001

Table of Contents
 
Title Page
Copyright Page
Foreword
FOREWORD
PREFACE
Acknowledgements
ABOUT THE AUTHORS
 
Chapter 1 - INTRODUCTION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
 
1. INTRODUCTION
2. WORLDWIDE ADOPTION OF IFRS
3. REMAINING EXCEPTIONS
4. THE INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE
5. THE INTERNATIONAL ACCOUNTING STANDARDS BOARD
 
Chapter 2 - IASB FRAMEWORK
 
1. INTRODUCTION
2. OBJECTIVE OF FINANCIAL STATEMENTS
3. UNDERLYING ASSUMPTIONS
4. QUALITATIVE CHARACTERISTICS OF FINANCIAL STATEMENTS
5. ELEMENTS OF FINANCIAL STATEMENTS
6. CONCEPTS OF CAPITAL AND CAPITAL MAINTENANCE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 3 - PRESENTATION OF FINANCIAL STATEMENTS (IAS 1)
 
1. INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS
4. PURPOSE OF FINANCIAL STATEMENTS
5. COMPONENTS OF FINANCIAL STATEMENTS
6. OVERALL CONSIDERATIONS
7. STRUCTURE AND CONTENT
MULTIPLE-CHOICE QUESTIONS
 
Chapter 4 - INVENTORIES (IAS 2)
 
1. BACKROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS
4. MEASUREMENT OF INVENTORIES
5. COST OF INVENTORIES
6. TECHNIQUES OF MEASUREMENT OF COSTS
7. COST FORMULAS
8. NET REALIZABLE VALUE
9. RECOGNITION OF EXPENSE
10. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 5 - CASH FLOW STATEMENTS (IAS 7)
 
1. BACKGROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 7, paragraph 6)
4. BENEFITS OF PRESENTING A CASH FLOW STATEMENT
5. CASH AND CASH EQUIVALENTS
6. PRESENTATION OF THE CASH FLOW STATEMENT
7. OPERATING ACTIVITIES
8. INVESTING ACTIVITIES
9. FINANCING ACTIVITIES
10. NONCASH TRANSACTIONS
11. DIRECT VERSUS INDIRECT METHOD
12. REPORTING CASH FLOWS ON A GROSS BASIS VERSUS A NET BASIS
13. FOREIGN CURRENCY CASH FLOWS
14. REPORTING FUTURES, FORWARD CONTRACTS, OPTIONS, AND SWAPS
15. RECONCILIATION OF CASH AND CASH EQUIVALENTS
16. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND OTHER BUSINESS UNITS
17. OTHER DISCLOSURES REQUIRED AND RECOMMENDED BY IAS 7
MULTIPLE-CHOICE QUESTIONS
 
Chapter 6 - ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS ...
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 8)
3. ACCOUNTING POLICIES
4. SELECTION AND APPLICATION OF ACCOUNTING POLICIES
5. CONSISTENCY OF ACCOUNTING POLICIES
6. FACTORS GOVERNING CHANGES IN ACCOUNTING POLICIES
7. APPLYING CHANGES IN ACCOUNTING POLICIES
8. LIMITATIONS OF RETROSPECTIVE APPLICATION
9. DISCLOSURES WITH RESPECT TO CHANGES IN ACCOUNTING POLICIES
10. CHANGES IN ACCOUNTING ESTIMATES
11. CORRECTION OF PRIOR-PERIOD ERRORS
MULTIPLE-CHOICE QUESTIONS
 
Chapter 7 - EVENTS AFTER THE BALANCE SHEET DATE (IAS 10)
 
1. BACKGROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS
4. AUTHORIZATION DATE
5. ADJUSTING AND NONADJUSTING EVENTS (after the balance sheet date)
6. DIVIDENDS PROPOSED OR DECLARED AFTER THE BALANCE SHEET DATE
7. GOING CONCERN CONSIDERATIONS
8. DISCLOSURE REQUIREMENTS
MULTIPLE-CHOICE QUESTIONS
 
Chapter 8 - CONSTRUCTION CONTRACTS (IAS 11)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 11)
3. COMBINING AND SEGMENTING CONSTRUCTION CONTRACTS
4. CONTRACT REVENUE
5. CONTRACT COSTS
6. RECOGNITION OF CONTRACT REVENUE AND EXPENSES
7. FIXED COST CONTRACT
8. COST-PLUS CONTRACT
9. PERCENTAGE OF COMPLETION METHOD
10. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 9 - INCOME TAXES (IAS 12)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS
3. CURRENT TAX LIABILITIES AND ASSETS
4. ACCOUNTING FOR DEFERRED TAX
5. CONSOLIDATED FINANCIAL STATEMENTS
6. TEMPORARY DIFFERENCES NOT RECOGNIZED FOR DEFERRED TAX
7. DEFERRED TAX ASSETS
8. TAX RATES
9. DISCOUNTING
10. CURRENT AND DEFERRED TAX RECOGNITION
11. DIVIDENDS
12. DISCLOSURE: KEY ELEMENTS
13. SICs
MULTIPLE-CHOICE QUESTIONS
 
Chapter 10 - SEGMENT REPORTING (IAS 14)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS
3. IDENTIFYING BUSINESS AND GEOGRAPHICAL SEGMENTS
4. REPORTABLE SEGMENTS
5. SEGMENT INFORMATION
6. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 11 - PROPERTY, PLANT, AND EQUIPMENT (IAS 16)
 
1. BACKGROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 16)
4. RECOGNITION OF AN ASSET
5. DEPRECIATION
6. DERECOGNITION
7. IFRIC INTERPRETATION 1
8. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 12 - LEASES (IAS 17)
 
1. BACKGROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 17)
4. CLASSIFICATION OF LEASES
5. LEASES IN THE FINANCIAL STATEMENTS OF LESSEES
6. LEASES IN THE FINANCIAL STATEMENTS OF LESSORS
7. SALE AND LEASEBACK TRANSACTIONS AND OTHER TRANSACTIONS INVOLVING THE LEGAL ...
MULTIPLE-CHOICE QUESTIONS
 
Chapter 13 - REVENUE (IAS 18)
 
1. BACKGROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 18)
4. MEASUREMENT OF REVENUE
5. IDENTIFICATION OF A TRANSACTION
6. SALE OF GOODS
7. RENDERING OF SERVICES
8. INTEREST, ROYALTIES, AND DIVIDENDS
9. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 14 - EMPLOYEE BENEFITS (IAS 19)
 
1. SCOPE
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 19)
3. DEFINED CONTRIBUTION PLANS AND DEFINED BENEFIT PLANS—CLASSIFICATION
4. DEFINED BENEFIT PLANS
5. DEFINED CONTRIBUTION PLANS
6. CONTRASTING DEFINED BENEFIT AND DEFINED CONTRIBUTION
7. ACCOUNTING FOR DEFINED CONTRIBUTION SCHEMES
8. ACCOUNTING FOR DEFINED BENEFIT PLANS
9. KEY INFORMATION: DEFINED BENEFIT PLANS
10. BALANCE SHEET
11. INCOME STATEMENT
12. MEASURING THE DEFINED BENEFIT OBLIGATION
13. PLAN ASSETS
14. PENSION ASSETS AND LIABILITIES
15. CURTAILMENTS AND SETTLEMENTS
16. ACTUARIAL GAINS AND LOSSES—DEFINED BENEFIT PLANS
17. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 15 - ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ...
 
1. INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 20)
4. GOVERNMENT GRANTS
5. RECOGNITION OF GOVERNMENT GRANTS
6. NONMONETARY GRANTS
7. PRESENTATION OF GRANTS RELATED TO ASSETS
8. REPAYMENT OF GOVERNMENT GRANTS
9. GOVERNMENT ASSISTANCE
10. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 16 - THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES (IAS 21)
 
1. OBJECTIVES
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 21)
3. FUNCTIONAL CURRENCY
4. RECORDING FOREIGN CURRENCY TRANSACTIONS USING THE FUNCTIONAL CURRENCY
5. RECOGNITION OF EXCHANGE DIFFERENCES
6. TRANSLATION TO THE PRESENTATION CURRENCY FROM THE FUNCTIONAL CURRENCY
7. TRANSLATION OF A FOREIGN OPERATION
8. DISPOSAL OF A FOREIGN ENTITY
9. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 17 - BORROWING COSTS (IAS 23)
 
1. BACKGROUND
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 23)
4. BORROWING COSTS
5. QUALIFYING ASSETS
6. RECOGNITION
7. BORROWINGS ELIGIBLE FOR CAPITALIZATION
8. EXCESS OF CARRYING AMOUNT OF THE QUALIFYING ASSET OVER THE RECOVERABLE AMOUNT
9. COMMENCEMENT OF CAPITALIZATION
10. SUSPENSION OF CAPITALIZATION
11. CESSATION OF CAPITALIZATION
12. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 18 - RELATED PARTY DISCLOSURES (IAS 24)
 
1. BACKGROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 24)
4. EXPLANATION AND FURTHER ELABORATION OF THE DEFINITIONS
5. SCOPE EXCLUSIONS
6. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 19 - ACCOUNTING AND REPORTING BY RETIREMENT BENEFIT PLANS (IAS 26)
 
1. INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 26)
4. DEFINED CONTRIBUTION PLANS
5. DEFINED BENEFIT PLANS
6. ADDITIONAL DISCLOSURES REQUIRED BY THE STANDARD
MULTIPLE-CHOICE QUESTIONS
 
Chapter 20 - CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (IAS 27)
 
1. SCOPE
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 27)
3. PRESENTATION OF FINANCIAL STATEMENTS
4. CONSOLIDATED FINANCIAL STATEMENTS
5. ACCOUNTING PROCEDURES
6. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 21 - INVESTMENTS IN ASSOCIATES (IAS 28)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 28)
3. SIGNIFICANT INFLUENCE
4. Equity Method
5. EXCEPTIONS TO THE EQUITY METHOD
6. INVESTOR CEASES TO HAVE SIGNIFICANT INFLUENCE
7. ACQUISITION OF AN ASSOCIATE AND ACCOUNTING TREATMENT
8. IMPAIRMENT LOSSES
9. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 22 - FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES (IAS 29)
 
1. SCOPE
2. DEFINITION OF HYPERINFLATION
3. CEASING TO BE HYPERINFLATIONARY
4. FUNCTIONAL CURRENCY AND HYPERINFLATION
5. RESTATEMENT OF FINANCIAL STATEMENTS: BALANCE SHEET
6. INCOME STATEMENT
7. SUNDRY POINTS
8. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 23 - DISCLOSURES IN THE FINANCIAL STATEMENTS OF BANKS AND SIMILAR ...
 
