目 录
目 录
CHAPTER 1 SUMMARY
Accounting Regulation………………………………………………………1
History of IASB…………………………………………………………………7
CHAPTER 2 PRESENTATION
Framework for the Preparation and Presentation of Financial Statements……………………………………………………………………12
IAS1 Presentation of Financial Statements……………………………18
IAS7 Cash Flow Statements………………………………………………25
IAS8 Accounting Policies, Changes in Accounting Estimates and Errors………………………………………………………………… 30
CHAPTER 3 BANLANCE SHEET AND INCOME STATEMENT
IAS2 Inventories…………………………………………………………34
IAS11 Construction Contracts………………………………………… 41
IAS18 Revenue……………………………………………………………49
IAS23 Borrowing Costs…………………………………………………56
IAS37 Provisions, Contingent Liabilities and Contingent Assets……………………………………………………………… 61
IAS12＊ Income Taxes…………………………………………………… 77
IAS16＊ Property, Plant, and Equipment………………………………80
IAS17＊ Leases…………………………………………………………… 84
CHAPTER 4 DISCLOSURE
IAS10 Events After the Balance Sheet Date………………………… 88
IAS14 Segment Reporting……………………………………………… 93
IAS24 Related Party Disclosures………………………………………108
IAS34 Interim Financial Reporting…………………………………… 113
CHARPTER 1 SUMMARY
Accounting Regulation
广义的会计规范所覆盖的范畴很广，其形成方式也各不相同。有的会计规范是会计从业人员及其他相关人员在长期的会计实践中逐步形成的无强制性的习惯和规则，即会计惯例；有的会计规范则是通过一定正式形式为人们所公认的，这类会计规范一般由国家有关部门或会计职业团体等组织以法律或文告等正式形式发布，具有强制性，它主要包括会计法律规范、会计准则规范、会计制度规范和会计职业道德规范。会计规范这一概念通常是指其狭义的范畴，即上文所述的后一种情况。
一、会计法律规范
法律是以国家强制力保证实施的规范准绳，对会计具有最强的约束力。纵观世界各国会计的发展，法律对会计实务乃至会计理论都产生了深远的影响。法律规范分为大陆法系和英美法系。大陆法系（亦称民法法系）是在罗马法基础上形成与发展起来的历史悠久、分布最广、影响很大的法系，它的代表国家是法国与德国。而英美法系（亦称普通法系或海洋法系）则是以英格兰普通法为基础形成、发展起来的，在进入现代社会后，它在发展中创新力度明显加强，影响也进一步扩大，在世界性法系中与大陆法系形成并驾齐驱的演进格局。这个法系的代表是英国和美国，并且在进入二十世纪后美国开始在这个法系中占据主要地位。
大陆法系会计法律规范
在大陆法系中，成文法是其主要的立法形式。在成文法国家中，法律是一系列无所不包的、严格的要求，法律的条文必须遵守。因此，会计法规结合在国家法律之中，并趋向于高度的指示性和程序性。另外，由于大陆法系国家的行政性规章较多，对经济的干预较大，其会计法规还表现在各种政府命令当中。以法国为例，法国是国家统一会计的倡导者，在其实行的全国会计方案中详细规定了全国统一的账户表、术语的定义与解释、会计计量（计价）原则、财务报表的标准格式、可接受的成本会计方法等。此外，《商法典》中的商务法规中包含了大量的会计与报告的条款，税法对会计也有重大影响。
（二）英美法系会计法律规范
与大陆法系相比，英美法系的法律规范主要以判例法(所谓判例法，就是基于法院的判决而形成的具有法律效力的判定，这种判定对以后的判决具有法律规范效力，能够作为法院判案的法律依据)为表现形式。在这些国家里，其法规渊源主要来自习惯、判例，典章性不强，也有成文法，但主要是对判例法的补充，且适用时需经法院判例解释方可生效，其在会计法规体系的构成上一般较为分散，层级性不强，没有专门的会计法，相关规定散见于《民法》、《公司法》、《证券法》等各种民法商法中。如美国，它没有国家统一的会计法，对会计实务产生重大影响的法律是1933年的《证券法》和1934年的《证券交易法》等，最具权威的机构是证券交易委员会（Securities and Exchange Commission，SEC）。美国的证券交易委员会在执行有关法令的过程中，对公司会计有权威性的影响，它既可以对公司的财务报告、财务报表的格式乃至项目作出规定，也可以对法令所涉及的会计术语作出规定或解释。
（三）我国会计法律体系的构成
我国属于大陆法系国家，现行的会计法律规范体系在构成上包括以下几个层次：
1．会计法律。依我国现行立法制度，是指由全国人大及其常委会制定和颁布的单独调整会计关系的法律规范，如《中华人民共和国会计法》。它对会计立法的目的、适用范围、会计核算和会计监督的基本要求、会计机构和会计人员管理、会计行为的法律责任等均作出原则性规定，属于基本会计法，是会计法律规范中的母法，具有覆盖全面、相对稳定的特点，是制定其它会计法律规范的依据，对一切组织内的会计行为都具有普遍的约束力。
2．全国性会计法规。全国性会计法规是指在全国范围内施行的、调整经济活动中某一方面会计关系的法规总称，是基本会计法在某一专项方面或某一部门、行业的具体延伸。在我国一般由国务院、财政部或财政部与中央其他行政部门联合制定和颁布，其制定依据是《会计法》及有关法律，主要包括国务院制定的《总会计师条例》、《会计人员职权条例》；财政部颁布的《会计基础工作规范》、《会计人员继续教育暂行规定》；财政部与国家档案局联合发布的《会计档案管理办法》等。
3．地方性会计法规。地方性会计法规是指由地方人大及其常委会或地方人民政府，根据有关法律和法规的授权，结合本地区的实际需要和特点，所制定和颁布的仅在本地区实施和有效的关于会计方面的法规。
4．其他相关法规。这类法规是指散见于其他法律中的关于会计行为调整方面的法规总称。如我国《刑法》中关于会计违法犯罪行为应承担的刑事责任的规定，《民法》中关于会计行为的民事责任条款，《证券法》、《公司法》、《税法》分别从各自角度对公司、企业会计行为作出的规定和要求等。
二、会计准则规范
（一）我国会计准则的变迁
建国后到20世纪70年代末，与我国长期实行的高度统一的计划经济相适应，我国采用了统一的会计制度，会计准则几乎无人提及。1976年起，我国进入了经济发展的新时期，会计理论界开始关注并讨论会计准则问题。80年代后期，多元经济成份并存发展，市场经济对资源的基础性配置作用不断增强，我国原有的与传统计划经济相适应的会计模式己越来越难以适应经济发展需要，从1988年10月开始，财政部成立会计准则组，对与会计准则制定有关的基本理论、基本假设、基本原则、会计目标以及会计要素等展开系统研究，并着手制定会计准则。进入90年代,中国经济面临深化改革和扩大开放的迫切形势，1992年，财政部发布了《企业会计准则》、《企业会计通则》以及13项行业会计制度和19项行业财务制度，结束了我国40多年来在计划经济基础上建立起来的会计模式，标志着我国会计由计划经济模式向市场经济模式的转换。90年代后半期，随着证券市场的发展，会计信息使用者对会计信息的需求以及我国部分公司境外上市融资的需求不断扩大，1997年，财政部颁布并实施了第一项有关关联方的具体会计准则，从而使会计准则建设进入了会计准则体系建设阶段。从1997年起，财政部又先后发布了16项具体会计准则，2000年，财政部以国务院发布的《企业财务会计报告条例》为依据制定了《企业会计制度》，建立了国家统一的会计制度，2001年发布实施了的新企业会计准则，标志着我国会计准则的建设与发展进入了一个崭新的阶段。
2006年2月15日，财政部在京举行会计审计准则体系发布会，发布了39项企业会计准则和48项注册会计师审计准则，这标志着适应我国市场经济发展要求、与国际惯例趋同的企业会计准则体系和注册会计师审计准则体系正式建立。企业会计准则如下：
企业会计准则——基本准则
企业会计准则第1号——存货
企业会计准则第2号——长期股权投资
企业会计准则第3号——投资性房地产
企业会计准则第4号——固定资产
企业会计准则第5号——生物资产
企业会计准则第6号——无形资产
企业会计准则第7号——非货币性资产交换
企业会计准则第8号——资产减值
企业会计准则第9号——职工薪酬
企业会计准则第10号——企业年金基金
企业会计准则第11号——股份支付
企业会计准则第12号——债务重组
企业会计准则第13号——或有事项
企业会计准则第14号——收入
企业会计准则第15号——建造合同
企业会计准则第16号——政府补助
企业会计准则第17号——借款费用
企业会计准则第18号——所得税
企业会计准则第19号——外币折算
企业会计准则第20号——企业合并
企业会计准则第21号——租赁
企业会计准则第22号——金融工具确认和计量
企业会计准则第23号——金融资产转移
企业会计准则第24号——套期保值
企业会计准则第25号——原保险合同
企业会计准则第26号——再保险合同
企业会计准则第27号——石油天然气开采
企业会计准则第28号——会计政策、会计估计变更和差错更正
企业会计准则第29号——资产负债表日后事项
企业会计准则第30号——财务报表列报
企业会计准则第31号——现金流量表
企业会计准则第32号——中期财务报告
企业会计准则第33号——合并财务报表
企业会计准则第34号——每股收益
企业会计准则第35号——分部报告
企业会计准则第36号——关联方披露
企业会计准则第37号——金融工具列报
企业会计准则第38号——首次执行企业会计准则
（二）我国会计准则的构成
我国的企业会计准则分为基本准则和具体准则两个层次。
（1）基本准则。基本准则也称为指导性准则，它是对会计核算的基本概念、基本原则、基本方法（确认、计量、记录、报告）所作出的一般性规定，覆盖面广，但操作性较差。我国1993年7月1日实施的《企业会计准则》就属于基本准则。国外一般称为概念公告或框架结构。
（2）具体准则。具体准则是以基本准则为理论基础，跨越部门和行业的界限，把发生在企业种带有共性或具有特性的某个或几个会计业务，针对其特点，在要素、要素的确认、计量、记录和披露等方面一一加以具体规范。每项具体准则包括准则正文和指南两部分。其中，指南是对准则正文所作的解释，和正文一样，具有法律效力。可见，具体准则是对基本准则的延伸、补充和具体化，兼顾到各种特殊业务，可操作性强。
三、会计制度规范
（一）会计制度概念与特征
会计制度是组织和从事会计工作所应遵循的规范，它包括一些原则和方法、规则，是会计活动所应遵循的标准。
会计制度具有以下特征：
（1）系统性，即会计制度是由相互联系的若干要素组成的具有特定功能的有机整体。
（2）规范性和技术性，会计制度是会计机构和人员行为的规范，它规定了一定的方法和技巧便于实务操作。
（3）时间性，会计制度规定在一定时间实行，并随着环境的变化进行修改和更新。
（4）强制性，会计制度的规定在实际工作中必须执行，不得违反。
（二）我国的会计制度体系
目前世界上我国和一些大陆法系国家如法国、德国等实行统一会计制度。我国统一的会计制度包含以下三层含义：
1．国家统一会计制度由国务院财政部门统一制定并在全国范围内实施
国务院财政部门作为全国会计工作的主管部门，制定国家统一的会计制度是其一项非常重要的职权。国家统一的会计制度由国务院财政部门制定，可以保证我国会计制度的统一、完整和权威，也有利于执行。
2．国家统一的会计制度应当依据会计法制定
会计法是我国会计核算、会计监督和会计管理的基本法律，比国家统一的会计制度具有更高的法律效力，因此，国务院财政部门制定国家统一的会计制度，应以会计法为依据，不得与会计法的规定相违背和抵触。
3．国家统一的会计制度是关于会计核算、会计监督、会计机构和会计人员以及会计工作管理的制度
国家统一的会计制度由许多规范共同组成，主要内容包括以下几个方面：
（1）会计核算制度，主要是有关会计核算的基本原则、会计科目的设置与要求，财务会计报告的格式与要求等规范。
（2）会计监督制度，是指有关会计机构、会计人员对单位的会计活动进行监督的制度，主要包括会计机构和会计人员对本单位的会计凭证、会计账簿、财务会计报告、实物与款项、财务收支及其他会计事项的监督。
（3）有关会计机构、会计人员的制度，主要包括会计机构的设置、会计人员配备和会计机构、会计人员的职责权限等制度。
（4）会计工作管理制度，主要是指各级人民政府财政部门对会计工作的指导、监督和管理等制度。
以上所说的会计制度可以说是广义的会计制度，在实践中经常提及的会计制度则是狭义的会计制度，即会计核算制度，也就是《企业会计制度》。《企业会计制度》伴随着我国经济的迅速发展而不断完善和进步。2000年12月29日，财政部发布了《关于印发<企业会计制度>的通知》，要求自2001年1月日起暂在股份有限公司范围内执行，同时鼓励其他企业采用该制度。新制度的颁布实施，打破了以往分行业、分所有制的会计制度体系，成为一个多层次的真正统一的制度。这是我国会计改革的一项重大举措，对于规范企业会计核算工作，提高会计信息质量，真实反映企业的财务状况和经营成果，加快实现我国会计核算模式的转变，适应经济国际一体化的趋势等方面，具有重大的意义。
四、会计职业道德规范
会计职业道德是指在会计职业活动中应遵循的、体现会计职业特征的、调整会计职业关系的职业行为准则和规范。主要内容包括：
1．爱岗敬业：热爱本职、尽心尽责。
2．诚实守信：保密守信。
3．廉洁自律：廉洁奉公、自我约束。
4．客观公正：依法办事、有独立性。
5．坚持准则：懂法、守法。
6．提高技能：勤学苦练、提高业务水平。
7．参与管理：间接参与
8．强化服务：深化意识、文明服务。
History of IASB
一、国际会计准则委员会及其准则的发展历史
（一）国际会计准则委员会及其准则的产生
国际会计准则委员会（International Accounting Standards Committee，缩写为IASC）的创立可以追溯到1966年，当时由任英格兰和威尔士特许会计师协会（ICAEW）会长的本森（Herry Benson）爵士首先发起，联合美国和加拿大会计师协会共同成立了“会计师国际研究小组”（AISG）,目的就是对英、美、加三国的会计准则和会计实务开展比较研究并发表研究报告。为了将AISG发展成一个具有广泛代表性的国际组织，在1972年悉尼召开的第十次国际会计师大会上，本森就建立国际性组织的必要性向各主要国家发出倡议。会后成立了“会计职业国际协调委员会”，负责与一些主要国家进行协商，形成了设立国际会计准则委员会的方案，这为以后正式成立国际会计准则委员会奠定了基础。
1973年6月，经澳大利亚、加拿大、法国、德国、日本、墨西哥、荷兰、英国和美国等9个国家的16个主要会计职业团体发起，在伦敦成立了国际会计准则委员会，并开始从事制定国际会计准则的工作。IASC刚成立时，只有上述创始会员是正式成员，其他陆续加入的会计职业团体均为非正式会员，1977年以后取消了这种划分。1982年，根据IASC与国际会计师联合会（IFAC）一份协议的安排，IFAC的所有会员都可以自动成为IASC的会员。以后，IASC会员的数目发展很快，至2000年底IASC改组之前，IASC已包括112个国家的153个会计职业团体。
IASC原设有“理事会”（The IASC Board）、“咨询小组”（The Consulting Group）和“筹划委员会”（The Steering Committees）等下属机构；1994年成立了“顾问委员会”（The Advisory Council）；1998年成立了“常设解释委员会”（The Standing Interpretations Committee,缩写为SIC）；1999年通过“塑造IASC的未来”的报告，开始对IASC的组织结构作出全面改组。
从1973年起至2001年IASC被正式改组为止，IASC及其准则大致经历了三个发展阶段：
1．1973——1988年，汇集与借鉴各国会计准则和会计惯例阶段。在此阶段，IASC共制定了26项国际会计准则。但当时的指导思想是尽量兼顾各国的会计实务。因此，当时制定的准则在某种程度上只是对各国会计实务的汇集，企业有很大的选择余地。
2．1989——1994年，实施“可比性和改进计划”（Comparability/Improvement Projects）的阶段。为了减少会计备选方法，提高财务报表的可比性，IASC开始实施“可比性和改进计划”。在此阶段，IASC根据“财务报表可比性意向书”的要求，于1993年对已发布的10项准则进行全面修订，并于1994年对其余18项准则进行格式重排。通过实施“可比性和改进计划”，IASC将修订的国际会计准则中可选择的会计处理方法从原来的38个减少到15个，并首次划分了“基准处理法”和“备选处理法”。
3．1995——2000年，制定“核心准则”阶段。从20世纪90年代中期开始，在“证券委员会国际组织”（IOSCO）的支持下，IASC致力于制定一套可以在全球资本市场上使用的“核心准则”（Core Standards）；1998年12月，随着国际会计准则第39号（IAS39）“金融工具：确认和计量”的批准发布，40项核心准则宣告全部完成；2000年5月，IOSCO宣布，已经完成了其中30项核心准则的评审工作，目前正向世界主要资本市场推荐使用。
（二）IASC的改组以及IASB的设立
早在1997年初，IASC就开始酝酿其组织架构的重组问题。当时IASC设立了“战略工作小组”（Strategy Working Party，缩写为SWP），负责考察IASC应该具有的结构及策略。1999年11月，SWP提交了题为《关于国际会计准则委员会未来规划的建议》，IASC于1999年12月通过决议采纳SWP的建议，任命了一个提名委员会来推选首批受托人。2000年3月，IASC执行委员会批准了新的国际会计准则委员会章程；5月，通过了IASC的重组方案和新的章程，同时提名委员会宣布了首批受托人名单。新章程包括ABC三个部分。A部分阐述国际会计准则委员会的名称、目标、成员以及基金会的设置，B部分规定了国际会计准则委员会的内部结构以及行政部门的具体安排和工作职能，C部分是从1992年10月的章程中选取的，其中的条款在B部分实施后将停止发挥作用。2000年6月，英国会计准则委员会主席大卫·特威迪()成为新的国际会计准则制定委员会主席，将原来负责准则制定的IASC执行委员会改组为国际会计准则制定委员会（International Accounting Standards Board，IASB），负责批准国际财务报告准则（IFRS）（包括2001年以前发布的国际会计准则IAS）和其他相关文件，如编报财务报表的框架、征求意见稿和其他讨论文件。2000年底最终确定了14名首届国际会计准则制定委员会成员，中国代表冯淑萍成为其中一员。2001年3月8日，在布鲁塞尔召开的会议上，IASC基金会管理委员会宣布正式启用重组后的IASC新框架，决定IASB从2001年4月开始运作，行使制定国际会计准则的职责。
IASC的改组带来了一些新的变化，如准则制定机构与会计职业界“脱钩”；国际会计师联合会的团体会员不再自动成为IASB的会员；IASB已注册成为一个独立的法律实体；国际会计准则制定委员会成员的选取以专业技术和知识水平为首要条件、以技术能力和财会知识等方面的8项条件为标准，国家的代表性因素不再重要；新国际会计准则制定委员会决定将其制定的准则更名为“国际财务报告准则”（International Financial Reporting Standards，缩写为IFRS）；同时，IASB也注意到了发达国家和发展中国家在准则应用上的差异问题，开始在一些委员会中吸收来自发展中国家的成员。准则制定组织、人员和程序等各方面新变化更加有利于国际会计准则向高质量原则导向型会计准则迈进。
二、准则文告
IASC发布的会计准则文件有两种：一是国际会计准则(IAS)；二是常设解释委员会解释公告（SIC Interpretations）。两者具有相同的权威性，应结合使用。此外，IASC还在1989年发布了“编报财务报表的框架”。该框架性文件不属于具体的会计准则，是用以制定和评价国际会计准则的指导性文件。
IASB设立后发布的准则更名为“国际财务报告准则”（IFRS）。
（一）国际会计准则
IASC自成立起到2001年1月底止，先后发布了41项国际会计准则，分别是：
国际会计准则第1号——财务报表的列报
国际会计准则第2号——存货
国际会计准则第3号——合并财务报表（被《国际会计准则第27号》和《国际会计准则第28号》取代）
国际会计准则第4号——折旧会计（被《国际会计准则第16号》和《国际会计准则第38号》取代）
国际会计准则第5号——财务报表应披露的信息（被《国际会计准则第1号》取代）
国际会计准则第6号——物价变动会计反映（被《国际会计准则第15号》取代）
国际会计准则第7号——现金流量表
国际会计准则第8号——会计政策、会计估计变更和差错
国际会计准则第9号——研究与开发费用（被《国际会计准则第38号》取代）
国际会计准则第10号——资产负债表日后事项（自2000年1月1日起生效）
国际会计准则第11号——建造合同
国际会计准则第12号——所得税
国际会计准则第13号——流动资产和流动负债的列报（被《国际会计准则第1号》取代）
国际会计准则第14号——分部报告
国际会计准则第15号——反映物价变动影响的信息
国际会计准则第16号——不动产、厂场和设备
国际会计准则第17号——租赁
国际会计准则第18号——收入
国际会计准则第19号——雇员福利
国际会计准则第20号——政府补助会计和政府援助的披露
国际会计准则第21号——汇率变动的影响
国际会计准则第22号——企业合并
国际会计准则第23号——借款费用
国际会计准则第24号——关联方披露
国际会计准则第25号——投资会计（被《国际会计准则第39号》和《国际会计准则第40号》取代）
国际会计准则第26号——退休福利计划的会计和报告
国际会计准则第27号——合并财务报表和对子公司投资会计
国际会计准则第28号——对联营企业投资会计
国际会计准则第29号——恶性通货膨胀经济中的财务报告
国际会计准则第30号——银行和类似金融机构财务报表中的披露
国际会计准则第31号——合营中权益的财务报告
国际会计准则第32号——金融工具：披露和列报
国际会计准则第33号——每股收益
国际会计准则第34号——中期财务报告
国际会计准则第35号——终止经营
国际会计准则第36号——资产减值
国际会计准则第37号——准备、或有负债和或有资产
国际会计准则第38号——无形资产
国际会计准则第39号——金融工具：确认和计量
国际会计准则第40号——投资性房地产
国际会计准则第41号——农业
（二）常设解释委员会解释公告（SIC）
常设解释委员会通过对有可能引起争论的会计问题的解释，推动国际会计准则的正确运用，提高按IAS编制的财务报表在世界范围内的广泛可比性。到目前为止，已发布30项解释公告，但SIC4、SIC26、SIC32尚未正式发布，而SIC8则在2003年6月被国际财务报告准则第1号取代。SIC解释公告内容如下（括号内为与本号解释公告相关的国际会计准则）：
解释公告第1号——一致性：存货成本的不同计算方法（国际会计准则第2号）
解释公告第2号——一致性：借款费用资本化（国际会计准则第23号）
解释公告第3号——消除与联营企业交易中的未实现利润和损失（国际会计准则第28号）
解释公告第5号——金融工具的分类：或有结算条款（国际会计准则第32号）
解释公告第6号——修改现用软件的费用（框架）
解释公告第7号——引入欧元（国际会计准则第21号）
解释公告第8号——首次采用国际会计准则作为首要的会计基础（被IFRS1取代）
解释公告第9号——企业合并：区分为购买或权益结合（国际会计准则第22号）
解释公告第10号——政府援助：与经营活动没有特定联系的政府援助（国际会计准则第20号）
解释公告第11号——外汇：严重货币贬值所导致的损失的资本化（国际会计准则第21号）
解释公告第12号——合并：特定目的实体（国际会计准则第27号）
解释公告第13号——共同控制实体：合营者的非货币性投人（国际会计准则第31号）
解释公告第14号——不动产、厂场和设备：项目减值或损失的补偿（国际会计准则第16号）
解释公告第15号——经营租赁：激励措施（国际会计准则第17号）
解释公告第16号——股本：购回本身的权益性工具（库藏股）（国际会计准则第32号）
解释公告第17号——权益：权益交易费用（国际会计准则第32号）
解释公告第18号——一致性：允许选用的处理方法（国际会计准则第1号）
解释公告第19号——报告货币：根据IAS21和IAS29对财务报表的计量和列报（国际会计准则第21号和国际会计准则第29号）
解释公告第20号——权益法：损失的确认（国际会计准则第27号）
解释公告第21号——所得税：已重估非折旧资产的收回（国际会计准则第12号）
解释公告第22号——企业合并：初始报告的公允价值和商誉的后续调整（国际会计准则第22号）
解释公告第23号——不动产、厂场和设备：大检修费用（国际会计准则第16号）
解释公告第24号——每股收益：金融工具和其他可用股份清偿和约（国际会计准则第33号）
解释公告第25号——所得税：企业或其股东纳税状况的改变（国际会计准则第12号）
解释公告第27号——评价涉及租赁法律形式的交易的实质（国际会计准则第1、17、18号）
解释公告第28号——企业合并：“交易日”和权益工具的公允价值（国际会计准则第22号）
解释公告第29号——披露：特许权服务协议（国际会计准则第1号）
解释公告第30号——报告货币：从计量货币到列报货币的折算（国际会计准则第21、29号）
解释公告第31号——收入：涉及广告服务的易货交易（国际会计准则第18号）
解释公告第33号——合并和权益法：潜在表决权和所有者权益的分摊（国际会计准则第27、28、39号）
（三）国际财务报告准则（IFRSs）
国际财务报告准则（IFRSs）是由国际会计准则理事会（IASB）发布的会计准则及解释公告。截止至2004年，发布的国际财务报告准则如下：
国际财务报告准则第1号——第一次采用国际财务报告准则
国际财务报告准则第2号——以股份为基础的支付
国际财务报告准则第3号——企业合并
国际财务报告准则第4号——保险合同
国际财务报告准则第5号——持有以备出售的非流动资产和终止经营
国际财务报告准则第6号——矿产资源勘探和评价
Framework For
the Preparation and Presentation of Financial Statements
PURPOSE AND STATUS OF THE FRAMEWORK
The IASB's Framework for the Preparation and Presentation of Financial Statements describes the basic concepts by which financial statements are prepared. The Framework serves as a guide to the Board in developing accounting standards and as a guide to resolving accounting issues that are not addressed directly in an International Accounting Standard or International Financial Reporting Standard or Interpretation.
In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgment in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgment, IAS requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework. This elevation of the importance of the Framework was added in the 2003 revisions to IAS 8.
THE IASB FRAMEWORK
The Framework:
Defines the objective of financial statements;
Identifies the qualitative characteristics that make information in financial statements useful; and
Defines the basic elements of financial statements and the concepts for recognizing and measuring them in financial statements. [Framework, paragraph 1, hereafter abbreviated ]
General Purpose Financial Statements
The Framework addresses general purpose financial statements that a business enterprise (including a state-owned business enterprise) prepares and presents at least annually to meet the common information needs of a wide range of users external to the enterprise. Therefore, the Framework does not necessarily apply to special purpose financial reports such as reports to tax authorities, reports to governmental regulatory authorities, prospectuses prepared in connection with securities offerings, and reports prepared in connection with business combinations.
Users and their Information Needs
The principal classes of users of financial statements are present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the general public. All of these categories of users rely on financial statements to help them in decision making. []
The Framework also concludes that because investors are providers of risk capital to the enterprise, financial statements that meet their needs will also meet most of the general financial information needs of other users. Common to all of these user groups is their interest in the ability of an enterprise to generate cash and cash equivalents and of the timing and certainty of those future cash flows. []
The Framework notes that financial statements cannot provide all the information that users may need to make economic decisions. For one thing, financial statements show the financial effects of past events and transactions, whereas the decisions that most users of financial statements have to make relate to the future. Further, financial statements provide only a limited amount of the non-financial information needed by users of financial statements.
While all of the information needs of these user groups cannot be met by financial statements, there are information needs that are common to all users, and general purpose financial statements focus on meeting these needs.
Responsibility for Financial Statements
The management of an enterprise has the primary responsibility for preparing and presenting the enterprise's financial statements. []
The Objective of Financial Statements
The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. [-14]
Financial Position
The financial position of an enterprise is affected by the economic resources it controls, its financial structure, its liquidity and solvency, and its capacity to adapt to changes in the environment in which it operates. []
The balance sheet presents this kind of information. []
Performance
Performance is the ability of an enterprise to earn a profit on the resources that have been invested in it. Information about the amounts and variability of profits helps in forecasting future cash flows from the enterprise's existing resources and in forecasting potential additional cash flows from additional resources that might be invested in the enterprise. []
The Framework states that information about performance is primarily provided in an income statement. [] IAS 1 adds a fourth basic financial statement, the statement showing changes in equity.
