IFRSC Knowledge Base

Last updated: 18 May 2020 Materiality concept Materiality is a crucial concept in financial reporting. A requirement in IFRS (including disclosure) need not be applied if the effect of not applying it is immaterial (see paragraph 8 of IFRS Practice Statement 2 Making Materiality Judgements). Under IFRS, ‘Information is material if omitting, misstating or obscuring … Read more

Last updated: 14 May 2020 IAS 8 covers: selecting and applying accounting policies and accounting for changes in accounting policies, changes in accounting estimates, corrections of prior period errors. In addition to IAS 8, the IASB has issued Guide to Selecting and Applying Accounting Policies. Accounting policies Definition of accounting policies Accounting policies are defined … Read more

Last updated: 16 April 2020 Statement of cash flows presents inflows and outflows of cash and cash equivalents and is dealt with in IAS 7. The statement of cash flows is required to be presented by all entities for each period for which financial statements are presented. Under IAS 7, cash flows are classified into … Read more

Last updated: 14 March 2020 Under IAS 2, inventories should be measured at the lower of cost and net realisable value (IAS 2.9). Net realisable value (‘NRV’) is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale (IAS 2.6). … Read more

Last updated: 14 March 2020 IAS 2 specifically allows making approximations when measuring the cost of inventories. Popular approximations include standard cost method or the retail method (IAS 2.21-22). Standard costs take into account normal levels of materials and supplies, labour, efficiency and capacity utilisation. Under retail method, the cost of inventory is determined by … Read more

Last updated: 14 March 2020 Under IAS 2, inventories are measured at the lower of cost (see below) and net realisable value (IAS 2.9). Components of cost The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition (IAS 2.10). … Read more

Last updated: 14 March 2020 IAS 2 covers accounting for inventories. It applies to all inventories except financial instruments (covered by IAS 32 and IFRS 9) and biological assets that are in the scope of IAS 41. Additional scope exemption relates to the measurement of inventories by certain producers of agricultural and forest products, agricultural … Read more

Last updated: 13 March 2020 General requirements for financial statements presentation are included in IAS 1 Presentation of Financial Statements. In general, this standard relates only to annual financial statements. However, paragraphs IAS 1.15-35 apply also to interim reporting (IAS 1.4). They cover fair presentation and compliance with IFRS, going concern, accrual basis of accounting, … Read more