1. INTRODUCTION
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 30)
3. SCOPE
4. REQUIRED DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 24 - INTERESTS IN JOINT VENTURES (IAS 31)
 
1. SCOPE
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 31)
3. DIFFERENT FORMS OF JOINT VENTURE
4. JOINTLY CONTROLLED OPERATIONS
5. JOINTLY CONTROLLED ASSETS
6. JOINTLY CONTROLLED ENTITIES
7. PROPORTIONATE CONSOLIDATION
8. EQUITY METHOD
9. EXCEPTION TO THE USE OF THE EQUITY METHOD AND PROPORTIONATE CONSOLIDATION
10. FINANCIAL STATEMENTS OF AN INVESTOR
11. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 25 - FINANCIAL INSTRUMENTS: PRESENTATION (IAS 32)
 
1. INTRODUCTION
2. SCOPE AND DEFINITIONS OF KEY TERMS (in accordance with IAS 32)
3. PRESENTATION OF LIABILITIES AND EQUITY
4. PRESENTATION OF INTEREST, DIVIDENDS, LOSSES, AND GAINS
5. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 26 - FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT (IAS 39)
 
1. INTRODUCTION
2. SCOPE
3. CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES INTO CATEGORIES
4. RECOGNITION
5. DERECOGNITION
6. MEASUREMENT
7. DERIVATIVES
8. HEDGE ACCOUNTING
MULTIPLE-CHOICE QUESTIONS
 
Chapter 27 - EARNINGS PER SHARE (IAS 33)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 33)
3. ORDINARY SHARES
4. PRESENTATION OF EARNINGS PER SHARE
5. BASIC EARNINGS PER SHARE
6. RIGHTS ISSUES
7. DILUTED EARNINGS PER SHARE
8. PRESENTATION
9. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 28 - INTERIM FINANCIAL REPORTING (IAS 34)
 
1. OBJECTIVE
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 34)
3. FORM AND CONTENT OF INTERIM REPORTS
4. EXPLANATORY NOTES
5. DISCLOSURE OF COMPLIANCE WITH IFRS
6. PERIODS TO BE PRESENTED BY INTERIM FINANCIAL STATEMENTS
7. MEASUREMENT
8. SUNDRY POINTS
MULTIPLE-CHOICE QUESTIONS
 
Chapter 29 - IMPAIRMENT OF ASSETS (IAS 36 )
 
1. SCOPE
2. DEFINITION OF KEY TERMS (in accordance with IAS 36)
3. IDENTIFYING AN IMPAIRMENT LOSS
4. DETERMINATION OF A RECOVERABLE AMOUNT
5. FAIR VALUE LESS COSTS TO SELL
6. VALUE-IN-USE
7. FUTURE CASH FLOWS
8. DISCOUNT RATE
9. RECOGNITION AND MEASUREMENT OF AN IMPAIRMENT LOSS
10. CASH-GENERATING UNITS
11. GOODWILL
12. TIMING OF IMPAIRMENT TEST
13. GROUP OR DIVISIONAL ASSETS (CORPORATE ASSETS)
14. ALLOCATION OF IMPAIRMENT LOSS
15. REVERSAL OF AN IMPAIRMENT LOSS
16. DISCLOSURE REQUIREMENTS
MULTIPLE-CHOICE QUESTIONS
 
Chapter 30 - PROVISIONS, CONTINGENT LIABILITIES, AND CONTINGENT ASSETS (IAS 37)
 
1. BACKGROUND AND INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 37)
4. PROVISIONS
5. CONTINGENT LIABILITIES
6. CONTINGENT ASSETS (Possible Assets)
7. INTERPRETATION OF IAS 37 (IFRIC)
8. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 31 - INTANGIBLE ASSETS (IAS 38)
 
1. INTRODUCTION AND BACKGROUND
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IAS 38)
4. ELABORATION AND INTERPRETATION OF THE DEFINITIONS
5. RECOGNITION AND MEASUREMENT
6. INTERNALLY GENERATED INTANGIBLE ASSETS
7. RECOGNITION OF AN EXPENSE
8. WEB SITE DEVELOPMENT COSTS
9. MEASUREMENT AFTER RECOGNITION
10. USEFUL LIFE
11. AMORTIZATION
12. IMPAIRMENT
13. RETIREMENTS AND DISPOSALS
14. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 32 - INVESTMENT PROPERTY (IAS 40)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 40)
3. INVESTMENT PROPERTY
4. RECOGNITION
5. MEASUREMENT
6. DISPOSALS
7. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 33 - AGRICULTURE (IAS 41)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS (in accordance with IAS 41)
3. RECOGNITION AND MEASUREMENT
4. GAINS AND LOSSES
5. FAIR VALUE RELIABILITY
6. GOVERNMENT GRANTS
7. ISSUES IN IAS 41
8. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 34 - FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ...
 
1. BACKGROUND
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IFRS 1)
4. DEEMED EXCEPTIONS TO THE “FIRST-TIME ADOPTER” RULE
5. OPENING IFRS BALANCE SHEET
6. ADJUSTMENTS REQUIRED IN PREPARING THE OPENING IFRS BALANCE SHEET (or in ...
7. ACCOUNTING POLICIES
8. REPORTING PERIOD
9. RATIONALE BEHIND USING THE “CURRENT VERSION OF IFRS”
10. TRANSITIONAL PROVISIONS IN OTHER IFRS
11. TARGETED EXEMPTIONS FROM OTHER IFRS
12. BUSINESS COMBINATIONS
13. FAIR VALUE OR REVALUATION AS DEEMED COST
14. EMPLOYEE BENEFITS
15. CUMULATIVE TRANSLATION DIFFERENCES
16. COMPOUND FINANCIAL INSTRUMENTS
17. ASSETS AND LIABILITIES OF SUBSIDIARIES, ASSOCIATES, AND JOINT VENTURES
18. EXCEPTIONS TO RETROSPECTIVE APPLICATION OF OTHER IFRS
19. PRESENTATION AND DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 35 - SHARE-BASED PAYMENTS (IFRS 2)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITION OF KEY TERM (in accordance with IFRS 2)
3. RECOGNITION OF SHARE-BASED PAYMENT
4. EQUITY-SETTLED TRANSACTIONS
5. CASH-SETTLED TRANSACTIONS
6. TRANSACTIONS THAT CAN BE SETTLED FOR SHARES OR CASH
7. DEFERRED TAX IMPLICATIONS
8. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 36 - BUSINESS COMBINATIONS (IFRS 3)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITIONS OF KEY TERMS
3. IDENTIFYING AN ACQUIRER
4. COST OF ACQUISITION
5. NET ASSETS ACQUIRED
6. GOODWILL
7. PIECEMEAL ACQUISITION
8. INITIAL ACCOUNTING
9. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 37 - INSURANCE CONTRACTS (IFRS 4)
 