Changes in Financial Position
Users of financial statements seek information about the investing, financing and operating activities that an enterprise has undertaken during the reporting period. This information helps in assessing how well the enterprise is able to generate cash and cash equivalents and how it uses those cash flows. []
The cash flow statement provides this kind of information. []
Notes and Supplementary Schedules
The financial statements also contain notes and supplementary schedules and other information that (a) explains items in the balance sheet and income statement, (b) discloses the risks and uncertainties affecting the enterprise, and (c) explains any resources and obligations not recognized in the balance sheet. []
Underlying Assumptions
The Framework sets out the underlying assumptions of financial statements:
Accrual Basis. The effects of transactions and other events are recognized when they occur, rather than when cash or its equivalent is received or paid, and they are reported in the financial statements of the periods to which they relate. []
Going Concern. The financial statements presume that an enterprise will continue in operation indefinitely or, if that presumption is not valid, disclosure and a different basis of reporting are required. []
Qualitative Characteristics of Financial Statements
These characteristics are the attributes that make the information in financial statements useful to investors, creditors, and others. The Framework identifies four principal qualitative characteristics: []
Understandability
Relevance
Reliability
Comparability
Understandability
Information should be presented in a way that is readily understandable by users who have a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently. []
Relevance
Information in financial statements is relevant when it influences the economic decisions of users. It can do that both by (a) helping them evaluate past, present, or future events relating to an enterprise and by (b) confirming or correcting past evaluations they have made. [-28]
Materiality is a component of relevance. Information is material if its omission or misstatement could influence the economic decisions of users. []
Timeliness is another component of relevance. To be useful, information must be provided to users within the time period in which it is most likely to bear on their decisions. []
Reliability
Information in financial statements is reliable if it is free from material error and bias and can be depended upon by users to represent events and transactions faithfully. Information is not reliable when it is purposely designed to influence users' decisions in a particular direction. [-32]
There is sometimes a tradeoff between relevance and reliability - and judgment is required to provide the appropriate balance. []
Reliability is affected by the use of estimates and by uncertainties associated with items recognized and measured in financial statements. These uncertainties are dealt with, in part, by disclosure and, in part, by exercising prudence in preparing financial statements. Prudence is the inclusion of a degree of caution in the exercise of the judgments needed in making the estimates required under conditions of uncertainty, such that assets or income are not overstated and liabilities or expenses are not understated. However, prudence can only be exercised within the context of the other qualitative characteristics in the Framework, particularly relevance and the faithful representation of transactions in financial statements. Prudence does not justify deliberate overstatement of liabilities or expenses or deliberate understatement of assets or income, because the financial statements would not be neutral and, therefore, not have the quality of reliability. [-37]
Comparability
Users must be able to compare the financial statements of an enterprise over time so that they can identify trends in its financial position and performance. Users must also be able to compare the financial statements of different enterprises. Disclosure of accounting policies is essential for comparability. [-42]
The Elements of Financial Statements
Financial statements portray the financial effects of transactions and other events by grouping them into broad classes according to their economic characteristics. These broad classes are termed the elements of financial statements.
The elements directly related to financial position (balance sheet) are: []
Assets
Liabilities
Equity
The elements directly related to performance (income statement) are: []
Income
Expenses
The cash flow statement reflects both income statement elements and changes in balance sheet elements. []
Definitions of the elements relating to financial position
Asset. An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise. [(a)]
Liability. A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. [(b)]
Equity. Equity is the residual interest in the assets of the enterprise after deducting all its liabilities. [(c)]
Definitions of the elements relating to performance
Income. Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. []
Expense. Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. []
The definition of income encompasses both revenue and gains. Revenue arises in the course of the ordinary activities of an enterprise and is referred to by a variety of different names including sales, fees, interest, dividends, royalties and rent. Gains represent other items that meet the definition of income and may, or may not, arise in the course of the ordinary activities of an enterprise. Gains represent increases in economic benefits and as such are no different in nature from revenue. Hence, they are not regarded as constituting a separate element in the IASC Framework. []
The definition of expenses encompasses losses as well as those expenses that arise in the course of the ordinary activities of the enterprise. Expenses that arise in the course of the ordinary activities of the enterprise include, for example, cost of sales, wages and depreciation. They usually take the form of an outflow or depletion of assets such as cash and cash equivalents, inventory, property, plant and equipment. Losses represent other items that meet the definition of expenses and may, or may not, arise in the course of the ordinary activities of the enterprise. Losses represent decreases in economic benefits and as such they are no different in nature from other expenses. Hence, they are not regarded as a separate element in this Framework. []
Recognition of the Elements of Financial Statements
Recognition is the process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the following criteria for recognition: [-83]
It is probable that any future economic benefit associated with the item will flow to or from the enterprise; and
The item's cost or value can be measured with reliability.
Based on these general criteria:
An asset is recognized in the balance sheet when it is probable that the future economic benefits will flow to the enterprise and the asset has a cost or value that can be measured reliably. []
A liability is recognized in the balance sheet when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which the settlement will take place can be measured reliably. []
Income is recognized in the income statement when an increase in future of economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably. This means, in effect, that recognition of income occurs simultaneously with the recognition of increases in assets or decreases in liabilities (for example, the net increase in assets arising on a sale of goods or services or the decrease in liabilities arising from the waiver of a debt payable). []
Expenses are recognized when a decrease in future of economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably. This means, in effect, that recognition of expenses occurs simultaneously with the recognition of an increase in liabilities or a decrease in assets (for example, the accrual of employee entitlements or the depreciation of equipment). []
Measurement of the Elements of Financial Statements
Measurement involves assigning monetary amounts at which the elements of the financial statements are to be recognized and reported. []
The Framework acknowledges that a variety of measurement bases are used today to different degrees and in varying combinations in financial statements, including: []
Historical cost
Current cost
Net realizable (settlement) value
Present value (discounted)
Historical cost is the measurement basis most commonly used today, but it is usually combined with other measurement bases. The Framework does not include concepts or principles for selecting which measurement basis should be used for particular elements of financial statements or in particular circumstances. The qualitative characteristics do provide some guidance, however. []
Vocabulary
accountability 受托责任观 decision usefulness 决策有用观
accrual basis 权责发生制 going concern 持续经营
relevance 相关性 reliability 可靠性
comparability 可比性 understandability 可理解性
timeliness 及时性 fair presentation 公允列报
asset 资产 liability 负债
equity 所有者权益 performance 经营业绩
income 收益 expense 费用
historical cost 历史成本 current cost 现行成本
realizable(settlement) value 可变现（结算）价值
present value 现值 financial capital 财务资本
physical capital 实物资本
Review
1. What problems does the Framework deal with?
2. What’s the relationship between the Framework and the IASs?
IAS1 Presentation of Financial Statements
Objective of IAS 1
The objective of IAS 1 (revised 1997) is to prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. IAS 1 sets out the overall framework and responsibilities for the presentation of financial statements, guidelines for their structure and minimum requirements for the content of the financial statements. Standards for recognizing, measuring, and disclosing specific transactions are addressed in other Standards and Interpretations.
Scope
Applies to all general purpose financial statements based on International Financial Reporting Standards. [IAS ]
General purpose financial statements are those intended to serve users who do not have the authority to demand financial reports tailored for their own needs. [IAS ]
Objective of Financial Statements
The objective of general purpose financial statements is to provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions. To meet that objective, financial statements provide information about an entity's: [IAS ]
Assets.
Liabilities.
Equity.
Income and expenses, including gains and losses.
Other changes in equity.
Cash flows.
That information, along with other information in the notes, assists users of financial statements in predicting the entity's future cash flows and, in particular, their timing and certainty.
Components of Financial Statements
A complete set of financial statements should include: [IAS ]
a balance sheet,
income statement,
a statement of changes in equity showing either:
all changes in equity, or
changes in equity other than those arising from transactions with equity holders acting in their capacity as equity holders;
cash flow statement, and
notes, comprising a summary of accounting policies and other explanatory notes.
Reports that are presented outside of the financial statements -- including financial reviews by management, environmental reports, and value added statements -- are outside the scope of IFRSs. [IAS -10]
Fair Presentation and Compliance with IFRSs
The financial statements must "present fairly" the financial position, financial performance and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events, and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework. The application of IFRSs, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation. [IAS ]
IAS 1 requires that an entity whose financial statements comply with IFRSs make an explicit and unreserved statement of such compliance in the notes. Financial statements shall not be described as complying with IFRSs unless they comply with all the requirements of IFRSs. [IAS ]
Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used or by notes or explanatory material. [IAS ]
IAS 1 acknowledges that, in extremely rare circumstances, management may conclude that compliance with an IFRS requirement would be so misleading that it would conflict with the objective of financial statements set out in the Framework. In such a case, the entity is required to depart from the IFRS requirement, with detailed disclosure of the nature, reasons, and impact of the departure. [IAS -18]
Going Concern
An entity preparing IFRS financial statements is presumed to be a going concern. If management has significant concerns about the entity's ability to continue as a going concern, the uncertainties must be disclosed. If management concludes that the entity is not a going concern, the financial statements should not be prepared on a going concern basis, in which case IAS 1 requires a series of disclosures. [IAS ]
Accrual Basis of Accounting
IAS 1 requires that an entity prepare its financial statements, except for cash flow information, using the accrual basis of accounting. [IAS ]
Consistency of Presentation
The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new IFRS. [IAS ]
Materiality and Aggregation
Each material class of similar items must be presented separately in the financial statements. Dissimilar items may be aggregated only if the are individually immaterial. [IAS ]
Offsetting> Assets and liabilities, and income and expenses, may not be offset unless required or permitted by a Standard or an Interpretation. [IAS ]
Comparative Information
IAS 1 requires that comparative information shall be disclosed in respect of the previous period for all amounts reported in the financial statements, both face of financial statements and notes, unless another Standard requires otherwise. [IAS ]
If comparative amounts are changed or reclassified, various disclosures are required. [IAS ]
Structure and Content of Financial Statements in General
Clearly identify: [IAS ]
the financial statements
the reporting enterprise
whether the statements are for the enterprise or for a group
the date or period covered
the presentation currency
the level of precision (thousands, millions, etc.)
Reporting Period
There is a presumption that financial statements will be prepared at least annually. If the annual reporting period changes and financial statements are prepared for a different period, the enterprise must disclose the reason for the change and a warning about problems of comparability. [IAS ]
Balance Sheet
An entity must normally present a classified balance sheet, separating current and noncurrent assets and liabilities. Only if a presentation based on liquidity provides information that is reliable and more relevant may the current/noncurrent split be omitted. [IAS ] In either case, if an asset (liability) category commingles amounts that will be received (settled) after 12 months with assets (liabilities) that will be received (settled) within 12 months, note disclosure is required that separates the longer-term amounts from the 12-month amounts. [IAS ]
Current assets are cash; cash equivalent; assets held for collection, sale, or consumption within the enterprise's normal operating cycle; or assets held for trading within the next 12 months. All other assets are noncurrent. [IAS ]
Current liabilities are those to be settled within the enterprise's normal operating cycle or due within 12 months, or those held for trading, or those for which the entity does not have an unconditional right to defer payment beyond 12 months. Other liabilities are noncurrent. [IAS ]
Long-term debt expected to be refinanced under an existing loan facility is noncurrent, even if due within 12 months. [IAS ]
If a liability has become payable on demand because an entity has breached an undertaking under a long-term loan agreement on or before the balance sheet date, the liability is current, even if the lender has agreed, after the balance sheet date and before the authorization of the financial statements for issue, not to demand payment as a consequence of the breach. [IAS ] However, the liability is classified as non-current if the lender agreed by the balance sheet date to provide a period of grace ending at least 12 months after the balance sheet date, within which the entity can rectify the breach and during which the lender cannot demand immediate repayment. [IA ]
Minimum items on the face of the balance sheet [IAS ]
(a) property, plant and equipment;
(b) investment property;
(c) intangible assets;
(d) financial assets (excluding amounts shown under (e), (h) and (i));
(e) investments accounted for using the equity method;
(f) biological assets;
(g) inventories;
(h) trade and other receivables;
(i) cash and cash equivalents;
(j) trade and other payables;
(k) provisions;
(l) financial liabilities (excluding amounts shown under (j) and (k));
(m) liabilities and assets for current tax, as defined in IAS 12;
(n) deferred tax liabilities and deferred tax assets, as defined in IAS 12;
(o) minority interest, presented within equity; and
(p) issued capital and reserves attributable to equity holders of the parent.
Additional line items may be needed to fairly present the entity's financial position. [IAS ]
IAS 1 does not prescribe the format of the balance sheet. Assets can be presented current then noncurrent, or vice versa, and liabilities and equity can be presented current then noncurrent then equity, or vice versa. A net asset presentation (assets minus liabilities) is allowed.
Regarding issued share capital and reserves, the following disclosures are required: [IAS ]
﹡numbers of shares authorized, issued and fully paid, and issued but not fully paid
﹡par value
﹡reconciliation of shares outstanding at the beginning and the end of the period
﹡description of rights, preferences, and restrictions
﹡treasury shares, including shares held by subsidiaries and associates
﹡shares reserved for issuance under options and contracts
﹡a description of the nature and purpose of each reserve within owners' equity
Income Statement
In the 2003 revision to IAS 1, the IASB is now using "profit or loss" rather than "net profit or loss" as the descriptive term for the bottom line of the income statement.
All items of income and expense recognized in a period must be included in profit or loss unless a Standard or an Interpretation requires otherwise. [IAS ]
Minimum items on the face of the income statement should include: [IAS ]
(a) revenue;
(b) finance costs;
(c) share of the profit or loss of associates and joint ventures accounted for using the equity method;
(d) a single amount comprising the total of (i) the post-tax profit or loss of discontinued operations and (ii) the post-tax gain or loss recognized on the disposal of the assets or disposal group(s) constituting the discontinued operation; and;
(e) tax expense; and
(f) profit or loss.
The following items must also be disclosed on the face of the income statement as allocations of profit or loss for the period: [IAS ]
(a) profit or loss attributable to minority interest; and
(b) profit or loss attributable to equity holders of the parent.
Additional line items may be needed to fairly present the enterprise's results of operations.
No items may be presented on the face of the income statement or in the notes as "extraordinary items". [IAS ]
Certain items must be disclosed either on the face of the income statement or in the notes, if material, including: [IAS ]
(a) write-downs of inventories to net realizable value or of property, plant and equipment to recoverable amount, as well as reversals of such write-downs;
(b) restructurings of the activities of an entity and reversals of any provisions for the costs of restructuring;
(c) disposals of items of property, plant and equipment;
(d) disposals of investments;
(e) discontinuing operations;
(f) litigation settlements; and
(g) other reversals of provisions.
Expenses should be analyzed either by nature (raw materials, staffing costs, depreciation, etc.) or by function (cost of sales, selling, administrative, etc.) either on the face of the income statement or in the notes. [IAS ] If an enterprise categorizes by function, additional information on the nature of expenses -- at a minimum depreciation, amortization, and staff costs -- must be disclosed. [IAS ]
Cash Flow Statement
Rather than setting out separate standards for presenting the cash flow statement, IAS refers to IAS 7, Cash Flow Statements
Statement of Changes in Equity
IAS 1 requires an entity to present a statement of changes in equity as a separate component of the financial statements. The statement must show: [IAS ]
(a) profit or loss for the period;
(b) each item of income and expense for the period that is recognized directly in equity, and the total of those items;
(c) total income and expense for the period (calculated as the sum of (a) and (b)), showing separately the total amounts attributable to equity holders of the parent and to minority interest; and
(d) for each component of equity, the effects of changes in accounting policies and corrections of errors recognized in accordance with IAS 8.
The following amounts may also be presented on the face of the statement of changes in equity, or they may be presented in the notes: [IAS ]
(a) capital transactions with owners;
(b) the balance of accumulated profits at the beginning and at the end of the period, and the movements for the period; and
(c) a reconciliation between the carrying amount of each class of equity capital, share premium and each reserve at the beginning and at the end of the period, disclosing each movement.
Notes to the Financial Statements
The notes must: [IAS ]
present information about the basis of preparation of the financial statements and the specific accounting policies used;
disclose any information required by IFRSs that is not presented on the face of the balance sheet, income statement, statement of changes in equity, or cash flow statement; and
provide additional information that is not presented on the face of the balance sheet, income statement, statement of changes in equity, or cash flow statement that is deemed relevant to an understanding of any of them.
Notes should be cross-referenced from the face of the financial statements to the relevant note. [IAS ]
IAS suggests that the notes should normally be presented in the following order:
a statement of compliance with IFRSs;
a summary of significant accounting policies applied, including: [IAS ]
the measurement basis (or bases) used in preparing the financial statements; and
the other accounting policies used that are relevant to an understanding of the financial statements.
supporting information for items presented on the face of the balance sheet, income statement, statement of changes in equity, and cash flow statement, in the order in which each statement and each line item is presented; and
other disclosures, including:
contingent liabilities (see IAS 37) and unrecognized contractual commitments; and
non-financial disclosures, such as the entity's financial risk management objectives and policies (see IAS 32).
Disclosure of judgments. New in the 2003 revision to IAS 1, an entity must disclose, in the summary of significant accounting policies or other notes, the judgments, apart from those involving estimations, that management has made in the process of applying the entity's accounting policies that have the most significant effect on the amounts recognized in the financial statements. [IAS ]
Examples cited in IAS include management's judgments in determining:
whether financial assets are held-to-maturity investments;
when substantially all the significant risks and rewards of ownership of financial assets and lease assets are transferred to other entities;
whether, in substance, particular sales of goods are financing arrangements and therefore do not give rise to revenue; and
whether the substance of the relationship between the entity and a special purpose entity indicates that the special purpose entity is controlled by the entity.
Disclosure of key sources of estimation uncertainty. Also new in the 2003 revision to IAS 1, an entity must disclose, in the notes, information about the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. [IAS ] These disclosures do not involve disclosing budgets or forecasts.
The following other note disclosures are required by IAS if not disclosed elsewhere in information published with the financial statements:
domicile of the enterprise;
country of incorporation;
address of registered office or principal place of business;
description of the enterprise's operations and principal activities;
name of its parent and the ultimate parent if it is part of a group.
Disclosures about Dividends
The following must be disclosed either on the face of the income statement or the statement of changes in equity or in the notes: [IAS ]
the amount of dividends recognized as distributions to equity holders during the period, and
the related amount per share.
The following must be disclosed in the notes: {IAS ]
the amount of dividends proposed or declared before the financial statements were authorized for issue but not recognized as a distribution to equity holders during the period, and the related amount per share; and
the amount of any cumulative preference dividends not recognized.
Vocabulary
current assets 流动资产 current liabilities 流动负债
balance sheet 资产负债表 income statement 损益表
statement of changes in equity 权益变动表
cash flow statement 现金流量表
property, plant and equipment 不动产、工厂（厂场）和设备
investment property 投资性房地产 intangible assets 无形资产
financial assets 金融资产
investments accounted for using the equity method 权益法核算的投资
biological assets 生物资产 inventories 存货
trade and other receivables 应收账款和其他应收款
cash and cash equivalents 现金及现金等价物
trade and other payables 应付账款和其他应付款
provisions 准备 financial liabilities 金融负债
liabilities and assets for current tax 应交税金
deferred tax liabilities and deferred tax assets 递延所得税负债和递延所得税资产
minority interest 少数股东权益
equity holders of the parent 母公司股东权益
Review
1. Overall requirements for presentation of financial statements
2. The structure of financial statements
3. The minimum requirements for the content of the financial statements
IAS7 Cash Flow Statements
Objective of IAS 7
The objective of IAS 7 is to require the presentation of information about the historical changes in cash and cash equivalents of an enterprise by means of a cash flow statement which classifies cash flows during the period according to operating, investing and financing activities.
Fundamental Principle in IAS 7
All enterprises that prepare financial statements in conformity with IAS are required to present a cash flow statement. [IAS ]
The cash flow statement analyses changes in cash and cash equivalents during a period. Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes in value. Guidance notes indicate that an investment normally meets the definition of a cash equivalent when it has a maturity of three months or less from the date of acquisition. Equity investments are normally excluded, unless they are in substance a cash equivalent (. preferred shares acquired within three months of their specified redemption date). Bank overdrafts which are repayable on demand and which form an integral part of an enterprise's cash management are also included as a component of cash and cash equivalents. [IAS -8]
Presentation of the Cash Flow Statement
Cash flows must be analysed between operating, investing and financing activities. [IAS ]
Key principles specified by IAS 7 for the preparation of a cash flow statement are as follows:
operating activities are the main revenue-producing activities of the enterprise that are not investing or financing activities, so operating cash flows include cash received from customers and cash paid to suppliers and employees [IAS ]
investing activities are the acquisition and disposal of long-term assets and other investments that are not considered to be cash equivalents [IAS ]
financing activities are activities that alter the equity capital and borrowing structure of the enterprise [IAS ]
interest and dividends received and paid may be classified as operating, investing, or financing cash flows, provided that they are classified consistently from period to period [IAS ]
cash flows arising from taxes on income are normally classified as operating, unless they can be specifically identified with financing or investing activities [IAS ]
for operating cash flows, the direct method of presentation is encouraged, but the indirect method is acceptable [IAS ]
The direct method shows each major class of gross cash receipts and gross cash payments. The operating cash flows section of the cash flow statement under the direct method would appear something like this:
Cash receipts from customers
xx,xxx
Cash paid to suppliers
xx,xxx
Cash paid to employees
xx,xxx
Cash paid for other operating expenses
xx,xxx
Interest paid
xx,xxx
Income taxes paid
xx,xxx
Net cash from operating activities
xx,xxx
The indirect method adjusts accrual basis net profit or loss for the effects of non-cash transactions. The operating cash flows section of the cash flow statement under the indirect method would appear something like this:
Profit before interest and income taxes
xx,xxx
Add back depreciation
xx,xxx
Add back amortisation of goodwill
xx,xxx
Increase in receivables
xx,xxx
Decrease in inventories
xx,xxx
Increase in trade payables
xx,xxx
Interest expense
xx,xxx<TD&NBSP;< TD>
Less Interest accrued but not yet paid
xx,xxx
Interest paid
xx,xxx
Income taxes paid
xx,xxx
Net cash from operating activities
xx,xxx
cash flows relating to extraordinary items should be classified as operating, investing or financing as appropriate and should be separately disclosed [IAS ]
the exchange rate used for translation of transactions denominated in a foreign currency and the cash flows of a foreign subsidiary should be the rate in effect at the date of the cash flows [IAS ]
cash flows of foreign subsidiaries should be translated at the exchange rates prevailing when the cash flows took place [IAS ]
as regards the cash flows of associates and joint ventures, where the equity method is used, the cash flow statement should report only cash flows between the investor and the investee; where proportionate consolidation is used, the cash flow statement should include the venturer's share of the cash flows of the investee [IAS -38]
aggregate cash flows relating to acquisitions and disposals of subsidiaries and other business units should be presented separately and classified as investing activities, with specified additional disclosures. The aggregate cash paid or received as consideration should be reported net of cash and cash equivalents acquired or disposed of [IAS ]
cash flows from investing and financing activities should be reported gross by major class of cash receipts and major class of cash payments except for the following cases, which may be reported on a net basis: [IAS -24]
cash receipts and payments on behalf of customers (for example, receipt and repayment of demand deposits by banks, and receipts collected on behalf of and paid over to the owner of a property)
cash receipts and payments for items in which the turnover is quick, the amounts are large, and the maturities are short, generally less than three months (for example, charges and collections from credit card customers, and purchase and sale of investments)
cash receipts and payments relating to fixed maturity deposits
cash advances and loans made to customers and repayments thereof
investing and financing transactions which do not require the use of cash should be excluded from the cash flow statement, but they should be separately disclosed elsewhere in the financial statements [IAS ]
the components of cash and cash equivalents should be disclosed, and a reconciliation presented to amounts reported in the balance sheet [IAS ]
the amount of cash and cash equivalents held by the enterprise that is not available for use by the group should be disclosed, together with a commentary by management [IAS ]
Vocabulary
operating activities 经营活动 investing activities 投资活动
financial activities 筹资活动 direct method 直接法
indirect method 间接法
Question
Q1:Gibson Entities had the following financial data for the year ended December 31, 2002: (Unit: millions of dollars)
Capital expenditures（资本支出） 75
Dividends declared
Net income 17
Common stock issued 33
Increase in accounts receivable 12
Depreciation and amortization(折旧和摊销)
Proceeds from sale of assets（出售资产的收入） 6
Gain on sale of assets（出售资产的利得）
Requirement: Based on the above, what is the ending cash balance（现金期末余额） at December 31, 2002, assuming an opening cash balance （现金期初余额）of $47 million?
Q2：甲股份有限公司（本题下称甲公司）为增值税一般纳税人，适用的增值税税率为17%，2004年度，甲公司有关业务资料如下：
（1）部分账户年初、年末余额或本年发生额如下：（金额单位：万元）
资产类账户名称
年初余额
年末余额
负债类账户名称
年初余额
年末余额
短期投资
200
500
短期借款
120
140
应收账款
1200
1600
应付账款
250
600
坏账准备
12
16
预收账款
124
224
预付账款
126
210
应付工资
262
452
存货
620
900
应付福利费
121
0
存货跌价准备
20
40
应付股利
30
0
待摊费用
220
700
预交税金
0
0
长期股权投资
720
1360
预提费用
210
215
固定资产
8600
8880
长期借款
360
840
无形资产
640
180
无形资产减值准备
20
40
损益类账户名称
借方发生额
贷方发生额
损益类账户名称
借方发生额
贷方发生额
主营业务收入
8400
财务费用
40
主营业务成本
4600
投资收益
405
营业费用
265
营业外支出
49
管理费用
908
（2）其他有关资料如下：
1）短期投资不属于现金等价物，本期以现金购入短期股票投资400万元，本期出售短期股票投资，款项已存入银行，获得投资收益40万元，不考虑其他与短期投资增减变动有关的交易或事项。
2）应收账款，预收账款的增减变动公与产成品销售有关。且均以银行存款结算，采用备抵法核算坏账损失，本期收回以前年度核销的坏账2万元，款项已存入银行，销售产成品均开出增值税专用发票。
3）原材料的增减变动均与购买原材料或生产产品消耗原材料有关。
年初存货均为外购原材料，年末存货仅为外购原材料和库存产成品。其中，库存产成品成本为630万元，外购原材料成本为270万元。
年末库存产成品成本中，原材料为252万元：工资及福利费为315万元，制造费用为63万元，其中折旧费13万元；其余均为以货币资金支付的其他制造费用。
本年已销产成品的成本（即主营业务成本）中，原材料为1840万元；工资及福利费为2300万元；制造费用为460万元，其中折旧费60万元，其余均为以货币资金支付的其他制造费用。
4）待摊费用年初数为预付的以经营租赁方式租入的一般管理用设备租金，本年另以银行存款预付经营租入一般管理用设备租金540万元。本年摊销待摊费用的金额为60万元。
5）4月1日，以专利权向乙公司的投资，占乙公司有表决权股份的40%，采用权益法核算；甲公司所享有乙公司所有者权益的份额为400万元。该专利权的账面余额为420万元，已计提减值准备20万元（按年计提）
2004年4月1日到12月31日，乙公司实现的净利润为600万元；甲公司和乙公司适用的所得税税率均为33%.
6）1月1日，以银行存款400万元购置设备一台，不需要安装，当日投入使用，4月2日，对一台管理用设备进行清理，该设备账面原价120万元，已计提折旧80万元，已计提减值准备20万元，以银行存款支付清理费用2万元，收到变价收入13万元，该设备已清理完毕。
7）无形资产摊销额为40万元，其中包括专利权对外投出前摊销额15万元，年末计提无形资产减值准备40万元。
8）借入短期借款240万元，借入长期借款460万元，长期借款年末余额中包括确认的20万元长期借款利息费用。
预提费用年初数和年末数均为预提短期银行借款利息，本年度的财务费用均为利息费用。财务费用包括预提的短期借款利息费用5万元。确认长期借款利息费用20万元，其余财务费用均以银行存款支付。
9）应付账款，预付账款的增减变动均与购买原材料有关，以银行存款结算，本期购买原材料均取得增值税专用发票。
本年应交增值税借方发生额为1428万元，其中购买商品发生的增值税进项税额为万元。已交税金为万元，贷方发生额为1428万元。均为销售商品发生的增值税销项税额。
10）应付工资，应付福利费年初数，年末数均与投资活动和筹资活动无关，本年确认的工资及福利费均与投资活动和筹资活动无关。
营业费用包括工资及福利费114万元，均以货币资金结算或形成应付债务，折旧费用4万元，其余营业费用均以银行存款支付。
管理费用包括工资及福利费285万元，均以货币资金结算或形成应付债务，折旧费用124万元，无形资产摊销40万元，一般管理用设备租金摊销60万元，计提坏账准备2万元，计提存货跌价准备20万元，其余管理费用均以银行存款支付。
投资收益包括从丙股份有限公司分得的现金股得125万元，款项已存入银行，甲公司对丙股份有限公司的长期股权投资采用成本法核算，分得的现金股利为甲公司投资后丙股份有限公司实现净利润的分配额。
除上述所给资料外，有关债权债务的增减变动均以货币资金结算。
不考虑本年度发生的其他交易或事项，以及除增值税以外的其他相关税费。
要求：计算答题卷“甲股份有限公司2004年度现金流量表有关项目”的金额，并将结果填入相应的表格内。
现金流量表有关项目
金额（万元）
1
销售商品、提供劳务收到的现金
2
购买商品、接受劳务支付的现金
3
支付给职工以及为职工支付的现金
4
支付的其他与经营活动有关的现金
5
收回投资所收到的现金
6
取得投资收益所收到的现金
7
处置固定资产、无形资产和其他长期资产所收回的现金净额
8
购建固定资产、无形资产和其他长期资产所支付的现金
9
投资所支付的现金
10
借款所收到的现金
11
偿还债务所支付的现金
12
分配股利、利润和偿付利息所支付的现金
IAS8 Accounting Policies,
Changes in Accounting Estimates and Errors
Key Definitions [IAS ]
Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.
A change in accounting estimate is an adjustment of the carrying amount of an asset or liability, or related expense, resulting from reassessing the expected future benefits and obligations associated with that asset or liability.
International Financial Reporting Standards are standards and interpretations adopted by the International Accounting Standards Board (IASB). They comprise:
International Financial Reporting Standards (IFRSs);
International Accounting Standards (IASs); and
Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC) and approved by the IASB.
Materiality. Omissions or misstatements of items are material if they could, by their size or nature, individually or collectively, influence the economic decisions of users taken on the basis of the financial statements.
