements- disclosures

SIC 31- Revenue barter transactions involving advertising services

SIC 32- Intangible Assets- Website development costs

SIC 33- Consolidation and Equity method

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

Important Clarification

There is no difference between IAS and IFRS, All those standard which is issued by International Accounting Standards Committee (IASC) is knows as International Accounting Standard (IAS). In April 2001 the International Accounting Standards Board (IASB) adopted all IAS and began developing new standards called IFRS. It is noteworthy that an IAS remains in effect unless replaced by an IFRS

All those interpreations which is issued by IASC is known as SIC and all those interpretations which is issued by IASB is known as IFRIC

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

US GAAP vs. IFRS

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

IFRS tend to be more principles driven, while U.S. GAAP is more rules driven

– More judgment needed with IFRS

– Less IFRS implementation guidance

– Fewer industry specific and regulatory interpretations with IFRS

– Less comparability with IFRS

􀁺 Consolidations– IFRS rules based on risks and rewards of ownership – more entities consolidated!

􀁺 Revenue Recognition– IFRS principles are broad, with no industry guidance – potentially earlier recognition for multiple deliverable contracts, PCS and time-based licenses

􀁺 Share-Based Payments– IFRS guidelines are different in various areas, including graded vesting,

deferred tax benefits, awards for goods or no employees, and liability vs. equity classification

􀁺 R&D – Under IFRS, development costs are capitalized, tracked, and evaluated for impairment

􀁺 Asset Impairment – Under IFRS, one-step impairment test vs. recoverable amount, with revaluation permitted – More impairments.

􀁺 Income Taxes – With IFRS, all deferred taxes are long-term and there is NO FIN 48 equivalent.

􀁺 Inventories – Under IFRS, carry at lower of cost or net realizable value - NO LIFO, which could have major tax implicat.

􀁺 Lease Classification – Under IFRS, no bright line ules (e.g.,90% test). Lessee/Lessor classification

should be parallel.

N.Gopinadh (CA STUDENT) (97 Points)
Replied 12 May 2009

Sir,

ThanQ very much for the information you have provided about IFRS.

I would like to whether there will be any change of syllabus for the coming up batches of CA(PCC & Final).

As it is very essential for everyone to know about IFRS, it should be introduced in the syllabus.

Will there be any change in Accounting procedures with effect to IFRS..??

Thanking you sir..

Taheri (14 Points)
Replied 12 May 2009

Hello Mr. Amit,

I have one query regarding IFRS course. ICAI is providing a course of IFRS and also A certified course from Europe is also an option. I would Like to know which one is better and which course you have done..

Thanks..

Taheri (14 Points)
Replied 12 May 2009

Also can u please send me the difference between Indian GAAP and IFRS if u have it . My email Id is taheri.future @ gmail.com

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

Dear Gopi,

IFRS is nothing its an advance verson of Accounting standard only . So dont think its different kind of animal. As you said abt the syllabus i am quite sure very soon they are going to introduce IFRS in the syllabus because from 2011 AS will be nullified and IFRS will come into the picture. So,everyone have to know abt the IFRS and truely speaking its really good fun and there will be huge changes in accounting procedure once IFRS will be in the picture

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

Dear Tahari,

I did certificate course from ICAI only and i find inst dont have a worth of 30 k but one thing i can say.. After classes i understand that how to read abt the IFRS that helps me lot and i studied my self in the IFRS.

For europe one that one is complete correspondance course there you have to study every thing from your own. No one will guide you.

In this point i bel our ICAI one is better option.

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

Dear Tahari

As you want to know the difference between IFRS and I-Gaap. I do one thing .. i will post here so large number of people will benefited and i will post a difference between IFRS , I-GAAP and US-GAAP that will be more benefited to lots of people

Thanks

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

Particulars	Indian GAAP	US GAAP	IFRS
1. Revenue Recognition	Revenues are recognized when all significant risks and rewards of ownership are transferred or on a percentage of completion basis. No detailed industry specific guidelines.	Industry specific revenue recognition guidelines. Could be different from what I-GAAP has recognized.	Revenues are recognized when all significant risks and rewards of ownership are transferred.
2. Balance sheet	Conforms to statute and captions are in the following order : --Equity and reserves --Debt --Fixed assets --Investments --Net current assets --Deferred expenditure and --Accumulated losses Required only for the current year with the prior year comparatives.	Balance sheet captions are presented in order of liquidity starting with the most liquid assets, cash. Also requires disclosure of movements in stockholders’ equity, including the number of shares outstanding for all years presented.	Balance sheet captions are presented in the inverse order of liquidity i.e. illiquid items appear earlier. Requires disclosure of either changes in equity or changes in equity other than those arising from capital transactions with owners and distribution of owners.
3. Correction of fundamental errors	Include effect in current year income Statement.	Restate comparatives. Adjustments required to be made to previously issued financial statements.	Include cumulative effect in current year income statement. For material items, restate comparatives.
4.Derivative and other financial instrument- Measurement of hedges of foreign entity investments.	New standard on financial instruments Recognition and Measurement is in line of IFRS	Gains/losses on hedges of foreign entity invest. recognized in equity. All hedge ineffectiveness recognize in the income statement. Gains/losses held in equity must be transferred to the income stat. on disposal of investment	Similar to US GAAP. Except, ineffectiveness of non-derivatives recognized in equity.

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 12 May 2009

Particulars	Indian GAAP	US GAAP	IFRS
5. Comprehensive income	No standards, not required.	Unrealized gains/losses on investment and Foreign currency translation disclosed as a separate component of equity.	Option to present a statement that shows all changes or only those changes in equity that did not arise from capital transactions with owners or distributions to owners.
6. Derivatives and other financial instruments – measurement of derivative instruments and hedging activities	New Standard on financial instruments: Recognition and Measurement in line of IFRS	Measure derivatives and hedge instrument at fair value: recognize changes in fair value in income statement except for effective cash flow hedges, defer in equity until effect of the underlying transaction is recognized in the income statement.Gains/losses on hedge instrument used to hedge forecast transaction, included in cost of asset/liability.	Similar to US GAAP. Gains/losses on hedge instrument used to hedge forecast transaction, included in the cost of asset/liability ( basis adjustment ).
7. Business Combinations	Restricts the use of pooling of interest method to circumstances which meet the criteria listed for an amalgamation in the nature of a merger. In all other cases, the purchase method is used.	Only accounted for by the purchase method. Several differences can arise in terms of date of combination, calculation Of share value to use for purchase price, especially if the I-GAAP method is ‘amalgamation’.	Business combinations under IFRS should be accounted for as an acquisition (purchase method).Where an acquirer cannot be identified then the pooling of interests method should be adopted.
8. Cash Flow Statement	Mandatory only for listed companies and comp. meeting certain turnover conditions.	Mandatory for all entities.	Mandatory for all entities.