1. BACKGROUND AND INTRODUCTION
2. DEFINITION OF KEY TERM (in accordance with IFRS 4)
3. FIRST PHASE
4. CHANGES IN ACCOUNTING POLICIES
5. CONCESSIONS IN IFRS 4
6. ACCOUNTING UNDER IFRS 4
7. DISCLOSURES
MULTIPLE-CHOICE QUESTIONS
 
Chapter 38 - NONCURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (IFRS 5)
 
1. SCOPE
2. DEFINITIONS OF KEY TERMS (in accordance with IFRS 5)
3. EXTENSION OF PERIOD BEYOND ONE YEAR
4. SUNDRY POINTS
5. MEASUREMENT OF NONCURRENT ASSETS THAT ARE HELD FOR SALE
6. CHANGE OF PLANS
7. DISCLOSURE: NONCURRENT ASSETS
8. DISCONTINUED OPERATIONS: PRESENTATION AND DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 39 - EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES (IFRS 6)
 
1. INTRODUCTION
2. SCOPE
3. DEFINITIONS OF KEY TERMS (in accordance with IFRS 6)
4. RECOGNITION
5. MEASUREMENT
6. IMPAIRMENT
7. DISCLOSURE
MULTIPLE-CHOICE QUESTIONS
 
Chapter 40 - FINANCIAL INSTRUMENTS: DISCLOSURES (IFRS 7)
 
1. INTRODUCTION
2. SCOPE
3. SIGNIFICANCE OF FINANCIAL INSTRUMENTS FOR FINANCIAL POSITION AND PERFORMANCE
4. NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS
MULTIPLE-CHOICE QUESTIONS
 
Index

001

FOREWORD
by the Chairman of IASB
 
I and my fellow Board members at the International Accounting Standards Board (IASB) are committed to developing high quality, understandable, and enforceable global accounting standards that meet the demands for comparable and transparent information in the world’s capital markets. Recently we completed a work program to develop and issue a stable platform of such standards. Those standards, the International Financial Reporting Standards (IFRS), are now being implemented in a large number of countries around the world. This is a major achievement on the road towards the global acceptance of a single set of accounting standards.
The responsibility for achieving high quality financial reporting, however, does not rest solely with IASB. Our role is limited to providing the set of standards that entities should apply to achieve high quality, comparable, and transparent financial reporting. For IFRS to be properly understood, implemented, and applied in practice, education and training of all relevant parties—including financial statement preparers, auditors, regulators, financial analysts, and other users of financial statements as well as accounting students—is essential.
This book should be a helpful tool in this regard. The approach of the book is to discuss core concepts and other key elements of the standards and to provide training material in the form of worked case studies and questions to support successful learning of the material. Consequently, the book should be useful for students who prepare for professional exams and for financial statement preparers, auditors, regulators, financial analysts, and other users of financial statements who in their work need to be familiar with the standards. The book should help practitioners and students alike understand, implement, and apply the key elements of the standards.
Sir David Tweedie
Chairman of IASB
December, 2005

FOREWORD
by the Secretary General of IOSCO
 
In recent years much has been written about International Financial Reporting Standards (IFRS) so it is opportune that a publication such as this would be released at this time particularly since this initiative helps to bring such clarity and focus to the debate.
Globalization is taking place at an ever more rapid pace. As cross-border financial activity increases, capital markets become more dependent on each other. As financial markets become ever more interdependent, there is a greater need for the development of internationally recognized and accepted standards dealing with capital market regulation.
The development of IFRS can be seen within this broader framework. They represent an especially useful instrument designed to promote a stable and more secure international regulatory environment. At the same time, IFRS deliver on accounting and disclosure objectives as well as the pursuit of improved transparency of global financial reporting.
For the International Organization of Securities Commissions (IOSCO), the development and subsequent progress of IFRS represents a priority outcome. The organization has been a key stakeholder with an active involvement in the process of setting the standards and in continually assessing their quality.
This involvement reflects a long history of commitment by IOSCO to efforts aimed at strengthening the integrity of international markets through the promotion of high quality accounting standards, including rigorous application and enforcement.
At the same time, there is an obligation of international standard setters to be responsive to concerns over the application and interpretation of the standards. This is a key complement to the success of IFRS and one which we take seriously.
Ultimately, accounting standards setting is a continuous process that must respond to changes and developments in the markets and the information needs of investors. Indeed, it has always been the case that effective financial reporting is fundamental to investor confidence as well as good corporate governance.
In the long term, the adoption of IFRS in many countries and their use in numerous cross-border transactions will help to bring about these high quality global accounting standards by providing transparent and comparable information in financial reports.
Although as an international standards setter IOSCO is not in position to endorse external publications, we have always recognized that by helping to promote clear information about the IFRS, publications such as this one serve a particularly useful function both as an educational opportunity and also to encourage confidence in these standards. On that basis it is most welcome.
Philippe Richard
IOSCO Secretary General
March 2006