Prior period errors are omissions from, and misstatements in, an entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that was available and could reasonably be expected to have been obtained and taken into account in preparing those statements. Such errors result from mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.
Selection and Application of Accounting Policies
When a Standard or an Interpretation specifically applies to a transaction, other event or condition, the accounting policy or policies applied to that item must be determined by applying the Standard or Interpretation and considering any relevant Implementation Guidance issued by the IASB for the Standard or Interpretation. [IAS ]
In the absence of a Standard or an Interpretation that specifically applies to a transaction, other event or condition, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. [IAS ]. In making that judgement, management must refer to, and consider the applicability of, the following sources in descending order:
the requirements and guidance in IASB standards and interpretations dealing with similar and related issues; and
the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the Framework. [IAS ]
Management may also consider the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards, other accounting literature and accepted industry practices, to the extent that these do not conflict with the sources in paragraph 11. [IAS ]
Consistency of Accounting Policies
An entity shall select and apply its accounting policies consistently for similar transactions, other events and conditions, unless a Standard or an Interpretation specifically requires or permits categorisation of items for which different policies may be appropriate. If a Standard or an Interpretation requires or permits such categorisation, an appropriate accounting policy shall be selected and applied consistently to each category. [IAS ]
Changes in Accounting Policies
An entity is permitted to change an accounting policy only if the change:
is required by a standard or interpretation; or
results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance, or cash flows. [IAS ]
Note that changes in accounting policies do not include applying an accounting policy to a kind of transaction or event that did not exist in the past. [IAS ]
If a change in accounting policy is required by a new IASB standard or interpretation, the change is accounted for as required by that new pronouncement or, if the new pronouncement does not include specific transition provisions, then the change in accounting policy is applied retrospectively. [IAS ]
Retrospective application means adjusting the opening balance of each affected component of equity for the earliest prior period presented and the other comparative amounts disclosed for each prior period presented as if the new accounting policy had always been applied. [IAS ]
However, if it is impracticable to determine either the period-specific effects or the cumulative effect of the change for one or more prior periods presented, the entity shall apply the new accounting policy to the carrying amounts of assets and liabilities as at the beginning of the earliest period for which retrospective application is practicable, which may be the current period, and shall make a corresponding adjustment to the opening balance of each affected component of equity for that period. [IAS ]
Also, if it is impracticable to determine the cumulative effect, at the beginning of the current period, of applying a new accounting policy to all prior periods, the entity shall adjust the comparative information to apply the new accounting policy prospectively from the earliest date practicable. [IAS ]
Disclosures Relating to Changes in Accounting Policies
Disclosures relating to changes in accounting policy caused by a new standard or interpretation include: [IAS ]
the title of the standard or interpretation causing the change;
the nature of the change in accounting policy;
a description of the transitional provisions, including those that might have an effect on future periods;
for the current period and each prior period presented, to the extent practicable, the amount of the adjustment:
for each financial statement line item affected; and
for basic and diluted earnings per share (only if the entity is applying IAS 33);
the amount of the adjustment relating to periods before those presented, to the extent practicable; and
if retrospective application is impracticable, an explanation and description of how the change in accounting policy was applied.
Financial statements of subsequent periods need not repeat these disclosures.
Disclosures relating to voluntary changes in accounting policy include: [IAS ]
the nature of the change in accounting policy;
the reasons why applying the new accounting policy provides reliable and more relevant information;
for the current period and each prior period presented, to the extent practicable, the amount of the adjustment:
for each financial statement line item affected; and
for basic and diluted earnings per share (only if the entity is applying IAS 33);
the amount of the adjustment relating to periods before those presented, to the extent practicable; and
if retrospective application is impracticable, an explanation and description of how the change in accounting policy was applied.
Financial statements of subsequent periods need not repeat these disclosures.
If an entity has not applied a new standard or interpretation that has been issued but is not yet effective, the entity must disclose that fact and any and known or reasonably estimable information relevant to assessing the possible impact that the new pronouncement will have in the year it is applied. [IAS ]
Changes in Accounting Estimate
The effect of a change in an accounting estimate shall be recognized prospectively by including it in profit or loss in: [IAS ]
the period of the change, if the change affects that period only; or
the period of the change and future periods, if the change affects both.
However, to the extent that a change in an accounting estimate gives rise to changes in assets and liabilities, or relates to an item of equity, it is recognized by adjusting the carrying amount of the related asset, liability, or equity item in the period of the change. [IAS ]
Disclosures Relating to Changes in Accounting Estimate
Disclose:
the nature and amount of a change in an accounting estimate that has an effect in the current period or is expected to have an effect in future periods
if the amount of the effect in future periods is not disclosed because estimating it is impracticable, an entity shall disclose that fact. [IAS -40]
Errors
The general principle in IAS 8 is that an entity must correct all material prior period errors retrospectively in the first set of financial statements authorised for issue after their discovery by: [IAS ]
restating the comparative amounts for the prior period(s) presented in which the error occurred; or
if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity for the earliest prior period presented.
However, if it is impracticable to determine the period-specific effects of an error on comparative information for one or more prior periods presented, the entity must restate the opening balances of assets, liabilities, and equity for the earliest period for which retrospective restatement is practicable (which may be the current period). [IAS ]
Further, if it is impracticable to determine the cumulative effect, at the beginning of the current period, of an error on all prior periods, the entity must restate the comparative information to correct the error prospectively from the earliest date practicable. [IAS ]
Disclosures Relating to Prior Period Errors
Disclosures relating to prior period errors include: [IAS ]
the nature of the prior period error;
for each prior period presented, to the extent practicable, the amount of the correction:
for each financial statement line item affected; and
for basic and diluted earnings per share (only if the entity is applying IAS 33);
the amount of the correction at the beginning of the earliest prior period presented; and
if retrospective restatement is impracticable, an explanation and description of how the error has been corrected.
Financial statements of subsequent periods need not repeat these disclosures.
Vocabulary
accounting policy 会计政策 accounting estimate 会计估计
prior period error 前期会计差错 materiality 重要性
retrospective application 追溯调整法 prospective application 未来适用法
retrospective restatement 追溯重述法 impracticable 不切实可行
Review
1. What accounting method should be chosen when changes in accounting policies and accounting estimates take place?
2. What accounting method should be chosen to deal with prior period errors?
IAS2 Inventories
Objective
The objective of this Standard is to prescribe the accounting treatment for inventories under the historical cost system. A primary issue in accounting for inventories is the amount of cost to be recognized as an asset and carried forward until the related revenues are recognized. This Standard provides practical guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.
Scope
1. This Standard should be applied in financial statements prepared in the context of the historical cost system in accounting for inventories other than:
(a) work in progress arising under construction contracts, including directly related service contracts (see IAS 11, Construction Contracts);
(b) financial instruments;
(c) producers' inventories of agricultural and forest products, mineral ores and agricultural produce to the extent that they are measured at net realizable value in accordance with well established practices in certain industries; and
(d) biological assets related to agricultural activity (see IAS 41, Agriculture).
2. This Standard supersedes IAS 2, Valuation and Presentation of Inventories in the Context of the Historical Cost System, approved in 1975.
3. The inventories referred to in paragraph 1(c) are measured at net realizable value at certain stages of production. This occurs, for example, when agricultural crops have been harvested or mineral ores have been extracted and sale is assured under a forward contract or a government guarantee, or when a homogenous market exists and there is a negligible risk of failure to sell. These inventories are excluded from the scope of this Standard.
Definitions
4. The following terms are used in this Standard with the meanings specified:
Inventories are assets:
(a) held for sale in the ordinary course of business;
(b) in the process of production for such sale; or
(c) in the form of materials or supplies to be consumed in the production process or in the rendering of services.
Net realizable value 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.
5. Inventories encompass goods purchased and held for resale including, for example, merchandise purchased by a retailer and held for resale, or land and other property held for resale. Inventories also encompass finished goods produced, or work in progress being produced, by the enterprise and include materials and supplies awaiting use in the production process. In the case of a service provider, inventories include the costs of the service, as described in paragraph 16, for which the enterprise has not yet recognized the related revenue (see IAS 18, Revenue).
Measurement of Inventories
6. Inventories should be measured at the lower of cost and net realizable value.
Cost of Inventories
7. The cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Costs of Purchase
8. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the enterprise from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
9. The costs of purchase may include foreign exchange differences which arise directly on the recent acquisition of inventories invoiced in a foreign currency in the rare circumstances permitted in the allowed alternative treatment in IAS 21, The Effects of Changes in Foreign Exchange Rates. These exchange differences are limited to those resulting from a severe devaluation or depreciation of a currency against which there is no practical means of hedging and that affects liabilities which cannot be settled and which arise on the recent acquisition of the inventories.
Costs of Conversion
10. The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads are those indirect costs of production that remain relatively constant regardless of the volume of production, such as depreciation and maintenance of factory buildings and equipment, and the cost of factory management and administration. Variable production overheads are those indirect costs of production that vary directly, or nearly directly, with the volume of production, such as indirect materials and indirect labour.
11. The allocation of fixed production overheads to the costs of conversion is based on the normal capacity of the production facilities. Normal capacity is the production expected to be achieved on average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. The actual level of production may be used if it approximates normal capacity. The amount of fixed overhead allocated to each unit of production is not increased as a consequence of low production or idle plant. Unallocated overheads are recognized as an expense in the period in which they are incurred. In periods of abnormally high production, the amount of fixed overhead allocated to each unit of production is decreased so that inventories are not measured above cost. Variable production overheads are allocated to each unit of production on the basis of the actual use of the production facilities.
12. A production process may result in more than one product being produced simultaneously. This is the case, for example, when joint products are produced or when there is a main product and a by-product. When the costs of conversion of each product are not separately identifiable, they are allocated between the products on a rational and consistent basis. The allocation may be based, for example, on the relative sales value of each product either at the stage in the production process when the products become separately identifiable, or at the completion of production. Most by-products, by their nature, are immaterial. When this is the case, they are often measured at net realizable value and this value is deducted from the cost of the main product. As a result, the carrying amount of the main product is not materially different from its cost.
Other Costs
13. Other costs are included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition. For example, it may be appropriate to include non-production overheads or the costs of designing products for specific customers in the cost of inventories.
14. Examples of costs excluded from the cost of inventories and recognized as expenses in the period in which they are incurred are:
(a) abnormal amounts of wasted materials, labour, or other production costs;
(b) storage costs, unless those costs are necessary in the production process prior to a further production stage;
(c) administrative overheads that do not contribute to bringing inventories to their present location and condition; and
(d) selling costs.
15. In limited circumstances, borrowing costs are included in the cost of inventories. These circumstances are identified in the allowed alternative treatment in IAS 23, Borrowing Costs.
Cost of Inventories of a Service Provider
16. The cost of inventories of a service provider consists primarily of the labour and other costs of personnel directly engaged in providing the service, including supervisory personnel, and attributable overheads. Labour and other costs relating to sales and general administrative personnel are not included but are recognized as expenses in the period in which they are incurred.
Cost of Agricultural Produce Harvested from Biological Assets
16A. Under IAS 41, Agriculture, inventories comprising agricultural produce that an enterprise has harvested from its biological assets are measured on initial recognition at their fair value less estimated point-of-sale costs at the point of harvest. This is the cost of the inventories at that date for application of this Standard.
Techniques for the Measurement of Cost
17. Techniques for the measurement of the cost of inventories, such as the standard cost method or the retail method, may be used for convenience if the results approximate cost. Standard costs take into account normal levels of materials and supplies, labour, efficiency and capacity utilisation. They are regularly reviewed and, if necessary, revised in the light of current conditions.
18. The retail method is often used in the retail industry for measuring inventories of large numbers of rapidly changing items, that have similar margins and for which it is impracticable to use other costing methods. The cost of the inventory is determined by reducing the sales value of the inventory by the appropriate percentage gross margin. The percentage used takes into consideration inventory which has been marked down to below its original selling price. An average percentage for each retail department is often used.
Cost Formulas
19. The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects should be assigned by using specific identification of their individual costs.
20. Specific identification of cost means that specific costs are attributed to identified items of inventory. This is an appropriate treatment for items that are segregated for a specific project, regardless of whether they have been bought or produced. However, specific identification of costs is inappropriate when there are large numbers of items of inventory which are ordinarily interchangeable. In such circumstances, the method of selecting those items that remain in inventories could be used to obtain predetermined effects on the net profit or loss for the period.
Benchmark Treatment
21. The cost of inventories, other than those dealt with in paragraph 19, should be assigned by using the first-in, first-out (FIFO) or weighted average cost formulas.[1]
22. The FIFO formula assumes that the items of inventory which were purchased first are sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. Under the weighted average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the enterprise.
Allowed Alternative Treatment
23. The cost of inventories, other than those dealt with in paragraph 19, should be assigned by using the last-in, first-out (LIFO) formula.[1]
24. The LIFO formula assumes that the items of inventory which were purchased or produced last are sold first, and consequently the items remaining in inventory at the end of the period are those first purchased or produced.
Net Realizable Value
25. The cost of inventories may not be recoverable if those inventories are damaged, if they have become wholly or partially obsolete, or if their selling prices have declined. The cost of inventories may also not be recoverable if the estimated costs of completion or the estimated costs to be incurred to make the sale have increased. The practice of writing inventories down below cost to net realizable value is consistent with the view that assets should not be carried in excess of amounts expected to be realized from their sale or use.
26. Inventories are usually written down to net realizable value on an item by item basis. In some circumstances, however, it may be appropriate to group similar or related items. This may be the case with items of inventory relating to the same product line that have similar purposes or end uses, are produced and marketed in the same geographical area, and cannot be practicably evaluated separately from other items in that product line. It is not appropriate to write inventories down based on a classification of inventory, for example, finished goods, or all the inventories in a particular industry or geographical segment. Service providers generally accumulate costs in respect of each service for which a separate selling price will be charged. Therefore, each such service is treated as a separate item.
27. Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made as to the amount the inventories are expected to realize. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period.
28. Estimates of net realizable value also take into consideration the purpose for which the inventory is held. For example, the net realizable value of the quantity of inventory held to satisfy firm sales or service contracts is based on the contract price. If the sales contracts are for less than the inventory quantities held, the net realizable value of the excess is based on general selling prices. Provisions or contingent liabilities may arise from firm sales contracts in excess of inventory quantities held or from firm purchase contracts. Such provisions or contingent liabilities are dealt with under IAS 37, Provisions, Contingent Liabilities and Contingent Assets.
29. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when a decline in the price of materials indicates that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value. In such circumstances, the replacement cost of the materials may be the best available measure of their net realizable value.
30. A new assessment is made of net realizable value in each subsequent period. When the circumstances which previously caused inventories to be written down below cost no longer exist, the amount of the write-down is reversed so that the new carrying amount is the lower of the cost and the revised net realizable value. This occurs, for example, when an item of inventory, which is carried at net realizable value because its selling price has declined, is still on hand in a subsequent period and its selling price has increased.
Recognition as an Expense
31. When inventories are sold, the carrying amount of those inventories should be recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories should be recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, should be recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.
32. The process of recognizing as an expense the carrying amount of inventories sold results in the matching of costs and revenues.
33. Some inventories may be allocated to other asset accounts, for example, inventory used as a component of self-constructed property, plant or equipment. Inventories allocated to another asset in this way are recognized as an expense during the useful life of that asset.
Disclosure
34. The financial statements should disclose:
(a) the accounting policies adopted in measuring inventories, including the cost formula used;
(b) the total carrying amount of inventories and the carrying amount in classifications appropriate to the enterprise;
(c) the carrying amount of inventories carried at net realizable value;
(d) the amount of any reversal of any write-down that is recognized as income in the period in accordance with paragraph 31;
(e) the circumstances or events that led to the reversal of a write-down of inventories in accordance with paragraph 31; and
(f) the carrying amount of inventories pledged as security for liabilities.
35. Information about the carrying amounts held in different classifications of inventories and the extent of the changes in these assets is useful to financial statement users. Common classifications of inventories are merchandise, production supplies, materials, work in progress and finished goods. The inventories of a service provider may simply be described as work in progress.
36. When the cost of inventories is determined using the LIFO formula in accordance with the allowed alternative treatment in paragraph 23, the financial statements should disclose the difference between the amount of inventories as shown in the balance sheet and either:
(a) the lower of the amount arrived at in accordance with paragraph 21 and net realizable value; or
(b) the lower of current cost at the balance sheet date and net realizable value.
37. The financial statements should disclose either:
(a) the cost of inventories recognized as an expense during the period; or
(b) the operating costs, applicable to revenues, recognized as an expense during the period, classified by their nature.
38. The cost of inventories recognized as an expense during the period consists of those costs previously included in the measurement of the items of inventory sold and unallocated production overheads and abnormal amounts of production costs of inventories. The circumstances of the enterprise may also warrant the inclusion of other costs, such as distribution costs.
39. Some enterprises adopt a different format for the income statement which results in different amounts being disclosed instead of the cost of inventories recognized as an expense during the period. Under this different format, an enterprise discloses the amounts of operating costs, applicable to revenues for the period, classified by their nature. In this case, the enterprise discloses the costs recognized as an expense for raw materials and consumables, labour costs and other operating costs together with the amount of the net change in inventories for the period.
40. A write-down to net realizable value may be of such size, incidence or nature to require disclosure under IAS 8, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies.
Effective Date
41. This International Accounting Standard becomes operative for financial statements covering periods beginning on or after 1 January 1995.
Vocabulary
inventory 存货 net realizable value(NRV) 可变现净值
first-in, first-out (FIFO) 先进先出法 last-in, first-out 后进先出法
weighted average cost 加权平均成本法 moving average cost 移动加权平均成本法
specific identification 个别确认法
Question
Q1: The perpetual inventory records of the Park Company indicate the following transactions in the month of June:
Units Cost/Unit
Inventor, June 1 200 $
Purchase
June 3 200 $
June 17 250 $
June 24 300 $
Sales
June 6 300
June 21 200
June 27 150
Requirement: Compute the cost of goods sold for June and the inventory at the end of June using the cost flow assumption——FIFO.
Q2: Price the following inventories at the year end
Note: M.—Material P.—Production S.—Semiprocuct
Inv.
Holding
Purpose of M.
Cost of M.
Working cost
Selling price of M./Tax
NRV of M.
Cost of P.
Selling price under contract
Preview selling price of P./Tax
NPV of P.
Price at the year end
M -A
P. A
20
10
19
＊
35/3
M-B
P. B
40
16
36
＊
60/6
M-C
Dispose
10
＊
13/1
＊
＊
＊
＊
P-D
Contract
＊
＊
＊
＊
48
52
48/5
S-E
Contract
40
5
＊
50
46/2
S-E
＊
40
5
＊
＊
46/2
IAS11 Construction Contracts
Objective
The objective of this Standard is to prescribe the accounting treatment of revenue and costs associated with construction contracts. Because of the nature of the activity undertaken in construction contracts, the date at which the contract activity is entered into and the date when the activity is completed usually fall into different accounting periods. Therefore, the primary issue in accounting for construction contracts is the allocation of contract revenue and contract costs to the accounting periods in which construction work is performed. This Standard uses the recognition criteria established in the Framework for the Preparation and Presentation of Financial Statements to determine when contract revenue and contract costs should be recognized as revenue and expenses in the income statement. It also provides practical guidance on the application of these criteria.
Scope
1. This Standard should be applied in accounting for construction contracts in the financial statements of contractors.
2. This Standard supersedes IAS 11, Accounting for Construction Contracts, approved in 1978.
Definitions
3. The following terms are used in this Standard with the meanings specified:
A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.
A fixed price contract is a construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which in some cases is subject to cost escalation clauses.
A cost plus contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee.
4. A construction contract may be negotiated for the construction of a single asset such as a bridge, building, dam, pipeline, road, ship or tunnel. A construction contract may also deal with the construction of a number of assets which are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use; examples of such contracts include those for the construction of refineries and other complex pieces of plant or equipment.
5. For the purposes of this Standard, construction contracts include:
(a) contracts for the rendering of services which are directly related to the construction of the asset, for example, those for the services of project managers and architects; and
(b) contracts for the destruction or restoration of assets, and the restoration of the environment following the demolition of assets.
6. Construction contracts are formulated in a number of ways which, for the purposes of this Standard, are classified as fixed price contracts and cost plus contracts. Some construction contracts may contain characteristics of both a fixed price contract and a cost plus contract, for example in the case of a cost plus contract with an agreed maximum price. In such circumstances, a contractor needs to consider all the conditions in paragraphs 23 and 24 in order to determine when to recognize contract revenue and expenses.
Combining and Segmenting Construction Contracts
7. The requirements of this Standard are usually applied separately to each construction contract. However, in certain circumstances, it is necessary to apply the Standard to the separately identifiable components of a single contract or to a group of contracts together in order to reflect the substance of a contract or a group of contracts.
8. When a contract covers a number of assets, the construction of each asset should be treated as a separate construction contract when:
(a) separate proposals have been submitted for each asset;
(b) each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset; and
(c) the costs and revenues of each asset can be identified.
9. A group of contracts, whether with a single customer or with several customers, should be treated as a single construction contract when:
(a) the group of contracts is negotiated as a single package;
(b) the contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin; and
(c) the contracts are performed concurrently or in a continuous sequence.
10. A contract may provide for the construction of an additional asset at the option of the customer or may be amended to include the construction of an additional asset. The construction of the additional asset should be treated as a separate construction contract when:
(a) the asset differs significantly in design, technology or function from the asset or assets covered by the original contract; or
(b) the price of the asset is negotiated without regard to the original contract price.
Contract Revenue
11. Contract revenue should comprise:
(a) the initial amount of revenue agreed in the contract; and
(b) variations in contract work, claims and incentive payments:
(i) to the extent that it is probable that they will result in revenue; and
(ii) they are capable of being reliably measured.
12. Contract revenue is measured at the fair value of the consideration received or receivable. The measurement of contract revenue is affected by a variety of uncertainties that depend on the outcome of future events. The estimates often need to be revised as events occur and uncertainties are resolved. Therefore, the amount of contract revenue may increase or decrease from one period to the next. For example:
(a) a contractor and a customer may agree variations or claims that increase or decrease contract revenue in a period subsequent to that in which the contract was initially agreed;
(b) the amount of revenue agreed in a fixed price contract may increase as a result of cost escalation clauses;
(c) the amount of contract revenue may decrease as a result of penalties arising from delays caused by the contractor in the completion of the contract; or
(d) when a fixed price contract involves a fixed price per unit of output, contract revenue increases as the number of units is increased.
13. A variation is an instruction by the customer for a change in the scope of the work to be performed under the contract. A variation may lead to an increase or a decrease in contract revenue. Examples of variations are changes in the specifications or design of the asset and changes in the duration of the contract. A variation is included in contract revenue when:
(a) it is probable that the customer will approve the variation and the amount of revenue arising from the variation; and
(b) the amount of revenue can be reliably measured.
14. A claim is an amount that the contractor seeks to collect from the customer or another party as reimbursement for costs not included in the contract price. A claim may arise from, for example, customer caused delays, errors in specifications or design, and disputed variations in contract work. The measurement of the amounts of revenue arising from claims is subject to a high level of uncertainty and often depends on the outcome of negotiations. Therefore, claims are only included in contract revenue when:
(a) negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and
(b) the amount that it is probable will be accepted by the customer can be measured reliably.
15. Incentive payments are additional amounts paid to the contractor if specified performance standards are met or exceeded. For example, a contract may allow for an incentive payment to the contractor for early completion of the contract. Incentive payments are included in contract revenue when:
(a) the contract is sufficiently advanced that it is probable that the specified performance standards will be met or exceeded; and
(b) the amount of the incentive payment can be measured reliably.
Contract Costs
16. Contract costs should comprise:
(a) costs that relate directly to the specific contract;
(b) costs that are attributable to contract activity in general and can be allocated to the contract; and
(c) such other costs as are specifically chargeable to the customer under the terms of the contract.
17. Costs that relate directly to a specific contract include:
(a) site labour costs, including site supervision;
(b) costs of materials used in construction;
(c) depreciation of plant and equipment used on the contract;
(d) costs of moving plant, equipment and materials to and from the contract site;
(e) costs of hiring plant and equipment;
(f) costs of design and technical assistance that is directly related to the contract;
(g) the estimated costs of rectification and guarantee work, including expected warranty costs; and
(h) claims from third parties.
These costs may be reduced by any incidental income that is not included in contract revenue, for example income from the sale of surplus materials and the disposal of plant and equipment at the end of the contract.
18. Costs that may be attributable to contract activity in general and can be allocated to specific contracts include:
(a) insurance;
(b) costs of design and technical assistance that is not directly related to a specific contract; and
(c) construction overheads.
Such costs are allocated using methods that are systematic and rational and are applied consistently to all costs having similar characteristics. The allocation is based on the normal level of construction activity. Construction overheads include costs such as the preparation and processing of construction personnel payroll. Costs that may be attributable to contract activity in general and can be allocated to specific contracts also include borrowing costs when the contractor adopts the allowed alternative treatment in IAS 23, Borrowing Costs.
19. Costs that are specifically chargeable to the customer under the terms of the contract may include some general administration costs and development costs for which reimbursement is specified in the terms of the contract.
20. Costs that cannot be attributed to contract activity or cannot be allocated to a contract are excluded from the costs of a construction contract. Such costs include:
(a) general administration costs for which reimbursement is not specified in the contract;
(b) selling costs;
(c) research and development costs for which reimbursement is not specified in the contract; and
(d) depreciation of idle plant and equipment that is not used on a particular contract.
21. Contract costs include the costs attributable to a contract for the period from the date of securing the contract to the final completion of the contract. However, costs that relate directly to a contract and which are incurred in securing the contract are also included as part of the contract costs if they can be separately identified and measured reliably and it is probable that the contract will be obtained. When costs incurred in securing a contract are recognized as an expense in the period in which they are incurred, they are not included in contract costs when the contract is obtained in a subsequent period.
Recognition of Contract Revenue and Expenses
22. When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract should be recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. An expected loss on the construction contract should be recognized as an expense immediately in accordance with paragraph 36.
23. In the case of a fixed price contract, the outcome of a construction contract can be estimated reliably when all the following conditions are satisfied:
(a) total contract revenue can be measured reliably;
(b) it is probable that the economic benefits associated with the contract will flow to the enterprise;
(c) both the contract costs to complete the contract and the stage of contract completion at the balance sheet date can be measured reliably; and
(d) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates.
24. In the case of a cost plus contract, the outcome of a construction contract can be estimated reliably when all the following conditions are satisfied:
(a) it is probable that the economic benefits associated with the contract will flow to the enterprise; and
(b) the contract costs attributable to the contract, whether or not specifically reimbursable, can be clearly identified and measured reliably.
25. The recognition of revenue and expenses by reference to the stage of completion of a contract is often referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed. This method provides useful information on the extent of contract activity and performance during a period.
26. Under the percentage of completion method, contract revenue is recognized as revenue in the income statement in the accounting periods in which the work is performed. Contract costs are usually recognized as an expense in the income statement in the accounting periods in which the work to which they relate is performed. However, any expected excess of total contract costs over total contract revenue for the contract is recognized as an expense immediately in accordance with paragraph 36.
27. A contractor may have incurred contract costs that relate to future activity on the contract. Such contract costs are recognized as an asset provided it is probable that they will be recovered. Such costs represent an amount due from the customer and are often classified as contract work in progress.
28. The outcome of a construction contract can only be estimated reliably when it is probable that the economic benefits associated with the contract will flow to the enterprise. However, when an uncertainty arises about the collectability of an amount already included in contract revenue, and already recognized in the income statement, the uncollectable amount or the amount in respect of which recovery has ceased to be probable is recognized as an expense rather than as an adjustment of the amount of contract revenue.
29. An enterprise is generally able to make reliable estimates after it has agreed to a contract which establishes:
(a) each party's enforceable rights regarding the asset to be constructed;
(b) the consideration to be exchanged; and
(c) the manner and terms of settlement.
It is also usually necessary for the enterprise to have an effective internal financial budgeting and reporting system. The enterprise reviews and, when necessary, revises the estimates of contract revenue and contract costs as the contract progresses. The need for such revisions does not necessarily indicate that the outcome of the contract cannot be estimated reliably.
30. The stage of completion of a contract may be determined in a variety of ways. The enterprise uses the method that measures reliably the work performed. Depending on the nature of the contract, the methods may include:
(a) the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs;
(b) surveys of work performed; or
(c) completion of a physical proportion of the contract work.
Progress payments and advances received from customers often do not reflect the work performed.
31. When the stage of completion is determined by reference to the contract costs incurred to date, only those contract costs that reflect work performed are included in costs incurred to date. Examples of contract costs which are excluded are:
(a) contract costs that relate to future activity on the contract, such as costs of materials that have been delivered to a contract site or set aside for use in a contract but not yet installed, used or applied during contract performance, unless the materials have been made specially for the contract; and
(b) payments made to subcontractors in advance of work performed under the subcontract.
32. When the outcome of a construction contract cannot be estimated reliably:
(a) revenue should be recognized only to the extent of contract costs incurred that it is probable will be recoverable; and
(b) contract costs should be recognized as an expense in the period in which they are incurred.
An expected loss on the construction contract should be recognized as an expense immediately in accordance with paragraph 36.
33. During the early stages of a contract it is often the case that the outcome of the contract cannot be estimated reliably. Nevertheless, it may be probable that the enterprise will recover the contract costs incurred. Therefore, contract revenue is recognized only to the extent of costs incurred that are expected to be recoverable. As the outcome of the contract cannot be estimated reliably, no profit is recognized. However, even though the outcome of the contract cannot be estimated reliably, it may be probable that total contract costs will exceed total contract revenues. In such cases, any expected excess of total contract costs over total contract revenue for the contract is recognized as an expense immediately in accordance with paragraph 36.
