Deferred Tax (IAS 12)

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Last updated: 3 April 2020 Deferred income tax is recognised under IAS 12 to account for differences between tax base of an asset or a liability and its carrying amount. Deferred income tax and current income tax comprise total tax expense in the income statement. Temporary differences Definition of temporary differences The notion of temporary differences … Read more

Scope of IAS 12 Income Taxes

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Last updated: 3 April 2020 Scope of IAS 12 – overview IAS 12 prescribes accounting for income taxes (current and deferred). Income taxes include all domestic and foreign taxes which are based on taxable profits (IAS 12.2). Taxes other than income taxes are accounted for under other IFRS, e.g. IAS 37 or IAS 19 (payroll … Read more

Materiality in IFRS Standards and Financial Reporting

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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

Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8)

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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

Statement of Cash Flows (IAS 7)

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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

Net Realisable Value (NRV) of Inventories (IAS 2)

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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

IFRS 2 Determination of the vesting period

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Last update 25/06/2020 Topics hide Overview IFRS 2 Determination of the vesting period Service commencement date and grant date Exhibit – Service commencement date before grant date Graded vesting Exhibit – Graded vesting Attribution to periods Exhibit – Straight-line attribution and different reference periods Exhibit – Straight-line attribution with challenging performance target Variable vesting period … Read more

Cost Formulas for Inventories – FIFO, LIFO and Weighted Average Cost (IAS 2)

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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