PREFACE
Achieving consistency in financial reporting worldwide is the need of the hour, especially if meaningful comparisons are to be made of financial information emanating from different countries using accounting standards that, until recently, were vastly different from each other. Thus, there has arisen the urgent need for promulgation of a common set of global accounting standards or, in other words, global convergence into a common language of accounting for the financial world. International Financial Reporting Standards (IFRS), the standards promulgated by the International Accounting Standards Board (IASB), previously known as International Accounting Standards (IAS) that were issued by the International Accounting Standard Committee (IASC), the IASB’s predecessor body, appear to be emerging as the global accounting standards and, according to some, could even qualify for the coveted title of “the Esperanto of accounting.”
This is a challenging and exciting time to be writing a book on IFRS. Challenging, because it is indeed a daunting task to publish a book on a body of knowledge such as IFRS, which is undergoing significant changes at an unprecedented pace. In some cases, changes were made to certain IASB standards within the same year, and thus we, as authors, had to revise chapters when amendments to existing standards were announced. In certain cases, even after chapters were initially written and finalized, in order to keep the book current, we had to rewrite parts. Yet this is also an exciting time to be writing a book on a subject of global importance such as IFRS, since the IASB standards are rapidly being adopted in a large number of countries all around the world. For instance, by the time this book goes to print, most countries in Europe, including all of the 25 member states of the European Union, will require listed companies to prepare their consolidated financial statements in accordance with IFRS instead of local requirements, and many countries in Africa, Asia, Australia, and the Americas are adopting IFRS as their national accounting standards. Knowing full well that the book will have to cater to the requirements of users globally made the task of writing even more challenging.
Whether you are an accountant, auditor, investor, banker, regulator, or financial analyst, understanding and appreciating the fundamental principles and requirements of IFRS has become more important than ever before. In this new financial world, knowledge of the fundamental principles of IFRS is essential to meet the growing demands of a changing regulatory and market environment. Cognizant of that, we embarked on this book project to help users and preparers of IFRS financial statements alike.
We have written this book with the end user in mind, which should make it user-friendly. For instance, if you are an accountant or an auditor working in a country that has recently adopted IFRS (say, one of the countries in the European Union), you are now faced with the challenges of being able to apply these standards and to read and understand financial statements prepared in accordance with them. This book will help you to do that. We believe that this book’s real strength lies in the fact that it explains the IASB standards in a lucid manner so even first-time adopters of IFRS can understand the subject. The book illustrates the practical application of the IASB standards using easy-to-apply illustrations and simple examples. It goes a step further and provides copious learning aids in the form of case studies (with worked solutions), multiple-choice questions (with answers), and practical insights. We hope its simple, step-by-step approach will guide you in the application of IFRS.
In general, the structure and contents of the book are consistent with the order and scope of each standard; each chapter discusses a specific IFRS, and the chapters are ordered consistent with the numbering of the IFRS currently in effect. This structure allows you to use the book as a handbook, side by side with the bound volume of standards issued by IASB. The only exception is the chapter on IAS 39, which is located immediately after the chapter on IAS 32 in this book, since both standards address the same topic: the accounting for financial instruments. Also, the chapters dealing with IAS precede the chapters dealing with IFRS.
We hope that this book will greatly facilitate learning and will also help readers to understand the technical complexities of the standards. Although a great deal of effort has gone into writing this book, we sincerely believe that there is always scope for improvement. Any suggestions and comments for future editions are therefore encouraged. We humbly submit that any views expressed in this publication are ours alone and do not necessarily represent those of the firms or organizations we are part of.
Finally, we wish all our readers a very educating journey through the book.
Abbas Ali Mirza
Graham Holt
Magnus Orrell
March 2006

ACKNOWLEDGMENTS
This book would not have seen the light of the day without the help of so many wonderful people around the globe who have helped us to put it together. This IFRS workbook project was conceived and conceptualized way back in 1998, but due to certain unanticipated issues that surfaced later, the project was dropped, only to be revived in 2005. We would be remiss in our duties if we did not thank the editors at John Wiley & Sons, Inc., USA, who had implicit faith in our abilities and greatly helped us in giving shape to this creative endeavor. In particular, we wish to place on record their sincere appreciation of the help provided to us by the following individuals of John Wiley & Sons: Robert Chiarelli, for his patronage of this book project; John De Remigis, for his stewardship of this book project from its incubation stages in 1998 to its completion in 2006 and for his perseverance for these many years; Judy Howarth and Brandon Dust, for their able guidance and patience; Natasha Andrews and Pam Reh and their editorial staff, for their creative and valuable editorial comments and assistance; and Julie Burdin, for her outstanding marketing plan and ideas.
We also wish to place on record our sincere appreciation of the untiring efforts of Ms. Liesel Knorr, the current secretary general of the German Accounting Standards Board and formerly technical director of the International Accounting Standards Committee (IASC), the predecessor body to the IASB, for her thorough technical review of the entire manuscript. Her invaluable comments have all been taken into account in writing this book.
We are also grateful to all our friends and colleagues who helped us during the preparation of this book.
Abbas Ali Mirza wishes to place on record his sincere gratitude for all the constructive suggestions offered to him by his friends in conceptualizing the idea of such a workbook on IFRS during its formative stages. Furthermore, for their unstinting support, creative ideas, and invaluable contributions, he also wishes to thank his peers and mentors, in particular: Omar Fahoum, chairman and managing partner, Deloitte & Touche (M.E.); Graham Martins, partner, Pannell Kerr Forster, United Arab Emirates; Dr. Barry J. Epstein, partner, Russell Novak & Co., LLP, USA, his longtime coauthor of the other IFRS book published by John Wiley & Sons, Inc., USA (currently entitled Wiley: IFRS 2006); and all his partners and colleagues from Deloitte & Touche (M.E.), including but not limited to Joe El Fadl, Graham Lucas, Anis Sadek, Musa Dajani, Ghassan Jaber, Vikas Taktiani, Hala Khalid, Shivani Agarwal, and Umme Kulsoom Soni.
Graham Holt wishes to thank all the special people who have directly and indirectly helped him in preparing this book. (They know he is grateful.)
Magnus Orrell extends his special thanks to his wife, Kristin Orrell, as well as to Andrew Spooner of Deloitte & Touche LLP in the United Kingdom and Bengt-Allan Mettinger, accounting consultant in Thailand, who all read earlier versions of the material in this book relating to financial instruments and provided many valuable comments and suggestions.