34. Contract costs that are not probable of being recovered are recognized as an expense immediately. Examples of circumstances in which the recoverability of contract costs incurred may not be probable and in which contract costs may need to be recognized as an expense immediately include contracts:
(a) which are not fully enforceable, that is, their validity is seriously in question;
(b) the completion of which is subject to the outcome of pending litigation or legislation;
(c) relating to properties that are likely to be condemned or expropriated;
(d) where the customer is unable to meet its obligations; or
(e) where the contractor is unable to complete the contract or otherwise meet its obligations under the contract.
35. When the uncertainties that prevented the outcome of the contract being estimated reliably no longer exist, revenue and expenses associated with the construction contract should be recognized in accordance with paragraph 22 rather than in accordance with paragraph 32.
Recognition of Expected Losses
36. When it is probable that total contract costs will exceed total contract revenue, the expected loss should be recognized as an expense immediately.
37. The amount of such a loss is determined irrespective of:
(a) whether or not work has commenced on the contract;
(b) the stage of completion of contract activity; or
(c) the amount of profits expected to arise on other contracts which are not treated as a single construction contract in accordance with paragraph 9.
Changes in Estimates
38. The percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenue and contract costs. Therefore, the effect of a change in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract, is accounted for as a change in accounting estimate (see IAS 8, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies). The changed estimates are used in the determination of the amount of revenue and expenses recognized in the income statement in the period in which the change is made and in subsequent periods.
Disclosure
39. An enterprise should disclose:
(a) the amount of contract revenue recognized as revenue in the period;
(b) the methods used to determine the contract revenue recognized in the period; and
(c) the methods used to determine the stage of completion of contracts in progress.
40. An enterprise should disclose each of the following for contracts in progress at the balance sheet date:
(a) the aggregate amount of costs incurred and recognized profits (less recognized losses) to date;
(b) the amount of advances received; and
(c) the amount of retentions.
41. Retentions are amounts of progress billings which are not paid until the satisfaction of conditions specified in the contract for the payment of such amounts or until defects have been rectified. Progress billings are amounts billed for work performed on a contract whether or not they have been paid by the customer. Advances are amounts received by the contractor before the related work is performed.
42. An enterprise should present:
(a) the gross amount due from customers for contract work as an asset; and
(b) the gross amount due to customers for contract work as a liability.
43. The gross amount due from customers for contract work is the net amount of:
(a) costs incurred plus recognized profits; less
(b) the sum of recognized losses and progress billings
for all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceeds progress billings.
44. The gross amount due to customers for contract work is the net amount of:
(a) costs incurred plus recognized profits; less
(b) the sum of recognized losses and progress billings
for all contracts in progress for which progress billings exceed costs incurred plus recognized profits (less recognized losses).
45. An enterprise discloses any contingent liabilities and contingent assets in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets. Contingent liabilities and contingent assets may arise from such items as warranty costs, claims, penalties or possible losses.
Effective Date
46. This International Accounting Standard becomes operative for financial statements covering periods beginning on or after 1 January 1995.
Vocabulary
construction contract 建造合同 fixed price contract 固定造价合同
cost plus contract 成本加成合同
percentage-of-completion method 完工百分比法
contract revenue 合同收入 contract expense 合同成本
Review
1. Combination and separation of construction contracts.
2. Contents of contract revenue and contract costs.
3. Survey the stage of completion.
IAS18 Revenue
Objective
Income is defined in the Framework for the Preparation and Presentation of Financial Statements as increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. Income encompasses both revenue and gains. Revenue is income that arises in the course of ordinary activities of an enterprise and is referred to by a variety of different names including sales, fees, interest, dividends and royalties. The objective of this Standard is to prescribe the accounting treatment of revenue arising from certain types of transactions and events.
The primary issue in accounting for revenue is determining when to recognize revenue. Revenue is recognized when it is probable that future economic benefits will flow to the enterprise and these benefits can be measured reliably. This Standard identifies the circumstances in which these criteria will be met and, therefore, revenue will be recognized. It also provides practical guidance on the application of these criteria.
Scope
1. This Standard should be applied in accounting for revenue arising from the following transactions and events:
(a) the sale of goods;
(b) the rendering of services; and
(c) the use by others of enterprise assets yielding interest, royalties and dividends.
2. This Standard supersedes IAS 18, Revenue Recognition, approved in 1982.
3. Goods includes goods produced by the enterprise for the purpose of sale and goods purchased for resale, such as merchandise purchased by a retailer or land and other property held for resale.
4. The rendering of services typically involves the performance by the enterprise of a contractually agreed task over an agreed period of time. The services may be rendered within a single period or over more than one period. Some contracts for the rendering of services are directly related to construction contracts, for example, those for the services of project managers and architects. Revenue arising from these contracts is not dealt with in this Standard but is dealt with in accordance with the requirements for construction contracts as specified in IAS 11, Construction Contracts.
5. The use by others of enterprise assets gives rise to revenue in the form of:
(a) interest - charges for the use of cash or cash equivalents or amounts due to the enterprise;
(b) royalties - charges for the use of long-term assets of the enterprise, for example, patents, trademarks, copyrights and computer software; and
(c) dividends - distributions of profits to holders of equity investments in proportion to their holdings of a particular class of capital.
6. This Standard does not deal with revenue arising from:
(a) lease agreements (see IAS 17, Leases);
(b) dividends arising from investments which are accounted for under the equity method (see IAS 28, Accounting for Investments in Associates);
(c) insurance contracts of insurance enterprises;
(d) changes in the fair value of financial assets and financial liabilities or their disposal (see IAS 39, Financial Instruments: Recognition and Measurement);
(e) changes in the value of other current assets;
(f) initial recognition and from changes in the fair value of biological assets related to agricultural activity (see IAS 41, Agriculture);
(g) initial recognition of agricultural produce (see IAS 41, Agriculture); and
(h) the extraction of mineral ores.
Definitions
7. The following terms are used in this Standard with the meanings specified:
Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increases in equity, other than increases relating to contributions from equity participants.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.
8. Revenue includes only the gross inflows of economic benefits received and receivable by the enterprise on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the enterprise and do not result in increases in equity. Therefore, they are excluded from revenue. Similarly, in an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the enterprise. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission.
Measurement of Revenue
9. Revenue should be measured at the fair value of the consideration received or receivable.[1]
10. The amount of revenue arising on a transaction is usually determined by agreement between the enterprise and the buyer or user of the asset. It is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the enterprise.
11. In most cases, the consideration is in the form of cash or cash equivalents and the amount of revenue is the amount of cash or cash equivalents received or receivable. However, when the inflow of cash or cash equivalents is deferred, the fair value of the consideration may be less than the nominal amount of cash received or receivable. For example, an enterprise may provide interest free credit to the buyer or accept a note receivable bearing a below-market interest rate from the buyer as consideration for the sale of goods. When the arrangement effectively constitutes a financing transaction, the fair value of the consideration is determined by discounting all future receipts using an imputed rate of interest. The imputed rate of interest is the more clearly determinable of either:
(a) the prevailing rate for a similar instrument of an issuer with a similar credit rating; or
(b) a rate of interest that discounts the nominal amount of the instrument to the current cash sales price of the goods or services.
The difference between the fair value and the nominal amount of the consideration is recognized as interest revenue in accordance with paragraphs 29 and 30 and in accordance with IAS 39, Financial Instruments: Recognition and Measurement.
12. When goods or services are exchanged or swapped for goods or services which are of a similar nature and value, the exchange is not regarded as a transaction which generates revenue. This is often the case with commodities like oil or milk where suppliers exchange or swap inventories in various locations to fulfil demand on a timely basis in a particular location. When goods are sold or services are rendered in exchange for dissimilar goods or services, the exchange is regarded as a transaction which generates revenue. The revenue is measured at the fair value of the goods or services received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the goods or services received cannot be measured reliably, the revenue is measured at the fair value of the goods or services given up, adjusted by the amount of any cash or cash equivalents transferred.
Identification of the Transaction
13. The recognition criteria in this Standard are usually applied separately to each transaction. However, in certain circumstances, it is necessary to apply the recognition criteria to the separately identifiable components of a single transaction in order to reflect the substance of the transaction. For example, when the selling price of a product includes an identifiable amount for subsequent servicing, that amount is deferred and recognized as revenue over the period during which the service is performed. Conversely, the recognition criteria are applied to two or more transactions together when they are linked in such a way that the commercial effect cannot be understood without reference to the series of transactions as a whole. For example, an enterprise may sell goods and, at the same time, enter into a separate agreement to repurchase the goods at a later date, thus negating the substantive effect of the transaction; in such a case, the two transactions are dealt with together.
Sale of Goods
14. Revenue from the sale of goods should be recognized when all the following conditions have been satisfied:
(a) the enterprise has transferred to the buyer the significant risks and rewards of ownership of the goods;
(b) the enterprise retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
(c) the amount of revenue can be measured reliably;
(d) it is probable that the economic benefits associated with the transaction will flow to the enterprise; and
(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
15. The assessment of when an enterprise has transferred the significant risks and rewards of ownership to the buyer requires an examination of the circumstances of the transaction. In most cases, the transfer of the risks and rewards of ownership coincides with the transfer of the legal title or the passing of possession to the buyer. This is the case for most retail sales. In other cases, the transfer of risks and rewards of ownership occurs at a different time from the transfer of legal title or the passing of possession.
16. If the enterprise retains significant risks of ownership, the transaction is not a sale and revenue is not recognized. An enterprise may retain a significant risk of ownership in a number of ways. Examples of situations in which the enterprise may retain the significant risks and rewards of ownership are:
(a) when the enterprise retains an obligation for unsatisfactory performance not covered by normal warranty provisions;
(b) when the receipt of the revenue from a particular sale is contingent on the derivation of revenue by the buyer from its sale of the goods;
(c) when the goods are shipped subject to installation and the installation is a significant part of the contract which has not yet been completed by the enterprise; and
(d) when the buyer has the right to rescind the purchase for a reason specified in the sales contract and the enterprise is uncertain about the probability of return.
17. If an enterprise retains only an insignificant risk of ownership, the transaction is a sale and revenue is recognized. For example, a seller may retain the legal title to the goods solely to protect the collectability of the amount due. In such a case, if the enterprise has transferred the significant risks and rewards of ownership, the transaction is a sale and revenue is recognized. Another example of an enterprise retaining only an insignificant risk of ownership may be a retail sale when a refund is offered if the customer is not satisfied. Revenue in such cases is recognized at the time of sale provided the seller can reliably estimate future returns and recognizes a liability for returns based on previous experience and other relevant factors.
18. Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the enterprise. In some cases, this may not be probable until the consideration is received or until an uncertainty is removed. For example, it may be uncertain that a foreign governmental authority will grant permission to remit the consideration from a sale in a foreign country. When the permission is granted, the uncertainty is removed and revenue is recognized. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectable amount or the amount in respect of which recovery has ceased to be probable is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.
19. Revenue and expenses that relate to the same transaction or other event are recognized simultaneously; this process is commonly referred to as the matching of revenues and expenses. Expenses, including warranties and other costs to be incurred after the shipment of the goods can normally be measured reliably when the other conditions for the recognition of revenue have been satisfied. However, revenue cannot be recognized when the expenses cannot be measured reliably; in such circumstances, any consideration already received for the sale of the goods is recognized as a liability.
Rendering of Services
20. When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction should be recognized by reference to the stage of completion of the transaction at the balance sheet date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:
(a) the amount of revenue can be measured reliably;
(b) it is probable that the economic benefits associated with the transaction will flow to the enterprise;
(c) the stage of completion of the transaction at the balance sheet date can be measured reliably; and
(d) the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.[2]
21. The recognition of revenue by reference to the stage of completion of a transaction is often referred to as the percentage of completion method. Under this method, revenue is recognized in the accounting periods in which the services are rendered. The recognition of revenue on this basis provides useful information on the extent of service activity and performance during a period. IAS 11, Construction Contracts, also requires the recognition of revenue on this basis. The requirements of that Standard are generally applicable to the recognition of revenue and the associated expenses for a transaction involving the rendering of services.
22. Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the enterprise. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectable amount, or the amount in respect of which recovery has ceased to be probable, is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.
23. An enterprise is generally able to make reliable estimates after it has agreed to the following with the other parties to the transaction:
(a) each party's enforceable rights regarding the service to be provided and received by the parties;
(b) the consideration to be exchanged; and
(c) the manner and terms of settlement.
It is also usually necessary for the enterprise to have an effective internal financial budgeting and reporting system. The enterprise reviews and, when necessary, revises the estimates of revenue as the service is performed. The need for such revisions does not necessarily indicate that the outcome of the transaction cannot be estimated reliably.
24. The stage of completion of a transaction may be determined by a variety of methods. An enterprise uses the method that measures reliably the services performed. Depending on the nature of the transaction, the methods may include:
(a) surveys of work performed;
(b) services performed to date as a percentage of total services to be performed; or
(c) the proportion that costs incurred to date bear to the estimated total costs of the transaction. Only costs that reflect services performed to date are included in costs incurred to date. Only costs that reflect services performed or to be performed are included in the estimated total costs of the transaction.
Progress payments and advances received from customers often do not reflect the services performed.
25. For practical purposes, when services are performed by an indeterminate number of acts over a specified period of time, revenue is recognized on a straight line basis over the specified period unless there is evidence that some other method better represents the stage of completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the significant act is executed.
26. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue should be recognized only to the extent of the expenses recognized that are recoverable.
27. During the early stages of a transaction, it is often the case that the outcome of the transaction cannot be estimated reliably. Nevertheless, it may be probable that the enterprise will recover the transaction costs incurred. Therefore, revenue is recognized only to the extent of costs incurred that are expected to be recoverable. As the outcome of the transaction cannot be estimated reliably, no profit is recognized.
28. When the outcome of a transaction cannot be estimated reliably and it is not probable that the costs incurred will be recovered, revenue is not recognized and the costs incurred are recognized as an expense. When the uncertainties that prevented the outcome of the contract being estimated reliably no longer exist, revenue is recognized in accordance with paragraph 20 rather than in accordance with paragraph 26.
Interest, Royalties and Dividends
29. Revenue arising from the use by others of enterprise assets yielding interest, royalties and dividends should be recognized on the bases set out in paragraph 30 when:
(a) it is probable that the economic benefits associated with the transaction will flow to the enterprise; and
(b) the amount of the revenue can be measured reliably.
30. Revenue should be recognized on the following bases:
(a) interest should be recognized on a time proportion basis that takes into account the effective yield on the asset;
(b) royalties should be recognized on an accrual basis in accordance with the substance of the relevant agreement; and
(c) dividends should be recognized when the shareholder's right to receive payment is established.
31. The effective yield on an asset is the rate of interest required to discount the stream of future cash receipts expected over the life of the asset to equate to the initial carrying amount of the asset. Interest revenue includes the amount of amortisation of any discount, premium or other difference between the initial carrying amount of a debt security and its amount at maturity.
32. When unpaid interest has accrued before the acquisition of an interest-bearing investment, the subsequent receipt of interest is allocated between pre-acquisition and post-acquisition periods; only the post-acquisition portion is recognized as revenue. When dividends on equity securities are declared from pre-acquisition net income, those dividends are deducted from the cost of the securities. If it is difficult to make such an allocation except on an arbitrary basis, dividends are recognized as revenue unless they clearly represent a recovery of part of the cost of the equity securities.
33. Royalties accrue in accordance with the terms of the relevant agreement and are usually recognized on that basis unless, having regard to the substance of the agreement, it is more appropriate to recognize revenue on some other systematic and rational basis.
34. Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the enterprise. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectable amount, or the amount in respect of which recovery has ceased to be probable, is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.
Disclosure
35. An enterprise should disclose:
(a) the accounting policies adopted for the recognition of revenue including the methods adopted to determine the stage of completion of transactions involving the rendering of services;
(b) the amount of each significant category of revenue recognized during the period including revenue arising from:
(i) the sale of goods;
(ii) the rendering of services;
(iii)interest;
(iv) royalties;
(v) dividends; and
(c) the amount of revenue arising from exchanges of goods or services included in each significant category of revenue.
36. An enterprise discloses any contingent liabilities and contingent assets in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets. Contingent liabilities and contingent assets may arise from items such as warranty costs, claims, penalties or possible losses.
Effective Date
37. This International Accounting Standard becomes operative for financial statements covering periods beginning on or after 1 January 1995.
Vocabulary
fair value 公允价值 sale of goods 销售商品
rendering of service 提供劳务 interest 利息
royalties 特许使用权 dividend 股利
Review
1. Recognition of revenue
2. Applying of fair value.
IAS23 Borrowing Costs
Objective
The objective of this Standard is to prescribe the accounting treatment for borrowing costs. This Standard generally requires the immediate expensing of borrowing costs. However, the Standard permits, as an allowed alternative treatment, the capitalization of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.
Scope
1. This Standard should be applied in accounting for borrowing costs.
2. This Standard supersedes IAS 23, Capitalization of Borrowing Costs, approved in 1983.
3. This Standard does not deal with the actual or imputed cost of equity, including preferred capital not classified as a liability.
Definitions
4. The following terms are used in this Standard with the meanings specified:
Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds.
A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
5. Borrowing costs may include:
(a) interest on bank overdrafts and short-term and long-term borrowings;
(b) amortisation of discounts or premiums relating to borrowings;
(c) amortisation of ancillary costs incurred in connection with the arrangement of borrowings;
(d) finance charges in respect of finance leases recognized in accordance with IAS 17, Leases; and
(e) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
6. Examples of qualifying assets are inventories that require a substantial period of time to bring them to a saleable condition, manufacturing plants, power generation facilities and investment properties. Other investments, and those inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis over a short period of time, are not qualifying assets. Assets that are ready for their intended use or sale when acquired also are not qualifying assets.
Borrowing Costs - Benchmark Treatment
Recognition
7. Borrowing costs should be recognized as an expense in the period in which they are incurred.
8. Under the benchmark treatment borrowing costs are recognized as an expense in the period in which they are incurred regardless of how the borrowings are applied.
Disclosure
9. The financial statements should disclose the accounting policy adopted for borrowing costs.
Borrowing Costs - Allowed Alternative Treatment
Recognition
10. Borrowing costs should be recognized as an expense in the period in which they are incurred, except to the extent that they are capitalized in accordance with paragraph 11.
11. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset should be capitalized as part of the cost of that asset. The amount of borrowing costs eligible for capitalization should be determined in accordance with this Standard.[1]
12. Under the allowed alternative treatment, borrowing costs that are directly attributable to the acquisition, construction or production of an asset are included in the cost of that asset. Such borrowing costs are capitalized as part of the cost of the asset when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognized as an expense in the period in which they are incurred.
Borrowing Costs Eligible for Capitalization
13. The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are those borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made. When an enterprise borrows funds specifically for the purpose of obtaining a particular qualifying asset, the borrowing costs that directly relate to that qualifying asset can be readily identified.
14. It may be difficult to identify a direct relationship between particular borrowings and a qualifying asset and to determine the borrowings that could otherwise have been avoided. Such a difficulty occurs, for example, when the financing activity of an enterprise is co-ordinated centrally. Difficulties also arise when a group uses a range of debt instruments to borrow funds at varying rates of interest, and lends those funds on various bases to other enterprises in the group. Other complications arise through the use of loans denominated in or linked to foreign currencies, when the group operates in highly inflationary economies, and from fluctuations in exchange rates. As a result, the determination of the amount of borrowing costs that are directly attributable to the acquisition of a qualifying asset is difficult and the exercise of judgement is required.
15. To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization on that asset should be determined as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.
16. The financing arrangements for a qualifying asset may result in an enterprise obtaining borrowed funds and incurring associated borrowing costs before some or all of the funds are used for expenditures on the qualifying asset. In such circumstances, the funds are often temporarily invested pending their expenditure on the qualifying asset. In determining the amount of borrowing costs eligible for capitalization during a period, any investment income earned on such funds is deducted from the borrowing costs incurred.
17. To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization should be determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate should be the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized during a period should not exceed the amount of borrowing costs incurred during that period.
18. In some circumstances, it is appropriate to include all borrowings of the parent and its subsidiaries when computing a weighted average of the borrowing costs; in other circumstances, it is appropriate for each subsidiary to use a weighted average of the borrowing costs applicable to its own borrowings.
Excess of the Carrying Amount of the Qualifying Asset over Recoverable Amount
19. When the carrying amount or the expected ultimate cost of the qualifying asset exceeds its recoverable amount or net realisable value, the carrying amount is written down or written off in accordance with the requirements of other International Accounting Standards. In certain circumstances, the amount of the write-down or write-off is written back in accordance with those other International Accounting Standards.
Commencement of Capitalization
20. The capitalization of borrowing costs as part of the cost of a qualifying asset should commence when:
(a) expenditures for the asset are being incurred;
(b) borrowing costs are being incurred; and
(c) activities that are necessary to prepare the asset for its intended use or sale are in progress.
21. Expenditures on a qualifying asset include only those expenditures that have resulted in payments of cash, transfers of other assets or the assumption of interest-bearing liabilities. Expenditures are reduced by any progress payments received and grants received in connection with the asset (see IAS 20, Accounting for Government Grants and Disclosure of Government Assistance). The average carrying amount of the asset during a period, including borrowing costs previously capitalized, is normally a reasonable approximation of the expenditures to which the capitalization rate is applied in that period.
22. The activities necessary to prepare the asset for its intended use or sale encompass more than the physical construction of the asset. They include technical and administrative work prior to the commencement of physical construction, such as the activities associated with obtaining permits prior to the commencement of the physical construction. However, such activities exclude the holding of an asset when no production or development that changes the asset's condition is taking place. For example, borrowing costs incurred while land is under development are capitalized during the period in which activities related to the development are being undertaken. However, borrowing costs incurred while land acquired for building purposes is held without any associated development activity do not qualify for capitalization.
Suspension of Capitalization
23. Capitalization of borrowing costs should be suspended during extended periods in which active development is interrupted.
24. Borrowing costs may be incurred during an extended period in which the activities necessary to prepare an asset for its intended use or sale are interrupted. Such costs are costs of holding partially completed assets and do not qualify for capitalization. However, capitalization of borrowing costs is not normally suspended during a period when substantial technical and administrative work is being carried out. Capitalization of borrowing costs is also not suspended when a temporary delay is a necessary part of the process of getting an asset ready for its intended use or sale. For example, capitalization continues during the extended period needed for inventories to mature or the extended period during which high water levels delay construction of a bridge, if such high water levels are common during the construction period in the geographic region involved.
Cessation of Capitalization
25. Capitalization of borrowing costs should cease when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.
26. An asset is normally ready for its intended use or sale when the physical construction of the asset is complete even though routine administrative work might still continue. If minor modifications, such as the decoration of a property to the purchaser's or user's specification, are all that are outstanding, this indicates that substantially all the activities are complete.
27. When the construction of a qualifying asset is completed in parts and each part is capable of being used while construction continues on other parts, capitalization of borrowing costs should cease when substantially all the activities necessary to prepare that part for its intended use or sale are completed.
28. A business park comprising several buildings, each of which can be used individually is an example of a qualifying asset for which each part is capable of being usable while construction continues on other parts. An example of a qualifying asset that needs to be complete before any part can be used is an industrial plant involving several processes which are carried out in sequence at different parts of the plant within the same site, such as a steel mill.
Disclosure
29. The financial statements should disclose:
(a) the accounting policy adopted for borrowing costs;
(b) the amount of borrowing costs capitalized during the period; and
(c) the capitalization rate used to determine the amount of borrowing costs eligible for capitalization.
Transitional Provisions
30. When the adoption of this Standard constitutes a change in accounting policy, an enterprise is encouraged to adjust its financial statements in accordance with IAS 8, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies. Alternatively, enterprises following the allowed alternative treatment should capitalize only those borrowing costs incurred after the effective date of the Standard which meet the criteria for capitalization.
Effective Date
31. This International Accounting Standard becomes operative for financial statements covering periods beginning on or after 1 January 1995.
Vocabulary
borrowing costs 借款费用 capitalization 资本化
qualifying asset 符合条件的资产 amortization 摊销
Question
Q1: Morskoy Inc. is constructing a warehouse that will take about 18 months to complete. It began construction on January 1, 2002. The following payments were made during 2002:
(Unit——millions of dollars)
$’000
January 31 200
March 31 450
June 30 100
October 31 200
November 30 250
The first payment on January 31 was funded from the entity’s pool of debt. However, the entity succeeded in raising a medium-term loan for an amount of $800,000 at March 31,2002, with simple interest（单利） of 9 percent per annum, calculated and payable monthly in arrears（按月计息和支付）. These funds were specifically used for this construction. Excess funds were temporarily invested at 6 percent per annum monthly in arrears and payable in cash. The pool of debt was again used to an amount of $200,000 for the payment on November 30, which could not be funded from the medium-term loan.
Morskoy Inc. adopted the accounting policy of capitalizing borrowing cost.
The following amounts of debt were outstanding at the balance sheet date, December 31,2002.
$’000
Medium-term loan (see description above) 800
Bank overdraft 1,200
(The weighted average amount outstanding during the year
was $750,000 and total interest charged by the bank amounted to $33,800)
A 10 percent, 7-year note dated October 31, 1997 9,000
with simple interest payable annually at December 31
Requirement: Calculate the amount to be capitalized to the cost price of the warehouse in 2002.
IAS37 Provisions,
Contingent Liabilities and Contingent Assets
Introduction
1. IAS 37 prescribes the accounting and disclosure for all provisions, contingent liabilities and contingent assets, except:
(a) those resulting from financial instruments that are carried at fair value;
(b) those resulting from executory contracts, except where the contract is onerous. Executory contracts are contracts under which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent;
(c) those arising in insurance enterprises from contracts with policyholders; or
(d) those covered by another International Accounting Standard.
Provisions
2. The Standard defines provisions as liabilities of uncertain timing or amount. A provision should be recognized when, and only when:
(a) an enterprise has a present obligation (legal or constructive) as a result of a past event;
(b) it is probable (. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation; and
(c) a reliable estimate can be made of the amount of the obligation. The Standard notes that it is only in extremely rare cases that a reliable estimate will not be possible.
3. The Standard defines a constructive obligation as an obligation that derives from an enterprise's actions where:
(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the enterprise has indicated to other parties that it will accept certain responsibilities; and
(b) as a result, the enterprise has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
4. In rare cases, for example in a law suit, it may not be clear whether an enterprise has a present obligation. In these cases, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the balance sheet date. An enterprise recognizes a provision for that present obligation if the other recognition criteria described above are met. If it is more likely than not that no present obligation exists, the enterprise discloses a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote.
5. The amount recognized as a provision should be the best estimate of the expenditure required to settle the present obligation at the balance sheet date, in other words, the amount that an enterprise would rationally pay to settle the obligation at the balance sheet date or to transfer it to a third party at that time.
6. The Standard requires that an enterprise should, in measuring a provision:
(a) take risks and uncertainties into account. However, uncertainty does not justify the creation of excessive provisions or a deliberate overstatement of liabilities;
(b) discount the provisions, where the effect of the time value of money is material, using a pre-tax discount rate (or rates) that reflect(s) current market assessments of the time value of money and those risks specific to the liability that have not been reflected in the best estimate of the expenditure. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense;
(c) take future events, such as changes in the law and technological changes, into account where there is sufficient objective evidence that they will occur; and
(d) not take gains from the expected disposal of assets into account, even if the expected disposal is closely linked to the event giving rise to the provision.
7. An enterprise may expect reimbursement of some or all of the expenditure required to settle a provision (for example, through insurance contracts, indemnity clauses or suppliers' warranties). An enterprise should:
(a) recognize a reimbursement when, and only when, it is virtually certain that reimbursement will be received if the enterprise settles the obligation. The amount recognized for the reimbursement should not exceed the amount of the provision; and
(b) recognize the reimbursement as a separate asset. In the income statement, the expense relating to a provision may be presented net of the amount recognized for a reimbursement.
8. Provisions should be reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision should be reversed.
9. A provision should be used only for expenditures for which the provision was originally recognized.
Provisions - Specific Applications
10. The Standard explains how the general recognition and measurement requirements for provisions should be applied in three specific cases: future operating losses; onerous contracts; and restructurings.
11. Provisions should not be recognized for future operating losses. An expectation of future operating losses is an indication that certain assets of the operation may be impaired. In this case, an enterprise tests these assets for impairment under IAS 36, Impairment of Assets.
12. If an enterprise has a contract that is onerous, the present obligation under the contract should be recognized and measured as a provision. An onerous contract is one in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
13. The Standard defines a restructuring as a programme that is planned and controlled by management, and materially changes either:
(a) the scope of a business undertaken by an enterprise; or
(b) the manner in which that business is conducted.
14. A provision for restructuring costs is recognized only when the general recognition criteria for provisions are met. In this context, a constructive obligation to restructure arises only when an enterprise:
(a) has a detailed formal plan for the restructuring identifying at least:
(i) the business or part of a business concerned;
(ii) the principal locations affected;
(iii) the location, function, and approximate number of employees who will be compensated for terminating their services;
(iv) the expenditures that will be undertaken; and
(v) when the plan will be implemented; and
(b) has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
15. A management or board decision to restructure does not give rise to a constructive obligation at the balance sheet date unless the enterprise has, before the balance sheet date:
(a) started to implement the restructuring plan; or
(b) communicated the restructuring plan to those affected by it in a sufficiently specific manner to raise a valid expectation in them that the enterprise will carry out the restructuring.
