IAS 1

• Presentation of financial statements
• 5 component
• -SOPL
• -socie
• -sofp
• -scf
• -notes to the accounts
• Fair presentation of the above
• Why? Comparability

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• Directors report
• Auditors report

NOTES TO THE FINANCIAL STATEMENTS

• Additional detail to items in financial statements
• Help users to understand the financial statements
• Explain particular treatment of items (ias 8)

IAS 2 -INVENTORIES

• Cost of purchase = purchas price + taxes + transport + handling costs
• Cost of conversion = (manuf businesses have direct labour and direct expenses)
• Standard states : inventory must be valued at lower of cost and net realisable value
• LIFO not acceptable
• FIFO and avco acceptable

IAS 7

• Statement of cash flow forms part of financial statements of limited companies
• See chapter

IAS 8

• Accounting policies, changes in accounting estimates and errors
• Requires companies to include details of specific policies used in preparation of financial statements
• Principles such as matching, prudence, consistency etc
• Based = example - inventory valuation
• Acc policies must be applied consistently
• Ias 8 deals with errors found on financial statements- must be corrected in next set of financial statements

IAS 10

• Events after reporting period
• Adjusting events : certain conditions arose at or before the end of reporting period, which not taken into account
• Financial implications are material - must adjust financial accounts before they are AUTHORISED
• Example - customer becomes insolvent - must change trade receivables (if significant)

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• Non adjusting events
• Arise after end of reporting period
• No adjustment needed
• If significant, must be disclosed as a note
• Example : major purchase of non current asset

IAS 16 PPE

• Standard for non current assets applied consistently
• Company’s treatment of assets understood by users
• PPE initially values at cost in sofp
• After acquisition, the company has to show the carrying amount

CARRYING AMOUNT AT EITHER

• 1) cost less Acc depreciation and impairment losses
• 2) revaluation based on fair value less subsequent dep and impairment losses( ias 36)

FAIR VALUES =MARKET VALUE

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• For each asset, financial statements must show
• - basis for determining carrying amount
• Depreciation method used
• Duration of useful economic life
• Carrying amount
• Accumulated depreciation and impairment losses at start and end
• Reconciliation of carrying amount at start and end (addition, purchase, disposal, etc)

IAS 36 IMPAIRMENT OF ASSETS

• Applies to nearly all non current assets
• When is an asset impaired?
• Recoverable amount is less than carrying amount(value in sofp after deduction of depreciation)
• Value shown in sofp must be reviewed at each sofp date, to check for impairment

EVIDENCE OF IMPAIRMENT

• Significant fall in value of asset
• Market value
• due to change in technology
• Economic downturn
• Damaged
• Restructuring of the business

IMPAIRMENT LOSS SHOWN IN STATEMENT OF PROFIT OR LOSS

IAS 37 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

• Obligation because of past event
• Probable that obligation requires settlement
• Necessary to be able to have a reliable estimate of liability
• A note must detail the provision

IAS 38 INTANGIBLE ASSETS

• No physical substance
• Identifiable and controlled by company
• Ex: licenses, quotas,patents, copyrights, trademarks
• Purchased or internally generated
• Internally generated not recognized
• Otherwise, intangible shown at cost initially,then, at carrying amount (less impairment loss) or revaluation