ABOUT THE AUTHORS
Abbas Ali Mirza is a partner at Deloitte & Touche (M.E.) based in Dubai and handles audits of major international and local clients of the firm. At Deloitte he is also responsible for regional functions, such as technical consultation on complex accounting and auditing issues. Abbas heads the Learning function for Deloitte, Middle East, and is a member of the Global firm’s EMEA Learning Executive. He has had a distinguished career in accounting, auditing, taxation, and business consulting and has worked for international audit and consulting firms in the United States of America, the Middle East, and India. Abbas is a frequent principal/keynote speaker at major global conferences on International Financial Reporting Standards (IFRS) and has chaired world-class events on accounting, such as the World Accounting Summit held in Dubai under the auspices of the United Nations Conference on Trade and Development (UNCTAD). He has been a coauthor, from inception, of another book on IFRS published by John Wiley & Sons, Inc., which is in its tenth anniversary edition and is currently entitled Wiley: IFRS 2006. He holds or has held many positions of repute in the accounting profession globally including
• 21st Session Chairman, United Nations’ Intergovernmental Working Group of Experts on International Standards on Accounting & Reporting (ISAR), to which position he was elected at the UNCTAD in Geneva in November 2004
• Member of the Developing Nations Permanent Task of the International Federation of Accountants (IFAC), recently renamed IFAC’s Developing Nations Committee
• Member of the Accounting Standards Committee, Securities and Exchange Board of India (SEBI), India
• Vice-Chairman of Auditors’ Group, Dubai Chamber of Commerce and Industry (DCCI)
• Technical Adviser to the Gulf Co-operation Council Accounting and Auditing Organization (GCCAAO)
• Member of the Consultative Group of Experts on Corporate Governance Disclosures, United Nations Conference on Trade & Development (UNCTAD)
• Member of the Consultative Group of Experts on Corporate Social Responsibility, United Nations Conference on Trade & Development (UNCTAD)
Graham Holt qualified as a Chartered Accountant (Institute of Chartered Accountants in England & Wales) with Price Waterhouse and is a fellow of the Association of Chartered Certified Accountants (ACCA). He holds B.Com and MA Econ qualifications also. As a current ACCA examiner, he has been prominent in the development of their IFRS stream and their examination scheme. He is a principal lecturer at the Manchester Metropolitan University Business School, where he is director of Professional Courses. Graham has given lectures on IFRS throughout the world and has many publications in the subject area. He has also been involved in running training courses on IFRS.
Magnus Orrell is in the national office of Deloitte & Touche LLP in Wilton, Connecticut (USA), where he specializes in financial instrument accounting issues under both IFRS and U.S. GAAP. Prior to joining Deloitte, he most recently served as project manager at the International Accounting Standards Board (IASB) in London, the United Kingdom, where he played a key role in the development of the current version of the international standards on financial instruments. Previously in his career, he served as a member of the Secretariat of the Basel Committee on Banking Supervision at the Bank for International Settlements (BIS) in Basel, Switzerland; as an official of the European Commission in Brussels, Belgium; and as an accounting expert at the Financial Supervisory Authority in Stockholm, Sweden. Apart from being a Certified Public Accountant (CPA) in the State of Connecticut, he also holds the Chartered Financial Analyst (CFA) designation conferred by the CFA Institute (formerly the Association for Investment Management and Research). Additionally, he holds a degree and master of science in business administration and economics, a degree of master of laws, and a master of accounting and financial management. He has been a frequent speaker on financial reporting issues at seminars, conferences, and executive-level meetings in many countries in Europe, Asia, and the Americas, and has authored articles in both accountancy and finance periodicals.

1
INTRODUCTION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

1. INTRODUCTION

International Accounting Standards (IAS), now renamed International Financial Reporting Standards (IFRS), are gaining acceptance worldwide. This section discusses the extent to which IFRS are recognized around the world and includes a brief overview of the history and key elements of the international standard-setting process.

2. WORLDWIDE ADOPTION OF IFRS

2.1 In the last few years, the international accounting standard-setting process has been able to claim a number of successes in achieving greater recognition and use of IFRS.
2.2 A major breakthrough came in 2002 when the European Union (EU) adopted legislation that requires listed companies in Europe to apply IFRS in their consolidated financial statements. The legislation came into effect in 2005 and applies to more than 7,000 companies in 28 countries, including countries such as France, Germany, Italy, Spain, and the United Kingdom. The adoption of IFRS in Europe means that IFRS replace national accounting standards and requirements as the basis for preparing and presenting group financial statements for listed companies in Europe.
2.3 Outside Europe, many other countries are also moving to IFRS. In 2005, IFRS had become mandatory in many countries in Southeast Asia, Central Asia, Latin America, Southern Africa, the Middle East, and the Caribbean. In addition, countries such as Australia, Hong Kong, New Zealand, Philippines, and Singapore had adopted national accounting standards that mirror IFRS. It was estimated that more than 70 countries required their listed companies to apply IFRS in preparing and presenting financial statements in 2005.
Countries that have Adopted IFRS
Countries in which some or all companies are required to apply IFRS or IFRS-based standards are listed below.
Africa:
Egypt, Kenya, Malawi, Mauritius, Namibia, South Africa, Tanzania
Americas:
Bahamas, Barbados, Costa Rica, Dominican Republic, Ecuador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Panama, Peru, Trinidad and Tobago, Venezuela
Asia:
Armenia, Bahrain, Bangladesh, China, Georgia, Hong Kong, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Nepal, Oman, Philippines, Qatar, Singapore, Tajikistan, United Arab Emirates
Europe:
Austria, Belgium, Bosnia, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovenia, Slovak Republic, Spain, Sweden, Ukraine, United Kingdom, Yugoslavia
Oceania:
Australia, New Zealand, Papua New Guinea
2.4 The adoption of standards that require high-quality, transparent, and comparable information is welcomed by investors, creditors, financial analysts, and other users of financial statements. Without common standards, it is difficult to compare financial information prepared by entities located in different parts of the world. In an increasingly global economy, the use of a single set of high-quality accounting standards facilitates investment and other economic decisions across borders, increases market efficiency, and reduces the cost of raising capital.