16. Where a restructuring involves the sale of an operation, no obligation arises for the sale until the enterprise is committed to the sale, . there is a binding sale agreement.
17. A restructuring provision should include only the direct expenditures arising from the restructuring, which are those that are both:
(a) necessarily entailed by the restructuring; and
(b) not associated with the ongoing activities of the enterprise. Thus, a restructuring provision does not include such costs as: retraining or relocating continuing staff; marketing; or investment in new systems and distribution networks.
Contingent Liabilities
18. The Standard supersedes the parts of IAS 10, Contingencies and Events Occurring After the Balance Sheet Date[1], that deal with contingencies. The Standard defines a contingent liability as:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or
(b) a present obligation that arises from past events but is not recognized because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.
19. An enterprise should not recognize a contingent liability. An enterprise should disclose a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent Assets
20. The Standard defines a contingent asset as a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. An example is a claim that an enterprise is pursuing through legal processes, where the outcome is uncertain.
21. An enterprise should not recognize a contingent asset. A contingent asset should be disclosed where an inflow of economic benefits is probable.
22. When the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
Effective Date
23. The Standard becomes operative for annual financial statements covering periods beginning on or after 1 July 1999. Earlier application is encouraged.
The standards, which have been set in bold italic type, should be read in the context of the background material and implementation guidance in this Standard, and in the context of the Preface to International Accounting Standards. International Accounting Standards are not intended to apply to immaterial items (see paragraph 12 of the Preface).
Objective
The objective of this Standard is to ensure that appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities and contingent assets and that sufficient information is disclosed in the notes to the financial statements to enable users to understand their nature, timing and amount.
Scope
1. This Standard should be applied by all enterprises in accounting for provisions, contingent liabilities and contingent assets, except:
(a) those resulting from financial instruments that are carried at fair value;
(b) those resulting from executory contracts, except where the contract is onerous;
(c) those arising in insurance enterprises from contracts with policyholders; and
(d) those covered by another International Accounting Standard.
2. This Standard applies to financial instruments (including guarantees) that are not carried at fair value.
3. Executory contracts are contracts under which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent. This Standard does not apply to executory contracts unless they are onerous.
4. This Standard applies to provisions, contingent liabilities and contingent assets of insurance enterprises other than those arising from contracts with policyholders.
5. Where another International Accounting Standard deals with a specific type of provision, contingent liability or contingent asset, an enterprise applies that Standard instead of this Standard. For example, certain types of provisions are also addressed in Standards on:
(a) construction contracts (see IAS 11, Construction Contracts);
(b) income taxes (see IAS 12, Income Taxes);
(c) leases (see IAS 17, Leases). However, as IAS 17 contains no specific requirements to deal with operating leases that have become onerous, this Standard applies to such cases; and
(d) employee benefits (see IAS 19, Employee Benefits).
6. Some amounts treated as provisions may relate to the recognition of revenue, for example where an enterprise gives guarantees in exchange for a fee. This Standard does not address the recognition of revenue. IAS 18, Revenue, identifies the circumstances in which revenue is recognized and provides practical guidance on the application of the recognition criteria. This Standard does not change the requirements of IAS 18.
7. This Standard defines provisions as liabilities of uncertain timing or amount. In some countries the term 'provision' is also used in the context of items such as depreciation, impairment of assets and doubtful debts: these are adjustments to the carrying amounts of assets and are not addressed in this Standard.
8. Other International Accounting Standards specify whether expenditures are treated as assets or as expenses. These issues are not addressed in this Standard. Accordingly, this Standard neither prohibits nor requires capitalisation of the costs recognized when a provision is made.
9. This Standard applies to provisions for restructuring (including discontinuing operations). Where a restructuring meets the definition of a discontinuing operation, additional disclosures may be required by IAS 35, Discontinuing Operations.
Definitions
10. The following terms are used in this Standard with the meanings specified:
A provision is a liability of uncertain timing or amount.
A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits.
An obligating event is an event that creates a legal or constructive obligation that results in an enterprise having no realistic alternative to settling that obligation.
A legal obligation is an obligation that derives from:
(a) a contract (through its explicit or implicit terms);
(b) legislation; or
(c) other operation of law.
A constructive obligation is an obligation that derives from an enterprise's actions where:
(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the enterprise has indicated to other parties that it will accept certain responsibilities; and
(b) as a result, the enterprise has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
A contingent liability is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or
(b) a present obligation that arises from past events but is not recognized because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise.
An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
A restructuring is a programme that is planned and controlled by management, and materially changes either:
(a) the scope of a business undertaken by an enterprise; or
(b) the manner in which that business is conducted.
Provisions and Other Liabilities
11. Provisions can be distinguished from other liabilities such as trade payables and accruals because there is uncertainty about the timing or amount of the future expenditure required in settlement. By contrast:
(a) trade payables are liabilities to pay for goods or services that have been received or supplied and have been invoiced or formally agreed with the supplier; and
(b) accruals are liabilities to pay for goods or services that have been received or supplied but have not been paid, invoiced or formally agreed with the supplier, including amounts due to employees (for example, amounts relating to accrued vacation pay). Although it is sometimes necessary to estimate the amount or timing of accruals, the uncertainty is generally much less than for provisions.
Accruals are often reported as part of trade and other payables, whereas provisions are reported separately.
Relationship between Provisions and Contingent Liabilities
12. In a general sense, all provisions are contingent because they are uncertain in timing or amount. However, within this Standard the term 'contingent' is used for liabilities and assets that are not recognized because their existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. In addition, the term 'contingent liability' is used for liabilities that do not meet the recognition criteria.
13. This Standard distinguishes between:
(a) provisions - which are recognized as liabilities (assuming that a reliable estimate can be made) because they are present obligations and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations; and
(b) contingent liabilities - which are not recognized as liabilities because they are either:
(i) possible obligations, as it has yet to be confirmed whether the enterprise has a present obligation that could lead to an outflow of resources embodying economic benefits; or
(ii) present obligations that do not meet the recognition criteria in this Standard (because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a sufficiently reliable estimate of the amount of the obligation cannot be made).
Recognition
Provisions
14. A provision should be recognized when:
(a) an enterprise has a present obligation (legal or constructive) as a result of a past event;[2]
(b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
(c) a reliable estimate can be made of the amount of the obligation.
If these conditions are not met, no provision should be recognized.
Present Obligation
15. In rare cases it is not clear whether there is a present obligation. In these cases, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the balance sheet date.
16. In almost all cases it will be clear whether a past event has given rise to a present obligation. In rare cases, for example in a law suit, it may be disputed either whether certain events have occurred or whether those events result in a present obligation. In such a case, an enterprise determines whether a present obligation exists at the balance sheet date by taking account of all available evidence, including, for example, the opinion of experts. The evidence considered includes any additional evidence provided by events after the balance sheet date. On the basis of such evidence:
(a) where it is more likely than not that a present obligation exists at the balance sheet date, the enterprise recognizes a provision (if the recognition criteria are met); and
(b) where it is more likely that no present obligation exists at the balance sheet date, the enterprise discloses a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote (see paragraph 86).
Past Event
17. A past event that leads to a present obligation is called an obligating event. For an event to be an obligating event, it is necessary that the enterprise has no realistic alternative to settling the obligation created by the event. This is the case only:
(a) where the settlement of the obligation can be enforced by law; or
(b) in the case of a constructive obligation, where the event (which may be an action of the enterprise) creates valid expectations in other parties that the enterprise will discharge the obligation.
18. Financial statements deal with the financial position of an enterprise at the end of its reporting period and not its possible position in the future. Therefore, no provision is recognized for costs that need to be incurred to operate in the future. The only liabilities recognized in an enterprise's balance sheet are those that exist at the balance sheet date.
19. It is only those obligations arising from past events existing independently of an enterprise's future actions (. the future conduct of its business) that are recognized as provisions. Examples of such obligations are penalties or clean-up costs for unlawful environmental damage, both of which would lead to an outflow of resources embodying economic benefits in settlement regardless of the future actions of the enterprise. Similarly, an enterprise recognizes a provision for the decommissioning costs of an oil installation or a nuclear power station to the extent that the enterprise is obliged to rectify damage already caused. In contrast, because of commercial pressures or legal requirements, an enterprise may intend or need to carry out expenditure to operate in a particular way in the future (for example, by fitting smoke filters in a certain type of factory). Because the enterprise can avoid the future expenditure by its future actions, for example by changing its method of operation, it has no present obligation for that future expenditure and no provision is recognized.
20. An obligation always involves another party to whom the obligation is owed. It is not necessary, however, to know the identity of the party to whom the obligation is owed - indeed the obligation may be to the public at large. Because an obligation always involves a commitment to another party, it follows that a management or board decision does not give rise to a constructive obligation at the balance sheet date unless the decision has been communicated before the balance sheet date to those affected by it in a sufficiently specific manner to raise a valid expectation in them that the enterprise will discharge its responsibilities.
21. An event that does not give rise to an obligation immediately may do so at a later date, because of changes in the law or because an act (for example, a sufficiently specific public statement) by the enterprise gives rise to a constructive obligation. For example, when environmental damage is caused there may be no obligation to remedy the consequences. However, the causing of the damage will become an obligating event when a new law requires the existing damage to be rectified or when the enterprise publicly accepts responsibility for rectification in a way that creates a constructive obligation.
22. Where details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is virtually certain to be enacted as drafted. For the purpose of this Standard, such an obligation is treated as a legal obligation. Differences in circumstances surrounding enactment make it impossible to specify a single event that would make the enactment of a law virtually certain. In many cases it will be impossible to be virtually certain of the enactment of a law until it is enacted.
Probable Outflow of Resources Embodying Economic Benefits
23. For a liability to qualify for recognition there must be not only a present obligation but also the probability of an outflow of resources embodying economic benefits to settle that obligation. For the purpose of this Standard[3], an outflow of resources or other event is regarded as probable if the event is more likely than not to occur, . the probability that the event will occur is greater than the probability that it will not. Where it is not probable that a present obligation exists, an enterprise discloses a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote (see paragraph 86).
24. Where there are a number of similar obligations (. product warranties or similar contracts) the probability that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Although the likelihood of outflow for any one item may be small, it may well be probable that some outflow of resources will be needed to settle the class of obligations as a whole. If that is the case, a provision is recognized (if the other recognition criteria are met).
Reliable Estimate of the Obligation
25. The use of estimates is an essential part of the preparation of financial statements and does not undermine their reliability. This is especially true in the case of provisions, which by their nature are more uncertain than most other balance sheet items. Except in extremely rare cases, an enterprise will be able to determine a range of possible outcomes and can therefore make an estimate of the obligation that is sufficiently reliable to use in recognizing a provision.
26. In the extremely rare case where no reliable estimate can be made, a liability exists that cannot be recognized. That liability is disclosed as a contingent liability (see paragraph 86).
Contingent Liabilities
27. An enterprise should not recognize a contingent liability.
28. A contingent liability is disclosed, as required by paragraph 86, unless the possibility of an outflow of resources embodying economic benefits is remote.
29. Where an enterprise is jointly and severally liable for an obligation, the part of the obligation that is expected to be met by other parties is treated as a contingent liability. The enterprise recognizes a provision for the part of the obligation for which an outflow of resources embodying economic benefits is probable, except in the extremely rare circumstances where no reliable estimate can be made.
30. Contingent liabilities may develop in a way not initially expected. Therefore, they are assessed continually to determine whether an outflow of resources embodying economic benefits has become probable. If it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability, a provision is recognized in the financial statements of the period in which the change in probability occurs (except in the extremely rare circumstances where no reliable estimate can be made).
Contingent Assets
31. An enterprise should not recognize a contingent asset.
32. Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the enterprise. An example is a claim that an enterprise is pursuing through legal processes, where the outcome is uncertain.
33. Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realized. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
34. A contingent asset is disclosed, as required by paragraph 89, where an inflow of economic benefits is probable.
35. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, an enterprise discloses the contingent asset (see paragraph 89).
Measurement
Best Estimate
36. The amount recognized as a provision should be the best estimate of the expenditure required to settle the present obligation at the balance sheet date.
37. The best estimate of the expenditure required to settle the present obligation is the amount that an enterprise would rationally pay to settle the obligation at the balance sheet date or to transfer it to a third party at that time. It will often be impossible or prohibitively expensive to settle or transfer an obligation at the balance sheet date. However, the estimate of the amount that an enterprise would rationally pay to settle or transfer the obligation gives the best estimate of the expenditure required to settle the present obligation at the balance sheet date.
38. The estimates of outcome and financial effect are determined by the judgment of the management of the enterprise, supplemented by experience of similar transactions and, in some cases, reports from independent experts. The evidence considered includes any additional evidence provided by events after the balance sheet date.
39. Uncertainties surrounding the amount to be recognized as a provision are dealt with by various means according to the circumstances. Where the provision being measured involves a large population of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities. The name for this statistical method of estimation is 'expected value'. The provision will therefore be different depending on whether the probability of a loss of a given amount is, for example, 60 per cent or 90 per cent. Where there is a continuous range of possible outcomes, and each point in that range is as likely as any other, the mid-point of the range is used.
Example
An enterprise sells goods with a warranty under which customers are covered for the cost of repairs of any manufacturing defects that become apparent within the first six months after purchase. If minor defects were detected in all products sold, repair costs of 1 million would result. If major defects were detected in all products sold, repair costs of 4 million would result. The enterprise's past experience and future expectations indicate that, for the coming year, 75 per cent of the goods sold will have no defects, 20 per cent of the goods sold will have minor defects and 5 per cent of the goods sold will have major defects. In accordance with paragraph 24, an enterprise assesses the probability of an outflow for the warranty obligations as a whole.
The expected value of the cost of repairs is:
(75% of nil) + (20% of 1m) + (5% of 4m) = 400,000
40. Where a single obligation is being measured, the individual most likely outcome may be the best estimate of the liability. However, even in such a case, the enterprise considers other possible outcomes. Where other possible outcomes are either mostly higher or mostly lower than the most likely outcome, the best estimate will be a higher or lower amount. For example, if an enterprise has to rectify a serious fault in a major plant that it has constructed for a customer, the individual most likely outcome may be for the repair to succeed at the first attempt at a cost of 1,000, but a provision for a larger amount is made if there is a significant chance that further attempts will be necessary.
41. The provision is measured before tax, as the tax consequences of the provision, and changes in it, are dealt with under IAS 12, Income Taxes.
Risks and Uncertainties
42. The risks and uncertainties that inevitably surround many events and circumstances should be taken into account in reaching the best estimate of a provision.
43. Risk describes variability of outcome. A risk adjustment may increase the amount at which a liability is measured. Caution is needed in making judgments under conditions of uncertainty, so that income or assets are not overstated and expenses or liabilities are not understated. However, uncertainty does not justify the creation of excessive provisions or a deliberate overstatement of liabilities. For example, if the projected costs of a particularly adverse outcome are estimated on a prudent basis, that outcome is not then deliberately treated as more probable than is realistically the case. Care is needed to avoid duplicating adjustments for risk and uncertainty with consequent overstatement of a provision.
44. Disclosure of the uncertainties surrounding the amount of the expenditure is made under paragraph 85(b).
Present Value
45. Where the effect of the time value of money is material, the amount of a provision should be the present value of the expenditures expected to be required to settle the obligation.
46. Because of the time value of money, provisions relating to cash outflows that arise soon after the balance sheet date are more onerous than those where cash outflows of the same amount arise later. Provisions are therefore discounted, where the effect is material.
47. The discount rate (or rates) should be a pre-tax rate (or rates) that reflect(s) current market assessments of the time value of money and the risks specific to the liability. The discount rate(s) should not reflect risks for which future cash flow estimates have been adjusted.
Future Events
48. Future events that may affect the amount required to settle an obligation should be reflected in the amount of a provision where there is sufficient objective evidence that they will occur.
49. Expected future events may be particularly important in measuring provisions. For example, an enterprise may believe that the cost of cleaning up a site at the end of its life will be reduced by future changes in technology. The amount recognized reflects a reasonable expectation of technically qualified, objective observers, taking account of all available evidence as to the technology that will be available at the time of the clean-up. Thus it is appropriate to include, for example, expected cost reductions associated with increased experience in applying existing technology or the expected cost of applying existing technology to a larger or more complex clean-up operation than has previously been carried out. However, an enterprise does not anticipate the development of a completely new technology for cleaning up unless it is supported by sufficient objective evidence.
50. The effect of possible new legislation is taken into consideration in measuring an existing obligation when sufficient objective evidence exists that the legislation is virtually certain to be enacted. The variety of circumstances that arise in practice makes it impossible to specify a single event that will provide sufficient, objective evidence in every case. Evidence is required both of what legislation will demand and of whether it is virtually certain to be enacted and implemented in due course. In many cases sufficient objective evidence will not exist until the new legislation is enacted.
Expected Disposal of Assets
51. Gains from the expected disposal of assets should not be taken into account in measuring a provision.
52. Gains on the expected disposal of assets are not taken into account in measuring a provision, even if the expected disposal is closely linked to the event giving rise to the provision. Instead, an enterprise recognizes gains on expected disposals of assets at the time specified by the International Accounting Standard dealing with the assets concerned.
Reimbursements
53. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement should be recognized when, and only when, it is virtually certain that reimbursement will be received if the enterprise settles the obligation. The reimbursement should be treated as a separate asset. The amount recognized for the reimbursement should not exceed the amount of the provision.
54. In the income statement, the expense relating to a provision may be presented net of the amount recognized for a reimbursement.
55. Sometimes, an enterprise is able to look to another party to pay part or all of the expenditure required to settle a provision (for example, through insurance contracts, indemnity clauses or suppliers' warranties). The other party may either reimburse amounts paid by the enterprise or pay the amounts directly.
56. In most cases the enterprise will remain liable for the whole of the amount in question so that the enterprise would have to settle the full amount if the third party failed to pay for any reason. In this situation, a provision is recognized for the full amount of the liability, and a separate asset for the expected reimbursement is recognized when it is virtually certain that reimbursement will be received if the enterprise settles the liability.
57. In some cases, the enterprise will not be liable for the costs in question if the third party fails to pay. In such a case the enterprise has no liability for those costs and they are not included in the provision.
58. As noted in paragraph 29, an obligation for which an enterprise is jointly and severally liable is a contingent liability to the extent that it is expected that the obligation will be settled by the other parties.
Changes in Provisions
59. Provisions should be reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision should be reversed.
60. Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognized as borrowing cost.
Use of Provisions
61. A provision should be used only for expenditures for which the provision was originally recognized.
62. Only expenditures that relate to the original provision are set against it. Setting expenditures against a provision that was originally recognized for another purpose would conceal the impact of two different events.
Application of the Recognition and Measurement Rules
Future Operating Losses
63. Provisions should not be recognized for future operating losses.
64. Future operating losses do not meet the definition of a liability in paragraph 10 and the general recognition criteria set out for provisions in paragraph 14.
65. An expectation of future operating losses is an indication that certain assets of the operation may be impaired. An enterprise tests these assets for impairment under IAS 36, Impairment of Assets.
Onerous Contracts
66. If an enterprise has a contract that is onerous, the present obligation under the contract should be recognized and measured as a provision.
67. Many contracts (for example, some routine purchase orders) can be cancelled without paying compensation to the other party, and therefore there is no obligation. Other contracts establish both rights and obligations for each of the contracting parties. Where events make such a contract onerous, the contract falls within the scope of this Standard and a liability exists which is recognized. Executory contracts that are not onerous fall outside the scope of this Standard.
68. This Standard defines an onerous contract as a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.
69. Before a separate provision for an onerous contract is established, an enterprise recognizes any impairment loss that has occurred on assets dedicated to that contract (see IAS 36, Impairment of Assets).
Restructuring
70. The following are examples of events that may fall under the definition of restructuring:
(a) sale or termination of a line of business;
(b) the closure of business locations in a country or region or the relocation of business activities from one country or region to another;
(c) changes in management structure, for example, eliminating a layer of management; and
(d) fundamental reorganisations that have a material effect on the nature and focus of the enterprise's operations.
71. A provision for restructuring costs is recognized only when the general recognition criteria for provisions set out in paragraph 14 are met. Paragraphs 72-83 set out how the general recognition criteria apply to restructurings.
72. A constructive obligation to restructure arises only when an enterprise:
(a) has a detailed formal plan for the restructuring identifying at least:
(i) the business or part of a business concerned;
(ii) the principal locations affected;
(iii) the location, function, and approximate number of employees who will be compensated for terminating their services;
(iv) the expenditures that will be undertaken; and
(v) when the plan will be implemented; and
(b) has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
73. Evidence that an enterprise has started to implement a restructuring plan would be provided, for example, by dismantling plant or selling assets or by the public announcement of the main features of the plan. A public announcement of a detailed plan to restructure constitutes a constructive obligation to restructure only if it is made in such a way and in sufficient detail (. setting out the main features of the plan) that it gives rise to valid expectations in other parties such as customers, suppliers and employees (or their representatives) that the enterprise will carry out the restructuring.
74. For a plan to be sufficient to give rise to a constructive obligation when communicated to those affected by it, its implementation needs to be planned to begin as soon as possible and to be completed in a timeframe that makes significant changes to the plan unlikely. If it is expected that there will be a long delay before the restructuring begins or that the restructuring will take an unreasonably long time, it is unlikely that the plan will raise a valid expectation on the part of others that the enterprise is at present committed to restructuring, because the timeframe allows opportunities for the enterprise to change its plans.
75. A management or board decision to restructure taken before the balance sheet date does not give rise to a constructive obligation at the balance sheet date unless the enterprise has, before the balance sheet date:
(a) started to implement the restructuring plan; or
(b) announced the main features of the restructuring plan to those affected by it in a sufficiently specific manner to raise a valid expectation in them that the enterprise will carry out the restructuring.
In some cases, an enterprise starts to implement a restructuring plan, or announces its main features to those affected, only after the balance sheet date. Disclosure may be required under IAS 10, Events After the Balance Sheet Date, if the restructuring is of such importance that its non-disclosure would affect the ability of the users of the financial statements to make proper evaluations and decisions.
76. Although a constructive obligation is not created solely by a management decision, an obligation may result from other earlier events together with such a decision. For example, negotiations with employee representatives for termination payments, or with purchasers for the sale of an operation, may have been concluded subject only to board approval. Once that approval has been obtained and communicated to the other parties, the enterprise has a constructive obligation to restructure, if the conditions of paragraph 72 are met.
77. In some countries, the ultimate authority is vested in a board whose membership includes representatives of interests other than those of management (. employees) or notification to such representatives may be necessary before the board decision is taken. Because a decision by such a board involves communication to these representatives, it may result in a constructive obligation to restructure.
78. No obligation arises for the sale of an operation until the enterprise is committed to the sale, . there is a binding sale agreement.
79. Even when an enterprise has taken a decision to sell an operation and announced that decision publicly, it cannot be committed to the sale until a purchaser has been identified and there is a binding sale agreement. Until there is a binding sale agreement, the enterprise will be able to change its mind and indeed will have to take another course of action if a purchaser cannot be found on acceptable terms. When the sale of an operation is envisaged as part of a restructuring, the assets of the operation are reviewed for impairment, under IAS 36, Impairment of Assets. When a sale is only part of a restructuring, a constructive obligation can arise for the other parts of the restructuring before a binding sale agreement exists.
80. A restructuring provision should include only the direct expenditures arising from the restructuring, which are those that are both:
(a) necessarily entailed by the restructuring; and
(b) not associated with the ongoing activities of the enterprise.
81. A restructuring provision does not include such costs as:
(a) retraining or relocating continuing staff;
(b) marketing; or
(c) investment in new systems and distribution networks.
These expenditures relate to the future conduct of the business and are not liabilities for restructuring at the balance sheet date. Such expenditures are recognized on the same basis as if they arose independently of a restructuring.
82. Identifiable future operating losses up to the date of a restructuring are not included in a provision, unless they relate to an onerous contract as defined in paragraph 10.
83. As required by paragraph 51, gains on the expected disposal of assets are not taken into account in measuring a restructuring provision, even if the sale of assets is envisaged as part of the restructuring.
Disclosure
84. For each class of provision, an enterprise should disclose:
(a) the carrying amount at the beginning and end of the period;
(b) additional provisions made in the period, including increases to existing provisions;
(c) amounts used (. incurred and charged against the provision) during the period;
(d) unused amounts reversed during the period; and
(e) the increase during the period in the discounted amount arising from the passage of time and the effect of any change in the discount rate.
Comparative information is not required.
85. An enterprise should disclose the following for each class of provision:
(a) a brief description of the nature of the obligation and the expected timing of any resulting outflows of economic benefits;
(b) an indication of the uncertainties about the amount or timing of those outflows. Where necessary to provide adequate information, an enterprise should disclose the major assumptions made concerning future events, as addressed in paragraph 48; and
(c) the amount of any expected reimbursement, stating the amount of any asset that has been recognized for that expected reimbursement.
86. Unless the possibility of any outflow in settlement is remote, an enterprise should disclose for each class of contingent liability at the balance sheet date a brief description of the nature of the contingent liability and, where practicable:
(a) an estimate of its financial effect, measured under paragraphs 36-52;
(b) an indication of the uncertainties relating to the amount or timing of any outflow; and
(c) the possibility of any reimbursement.
87. In determining which provisions or contingent liabilities may be aggregated to form a class, it is necessary to consider whether the nature of the items is sufficiently similar for a single statement about them to fulfil the requirements of paragraphs 85(a) and (b) and 86(a) and (b). Thus, it may be appropriate to treat as a single class of provision amounts relating to warranties of different products, but it would not be appropriate to treat as a single class amounts relating to normal warranties and amounts that are subject to legal proceedings.
88. Where a provision and a contingent liability arise from the same set of circumstances, an enterprise makes the disclosures required by paragraphs 84-86 in a way that shows the link between the provision and the contingent liability.
89. Where an inflow of economic benefits is probable, an enterprise should disclose a brief description of the nature of the contingent assets at the balance sheet date, and, where practicable, an estimate of their financial effect, measured using the principles set out for provisions in paragraphs 36-52.
90. It is important that disclosures for contingent assets avoid giving misleading indications of the likelihood of income arising.
91. Where any of the information required by paragraphs 86 and 89 is not disclosed because it is not practicable to do so, that fact should be stated.
92. In extremely rare cases, disclosure of some or all of the information required by paragraphs 84-89 can be expected to prejudice seriously the position of the enterprise in a dispute with other parties on the subject matter of the provision, contingent liability or contingent asset. In such cases, an enterprise need not disclose the information, but should disclose the general nature of the dispute, together with the fact that, and reason why, the information has not been disclosed.
Transitional Provisions
93. The effect of adopting this Standard on its effective date (or earlier) should be reported as an adjustment to the opening balance of retained earnings for the period in which the Standard is first adopted. Enterprises are encouraged, but not required, to adjust the opening balance of retained earnings for the earliest period presented and to restate comparative information. If comparative information is not restated, this fact should be disclosed.
94. The Standard requires a different treatment from IAS 8, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies. IAS 8 requires comparative information to be restated (benchmark treatment) or additional pro forma comparative information on a restated basis to be disclosed (allowed alternative treatment) unless it is impracticable to do so.
Effective Date
95. This International Accounting Standard becomes operative for annual financial statements covering periods beginning on or after 1 July 1999. Earlier application is encouraged. If an enterprise applies this Standard for periods beginning before 1 July 1999, it should disclose that fact.
96. This Standard supersedes the parts of IAS 10, Contingencies and Events Occurring After the Balance Sheet Date, that deal with contingencies.
Vocabulary
provision 准备 contingent assets 或有资产
contingent liabilities 或有负债 possible obligation 潜在义务
present obligation 现时义务 onerous contract 亏损合同
restructuring 重组 reimbursement 补偿
Review
1. Identify the following important definitions: provisions, contingent assets, contingent liabilities.
2. Recognition, measure and disclosure of provisions, contingent assets and contingent liabilities.
IAS12＊ Income Taxes
Objective of IAS 12
The objective of IAS 12 (Revised 1996) is to prescribe the accounting treatment for income taxes.
Key Definitions [IAS ]
Temporary difference: A difference between the carrying amount of an asset or liability and its tax base.
Taxable temporary difference: A temporary difference that will result in taxable amounts in the future when the carrying amount of the asset is recovered or the liability is settled.
Deductible temporary difference: A temporary difference that will result in amounts that are tax deductible in the future when the carrying amount of the asset is recovered or the liability is settled.
Current Tax
Current tax for the current and prior periods should be recognized as a liability to the extent that it has not yet been settled, and as an asset to the extent that the amounts already paid exceed the amount due. [IAS ] The benefit of a tax loss which can be carried back to recover current tax of a prior period should be recognized as an asset. [IAS ] Current tax assets and liabilities should be measured at the amount expected to be paid to (recovered from) taxation authorities, using the rates/laws that have been enacted or substantively enacted by the balance sheet date. [IAS ]
Recognition of Deferred Tax Liabilities
The general principle in IAS 12 is that deferred tax liabilities should be recognized for all taxable temporary differences. There are 3 exceptions to the requirement to recognize a deferred tax liability, as follows: [IAS ]
liabilities arising from goodwill for which amortisation is not deductible for tax purposes;
liabilities arising from the initial recognition of an asset/liability other than in a business combination which, at the time of the transaction, does not affect either the accounting or the taxable profit; and
liabilities arising from undistributed profits from investments where the enterprise is able to control the timing of the reversal of the difference and it is probable that the reversal will not occur in the foreseeable future.