3. REMAINING EXCEPTIONS

3.1 Measured in terms of the size of their capital markets, the most significant remaining exceptions to the global recognition of IFRS are the United States (US), Japan, and Canada. In these countries, entities continue to be required to follow local accounting standards.
3.2 The International Accounting Standards Board (IASB), the body in charge of setting IFRS, works closely with the national accounting standard-setting bodies in these countries, including the US Financial Accounting Standards Board (FASB) and the Accounting Standards Board of Japan (ASBJ), to narrow the differences between local accounting standards and IFRS. In Canada, a proposal for conforming local accounting standards to IFRS has been published.
3.3 In the US, the domestic securities regulator (Securities and Exchange Commission, SEC) has developed a roadmap for eliminating the current requirement for non-US companies that raise capital in US markets to prepare a reconciliation of their IFRS financial statements to US Generally Accepted Accounting Principles (US GAAP).

4. THE INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE

From 1973 until 2001, the body in charge of setting the international standards was the International Accounting Standards Committee (IASC). The principal significance of IASC was to encourage national accounting standard setters around the world to improve and harmonize national accounting standards. Its objectives, as stated in its Constitution, were to
• Formulate and publish in the public interest accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance and observance
• Work generally for the improvement and harmonization of regulations, accounting standards, and procedures relating to the presentation of financial statements

4.1 IASC and the Accounting Profession

IASC always had a special relationship with the international accounting profession. IASC was created in 1973 by agreement between the professional accountancy bodies in nine countries, and, from 1982, its membership consisted of all those professional accountancy bodies that were members of the International Federation of Accountants (IFAC), that is, professional accountancy bodies in more than 100 countries. As part of their membership in IASC, professional accountancy bodies worldwide committed themselves to use their best endeavors to persuade governments, standard-setting bodies, securities regulators, and the business community that published financial statements should comply with IAS.

4.2 IASC Board

The members of IASC (i.e., professional accountancy bodies around the world) delegated the responsibility for all IASC activities, including all standard-setting activities, to the IASC Board. The Board consisted of 13 country delegations representing members of IASC and up to four other organizations appointed by the Board. The Board, which usually met four times per year, was supported by a small secretariat located in London, the United Kingdom.

4.3 The Initial Set of Standards Issued by IASC

In its early years, IASC focused its efforts on developing a set of basic accounting standards. These standards usually were worded broadly and contained several alternative treatments to accommodate the existence of different accounting practices around the world. Later these standards came to be criticized for being too broad and having too many options.

4.4 Improvements and Comparability Project

Beginning in 1987, IASC initiated work to improve its standards, reduce the number of choices, and specify preferred accounting treatments in order to allow greater comparability in financial statements. This work took on further importance as securities regulators worldwide started to take an active interest in the international accounting standard-setting process.

4.5 Core Standards Work Program

4.5.1 During the 1990s, IASC worked increasingly closely with the International Organization of Securities Commissions (IOSCO) on defining its agenda. In 1993, the Technical Committee of IOSCO held out the possibility of IOSCO endorsement of IASC Standards for cross-border listing and capital-raising purposes around the world and identified a list of core standards that IASC would need to complete for purposes of such an endorsement. In response, IASC in 1995 announced that it had agreed on a work plan to develop the comprehensive set of core standards sought after by IOSCO. This effort became known as the Core Standards Work Program.
4.5.2 After three years of intense work to develop and publish standards that met IOSCO’s criteria, IASC completed the Core Standards Work Program in 1998. In 2000, the Technical Committee of IOSCO recommended securities regulators worldwide to permit foreign issuers to use IASC Standards for cross-border offering and listing purposes, subject to certain supplemental treatments.

4.6 International Accounting Standards and SIC Interpretations

During its existence, IASC issued 41 numbered Standards, known as International Accounting Standards (IAS), as well as a Framework for the Preparation and Presentation of Financial Statements . While some of the Standards issued by the IASC have been withdrawn, many are still in force. In addition, some of the Interpretations issued by the IASC’s interpretive body, the so-called Standing Interpretations Committee (SIC), are still in force.
List of IAS Still in Force for 2006 Financial Statements
IAS 1, Presentation of Financial Statements
IAS 2, Inventories
IAS 7, Cash Flow Statements
IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10, Events After the Balance Sheet Date
IAS 11, Construction Contracts
IAS 12, Income Taxes
IAS 14, Segment Reporting
IAS 16, Property, Plant, and Equipment
IAS 17, Leases
IAS 18, Revenue
IAS 19, Employee Benefits
IAS 20, Accounting for Government Grants and Disclosure of Government Assistance
IAS 21, The Effects of Changes in Foreign Exchange Rates
IAS 23, Borrowing Costs
IAS 24, Related-Party Disclosures
IAS 26, Accounting and Reporting by Retirement Benefit Plans
IAS 27, Consolidated and Separate Financial Statements
IAS 28, Investments in Associates
IAS 29, Financial Reporting in Hyperinflationary Economies
IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions
IAS 31, Interests in Joint Ventures
IAS 32, Financial Instruments: Disclosure and Presentation
IAS 33, Earnings per Share
IAS 34, Interim Financial Reporting
IAS 36, Impairment of Assets
IAS 37, Provisions, Contingent Liabilities and Contingent Assets
IAS 38, Intangible Assets
IAS 39, Financial Instruments: Recognition and Measurement
IAS 40, Investment Property
IAS 41, Agriculture
List of SIC Interpretations Still in Force for 2006 Financial Statements
SIC 7, Introduction of the Euro
SIC 10, Government Assistance—No Specific Relation to Operating Activities
SIC 12, Consolidation—Special-Purpose Entities
SIC 13, Jointly Controlled Entities—Nonmonetary Contributions by Venturers
SIC 15, Operating Leases—Incentives
SIC 21, Income Taxes—Recovery of Revalued Nondepreciable Assets
SIC 25, Income Taxes—Changes in the Tax Status of an Entity or its Shareholders
SIC 27, Evaluating the Substance of Transactions Involving the Legal Form of a Lease
SIC 29, Disclosure—Service Concession Arrangements
SIC 31, Revenue—Barter Transactions Involving Advertising Services
SIC 32, Intangible Assets—Web Site Costs

5. THE INTERNATIONAL ACCOUNTING STANDARDS BOARD

5.0.1 In 2001, fundamental changes were made to strengthen the independence, legitimacy, and quality of the international accounting standard-setting process. In particular, the IASC was replaced by the International Accounting Standards Board (IASB) as the body in charge of setting the international standards.
Key Differences between IASC and IASB
The IASB differs from the IASC, its predecessor body, in several key areas:
• Unlike the IASC, the IASB does not have a special relationship with the international accounting profession. Instead, IASB is governed by a group of Trustees of diverse geographic and functional backgrounds who are independent of the accounting profession.
• Unlike the Board members of the IASC, Board members of the IASB are individuals who are appointed based on technical skill and background experience rather than as representatives of specific national accountancy bodies or other organizations.
• Unlike the IASC Board, which only met about four times a year, the IASB Board usually meets each month. Moreover, the number of technical and commercial staff working for IASB has increased significantly as compared with IASC. (Similar to IASC, the headquarters of the IASB is located in London, the United Kingdom.)
The interpretive body of the IASC (SIC), has been replaced by the International Financial Reporting Interpretations Committee (IFRIC).
5.0.2 The objectives of the IASB, as stated in its Constitution, are to
a. Develop, in the public interest, a single set of high-quality, understandable, and enforceable global accounting standards that require high-quality, transparent, and comparable information in financial statements and other financial reporting to help participants in the various capital markets of the world and other users of the information to make economic decisions;
b. Promote the use and rigorous application of those standards; and
c. Work actively with national standard setters to bring about convergence of national accounting standards and International Financial Reporting Standards to high-quality solutions.
5.0.3 At its first meeting in 2001, IASB adopted all outstanding IAS issued by the IASC as its own Standards. Those IAS continue to be in force to the extent they are not amended or withdrawn by the IASB. New Standards issued by IASB are known as IFRS. When referring collectively to IFRS, that term includes both IAS and IFRS.
List of IFRS
IFRS 1, First-time Adoption of International Financial Reporting Standards
IFRS 2, Share-Based Payment
IFRS 3, Business Combinations
IFRS 4, Insurance Contracts
IFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations
IFRS 6, Exploration for and Evaluation of Mineral Resources
IFRS 7, Financial Instruments: Disclosures
5.0.4 One of the initial projects undertaken by IASB was to identify opportunities to improve the existing set of Standards by adding guidance and eliminating inconsistencies and choices. The improved Standards, adopted in 2003, form part of IASB’s so-called stable platform of Standards for use in 2005 when a significant number of countries around the world moved from national accounting requirements to IFRS, such as all the countries in the European Union.

5.1 Structure and Governance of IASB

5.1.1 Trustees

The governance of IASB rests with the Trustees of the International Accounting Standards Committee Foundation (the “IASC Foundation Trustees” or, simply, the “Trustees”). The Trustees have no involvement in IASB’s standard-setting activities. Instead, the Trustees are responsible for broad strategic issues, budget, and operating procedures, as well as for appointing the members of IASB.

5.1.2 The Board

The Board is responsible for all standard-setting activities, including the development and adoption of IFRS. The Board has 14 members from around the world who are selected by the Trustees based on technical skills and relevant business and market experience. The Board, which usually meets once a month, has 12 full-time members and 2 part-time members. The Board members are from a mix of backgrounds, including auditors, preparers of financial statements, users of financial statements, and academics.

5.1.3 Standards Advisory Council

IASB is advised by the Standards Advisory Council (SAC). It has about 40 members appointed by the Trustees and provides a forum for organizations and individuals with an interest in international financial reporting to provide advice on IASB agenda decisions and priorities. Members currently include chief financial and accounting officers from some of the world’s largest corporations and international organizations, leading financial analysts and academics, regulators, accounting standard setters, and partners from leading accounting firms.

5.1.4 International Financial Reporting Interpretations Committee (IFRIC)

IASB’s interpretive body, IFRIC, is in charge of developing interpretive guidance on accounting issues that are not specifically dealt with in IFRSs or that are likely to receive divergent or unacceptable interpretations in the absence of authoritative guidance. IFRIC members are appointed by the Trustees.
List of IFRIC Interpretations
IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar Liabilities
IFRIC 2, Members’ Shares in Cooperative Entities and Similar Instruments
IFRIC 3, Emission Rights (withdrawn)
IFRIC 4, Determining Whether an Arrangement Contains a Lease
IFRIC 5, Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
IFRIC 6, Liabilities Arising from Participating in a Specific Market—Waste Electrical and Electronic Equipment
IFRIC 7, Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
IFRIC 8, Scope of IFRS 2
IFRIC 9, Reassessment of Embedded Derivatives

5.1.5 Standard-Setting Due Process

As part of its due process in developing new or revised Standards, the Board publishes an Exposure Draft of the proposed Standard for public comment in order to obtain the views of all interested parties. It also publishes a “Basis for Conclusions” to its Exposure Drafts and Standards to explain how it reached its conclusions and to give background information. When one or more Board members disagree with a Standard, the Board publishes those dissenting opinions with the Standard. To obtain advice on major projects, the Board often forms advisory committees or other specialist groups and may also hold public hearings and conduct field tests on proposed Standards.

2
IASB FRAMEWORK

1. INTRODUCTION