Recognition of Deferred Tax Assets
A deferred tax asset should be recognized for deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised, unless the deferred tax asset arises from: [IAS ]
negative goodwill which was treated as deferred income under IAS 22 Business Combinations; or
the initial recognition of an asset/liability other than in a business combination which, at the time of the transaction, does not affect the accounting or the taxable profit.
Deferred tax assets for deductible temporary differences arising from investments in subsidiaries, associates, branches and joint ventures should be recognized to the extent that it is probable that the temporary difference will reverse in the foreseeable future and that taxable profit will be available against which the temporary difference will be utilised. [IAS ]
The carrying amount of deferred tax assets should be reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such reduction should be subsequently reversed to the extent that it becomes probable that sufficient taxable profit will be available. [IAS ]
A deferred tax asset should be recognized for an unused tax loss carryforward or unused tax credit if, and only if, it is considered probable that there will be sufficient future taxable profit against which the loss or credit carryforwards can be utilised. [IAS ]
Measurement of Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities should be measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled (liability method), based on tax rates/laws that have been enacted or substantively enacted by the balance sheet date. [IAS ] The measurement should reflect the entity's expectations, at the balance sheet date, as to the manner in which the carrying amount of its assets and liabilities will be recovered or settled. [IAS ]
Deferred tax assets and liabilities should not be discounted. [IAS ]
Recognition of Tax Expense or Income
Current and deferred tax should be recognized as income or expense and included in net profit or loss for the period, except to the extent that the tax arises from: [IAS ]
a transaction or event that is recognized directly in equity; or
a business combination accounted for as an acquisition.
If the tax relates to items that are credited or charged directly to equity, the tax should also be charged or credited directly to equity. [IAS ]
If the tax arises from a business combination that is an acquisition, it should be recognized as an identifiable asset or liability at the date of acquisition in accordance with IFRS 3 Business Combinations (thus affecting goodwill or negative goodwill).
Tax Consequences of Dividends
In some jurisdictions, income taxes are payable at a higher or lower rate if part or all of the net profit or retained earnings is paid out as a dividend. In other jurisdictions, income taxes may be refundable if part or all of the net profit or retained earnings is paid out as a dividend. Possible future dividend distributions or tax refunds should not be anticipated in measuring deferred tax assets and liabilities. [IAS ]
IAS 10, Events after the Balance Sheet Date, requires disclosure, and prohibits accrual, of a dividend that is proposed or declared after the end of the reporting period but before the financial statements were authorised for issue. IAS 12 requires disclosure of the tax consequences of such dividends as well as disclosure of the nature and amounts of the potential income tax consequences of dividends. [IAS ]
Presentation
Current tax assets and current tax liabilities should be offset on the balance sheet only if the enterprise has the legal right and the intention to settle on a net basis. [IAS ]
Deferred tax assets and deferred tax liabilities should be offset on the balance sheet only if the enterprise has the legal right to settle on a net basis and they are levied by the same taxing authority on the same entity or different entities that intend to realise the asset and settle the liability at the same time. [IAS ]
Disclosure
current tax assets [IAS ]
current tax liabilities [IAS ]
deferred tax assets (always classified as noncurrent) [IAS -70]
deferred tax liabilities (always classified as noncurrent) [IAS -70]
tax expense (tax income) relating to profit or loss from ordinary activities (must be shown on the face of the income statement) [IAS ]
major components of tax expense (tax income) [IAS ]
aggregate current and deferred tax relating to items reported directly in equity [IAS ]
tax relating to extraordinary items [IAS ]
explanation of the relationship between tax expense (income) and the tax that would be expected by applying the current tax rate to accounting profit or loss (this can be presented as a reconciliation of amounts of tax or a reconciliation of the rate of tax) [IAS ]
changes in tax rates [IAS ]
amounts and other details of deductible temporary differences, unused tax losses, and unused tax credits [IAS ]
temporary differences associated with investments in subsidiaries, associates, branches, and joint ventures [IAS ]
for each type of temporary difference and unused tax loss and credit, the amount of deferred tax assets or liabilities recognized in the balance sheet and the amount of deferred tax income or expense recognized in the income statement [IAS ]
tax relating to discontinuing operations [IAS ]
tax consequences of post-balance-sheet dividends [IAS ]
details of deferred tax assets [IAS ]
Vocabulary
income taxes 所得税 accounting profit 会计利润
taxable profit 应税利润 tax loss 可抵扣亏损
tax expense 所得税费用 tax income 所得税收益
current tax 当期所得税 deferred tax assets 递延所得税资产
deferred tax liabilities 递延所得税负债 temporary differences 暂时性差异
taxable temporary differences 应税暂时性差异
deductible temporary differences 可抵扣暂时性差异
IAS16＊ Property, Plant, and Equipment
Objective of IAS 16
The objective of IAS 16 is to prescribe the accounting treatment for property, plant, and equipment. The principal issues are the timing of recognition of assets, the determination of their carrying amounts, and the depreciation charges to be recognized in relation to them.
Scope
While IAS 16 does not apply to biological assets related to agricultural activity (see IAS 41) or mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative resources, it does apply to property, plant, and equipment used to develop or maintain such assets. [IAS ]
Recognition
Items of property, plant, and equipment should be recognized as assets when it is probable that: [IAS ]
the future economic benefits associated with the asset will flow to the enterprise; and
the cost of the asset can be measured reliably.
This recognition principle is applied to all property, plant, and equipment costs at the time they are incurred. These costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it.
IAS 16 does not prescribe the unit of measure for recognition – what constitutes an item of property, plant, and equipment. [IAS ] Note, however, that if the cost model is used (see below) each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately. [IAS ]
IAS 16 recognizes that parts of some items of property, plant, and equipment may require replacement at regular intervals. The carrying amount of an item of property, plant, and equipment will include the cost of replacing the part of such an item when that cost is incurred if the recognition criteria (future benefits and measurement reliability) are met. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS -72. [IAS ]
Also, continued operation of an item of property, plant, and equipment (for example, an aircraft) may require regular major inspections for faults regardless of whether parts of the item are replaced. When each major inspection is performed, its cost is recognized in the carrying amount of the item of property, plant, and equipment as a replacement if the recognition criteria are satisfied. If necessary, the estimated cost of a future similar inspection may be used as an indication of what the cost of the existing inspection component was when the item was acquired or constructed. [IAS ]
Initial Measurement
They should be initially recorded at cost. [IAS ] Cost includes all costs necessary to bring the asset to working condition for its intended use. This would include not only its original purchase price but also costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site (see IAS 37, Provisions, Contingent Liabilities and Contingent Assets). [IAS -17]
If payment for an item of property, plant, and equipment is deferred, interest at a market rate must be recognized or imputed. [IAS ]
If an asset is acquired in exchange for another asset (whether similar or dissimilar in nature), the cost will be measured at the fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up. [IAS ]
Measurement Subsequent to Initial Recognition
IAS 16 permits two accounting models:
Cost Model. The asset is carried at cost less accumulated depreciation and impairment. [IAS ]
Revaluation Model. The asset is carried at a revalued amount, being its fair value at the date of revaluation less subsequent depreciation, provided that fair value can be measured reliably. [IAS ]
The Revaluation Model
Under the revaluation model, revaluations should be carried out regularly, so that the carrying amount of an asset does not differ materially from its fair value at the balance sheet date. [IAS ]
If an item is revalued, the entire class of assets to which that asset belongs should be revalued. [IAS ]
Revalued assets are depreciated in the same way as under the cost model (see below).
If a revaluation results in an increase in value, it should be credited to equity under the heading "revaluation surplus" unless it represents the reversal of a revaluation decrease of the same asset previously recognized as an expense, in which case it should be recognized as income. [IAS ]
A decrease arising as a result of a revaluation should be recognized as an expense to the extent that it exceeds any amount previously credited to the revaluation surplus relating to the same asset. [IAS ]
When a revalued asset is disposed of, any revaluation surplus may be transferred directly to retained earnings, or it may be left in equity under the heading revaluation surplus. The transfer to retained earnings should not be made through the income statement (that is, no "recycling" through profit or loss). [IAS ]
Depreciation (Cost and Revaluation Models)
For all depreciable assets:
The depreciable amount (cost less prior depreciation, impairment, and residual value) should be allocated on a systematic basis over the asset's useful life [IAS ].
The residual value and the useful life of an asset should be reviewed at least at each financial year-end and, if expectations differ from previous estimates, any change is accounted for prospectively as a change in estimate under IAS 8. [IAS ]
The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the enterprise [IAS ];
The depreciation method should be reviewed at least annually and, if the pattern of consumption of benefits has changed, the depreciation method should be changed prospectively as a change in estimate under IAS 8. [IAS ]
Depreciation should be charged to the income statement, unless it is included in the carrying amount of another asset [IAS ].
Depreciation begins when the asset is available for use and continues until the asset is derecognized, even if it is idle.
Recoverability of the Carrying Amount
IAS 36 requires impairment testing and, if necessary, recognition for property, plant, and equipment.
Any claim for compensation from third parties for impairment is included in profit or loss when the claim becomes receivable. [IAS ]
Derecogniton (Retirements and Disposals)
An asset should be removed from the balance sheet on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. The gain or loss on disposal is the difference between the proceeds and the carrying amount and should be recognized in the income statement. [IAS -71]
Disclosure
For each class of property, plant, and equipment, disclose: [IAS ]
basis for measuring carrying amount;
depreciation method(s) used;
useful lives or depreciation rates;
gross carrying amount and accumulated depreciation and impairment losses;
reconciliation of the carrying amount at the beginning and the end of the period, showing:
additions;
disposals;
acquisitions through business combinations;
revaluation increases;
impairment losses;
reversals of impairment losses;
depreciation;
net foreign exchange differences on translation;
other movements.
Also disclose: [IAS ]
restrictions on title;
expenditures to construct property, plant, and equipment during the period;
commitments to acquire property, plant, and equipment.
compensation from third parties for items of property, plant, and equipment that were impaired, lost or given up that is included in profit or loss.
If property, plant, and equipment is stated at revalued amounts, certain additional disclosures are required: [IAS ]
the effective date of the revaluation;
whether an independent valuer was involved;
the methods and significant assumptions used in estimating fair values;
the extent to which fair values were determined directly by reference to observable prices in an active market or recent market transactions on arm's length terms or were estimated using other valuation techniques;
the carrying amount that would have been recognized had the assets been carried under the cost model;
the revaluation surplus, including changes during the period and distribution restrictions.
Vocabulary
property, plant, and equipment 不动产，厂场（工厂）和设备
fair value 公允价值 carrying amount 账面价值
depreciation 折旧 impairment loss 减值损失
recoverable amount 可回收金额 residual value 残值
useful life 使用寿命 write off 冲销
self-constructed assets 自建资产 government grants 政府捐赠
cost model 成本模式 revaluation model 重估模式
revaluation profits and losses 重估损益
depreciation method 折旧方法 depreciation expense 折旧费用
depreciation rate 折旧率 accelerated depreciation 加速折旧
sum-of-the-years’ digits method 年数总和法
double-declining balance method 双倍余额递减法
straight-line depreciation method 直线法
reconciliation 调整值
IAS17＊ Leases
Objective of IAS 17
The objective of IAS 17 (Revised 1997) is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosures to apply in relation to finance and operating leases.
Scope
IAS 17 applies to all leases other than lease agreements for minerals, oil, natural gas, and similar regenerative resources and licensing agreements for films, videos, plays, manuscripts, patents, copyrights, and similar items. [IAS ]
However, IAS 17 does not apply as the basis of measurement for the following leased assets:
Property held by lessees that is accounted for as investment property for which the lessee uses the fair value model set out in IAS 40.
Investment property provided by lessors under operating leases (see IAS 40).
Biological assets held by lessees under finance leases (see IAS 41).
Biological assets provided by lessors under operating leases (see IAS 41).
Classification of Leases
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership. All other leases are classified as operating leases. Classification is made at the inception of the lease. [IAS ]
Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form. Situations that would normally lead to a lease being classified as a finance lease include the following: [IAS ]
the lease transfers ownership of the asset to the lessee by the end of the lease term;
the lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than fair value at the date the option becomes exercisable that, at the inception of the lease, it is reasonably certain that the option will be exercised;
the lease term is for the major part of the economic life of the asset, even if title is not transferred;
at the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; and
the lease assets are of a specialised nature such that only the lessee can use them without major modifications being made.
Other situations that might also lead to classification as a finance lease are: [IAS ]
If the lessee is entitled to cancel the lease, the lessor's losses associated with the cancellation are borne by the lessee;
gains or losses from fluctuations in the fair value of the residual fall to the lessee (for example, by means of a rebate of lease payments); and
the lessee has the ability to continue to lease for a secondary period at a rent that is substantially lower than market rent.
In classifying a lease of land and buildings, land and buildings elements would normally be separately. The minimum lease payments are allocated between the land and buildings elements in proportion to their relative fair values. The land element is normally classified as an operating lease unless title passes to the lessee at the end of the lease term. The buildings element is classified as an operating or finance lease by applying the classification criteria in IAS 17. [IAS ] However, separate measurement of the land and buildings elements is not required if the lessee's interest in both land and buildings is classified as an investment property in accordance with IAS 40 and the fair value model is adopted. [IAS ]
Accounting by Lessees
The following principles should be applied in the financial statements of lessees:
at commencement of the lease term, finance leases should be recorded as an asset and a liability at the lower of the fair value of the asset and the present value of the minimum lease payments (discounted at the interest rate implicit in the lease, if practicable, or else at the enterprise's incremental borrowing rate); [IAS ]
finance lease payments should be apportioned between the finance charge and the reduction of the outstanding liability (the finance charge to be allocated so as to produce a constant periodic rate of interest on the remaining balance of the liability); [IAS ]
the depreciation policy for assets held under finance leases should be consistent with that for owned assets. If there is no reasonable certainty that the lessee will obtain ownership at the end of the lease - the asset should be depreciated over the shorter of the lease term or the life of the asset; [IAS ] and
for operating leases, the lease payments should be recognized as an expense in the income statement over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern of the user's benefit. [IAS ]
Incentives for the agreement of a new or renewed operating lease should be recognized by the lessee as a reduction of the rental expense over the lease term, irrespective of the incentive's nature or form, or the timing of payments. [SIC 15]
Accounting by Lessors
The following principles should be applied in the financial statements of lessors:
at commencement of the lease term, the lessor should record a finance lease in the balance sheet as a receivable, at an amount equal to the net investment in the lease; [IAS ]
the lessor should recognize finance income based on a pattern reflecting a constant periodic rate of return on the lessor's net investment outstanding in respect of the finance lease; [IAS ] and
assets held for operating leases should be presented in the balance sheet of the lessor according to the nature of the asset. [IAS ] Lease income should be recognized over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern in which use benefit is derived from the leased asset is diminished. [IAS ]
Incentives for the agreement of a new or renewed operating lease should be recognized by the lessor as a reduction of the rental income over the lease term, irrespective of the incentive's nature or form, or the timing of payments. [SIC 15]
Manufacturers or dealer lessors should include selling profit or loss in the same period as they would for an outright sale. If artificially low rates of interest are charged, selling profit should be restricted to that which would apply if a commercial rate of interest were charged. [IAS ]
Under the 2003 revisions to IAS 17, initial direct and incremental costs incurred by lessors in negotiating leases must be recognized over the lease term. They may no longer be charged to expense when incurred. This treatment does not apply to manufacturer or dealer lessors where such cost recognition is as an expense when the selling profit is recognized.
Sale and Leaseback Transactions
For a sale and leaseback transaction that results in a finance lease, any excess of proceeds over the carrying amount is deferred and amortised over the lease term. [IAS ]
For a transaction that results in an operating lease: [IAS ]
if the transaction is clearly carried out at fair value - the profit or loss should be recognized immediately;
if the sale price is below fair value - profit or loss should be recognized immediately, except if a loss is compensated for by future rentals at below market price, the loss it should be amortised over the period of use;
if the sale price is above fair value - the excess over fair value should be deferred and amortised over the period of use; and
if the fair value at the time of the transaction is less than the carrying amount - a loss equal to the difference should be recognized immediately. [IAS ]
Disclosure: Lessees - Finance Lease [IAS ]
carrying amount of asset;
reconciliation between total minimum lease payments and their present value;
amounts of minimum lease payments at balance sheet date and the present value thereof, for:
the next year;
years 2 through 5 combined;
beyond five years;
contingent rent recognized as an expense;
total future minimum sublease income under noncancellable subleases; and
general description of significant leasing arrangements, including contingent rent provisions, renewal or purchase options, and restrictions imposed on dividends, borrowings, or further leasing.
Disclosure: Lessees - Operating Lease [IAS ]
amounts of minimum lease payments at balance sheet date under noncancellable operating leases for:
the next year;
years 2 through 5 combined;
beyond five years;
total future minimum sublease income under noncancellable subleases;
lease and sublease payments recognized in income for the period;
contingent rent recognized as an expense; and
general description of significant leasing arrangements, including contingent rent provisions, renewal or purchase options, and restrictions imposed on dividends, borrowings, or further leasing
Disclosure: Lessors - Finance Lease [IAS ]
reconciliation between gross investment in the lease and the present value of minimum lease payments;
gross investment and present value of minimum lease payments receivable for:
the next year;
years 2 through 5 combined;
beyond five years;
unearned finance income;
unguaranteed residual values;
accumulated allowance for uncollectible lease payments receivable;
contingent rent recognized in income; and
general description of significant leasing arrangements.
Disclosure: Lessors - Operating Lease [IAS ]
amounts of minimum lease payments at balance sheet date under noncancellable operating leases in the aggregate and for:
the next year;
years 2 through 5 combined;
beyond five years;
contingent rent recognized as in income; and
general description of significant leasing arrangements.
Vocabulary
lease 租赁 finance lease 融资租赁
operating lease 经营租赁 lessee 承租人
lessor 出租人
minimum lease payment 最低租赁付款额 lease term 租赁期
substance over form 实质重于形式 inception of the lease 起租日
non-cancellable lease 不可撤销租赁
Guaranteed residual value 已担保余值
Unguaranteed residual value 未担保余值
Gross investment in the lease 租赁投资总额
Unearned finance income 未赚取的融资收益
Net investment in the lease 租赁投资净额
interest rate implicit in the lease 租赁中的内含利率
lessee's incremental borrowing rate of interest 承租人的增量借款利率
Contingent rent 或有租金
IAS10 Events After the Balance Sheet Date
Introduction
IAS 10, Events After the Balance Sheet Date, replaces those parts of IAS 10, Contingencies and Events Occurring After the Balance Sheet Date, that have not already been superseded by IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The new Standard makes the following limited changes:
(a) new disclosures about the date of the authorisation of the financial statements for issue;
(b) deletion of the option to recognize a liability for dividends that are stated to be in respect of the period covered by the financial statements and are proposed or declared after the balance sheet date but before the financial statements are authorised for issue. An enterprise may give the required disclosure of such dividends either on the face of the balance sheet as a separate component of equity or in the notes to the financial statements;
(c) confirmation that an enterprise should update disclosures that relate to conditions that existed at the balance sheet date in the light of any new information that it receives after the balance sheet date about those conditions;
(d) deletion of the requirement to adjust the financial statements where an event after the balance sheet date indicates that the going concern assumption is not appropriate for part of the enterprise. Under IAS 1, Presentation of Financial Statements, the going concern assumption applies to an enterprise as a whole;
(e) certain refinements to the examples of adjusting and non-adjusting events; and
(f) various drafting improvements.
The standards, which have been set in bold italic type, should be read in the context of the background material and implementation guidance in this Standard, and in the context of the Preface to International Accounting Standards. International Accounting Standards are not intended to apply to immaterial items (see paragraph 12 of the Preface).
Objective
The objective of this Standard is to prescribe:
(a) when an enterprise should adjust its financial statements for events after the balance sheet date; and
(b) the disclosures that an enterprise should give about the date when the financial statements were authorised for issue and about events after the balance sheet date.
The Standard also requires that an enterprise should not prepare its financial statements on a going concern basis if events after the balance sheet date indicate that the going concern assumption is not appropriate.
Scope
1. This Standard should be applied in the accounting for, and disclosure of, events after the balance sheet date.
Definitions
2. The following terms are used in this Standard with the meanings specified:
Events after the balance sheet date are those events, both favourable and unfavourable, that occur between the balance sheet date and the date when the financial statements are authorised for issue. Two types of events can be identified:
(a) those that provide evidence of conditions that existed at the balance sheet date (adjusting events after the balance sheet date); and
(b) those that are indicative of conditions that arose after the balance sheet date (non-adjusting events after the balance sheet date).
3. The process involved in authorising the financial statements for issue will vary depending upon the management structure, statutory requirements and procedures followed in preparing and finalising the financial statements.
4. In some cases, an enterprise is required to submit its financial statements to its shareholders for approval after the financial statements have already been issued. In such cases, the financial statements are authorised for issue on the date of original issuance, not on the date when shareholders approve the financial statements.
Example
The management of an enterprise completes draft financial statements for the year to 31 December 20X1 on 28 February 20X2. On 18 March 20X2, the board of directors reviews the financial statements and authorises them for issue. The enterprise announces its profit and selected other financial information on 19 March 20X2. The financial statements are made available to shareholders and others on 1 April 20X2. The annual meeting of shareholders approves the financial statements on 15 May 20X2 and the approved financial statements are then filed with a regulatory body on 17 May 20X2.
The financial statements are authorised for issue on 18 March 20X2 (date of Board authorisation for issue).
5. In some cases, the management of an enterprise is required to issue its financial statements to a supervisory board (made up solely of non-executives) for approval. In such cases, the financial statements are authorised for issue when the management authorises them for issue to the supervisory board.
Example
On 18 March 20X2, the management of an enterprise authorises financial statements for issue to its supervisory board. The supervisory board is made up solely of non-executives and may include representatives of employees and other outside interests. The supervisory board approves the financial statements on 26 March 20X2. The financial statements are made available to shareholders and others on 1 April 20X2. The annual meeting of shareholders receives the financial statements on 15 May 20X2 and the financial statements are then filed with a regulatory body on 17 May 20X2.
The financial statements are authorised for issue on 18 March 20X2 (date of management authorisation for issue to the supervisory board).
6. Events after the balance sheet date include all events up to the date when the financial statements are authorised for issue, even if those events occur after the publication of a profit announcement or of other selected financial information.
Recognition and Measurement
Adjusting Events After the Balance Sheet Date
7. An enterprise should adjust the amounts recognized inits financial statements to reflect adjusting events after the balance sheet date.
8. The following are examples of adjusting events after the balance sheet date that require an enterprise to adjust the amounts recognized in its financial statements, or to recognize items that were not previously recognized:
(a) the resolution after the balance sheet date of a court case which, because it confirms that an enterprise already had a present obligation at the balance sheet date, requires the enterprise to adjust a provision already recognized, or to recognize a provision instead of merely disclosing a contingent liability;
(b) the receipt of information after the balance sheet date indicating that an asset was impaired at the balance sheet date, or that the amount of a previously recognized impairment loss for that asset needs to be adjusted. For example:
(i) the bankruptcy of a customer which occurs after the balance sheet date usually confirms that a loss already existed at the balance sheet date on a trade receivable account and that the enterprise needs to adjust the carrying amount of the trade receivable account; and
(ii) the sale of inventories after the balance sheet date may give evidence about their net realisable value at the balance sheet date;
(c) the determination after the balance sheet date of the cost of assets purchased, or the proceeds from assets sold, before the balance sheet date;
(d) the determination after the balance sheet date of the amount of profit sharing or bonus payments, if the enterprise had a present legal or constructive obligation at the balance sheet date to make such payments as a result of events before that date (see IAS 19, Employee Benefits); and
(e) the discovery of fraud or errors that show that the financial statements were incorrect.
Non-Adjusting Events After the Balance Sheet Date
9. An enterprise should not adjust the amounts recognized in its financial statements to reflect non-adjusting events after the balance sheet date.
10. An example of a non-adjusting event after the balance sheet date is a decline in market value of investments between the balance sheet date and the date when the financial statements are authorised for issue. The fall in market value does not normally relate to the condition of the investments at the balance sheet date, but reflects circumstances that have arisen in the following period. Therefore, an enterprise does not adjust the amounts recognized in its financial statements for the investments. Similarly, the enterprise does not update the amounts disclosed for the investments as at the balance sheet date, although it may need to give additional disclosure under paragraph 20.
Dividends
11. If dividends to holders of equity instruments (as defined in IAS 32, Financial Instruments: Disclosure and Presentation) are proposed or declared after the balance sheet date, an enterprise should not recognize those dividends as a liability at the balance sheet date.
12. IAS 1, Presentation of Financial Statements, requires an enterprise to disclose the amount of dividends that were proposed or declared after the balance sheet date but before the financial statements were authorised for issue. IAS 1 permits an enterprise to make this disclosure either:
(a) on the face of the balance sheet as a separate component of equity; or
(b) in the notes to the financial statements.
Going Concern
13. An enterprise should not prepare its financial statements on a going concern basis if management determines after the balance sheet date either that it intends to liquidate the enterprise or to cease trading, or that it has no realistic alternative but to do so.
14. Deterioration in operating results and financial position after the balance sheet date may indicate a need to consider whether the going concern assumption is still appropriate. If the going concern assumption is no longer appropriate, the effect is so pervasive that this Standard requires a fundamental change in the basis of accounting, rather than an adjustment to the amounts recognized within the original basis of accounting.
15. IAS 1, Presentation of Financial Statements, requires certain disclosures if:
(a) the financial statements are not prepared on a going concern basis; or
(b) management is aware of material uncertainties related to events or conditions that may cast significant doubt upon the enterprise's ability to continue as a going concern. The events or conditions requiring disclosure may arise after the balance sheet date.
Disclosure
Date of Authorisation for Issue
16. An enterprise should disclose the date when the financial statements were authorised for issue and who gave that authorisation. If the enterprise's owners or others have the power to amend the financial statements after issuance, the enterprise should disclose that fact.
17. It is important for users to know when the financial statements were authorised for issue, as the financial statements do not reflect events after this date.
Updating Disclosure about Conditions at the Balance Sheet Date
18. If an enterprise receives information after the balance sheet date about conditions that existed at the balance sheet date, the enterprise should update disclosures that relate to these conditions, in the light of the new information.
19. In some cases, an enterprise needs to update the disclosures in its financial statements to reflect information received after the balance sheet date, even when the information does not affect the amounts that the enterprise recognizes in its financial statements. One example of the need to update disclosures is when evidence becomes available after the balance sheet date about a contingent liability that existed at the balance sheet date. In addition to considering whether it should now recognize a provision under IAS 37, Provisions, Contingent Liabilities and Contingent Assets, an enterprise updates its disclosures about the contingent liability in the light of that evidence.
Non-Adjusting Events After the Balance Sheet Date
20. Where non-adjusting events after the balance sheet date are of such importance that non-disclosure would affect the ability of the users of the financial statements to make proper evaluations and decisions, an enterprise should disclose the following information for each significant category of non-adjusting event after the balance sheet date:
(a) the nature of the event; and
(b) an estimate of its financial effect, or a statement that such an estimate cannot be made.
21. The following are examples of non-adjusting events after the balance sheet date that may be of such importance that non-disclosure would affect the ability of the users of the financial statements to make proper evaluations and decisions:
(a) a major business combination after the balance sheet date (IAS 22, Business Combinations, requires specific disclosures in such cases) or disposing of a major subsidiary;
(b) announcing a plan to discontinue an operation, disposing of assets or settling liabilities attributable to a discontinuing operation or entering into binding agreements to sell such assets or settle such liabilities (see IAS 35, Discontinuing Operations);
(c) major purchases and disposals of assets, or expropriation of major assets by government;
(d) the destruction of a major production plant by a fire after the balance sheet date;
(e) announcing, or commencing the implementation of, a major restructuring (see IAS 37, Provisions, Contingent Liabilities and Contingent Assets);
(f) major ordinary share transactions and potential ordinary share transactions after the balance sheet date (IAS 33, Earnings Per Share, encourages an enterprise to disclose a description of such transactions, other than capitalisation issues and share splits);
(g) abnormally large changes after the balance sheet date in asset prices or foreign exchange rates;
(h) changes in tax rates or tax laws enacted or announced after the balance sheet date that have a significant effect on current and deferred tax assets and liabilities (see IAS 12, Income Taxes);
(i) entering into significant commitments or contingent liabilities, for example, by issuing significant guarantees; and
(j) commencing major litigation arising solely out of events that occurred after the balance sheet date.
Effective Date
22. This International Accounting Standard becomes operative for annual financial statements covering periods beginning on or after 1 January 2000.
23. In 1998, IAS 37, Provisions, Contingent Liabilities and Contingent Assets, superseded the parts of IAS 10, Contingencies and Events Occurring After the Balance Sheet Date, that dealt with contingencies. This Standard supersedes the rest of that Standard.
Vocabulary
events after the balance sheet date 资产负债表日后事项
conditions existing at the balance sheet date 资产负债表日已经存在的事项
adjusting events 调整事项
nonadjusting events 非调整事项
Review
1. Identify the adjusting events and nonadjusting events.
2. The date the financial statements issued.
IAS14 Segment Reporting
Objective
The objective of this Standard is to establish principles for reporting financial information by segment—information about the different types of products and services an enterprise produces and the different geographical areas in which it operates—to help users of financial statements:
(a) better understand the enterprise's past performance;
(b) better assess the enterprise's risks and returns; and
(c) make more informed judgements about the enterprise as a whole.
Scope
1. This Standard should be applied in complete sets of published financial statements that comply with International Accounting Standards.
2. A complete set of financial statements includes a balance sheet, income statement, cash flow statement, a statement showing changes in equity, and notes, as provided in IAS 1, Presentation of Financial Statements.
3. This Standard should be applied by enterprises whose equity or debt securities are publicly traded and by enterprises that are in the process of issuing equity or debt securities in public securities markets.
4. If an enterprise whose securities are not publicly traded prepares financial statements that comply with International Accounting Standards, that enterprise is encouraged to disclose financial information by segment voluntarily.
5. If an enterprise whose securities are not publicly traded chooses to disclose segment information voluntarily in financial statements that comply with International Accounting Standards, that enterprise should comply fully with the requirements of this Standard.
6. If a single financial report contains both consolidated financial statements of an enterprise whose securities are publicly traded and the separate financial statements of the parent or one or more subsidiaries, segment information need be presented only on the basis of the consolidated financial statements. If a subsidiary is itself an enterprise whose securities are publicly traded, it will present segment information in its own separate financial report.
7. Similarly, if a single financial report contains both the financial statements of an enterprise whose securities are publicly traded and the separate financial statements of an equity method associate or joint venture in which the enterprise has a financial interest, segment information need be presented only on the basis of the enterprise's financial statements. If the equity method associate or joint venture is itself an enterprise whose securities are publicly traded, it will present segment information in its own separate financial report.
Definitions
Definitions from Other International Accounting Standards
8. The following terms are used in this Standard with the meanings specified in IAS 7, Cash Flow Statements; IAS 8, Net Profit or Loss for the period, Fundamental Errors and Changes in Accounting Policies; and IAS 18, Revenue:
Operating activities are the principal revenue-producing activities of an enterprise and other activities that are not investing or financing activities.
Accounting policies are the specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting financial statements.
Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increases in equity, other than increases relating to contributions from equity participants
Definitions of Business Segment and Geographical Segment
9. The terms business segment and geographical segment are used in this Standard with the following meanings:
A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. Factors that should be considered in determining whether products and services are related include:
(a) the nature of the products or services;
(b) the nature of the production processes;
(c) the type or class of customer for the products or services;
(d) the methods used to distribute the products or provide the services; and
(e) if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.
A geographical segment is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments. Factors that should be considered in identifying geographical segments include:
(a) similarity of economic and political conditions;
(b) relationships between operations in different geographical areas;
(c) proximity of operations;
(d) special risks associated with operations in a particular area;
(e) exchange control regulations; and
(f) the underlying currency risks.
A reportable segment is a business segment or a geographical segment identified based on the foregoing definitions for which segment information is required to be disclosed by this Standard.
10. The factors in paragraph 9 for identifying business segments and geographical segments are not listed in any particular order.
11. A single business segment does not include products and services with significantly differing risks and returns. While there may be dissimilarities with respect to one or several of the factors in the definition of a business segment, the products and services included in a single business segment are expected to be similar with respect to a majority of the factors.
12. Similarly, a geographical segment does not include operations in economic environments with significantly differing risks and returns. A geographical segment may be a single country, a group of two or more countries, or a region within a country.
13. The predominant sources of risks affect how most enterprises are organised and managed. Therefore, paragraph 27 of this Standard provides that an enterprise's organisational structure and its internal financial reporting system is the basis for identifying its segments. The risks and returns of an enterprise are influenced both by the geographical location of its operations (where its products are produced or where its service delivery activities are based) and also by the location of its markets (where its products are sold or services are rendered). The definition allows geographical segments to be based on either:
(a) the location of an enterprise's production or service facilities and other assets; or
(b) the location of its markets and customers.
14. An enterprise's organisational and internal reporting structure will normally provide evidence of whether its dominant source of geographical risks results from the location of its assets (the origin of its sales) or the location of its customers (the destination of its sales). Accordingly, an enterprise looks to this structure to determine whether its geographical segments should be based on the location of its assets or on the location of its customers.
15. Determining the composition of a business or geographical segment involves a certain amount of judgement. In making that judgement, enterprise management takes into account the objective of reporting financial information by segment as set forth in this Standard and the qualitative characteristics of financial statements as identified in the IASC Framework for the Preparation and Presentation of Financial Statements. Those qualitative characteristics include the relevance, reliability, and comparability over time of financial information that is reported about an enterprise's different groups of products and services and about its operations in particular geographical areas, and the usefulness of that information for assessing the risks and returns of the enterprise as a whole.
Definitions of Segment Revenue, Expense, Result, Assets, and Liabilities
16. The following additional terms are used in this Standard with the meanings specified:
Segment revenue is revenue reported in the enterprise's income statement that is directly attributable to a segment and the relevant portion of enterprise revenue that can be allocated on a reasonable basis to a segment, whether from sales to external customers or from transactions with other segments of the same enterprise. Segment revenue does not include:
(a) extraordinary items;
(b) interest or dividend income, including interest earned on advances or loans to other segments, unless the segment's operations are primarily of a financial nature; or
(c) gains on sales of investments or gains on extinguishment of debt unless the segment's operations are primarily of a financial nature.
Segment revenue includes an enterprise's share of profits or losses of associates, joint ventures, or other investments accounted for under the equity method only if those items are included in consolidated or total enterprise revenue.
Segment revenue includes a joint venturer's share of the revenue of a jointly controlled entity that is accounted for by proportionate consolidation in accordance with IAS 31, Financial Reporting of Interests in Joint Ventures.
Segment expense is expense resulting from the operating activities of a segment that is directly attributable to the segment and the relevant portion of an expense that can be allocated on a reasonable basis to the segment, including expenses relating to sales to external customers and expenses relating to transactions with other segments of the same enterprise. Segment expense does not include:
(a) extraordinary items;
(b) interest, including interest incurred on advances or loans from other segments, unless the segment's operations are primarily of a financial nature;
(c) losses on sales of investments or losses on extinguishment of debt unless the segment's operations are primarily of a financial nature;
(d) an enterprise's share of losses of associates, joint ventures, or other investments accounted for under the equity method;
(e) income tax expense; or
(f) general administrative expenses, head-office expenses, and other expenses that arise at the enterprise level and relate to the enterprise as a whole. However, costs are sometimes incurred at the enterprise level on behalf of a segment. Such costs are segment expenses if they relate to the segment's operating activities and they can be directly attributed or allocated to the segment on a reasonable basis.
Segment expense includes a joint venturer's share of the expenses of a jointly controlled entity that is accounted for by proportionate consolidation in accordance with IAS 31.
For a segment's operations that are primarily of a financial nature, interest income and interest expense may be reported as a single net amount for segment reporting purposes only if those items are netted in the consolidated or enterprise financial statements.
Segment result is segment revenue less segment expense. Segment result is determined before any adjustments for minority interest.
Segment assets are those operating assets that are employed by a segment in its operating activities and that either are directly attributable to the segment or can be allocated to the segment on a reasonable basis.
If a segment's segment result includes interest or dividend income, its segment assets include the related receivables, loans, investments, or other income-producing assets.
Segment assets do not include income tax assets.
Segment assets include investments accounted for under the equity method only if the profit or loss from such investments is included in segment revenue. Segment assets include a joint venturer's share of the operating assets of a jointly controlled entity that is accounted for by proportionate consolidation in accordance with IAS 31.
Segment assets are determined after deducting related allowances that are reported as direct offsets in the enterprise's balance sheet.
Segment liabilities are those operating liabilities that result from the operating activities of a segment and that either are directly attributable to the segment or can be allocated to the segment on a reasonable basis.
If a segment's segment result includes interest expense, its segment liabilities include the related interest-bearing liabilities.
Segment liabilities include a joint venturer's share of the liabilities of a jointly controlled entity that is accounted for by proportionate consolidation in accordance with IAS 31.
Segment liabilities do not include income tax liabilities.
Segment accounting policies are the accounting policies adopted for preparing and presenting the financial statements of the consolidated group or enterprise as well as those accounting policies that relate specifically to segment reporting.
17. The definitions of segment revenue, segment expense, segment assets, and segment liabilities include amounts of such items that are directly attributable to a segment and amounts of such items that can be allocated to a segment on a reasonable basis. An enterprise looks to its internal financial reporting system as the starting point for identifying those items that can be directly attributed, or reasonably allocated, to segments. That is, there is a presumption that amounts that have been identified with segments for internal financial reporting purposes are directly attributable or reasonably allocable to segments for the purpose of measuring the segment revenue, segment expense, segment assets, and segment liabilities of reportable segments.
18. In some cases, however, a revenue, expense, asset, or liability may have been allocated to segments for internal financial reporting purposes on a basis that is understood by enterprise management but that could be deemed subjective, arbitrary, or difficult to understand by external users of financial statements. Such an allocation would not constitute a reasonable basis under the definitions of segment revenue, segment expense, segment assets, and segment liabilities in this Standard. Conversely, an enterprise may choose not to allocate some item of revenue, expense, asset, or liability for internal financial reporting purposes, even though a reasonable basis for doing so exists. Such an item is allocated pursuant to the definitions of segment revenue, segment expense, segment assets, and segment liabilities in this Standard.
19. Examples of segment assets include current assets that are used in the operating activities of the segment, property, plant, and equipment, assets that are the subject of finance leases (IAS 17, Leases), and intangible assets. If a particular item of depreciation or amortisation is included in segment expense, the related asset is also included in segment assets. Segment assets do not include assets used for general enterprise or head-office purposes. Segment assets include operating assets shared by two or more segments if a reasonable basis for allocation exists. Segment assets include goodwill that is directly attributable to a segment or that can be allocated to a segment on a reasonable basis, and segment expense includes related amortisation of goodwill.
20. Examples of segment liabilities include trade and other payables, accrued liabilities, customer advances, product warranty provisions, and other claims relating to the provision of goods and services. Segment liabilities do not include borrowings, liabilities related to assets that are the subject of finance leases (IAS 17), and other liabilities that are incurred for financing rather than operating purposes. If interest expense is included in segment result, the related interest-bearing liability is included in segment liabilities. The liabilities of segments whose operations are not primarily of a financial nature do not include borrowings and similar liabilities because segment result represents an operating, rather than a net-of-financing, profit or loss. Further, because debt is often issued at the head-office level on an enterprise-wide basis, it is often not possible to directly attribute, or reasonably allocate, the interest-bearing liability to the segment.
21. Measurements of segment assets and liabilities include adjustments to the prior carrying amounts of the identifiable segment assets and segment liabilities of a company acquired in a business combination accounted for as a purchase, even if those adjustments are made only for the purpose of preparing consolidated financial statements and are not recorded in either the parent's or the subsidiary's separate financial statements. Similarly, if property, plant, and equipment has been revalued subsequent to acquisition in accordance with the alternative accounting treatment allowed by IAS 16, then measurements of segment assets reflect those revaluations.
22. Some guidance for cost allocation can be found in other International Accounting Standards. For example, paragraphs 8-16 of IAS 2, Inventories, provide guidance for attributing and allocating costs to inventories, and paragraphs 16-21 of IAS 11, Construction Contracts, provide guidance for attributing and allocating costs to contracts. That guidance may be useful in attributing or allocating costs to segments.
23. IAS 7, Cash Flow Statements, provides guidance as to whether bank overdrafts should be included as a component of cash or should be reported as borrowings.
24. Segment revenue, segment expense, segment assets, and segment liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and transactions are between group enterprises within a single segment.
25. While the accounting policies used in preparing and presenting the financial statements of the enterprise as a whole are also the fundamental segment accounting policies, segment accounting policies include, in addition, policies that relate specifically to segment reporting, such as identification of segments, method of pricing inter-segment transfers, and basis for allocating revenues and expenses to segments.
Identifying Reportable Segments
Primary and Secondary Segment Reporting Formats
26. The dominant source and nature of an enterprise's risks and returns should govern whether its primary segment reporting format will be business segments or geographical segments. If the enterprise's risks and rates of return are affected predominantly by differences in the products and services it produces, its primary format for reporting segment information should be business segments, with secondary information reported geographically. Similarly, if the enterprise's risks and rates of return are affected predominantly by the fact that it operates in different countries or other geographical areas, its primary format for reporting segment information should be geographical segments, with secondary information reported for groups of related products and services.
27. An enterprise's internal organisational and management structure and its system of internal financial reporting to the board of directors and the chief executive officer should normally be the basis for identifying the predominant source and nature of risks and differing rates of return facing the enterprise and, therefore, for determining which reporting format is primary and which is secondary, except as provided in subparagraphs (a) and (b) below:
(a) if an enterprise's risks and rates of return are strongly affected both by differences in the products and services it produces and by differences in the geographical areas in which it operates, as evidenced by a "matrix approach" to managing the company and to reporting internally to the board of directors and the chief executive officer, then the enterprise should use business segments as its primary segment reporting format and geographical segments as its secondary reporting format; and
(b) if an enterprise's internal organisational and management structure and its system of internal financial reporting to the board of directors and the chief executive officer are based neither on individual products or services or on groups of related products/services nor on geography, the directors and management of the enterprise should determine whether the enterprise's risks and returns are related more to the products and services it produces or more to the geographical areas in which it operates and, as a consequence, should choose either business segments or geographical segments as the enterprise's primary segment reporting format, with the other as its secondary reporting format.
28. For most enterprises, the predominant source of risks and returns determines how the enterprise is organised and managed. An enterprise's organisational and management structure and its internal financial reporting system normally provide the best evidence of the enterprise's predominant source of risks and returns for purpose of its segment reporting. Therefore, except in rare circumstances, an enterprise will report segment information in its financial statements on the same basis as it reports internally to top management. Its predominant source of risks and returns becomes its primary segment reporting format. Its secondary source of risks and returns becomes its secondary segment reporting format.
29. A "matrix presentation"—both business segments and geographical segments as primary segment reporting formats with full segment disclosures on each basis—often will provide useful information if an enterprise's risks and rates of return are strongly affected both by differences in the products and services it produces and by differences in the geographical areas in which it operates. This Standard does not require, but does not prohibit, a "matrix presentation".
30. In some cases, an enterprise's organisation and internal reporting may have developed along lines unrelated either to differences in the types of products and services they produce or to the geographical areas in which they operate. For instance, internal reporting may be organised solely by legal entity, resulting in internal segments composed of groups of unrelated products and services. In those unusual cases, the internally reported segment data will not meet the objective of this Standard. Accordingly, paragraph 27(b) requires the directors and management of the enterprise to determine whether the enterprise's risks and returns are more product/service driven or geographically driven and to choose either business segments or geographical segments as the enterprise's primary basis of segment reporting. The objective is to achieve a reasonable degree of comparability with other enterprises, enhance understandability of the resulting information, and meet the expressed needs of investors, creditors, and others for information about product/service-related and geographically-related risks and returns.
Business and Geographical Segments
31. An enterprise's business and geographical segments for external reporting purposes should be those organisational units for which information is reported to the board of directors and to the chief executive officer for the purpose of evaluating the unit's past performance and for making decisions about future allocations of resources, except as provided in paragraph 32.
32. If an enterprise's internal organisational and management structure and its system of internal financial reporting to the board of directors and the chief executive officer are based neither on individual products or services or on groups of related products/services nor on geography, paragraph 27(b) requires that the directors and management of the enterprise should choose either business segments or geographical segments as the enterprise's primary segment reporting format based on their assessment of which reflects the primary source of the enterprise's risks and returns, with the other its secondary reporting format. In that case, the directors and management of the enterprise must determine its business segments and geographical segments for external reporting purposes based on the factors in the definitions in paragraph 9 of this Standard, rather than on the basis of its system of internal financial reporting to the board of directors and chief executive officer, consistent with the following:
(a) if one or more of the segments reported internally to the directors and management is a business segment or a geographical segment based on the factors in the definitions in paragraph 9 but others are not, subparagraph (b) below should be applied only to those internal segments that do not meet the definitions in paragraph 9 (that is, an internally reported segment that meets the definition should not be further segmented);
(b) for those segments reported internally to the directors and management that do not satisfy the definitions in paragraph 9, management of the enterprise should look to the next lower level of internal segmentation that reports information along product and service lines or geographical lines, as appropriate under the definitions in paragraph 9; and
(c) if such an internally reported lower-level segment meets the definition of business segment or geographical segment based on the factors in paragraph 9, the criteria in paragraphs 34 and 35 for identifying reportable segments should be applied to that segment.
33. Under this Standard, most enterprises will identify their business and geographical segments as the organisational units for which information is reported to the board of directors (particularly the supervisory non-management directors, if any) and to the chief executive officer (the senior operating decision maker, which in some cases may be a group of several people) for the purpose of evaluating each unit's past performance and for making decisions about future allocations of resources. And even if an enterprise must apply paragraph 32 because its internal segments are not along product/service or geographical lines, it will look to the next lower level of internal segmentation that reports information along product and service lines or geographical lines rather than construct segments solely for external reporting purposes. This approach of looking to an enterprise's organisational and management structure and its internal financial reporting system to identify the enterprise's business and geographical segments for external reporting purposes is sometimes called the "management approach", and the organisational components for which information is reported internally are sometimes called "operating segments".
Reportable Segments
34. Two or more internally reported business segments or geographical segments that are substantially similar may be combined as a single business segment or geographical segment. Two or more business segments or geographical segments are substantially similar only if:
(a) they exhibit similar long-term financial performance; and
(b) they are similar in all of the factors in the appropriate definition in paragraph 9.
35. A business segment or geographical segment should be identified as a reportable segment if a majority of its revenue is earned from sales to external customers and:
(a) its revenue from sales to external customers and from transactions with other segments is 10 per cent or more of the total revenue, external and internal, of all segments; or
(b) its segment result, whether profit or loss, is 10 per cent or more of the combined result of all segments in profit or the combined result of all segments in loss, whichever is the greater in absolute amount; or
(c) its assets are 10 per cent or more of the total assets of all segments.
36. If an internally reported segment is below all of the thresholds of significance in paragraph 35:
(a) that segment may be designated as a reportable segment despite its size;
(b) if not designated as a reportable segment despite its size, that segment may be combined into a separately reportable segment with one or more other similar internally reported segment(s) that are also below all of the thresholds of significance in paragraph 35 (two or more business segments or geographical segments are similar if they share a majority of the factors in the appropriate definition in paragraph 9); and
(c) if that segment is not separately reported or combined, it should be included as an unallocated reconciling item.
37. If total external revenue attributable to reportable segments constitutes less than 75 per cent of the total consolidated or enterprise revenue, additional segments should be identified as reportable segments, even if they do not meet the 10 per cent thresholds in paragraph 35, until at least 75 per cent of total consolidated or enterprise revenue is included in reportable segments.
38. The 10 per cent thresholds in this Standard are not intended to be a guide for determining materiality for any aspect of financial reporting other than identifying reportable business and geographical segments.
39. By limiting reportable segments to those that earn a majority of their revenue from sales to external customers, this Standard does not require that the different stages of vertically integrated operations be identified as separate business segments. However, in some industries, current practice is to report certain vertically integrated activities as separate business segments even if they do not generate significant external sales revenue. For instance, many international oil companies report their upstream activities (exploration and production) and their downstream activities (refining and marketing) as separate business segments even if most or all of the upstream product (crude petroleum) is transferred internally to the enterprise's refining operation.
40. This Standard encourages, but does not require, the voluntary reporting of vertically integrated activities as separate segments, with appropriate description including disclosure of the basis of pricing inter-segment transfers as required by paragraph 75.
41. If an enterprise's internal reporting system treats vertically integrated activities as separate segments and the enterprise does not choose to report them externally as business segments, the selling segment should be combined into the buying segment(s) in identifying externally reportable business segments unless there is no reasonable basis for doing so, in which case the selling segment would be included as an unallocated reconciling item.
42. A segment identified as a reportable segment in the immediately preceding period because it satisfied the relevant 10 per cent thresholds should continue to be a reportable segment for the current period notwithstanding that its revenue, result, and assets all no longer exceed the 10 per cent thresholds, if the management of the enterprise judges the segment to be of continuing significance.
43. If a segment is identified as a reportable segment in the current period because it satisfies the relevant 10 per cent thresholds, prior period segment data that is presented for comparative purposes should be restated to reflect the newly reportable segment as a separate segment, even if that segment did not satisfy the 10 per cent thresholds in the prior period, unless it is impracticable to do so.
Segment Accounting Policies
44. Segment information should be prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the consolidated group or enterprise.
45. There is a presumption that the accounting policies that the directors and management of an enterprise have chosen to use, in preparing its consolidated or enterprise-wide financial statements, are those that the directors and management believe are the most appropriate for external reporting purposes. Since the purpose of segment information is to help users of financial statements better understand and make more informed judgements about the enterprise as a whole, this Standard requires the use, in preparing segment information, of the accounting policies that the directors and management have chosen. That does not mean, however, that the consolidated or enterprise accounting policies are to be applied to reportable segments as if the segments were separate stand-alone reporting entities. A detailed calculation done in applying a particular accounting policy at the enterprise-wide level may be allocated to segments if there is a reasonable basis for doing so. Pension calculations, for example, often are done for an enterprise as a whole, but the enterprise-wide figures may be allocated to segments based on salary and demographic data for the segments.
46. This Standard does not prohibit the disclosure of additional segment information that is prepared on a basis other than the accounting policies adopted for the consolidated or enterprise financial statements provided that (a) the information is reported internally to the board of directors and the chief executive officer for purposes of making decisions about allocating resources to the segment and assessing its performance and (b) the basis of measurement for this additional information is clearly described.
47. Assets that are jointly used by two or more segments should be allocated to segments if, and only if, their related revenues and expenses also are allocated to those segments.
48. The way in which asset, liability, revenue, and expense items are allocated to segments depends on such factors as the nature of those items, the activities conducted by the segment, and the relative autonomy of that segment. It is not possible or appropriate to specify a single basis of allocation that should be adopted by all enterprises. Nor is it appropriate to force allocation of enterprise asset, liability, revenue, and expense items that relate jointly to two or more segments, if the only basis for making those allocations is arbitrary or difficult to understand. At the same time, the definitions of segment revenue, segment expense, segment assets, and segment liabilities are interrelated, and the resulting allocations should be consistent. Therefore, jointly used assets are allocated to segments if, and only if, their related revenues and expenses also are allocated to those segments. For example, an asset is included in segment assets if, and only if, the related depreciation or amortisation is deducted in measuring segment result.
Disclosure
49. Paragraphs 50-67 specify the disclosures required for reportable segments for an enterprise's primary segment reporting format. Paragraphs 68-72 identify the disclosures required for an enterprise's secondary reporting format. Enterprises are encouraged to present all of the primary-segment disclosures identified in paragraphs 50-67 for each reportable secondary segment, although paragraphs 68-72 require considerably less disclosure on the secondary basis. Paragraphs 74-83 address several other segment disclosure matters. Appendix B to this Standard illustrates application of these disclosure standards.
Primary Reporting Format
50. The disclosure requirements in paragraphs 51-67 should be applied to each reportable segment based on an enterprise's primary reporting format.
51. An enterprise should disclose segment revenue for each reportable segment. Segment revenue from sales to external customers and segment revenue from transactions with other segments should be separately reported.
52. An enterprise should disclose segment result for each reportable segment.
53. If an enterprise can compute segment net profit or loss or some other measure of segment profitability other than segment result without arbitrary allocations, reporting of such amount(s) is encouraged in addition to segment result, appropriately described. If that measure is prepared on a basis other than the accounting policies adopted for the consolidated or enterprise financial statements, the enterprise will include in its financial statements a clear description of the basis of measurement.
54. An example of a measure of segment performance above segment result on the income statement is gross margin on sales. Examples of measures of segment performance below segment result on the income statement are profit or loss from ordinary activities (either before or after income taxes) and net profit or loss.
55. An enterprise should disclose the total carrying amount of segment assets for each reportable segment.
56. An enterprise should disclose segment liabilities for each reportable segment.
57. An enterprise should disclose the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (property, plant, equipment, and intangible assets) for each reportable segment. While this sometimes is referred to as capital additions or capital expenditure, the measurement required by this principle should be on an accrual basis, not a cash basis.
58. An enterprise should disclose the total amount of expense included in segment result for depreciation and amortisation of segment assets for the period for each reportable segment.
59. An enterprise is encouraged, but not required to disclose the nature and amount of any items of segment revenue and segment expense that are of such size, nature, or incidence that their disclosure is relevant to explain the performance of each reportable segment for the period.
60. IAS 8 requires that "when items of income or expense within profit or loss from ordinary activities are of such size, nature, or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items should be disclosed separately". IAS 8 offers a number of examples, including write-downs of inventories and property, plant, and equipment, provisions for restructurings, disposals of property, plant, and equipment and long-term investments, discontinued operations, litigation settlements, and reversals of provisions. Paragraph 59 is not intended to change the classification of any such items of revenue or expense from ordinary to extraordinary (as defined in IAS 8) or to change the measurement of such items. The disclosure encouraged by that paragraph, however, does change the level at which the significance of such items is evaluated for disclosure purposes from the enterprise level to the segment level.
61. An enterprise should disclose, for each reportable segment, the total amount of significant non-cash expenses, other than depreciation and amortisation for which separate disclosure is required by paragraph 58, that were included in segment expense and, therefore, deducted in measuring segment result.
62. IAS 7 requires that an enterprise present a cash flow statement that separately reports cash flows from operating, investing, and financing activities. IAS 7 notes that disclosing cash flow information for each reportable industry and geographical segment is relevant to understanding the enterprise's overall financial position, liquidity, and cash flows. IAS 7 encourages the disclosure of such information. This Standard also encourages the segment cash flow disclosures that are encouraged by IAS 7. Additionally, it encourages disclosure of significant non-cash revenues that were included in segment revenue and, therefore, added in measuring segment result.
63. An enterprise that provides the segment cash flow disclosures that are encouraged by IAS 7 need not also disclose depreciation and amortisation expense pursuant to paragraph 58 or non-cash expenses pursuant to paragraph 61.
64. An enterprise should disclose, for each reportable segment, the aggregate of the enterprise's share of the net profit or loss of associates, joint ventures, or other investments accounted for under the equity method if substantially all of those associates' operations are within that single segment.
65. While a single aggregate amount is disclosed pursuant to the preceding paragraph, each associate, joint venture, or other equity method investment is assessed individually to determine whether its operations are substantially all within a segment.
66. If an enterprise's aggregate share of the net profit or loss of associates, joint ventures, or other investments accounted for under the equity method is disclosed by reportable segment, the aggregate investments in those associates and joint ventures should also be disclosed by reportable segment.
67. An enterprise should present a reconciliation between the information disclosed for reportable segments and the aggregated information in the consolidated or enterprise financial statements. In presenting the reconciliation, segment revenue should be reconciled to enterprise revenue from external customers (including disclosure of the amount of enterprise revenue from external customers not included in any segment's revenue); segment result should be reconciled to a comparable measure of enterprise operating profit or loss as well as to enterprise net profit or loss; segment assets should be reconciled to enterprise assets; and segment liabilities should be reconciled to enterprise liabilities.
Secondary Segment Information
68. Paragraphs 50-67 identify the disclosure requirements to be applied to each reportable segment based on an enterprise's primary reporting format. Paragraphs 69-72 identify the disclosure requirements to be applied to each reportable segment based on an enterprise's secondary reporting format, as follows:
(a) if an enterprise's primary format is business segments, the required secondary-format disclosures are identified in paragraph 69;
(b) if an enterprise's primary format is geographical segments based on location of assets (where the enterprise's products are produced or where its service delivery operations are based), the required secondary-format disclosures are identified in paragraphs 70 and 71;
(c) if an enterprise's primary format is geographical segments based on the location of its customers (where its products are sold or services are rendered), the required secondary-format disclosures are identified in paragraphs 70 and 72.
69. If an enterprise's primary format for reporting segment information is business segments, it should also report the following information:
(a) segment revenue from external customers by geographical area based on the geographical location of its customers, for each geographical segment whose revenue from sales to external customers is 10 per cent or more of total enterprise revenue from sales to all external customers;
(b) the total carrying amount of segment assets by geographical location of assets, for each geographical segment whose segment assets are 10 per cent or more of the total assets of all geographical segments; and
(c) the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (property, plant, equipment, and intangible assets) by geographical location of assets, for each geographical segment whose segment assets are 10 per cent or more of the total assets of all geographical segments.
70. If an enterprise's primary format for reporting segment information is geographical segments (whether based on location of assets or location of customers), it should also report the following segment information for each business segment whose revenue from sales to external customers is 10 per cent or more of total enterprise revenue from sales to all external customers or whose segment assets are 10 per cent or more of the total assets of all business segments:
(a) segment revenue from external customers;
(b) the total carrying amount of segment assets; and
(c) the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (property, plant, equipment, and intangible assets).
71. If an enterprise's primary format for reporting segment information is geographical segments that are based on location of assets, and if the location of its customers is different from the location of its assets, then the enterprise should also report revenue from sales to external customers for each customer-based geographical segment whose revenue from sales to external customers is 10 per cent or more of total enterprise revenue from sales to all external customers.
72. If an enterprise's primary format for reporting segment information is geographical segments that are based on location of customers, and if the enterprise's assets are located in different geographical areas from its customers, then the enterprise should also report the following segment information for each asset-based geographical segment whose revenue from sales to external customers or segment assets are 10 per cent or more of related consolidated or total enterprise amounts:
(a) the total carrying amount of segment assets by geographical location of the assets; and
(b) the total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (property, plant, equipment, and intangible assets) by location of the assets.
Illustrative Segment Disclosures
73. Appendix B to this Standard presents an illustration of the disclosures for primary and secondary reporting formats that are required by this Standard.
Other Disclosure Matters
74. If a business segment or geographical segment for which information is reported to the board of directors and chief executive officer is not a reportable segment because it earns a majority of its revenue from sales to other segments, but nonetheless its revenue from sales to external customers is 10 per cent or more of total enterprise revenue from sales to all external customers, the enterprise should disclose that fact and the amounts of revenue from (a) sales to external customers and (b) internal sales to other segments.
75. In measuring and reporting segment revenue from transactions with other segments, inter-segment transfers should be measured on the basis that the enterprise actually used to price those transfers. The basis of pricing inter-segment transfers and any change therein should be disclosed in the financial statements.
76. Changes in accounting policies adopted for segment reporting that have a material effect on segment information should be disclosed, and prior period segment information presented for comparative purposes should be restated unless it is impracticable to do so. Such disclosure should include a description of the nature of the change, the reasons for the change, the fact that comparative information has been restated or that it is impracticable to do so, and the financial effect of the change, if it is reasonably determinable. If an enterprise changes the identification of its segments and it does not restate prior period segment information on the new basis because it is impracticable to do so, then for the purpose of comparison the enterprise should report segment data for both the old and the new bases of segmentation in the year in which it changes the identification of its segments.
77. Changes in accounting policies adopted by the enterprise are dealt with in IAS 8. IAS 8 requires that changes in accounting policy should be made only if required by statute, or by an accounting standard-setting body, or if the change will result in a more appropriate presentation of events or transactions in the financial statements of the enterprise.
78. Changes in accounting policies adopted at the enterprise level that affect segment information are dealt with in accordance with IAS 8. Unless a new International Accounting Standard specifies otherwise, IAS 8 requires that a change in accounting policy should be applied retrospectively and that prior period information be restated unless it is impracticable to do so (benchmark treatment) or that the cumulative adjustment resulting from the change be included in determining the enterprise's net profit or loss for the current period (allowed alternative treatment). If the benchmark treatment is followed, prior period segment information will be restated. If the allowed alternative is followed, the cumulative adjustment that is included in determining the enterprise's net profit or loss is included in segment result if it is an operating item that can be attributed or reasonably allocated to segments. In the latter case, IAS 8 may require separate disclosure if its size, nature, or incidence is such that the disclosure is relevant to explain the performance of the enterprise for the period.
79. Some changes in accounting policies relate specifically to segment reporting. Examples include changes in identification of segments and changes in the basis for allocating revenues and expenses to segments. Such changes can have a significant impact on the segment information reported but will not change aggregate financial information reported for the enterprise. To enable users to understand the changes and to assess trends, prior period segment information that is included in the financial statements for comparative purposes is restated, if practicable, to reflect the new accounting policy.
80. Paragraph 75 requires that, for segment reporting purposes, inter-segment transfers should be measured on the basis that the enterprise actually used to price those transfers. If an enterprise changes the method that it actually uses to price inter-segment transfers, that is not a change in accounting policy for which prior period segment data should be restated pursuant to paragraph 76. However, paragraph 75 requires disclosure of the change.
81. An enterprise should indicate the types of products and services included in each reported business segment and indicate the composition of each reported geographical segment, both primary and secondary, if not otherwise disclosed in the financial statements or elsewhere in the financial report.
82. To assess the impact of such matters as shifts in demand, changes in the price of inputs or other factors of production, and the development of alternative products and processes on a business segment, it is necessary to know the activities encompassed by that segment. Similarly, to assess the impact of changes in the economic and political environment on the risks and rates of returns of a geographical segment, it is important to know the composition of that geographical segment.
83. Previously reported segments that no longer satisfy the quantitative thresholds are not reported separately. They may no longer satisfy those thresholds, for example, because of a decline in demand or a change in management strategy or because a part of the operations of the segment has been sold or combined with other segments. An explanation of the reasons why a previously reported segment is no longer reported may also be useful in confirming expectations regarding declining markets and changes in enterprise strategies.
Effective Date
84. This International Accounting Standard becomes operative for financial statements covering periods beginning on or after 1 July 1998. Earlier application is encouraged. If an enterprise applies this Standard for financial statements covering periods beginning before 1 July 1998 instead of the original IAS 14, the enterprise should disclose that fact. If financial statements include comparative information for periods prior to the effective date or earlier voluntary adoption of this Standard, restatement of segment data included therein to conform to the provisions of this Standard is required unless it is not practicable to do so, in which case the enterprise should disclose that fact.
Vocabulary
segment reporting 分部报告
reportable segment 报告分部
business segment 业务分部
geographical segment 地区分部
segment assets 分部资产
segment liabilities 分部负债
Question
Q1: Determine the reportable segment
Hollier Inc. is a diversified entity that operates in five business segments and four geographical segments. The following financial information relates to the year ending June 30, 2005.
Business Segment Data(in $'000)
Beer
Beverages
Hotels
Retail
Packaging
Total
Total Revenue from Sales
2249
1244
4894
3815
7552
19754
To External Customers
809
543
4029
3021
5211
13613
To Other Segments
1440
701
865
794
2341
6141
Segment Result
631
(131)
714
(401)
1510
2323
Assets
4977
3475
5253
1072
8258
23035
Geographical Segment Date(in $'000)
Finland
France
.
Australia
Total
Total Revenue from Sales
7111
1371
3451
7821
19754
To External Customers
6841
1000
2164
3608
13613
To Other Segments
270
371
1287
4213
6141
Segment Result
1536
(478)
494
771
2323
Assets
9231
5001
3667
5136
23035
IAS24 Related Party Disclosures
Scope
1. This Standard should be applied in dealing with related parties and transactions between a reporting enterprise and its related parties. The requirements of this Standard apply to the financial statements of each reporting enterprise.
2. This Standard applies only to those related party relationships described in paragraph 3, as modified by paragraph 6.
3. This Standard deals only with those related party relationships described in (a) to (e) below:
(a) enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the reporting enterprise. (This includes holding companies, subsidiaries and fellow subsidiaries);
(b) associates (see IAS 28, Accounting for Investments in Associates);
(c) individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them significant influence over the enterprise, and close members of the family[1] of any such individual;
(d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the reporting enterprise, including directors and officers of companies and close members of the families of such individuals; and
(e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. This includes enterprises owned by directors or major shareholders of the reporting enterprise and enterprises that have a member of key management in common with the reporting enterprise.
In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
4. No disclosure of transactions is required:
(a) in consolidated financial statements in respect of intra-group transactions;
(b) in parent financial statements when they are made available or published with the consolidated financial statements;
(c) in financial statements of a wholly-owned subsidiary if its parent is incorporated in the same country and provides consolidated financial statements in that country; and
(d) in financial statements of state-controlled enterprises of transactions with other state-controlled enterprises.
Definitions
5. The following terms are used in this Standard with the meanings specified:
Related party - parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.
Related party transaction - a transfer of resources or obligations between related parties, regardless of whether a price is charged.
Control - ownership, directly, or indirectly through subsidiaries, of more than one half of the voting power of an enterprise, or a substantial interest in voting power and the power to direct, by statute or agreement, the financial and operating policies of the management of the enterprise.
Significant influence (for the purpose of this Standard) - participation in the financial and operating policy decisions of an enterprise, but not control of those policies. Significant influence may be exercised in several ways, usually by representation on the board of directors but also by, for example, participation in the policy making process, material intercompany transactions, interchange of managerial personnel or dependence on technical information. Significant influence may be gained by share ownership, statute or agreement. With share ownership, significant influence is presumed in accordance with the definition contained in IAS 28, Accounting for Investments in Associates.
6. In the context of this Standard, the following are deemed not to be related parties :
(a) two companies simply because they have a director in common, notwithstanding paragraphs 3 (d) and (e) above, (but it is necessary to consider the possibility, and to assess the likelihood, that the director would be able to affect the policies of both companies in their mutual dealings);
(b)
(i) providers of finance;
(ii) trade unions;
(iii) public utilities;
(iv) government departments and agencies,
in the course of their normal dealings with an enterprise by virtue only of those dealings (although they may circumscribe the freedom of action of an enterprise or participate in its decision-making process); and
(c) a single customer, supplier, franchisor, distributor, or general agent with whom an enterprise transacts a significant volume of business merely by virtue of the resulting economic dependence.
The Related Party Issue
7. Related party relationships are a normal feature of commerce and business. For example, enterprises frequently carry on separate parts of their activities through subsidiary or associated enterprises and acquire interests in other enterprises - for investment purposes or for trading reasons - that are of sufficient proportions that the investing company can control or exercise significant influence on the financial and operating decisions of its investee.
8. A related party relationship could have an effect on the financial position and operating results of the reporting enterprise. Related parties may enter into transactions which unrelated parties would not enter into. Also, transactions between related parties may not be effected at the same amounts as between unrelated parties.
9. The operating results and financial position of an enterprise may be affected by a related party relationship even if related party transactions do not occur. The mere existence of the relationship may be sufficient to affect the transactions of the reporting enterprise with other parties. For example, a subsidiary may terminate relations with a trading partner on acquisition by the parent of a fellow subsidiary engaged in the same trade as the former partner. Alternatively, one party may refrain from acting because of the significant influence of another - for example, a subsidiary may be instructed by its parent not to engage in research and development.
10. Because there is an inherent difficulty for management to determine the effect of influences which do not lead to transactions, disclosure of such effects is not required by this Standard.
11. Accounting recognition of a transfer of resources is normally based on the price agreed between the parties. Between unrelated parties the price is an arm's length price. Related parties may have a degree of flexibility in the price-setting process that is not present in transactions between unrelated parties.
12. A variety of methods is used to price transactions between related parties.
13. One way of determining a price for a transaction between related parties is by the comparable uncontrolled price method, which sets the price by reference to comparable goods sold in an economically comparable market to a buyer unrelated to the seller. Where the goods or services supplied in a related party transaction, and the conditions relating thereto, are similar to those in normal trading transactions, this method is often used. It is also often used for determining the cost of finance.
14. Where goods are transferred between related parties before sale to an independent party, the resale price method is often used. This reduces the resale price by a margin, representing an amount from which the re-seller would seek to cover his costs and make an appropriate profit, to arrive at a transfer price to the re-seller. There are problems of judgment in determining a compensation appropriate to the re-seller's contribution to the process. This method is also used for transfers of other resources, such as rights and services.
15. Another approach is the cost-plus method, which seeks to add an appropriate mark-up to the supplier's cost. Difficulties may be experienced in determining both the elements of cost attributable and the mark-up. Among the yardsticks that may assist in determining transfer prices are comparable returns in similar industries on turnover or capital employed.
16. Sometimes prices of related party transactions are not determined under one of the methods described in paragraphs 13 to 15 above. Sometimes, no price is charged - as in the examples of the free provision of management services and the extension of free credit on a debt.
17. Sometimes, transactions would not have taken place if the relationship had not existed. For example, a company that sold a large proportion of its production to its parent company at cost might not have found an alternative customer if the parent company had not purchased the goods.
Disclosure
18. In many countries the laws require financial statements to give disclosures about certain categories of related parties. In particular, attention is focused on transactions with the directors of an enterprise, especially their remuneration and borrowings, because of the fiduciary nature of their relationship with the enterprise, as well as disclosures of significant intercompany transactions and investments in and balances with group and associated companies and with directors. IAS 27, Consolidated Financial Statements and Accounting for Investments in Subsidiaries, and IAS 28, Accounting for Investments in Associates require disclosure of a list of significant subsidiaries and associates. IAS 8, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies, requires disclosure of extraordinary items and items of income and expense within profit or loss from ordinary activities that are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period.
19. The following are examples of situations where related party transactions may lead to disclosures by a reporting enterprise in the period which they affect:
purchases or sales of goods (finished or unfinished);
purchases or sales of property and other assets;
rendering or receiving of services;
agency arrangements;
leasing arrangements;
transfer of research and development;
licence agreements;
finance (including loans and equity contributions in cash or in kind);
guarantees and collaterals; and
management contracts.
20. Related party relationships where control exists should be disclosed irrespective of whether there have been transactions between the related parties.
21. In order for a reader of financial statements to form a view about the effects of related party relationships on a reporting enterprise, it is appropriate to disclose the related party relationship where control exists, irrespective of whether there have been transactions between the related parties.
22. If there have been transactions between related parties, the reporting enterprise should disclose the nature of the related party relationships as well as the types of transactions and the elements of the transactions necessary for an understanding of the financial statements.
23. The elements of transactions necessary for an understanding of the financial statements would normally include:
(a) an indication of the volume of the transactions, either as an amount or as an appropriate proportion;
(b) amounts or appropriate proportions of outstanding items; and
(c) pricing policies.
24. Items of a similar nature may be disclosed in aggregate except when separate disclosure is necessary for an understanding of the effects of related party transactions on the financial statements of the reporting enterprise.
25. Disclosure of transactions between members of a group is unnecessary in consolidated financial statements because consolidated financial statements present information about the parent and subsidiaries as a single reporting enterprise. Transactions with associated enterprises accounted for under the equity method are not eliminated and therefore require separate disclosure as related party transactions.
Effective Date
26. This International Accounting Standard becomes operative for financial statements covering the periods beginning on or after 1 January 1986.
Vocabulary
related party 关联方
related party transaction 关联方交易
related party relationship 关联方关系
control 控制
jointly control 共同控制
significant influence 重大影响
Review
1. Identify the related party, related party transaction.
2. Disclosure of related parties.
IAS34 Interim Financial Reporting
Objective
The objective of this Standard is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed financial statements for an interim period. Timely and reliable interim financial reporting improves the ability of investors, creditors, and others to understand an enterprise's capacity to generate earnings and cash flows and its financial condition and liquidity.
Scope
1. This Standard does not mandate which enterprises should be required to publish interim financial reports, how frequently, or how soon after the end of an interim period. However, governments, securities regulators, stock exchanges, and accountancy bodies often require enterprises whose debt or equity securities are publicly traded to publish interim financial reports. This Standard applies if an enterprise is required or elects to publish an interim financial report in accordance with International Accounting Standards. The International Accounting Standards Committee encourages publicly traded enterprises to provide interim financial reports that conform to the recognition, measurement, and disclosure principles set out in this Standard. Specifically, publicly traded enterprises are encouraged:
(a) to provide interim financial reports at least as of the end of the first half of their financial year; and
(b) to make their interim financial reports available not later than 60 days after the end of the interim period.
2. Each financial report, annual or interim, is evaluated on its own for conformity to International Accounting Standards. The fact that an enterprise may not have provided interim financial reports during a particular financial year or may have provided interim financial reports that do not comply with this Standard does not prevent the enterprise's annual financial statements from conforming to International Accounting Standards if they otherwise do so.
3. If an enterprise's interim financial report is described as complying with International Accounting Standards, it must comply with all of the requirements of this Standard. Paragraph 19 requires certain disclosures in that regard.
Definitions
4. The following terms are used in this Standard with the meanings specified:
Interim period is a financial reporting period shorter than a full financial year.
Interim financial report means a financial report containing either a complete set of financial statements (as described in IAS 1, Presentation of Financial Statements) or a set of condensed financial statements (as described in this Standard) for an interim period.
Content of an Interim Financial Report
5. IAS 1 defines a complete set of financial statements as including the following components:
(a) balance sheet;
(b) income statement;
(c) statement showing either (i) all changes in equity or (ii) changes in equity other than those arising from capital transactions with owners and distributions to owners;
(d) cash flow statement; and
(e) accounting policies and explanatory notes.
6. In the interest of timeliness and cost considerations and to avoid repetition of information previously reported, an enterprise may be required to or may elect to provide less information at interim dates as compared with its annual financial statements. This Standard defines the minimum content of an interim financial report as including condensed financial statements and selected explanatory notes. The interim financial report is intended to provide an update on the latest complete set of annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported.
7. Nothing in this Standard is intended to prohibit or discourage an enterprise from publishing a complete set of financial statements (as described in IAS 1) in its interim financial report, rather than condensed financial statements and selected explanatory notes. Nor does this Standard prohibit or discourage an enterprise from including in condensed interim financial statements more than the minimum line items or selected explanatory notes as set out in this Standard. The recognition and measurement guidance in this Standard applies also to complete financial statements for an interim period, and such statements would include all of the disclosures required by this Standard (particularly the selected note disclosures in paragraph 16) as well as those required by other International Accounting Standards.
Minimum Components of an Interim Financial Report
8. An interim financial report should include, at a minimum, the following components:
(a) condensed balance sheet;
(b) condensed income statement;
(c) condensed statement showing either (i) all changes in equity or (ii) changes in equity other than those arising from capital transactions with owners and distributions to owners;
(d) condensed cash flow statement; and
(e) selected explanatory notes.
Form and Content of Interim Financial Statements
9. If an enterprise publishes a complete set of financial statements in its interim financial report, the form and content of those statements should conform to the requirements of IAS 1 for a complete set of financial statements.
10. If an enterprise publishes a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each of the headings and subtotals that were included in its most recent annual financial statements and the selected explanatory notes as required by this Standard. Additional line items or notes should be included if their omission would make the condensed interim financial statements misleading.
11. Basic and diluted earnings per share should be presented on the face of an income statement, complete or condensed, for an interim period.
12. IAS 1 provides guidance on the structure of financial statements and includes an appendix, "Illustrative Financial Statement Structure", that provides further guidance on major headings and subtotals.
13. While IAS 1 requires that a statement showing changes in equity be presented as a separate component of an enterprise's financial statements, it permits information about changes in equity arising from capital transactions with owners and distributions to owners to be shown either on the face of the statement or, alternatively, in the notes. An enterprise follows the same format in its interim statement showing changes in equity as it did in its most recent annual statement.
14. An interim financial report is prepared on a consolidated basis if the enterprise's most recent annual financial statements were consolidated statements. The parent's separate financial statements are not consistent or comparable with the consolidated statements in the most recent annual financial report. If an enterprise's annual financial report included the parent's separate financial statements in addition to consolidated financial statements, this Standard neither requires nor prohibits the inclusion of the parent's separate statements in the enterprise's interim financial report.
Selected Explanatory Notes
15. A user of an enterprise's interim financial report will also have access to the most recent annual financial report of that enterprise. It is unnecessary, therefore, for the notes to an interim financial report to provide relatively insignificant updates to the information that was already reported in the notes in the most recent annual report. At an interim date, an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the enterprise since the last annual reporting date is more useful.
16. An enterprise should include the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report. The information should normally be reported on a financial year-to-date basis. However, the enterprise should also disclose any events or transactions that are material to an understanding of the current interim period:
(a) a statement that the same accounting policies and methods of computation are followed in the interim financial statements as compared with the most recent annual financial statements or, if those policies or methods have been changed, a description of the nature and effect of the change;
(b) explanatory comments about the seasonality or cyclicality of interim operations;
(c) the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence;
(d) the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period;
(e) issuances, repurchases, and repayments of debt and equity securities;
(f) dividends paid (aggregate or per share) separately for ordinary shares and other shares;
(g) segment revenue and segment result for business segments or geographical segments, whichever is the enterprise's primary basis of segment reporting (disclosure of segment data is required in an enterprise's interim financial report only if IAS 14, Segment Reporting, requires that enterprise to disclose segment data in its annual financial statements);
(h) material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period;
(i) the effect of changes in the composition of the enterprise during the interim period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations; and
(j) changes in contingent liabilities or contingent assets since the last annual balance sheet date.
17. Examples of the kinds of disclosures that are required by paragraph 16 are set out below. Individual International Accounting Standards provide guidance regarding disclosures for many of these items:
(a) the write-down of inventories to net realisable value and the reversal of such a write-down;
(b) recognition of a loss from the impairment of property, plant, and equipment, intangible assets, or other assets, and the reversal of such an impairment loss;
(c) the reversal of any provisions for the costs of restructuring;
(d) acquisitions and disposals of items of property, plant, and equipment;
(e) commitments for the purchase of property, plant, and equipment;
(f) litigation settlements;
(g) corrections of fundamental errors in previously reported financial data;
(h) extraordinary items;
(i) any debt default or any breach of a debt covenant that has not been corrected subsequently; and
(j) related party transactions.
18. Other International Accounting Standards specify disclosures that should be made in financial statements. In that context, financial statements means complete sets of financial statements of the type normally included in an annual financial report and sometimes included in other reports. The disclosures required by those other International Accounting Standards are not required if an enterprise's interim financial report includes only condensed financial statements and selected explanatory notes rather than a complete set of financial statements.
Disclosure of Compliance with IAS
19. If an enterprise's interim financial report is in compliance with this International Accounting Standard, that fact should be disclosed. An interim financial report should not be described as complying with International Accounting Standards unless it complies with all of the requirements of each applicable Standard and each applicable Interpretation of the Standing Interpretations Committee.
Periods for which Interim Financial Statements are Required to be Presented
20. Interim reports should include interim financial statements (condensed or complete) for periods as follows:
(a) balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year;
(b) income statements for the current interim period and cumulatively for the current financial year to date, with comparative income statements for the comparable interim periods (current and year-to-date) of the immediately preceding financial year;
(c) statement showing changes in equity cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year; and
(d) cash flow statement cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year.
21. For an enterprise whose business is highly seasonal, financial information for the twelve months ending on the interim reporting date and comparative information for the prior twelve-month period may be useful. Accordingly, enterprises whose business is highly seasonal are encouraged to consider reporting such information in addition to the information called for in the preceding paragraph.
22. Appendix A illustrates the periods required to be presented by an enterprise that reports half-yearly and an enterprise that reports quarterly.
Materiality
23. In deciding how to recognize, measure, classify, or disclose an item for interim financial reporting purposes, materiality should be assessed in relation to the interim period financial data. In making assessments of materiality, it should be recognized that interim measurements may rely on estimates to a greater extent than measurements of annual financial data.
24. The Preface to International Accounting Standards states that "International Accounting Standards are not intended to apply to immaterial items." The Framework states that "information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements." IAS 8, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies, requires separate disclosure of material extraordinary items, unusual ordinary items, discontinued operations, changes in accounting estimates, fundamental errors, and changes in accounting policies. IAS 8 does not contain quantified guidance as to materiality.
25. While judgement is always required in assessing materiality for financial reporting purposes, this Standard bases the recognition and disclosure decision on data for the interim period by itself for reasons of understandability of the interim figures. Thus, for example, unusual or extraordinary items, changes in accounting policies or estimates, and fundamental errors are recognized and disclosed based on materiality in relation to interim period data to avoid misleading inferences that might result from nondisclosure. The overriding goal is to ensure that an interim financial report includes all information that is relevant to understanding an enterprise's financial position and performance during the interim period.
Disclosure in Annual Financial Statements
26. If an estimate of an amount reported in an interim period is changed significantly during the final interim period of the financial year but a separate financial report is not published for that final interim period, the nature and amount of that change in estimate should be disclosed in a note to the annual financial statements for that financial year.
27. IAS 8 requires disclosure of the nature and (if practicable) the amount of a change in estimate that either has a material effect in the current period or is expected to have a material effect in subsequent periods. Paragraph 16(d) of this Standard requires similar disclosure in an interim financial report. Examples include changes in estimate in the final interim period relating to inventory write-downs, restructurings, or impairment losses that were reported in an earlier interim period of the financial year. The disclosure required by the preceding paragraph is consistent with the IAS 8 requirement and is intended to be narrow in scope - relating only to the change in estimate. An enterprise is not required to include additional interim period financial information in its annual financial statements.
Recognition and Measurement
Same Accounting Policies as Annual
28. An enterprise should apply the same accounting policies in its interim financial statements as are applied in its annual financial statements, except for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. However, the frequency of an enterprise's reporting (annual, half-yearly, or quarterly) should not affect the measurement of its annual results. To achieve that objective, measurements for interim reporting purposes should be made on a year-to-date basis.
29. Requiring that an enterprise apply the same accounting policies in its interim financial statements as in its annual statements may seem to suggest that interim period measurements are made as if each interim period stands alone as an independent reporting period. However, by providing that the frequency of an enterprise's reporting should not affect the measurement of its annual results, paragraph 28 acknowledges that an interim period is a part of a larger financial year. Year-to-date measurements may involve changes in estimates of amounts reported in prior interim periods of the current financial year. But the principles for recognizing assets, liabilities, income, and expenses for interim periods are the same as in annual financial statements.
30. To illustrate:
(a) the principles for recognizing and measuring losses from inventory write-downs, restructurings, or impairments in an interim period are the same as those that an enterprise would follow if it prepared only annual financial statements. However, if such items are recognized and measured in one interim period and the estimate changes in a subsequent interim period of that financial year, the original estimate is changed in the subsequent interim period either by accrual of an additional amount of loss or by reversal of the previously recognized amount;
(b) a cost that does not meet the definition of an asset at the end of an interim period is not deferred on the balance sheet either to await future information as to whether it has met the definition of an asset or to smooth earnings over interim periods within a financial year; and
(c) income tax expense is recognized in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Amounts accrued for income tax expense in one interim period may have to be adjusted in a subsequent interim period of that financial year if the estimate of the annual income tax rate changes.
31. Under the Framework for the Preparation and Presentation of Financial Statements (the Framework), recognition is the "process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the criteria for recognition". The definitions of assets, liabilities, income, and expenses are fundamental to recognition, both at annual and interim financial reporting dates.
32. For assets, the same tests of future economic benefits apply at interim dates and at the end of an enterprise's financial year. Costs that, by their nature, would not qualify as assets at financial year end would not qualify at interim dates either. Similarly, a liability at an interim reporting date must represent an existing obligation at that date, just as it must at an annual reporting date.
33. An essential characteristic of income (revenue) and expenses is that the related inflows and outflows of assets and liabilities have already taken place. If those inflows or outflows have taken place, the related revenue and expense are recognized; otherwise they are not recognized. The Framework says that "expenses are recognized in the income statement when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.... [The] Framework does not allow the recognition of items in the balance sheet which do not meet the definition of assets or liabilities."
34. In measuring the assets, liabilities, income, expenses, and cash flows reported in its financial statements, an enterprise that reports only annually is able to take into account information that becomes available throughout the financial year. Its measurements are, in effect, on a year-to-date basis.
35. An enterprise that reports half-yearly uses information available by mid-year or shortly thereafter in making the measurements in its financial statements for the first six-month period and information available by year-end or shortly thereafter for the twelve-month period. The twelve-month measurements will reflect possible changes in estimates of amounts reported for the first six-month period. The amounts reported in the interim financial report for the first six-month period are not retrospectively adjusted. Paragraphs 16(d) and 26 require, however, that the nature and amount of any significant changes in estimates be disclosed.
36. An enterprise that reports more frequently than half-yearly measures income and expenses on a year-to-date basis for each interim period using information available when each set of financial statements is being prepared. Amounts of income and expenses reported in the current interim period will reflect any changes in estimates of amounts reported in prior interim periods of the financial year. The amounts reported in prior interim periods are not retrospectively adjusted. Paragraphs 16(d) and 26 require, however, that the nature and amount of any significant changes in estimates be disclosed.
Revenues Received Seasonally, Cyclically, or Occasionally
37. Revenues that are received seasonally, cyclically, or occasionally within a financial year should not be anticipated or deferred as of an interim date if anticipation or deferral would not be appropriate at the end of the enterprise's financial year.
38. Examples include dividend revenue, royalties, and government grants. Additionally, some enterprises consistently earn more revenues in certain interim periods of a financial year than in other interim periods, for example, seasonal revenues of retailers. Such revenues are recognized when they occur.
Costs Incurred Unevenly During the Financial Year
39. Costs that are incurred unevenly during an enterprise's financial year should be anticipated or deferred for interim reporting purposes if, and only if, it is also appropriate to anticipate or defer that type of cost at the end of the financial year.
Applying the Recognition and Measurement Principles
40. Appendix B provides examples of applying the general recognition and measurement principles set out in paragraphs 28-39.
Use of Estimates
41. The measurement procedures to be followed in an interim financial report should be designed to ensure that the resulting information is reliable and that all material financial information that is relevant to an understanding of the financial position or performance of the enterprise is appropriately disclosed. While measurements in both annual and interim financial reports are often based on reasonable estimates, the preparation of interim financial reports generally will require a greater use of estimation methods than annual financial reports.
42. Appendix C provides examples of the use of estimates in interim periods.
Restatement of Previously Reported Interim Periods
43. A change in accounting policy, other than one for which the transition is specified by a new International Accounting Standard, should be reflected by:
(a) restating the financial statements of prior interim periods of the current financial year and the comparable interim periods of prior financial years (see paragraph 20), if the enterprise follows the benchmark treatment under IAS 8; or
(b) restating the financial statements of prior interim periods of the current financial year, if the enterprise follows the allowed alternative treatment under IAS 8. In this case, comparable interim periods of prior financial years are not restated.
44. One objective of the preceding principle is to ensure that a single accounting policy is applied to a particular class of transactions throughout an entire financial year. Under IAS 8, a change in accounting policy is reflected by retrospective application, with restatement of prior period financial data, if practicable. However, if the amount of the adjustment relating to prior financial years is not reasonably determinable, then under IAS 8 the new policy is applied prospectively. An allowed alternative is to include the entire cumulative retrospective adjustment in the determination of net profit or loss for the period in which the accounting policy is changed. The effect of the principle in paragraph 43 is to require that within the current financial year any change in accounting policy be applied retrospectively to the beginning of the financial year.
45. To allow accounting changes to be reflected as of an interim date within the financial year would allow two differing accounting policies to be applied to a particular class of transactions within a single financial year. The result would be interim allocation difficulties, obscured operating results, and complicated analysis and understandability of interim period information.
Effective Date
46. This International Accounting Standard becomes operative for financial statements covering periods beginning on or after 1 January 1999. Earlier application is encouraged.
Vocabulary
interim period 中期
interim period report 中期财务报告
Review
1. Period of interim period report
2. Selected explanatory notes
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