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This edition contains interpretations and application of the IFRS Standards, as approved by the International Accounting Standards Board (Board) for issue up to 31 December 2018, that are required to be applied for accounting periods beginning on 1 January 2019.

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ISBN: 978-1-119-57735-5 (pbk) ISBN: 978-1-119-57732-4 (epdf)

ISBN: 978-1-119-57730-0 (epub) ISBN: 978-1-119-57974-8 (obook)

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CONTENTS

Cover

About the Authors

1 Introduction to International Financial Reporting Standards

Introduction
Origins and Early History of the IASB
The Current Structure
Process of IFRS Standard Setting
Convergence: The IASB and Financial Reporting in the Us
The IASB and Europe
Appendix A: Current International Financial Reporting Standards (IAS/IFRS) and Interpretations (SIC/IFRIC)
Appendix B: Projects Completed Since Previous Issue (July 2017 to June 2018)
Appendix C: IFRS for SMEs

2 Conceptual Framework

Introduction
Conceptual Framework for Financial Reporting 2018
Conceptual Framework for Financial Reporting 2010
Hierarchy of Standards
IFRS Practice Statement 1 – Management Commentary
Future Developments
US GAAP Comparison

3 Presentation of Financial Statements

Introduction
Scope
Definitions of Terms
Financial Statements
General Features
Structure and Content
Future Developments
Illustrative Financial Statements
US GAAP Comparison

4 Statement of Financial Position

Introduction
Scope
Definitions of Terms
General Concepts, Structure And Content
Classification of Assets
Classification of Liabilities
Classification of Shareholders’ Equity
Future Developments
US GAAP Comparison

5 Statements of Profit or Loss and Other Comprehensive Income, and Changes in Equity

Introduction
Future Developments
Scope
Definitions of Terms
Concepts of Income
Recognition and Measurement
Statement of Profit or Loss and Other Comprehensive Income
Presentation in the Profit or Loss Section
Other Comprehensive Income
Statement of Changes in Equity
US GAAP Comparison

6 Statement of Cash Flows

Introduction
Scope
Definitions of Terms
Background
Presentation
Other Requirements
Disclosure and Examples
Consolidated Statement of Cash Flows
US GAAP Comparison

7 Accounting Policies, Changes in Accounting Estimates, and Errors

Introduction
Scope
Definitions of Terms
Importance of Comparability and Consistency in Financial Reporting
Accounting Policy
Selecting Accounting Policies
Changes in Accounting Policies
Changes in Accounting Estimates
Correction of Errors
Future Developments
US GAAP Comparison

8 Inventories

Introduction
Definitions of Terms
Recognition and Measurement
Methods of Inventory
US GAAP Comparison

9 Property, Plant and Equipment

Introduction
Definitions of Terms
Recognition and Measurement
Derecognition
Disclosures
Examples of Financial Statement Disclosures
US GAAP Comparison

10 Borrowing Costs

Introduction
Definitions of Terms
Recognition and Measurement
US GAAP Comparison

11 Intangible Assets

Introduction
Scope
Definitions of Terms
Recognition and Measurement
Disclosures
Example of Financial Statement Disclosure
US GAAP Comparison

12 Investment Property

Introduction
Definitions of Terms
Identification
Recognition and Measurement
Presentation and Disclosure
Examples of Financial Statement Disclosures
US GAAP Comparison

13 Impairment of Assets and Non-Current Assets Held for Sale

Introduction
Definitions of Terms: Impairment of Assets
Impairment of Assets (IAS 36)
Examples of Financial Statement Disclosures
Definitions of Terms: Non-Current Assets Held for Sale
Non-Current Assets Held for Sale
Discontinued Operations
Examples of Financial Statement Disclosures
US GAAP Comparison

14 Consolidations, Joint Arrangements, Associates and Separate Financial Statements

Introduction
Definitions of Terms
Consolidated Financial Statements
Examples of Financial Statement Disclosures
Joint Arrangements
Associates
Equity Method of Accounting
Examples of Financial Statement Disclosures
Separate Financial Statements
Disclosure Requirements
US GAAP Comparison

15 Business Combinations

Introduction
Definitions of Terms
Business Combinations and Consolidations
Business Combinations
Disclosure Requirements
Examples of Financial Statement Disclosures
Future Developments
US GAAP Comparison

16 Shareholders’ Equity

Introduction
Definitions of Terms
Recognition and Measurement
Presentation and Disclosure
Classification Between Liabilities and Equity
Share Issuances and Related Matters
Future Developments
US GAAP Comparison

17 Share-Based Payment

Introduction
Scope
Definitions of Terms
Overview
Recognition and Measurement
Equity-Settled Share-Based Payments
Cash-Settled Share-Based Payments
Share-Based Payment Transactions With Cash Alternatives
Share-Based Transactions Among Group Entities
Disclosure
Examples of Financial Statement Disclosures
Appendix: Employee Share Options Valuation Example

18 Current Liabilities, Provisions, Contingencies and Events After the Reporting Period

Introduction
Definitions of Terms
Recognition and Measurement
Disclosures
Practical Examples
Reporting Events Occurring After the Reporting Period
Examples of Financial Statement Disclosures
US GAAP Comparison

19 Employee Benefits

Introduction
Definitions of Terms
Background
Basic Principles of IAS 19
Post-Employment Benefit Plans
Employer’S Liability and Assets
Minimum Funding Requirement
Other Pension Considerations
Disclosures for Post-Employment Benefit Plans
Examples of Financial Statement Disclosures
Other Employee Benefits
US GAAP Comparison

20 Revenue From Contracts with Customers

Introduction
Definitions of Terms
Scope
The Revenue Model
Contract Cost
Presentation
Disclosure
Example of Financial Statement Disclosures
Specific Transactions in IFRS 15
Other Specific Transactions
US GAAP Comparison

21 Government Grants

Introduction
Scope
Definitions of Terms
Recognition of Government Grants
Presentation and Disclosure
Other Issues
Service Concessions
US GAAP Comparison

22 Leases

Introduction
Definitions of Terms
Classification of Leases
Recognition and Measurement
Disclosure Requirements Under IAS 17
Examples of Financial Statement Disclosures
US GAAP Comparison

23 Foreign Currency

Introduction
Definitions of Terms
Scope, Objectives and Discussion of Definitions
Foreign Currency Transactions
Translation of Foreign Currency Financial Statements
Guidance Applicable To Special Situations
Disclosure
Hedging
Examples of Financial Statement Disclosures
US GAAP Comparison

24 Financial Instruments

Introduction
Definitions of Terms
Recognition, Measurement and Derecognition of Financial Instruments
Financial Liabilities
Subsequent Measurement of Financial Liabilities
Embedded Derivatives
Financial Instruments Measured At Amortised Cost
Fair Valuation Gains and Losses
Impairment of Financial Instruments
Hedge Accounting
Effective Date and Transition Requirements of Ifrs 9
Presentation of Financial Instruments Under Ias 32
Disclosures
Future Developments

25 Fair Value

Introduction
Scope
Definitions of Terms
Fair Value Measurement Principles and Methodologies
Fair Value Disclosure
Future Developments
US GAAP Comparison

26 Income Taxes

Introduction
Scope
Definitions of Terms
Identification
Recognition and Measurement of Current Tax
Recognition and Measurement of Deferred Tax
Recognition in Profit or Loss
Calculation of Deferred Tax Asset or Liability
Effect of Changed Circumstances
Specific Transactions
Presentation and Disclosure
Example of Financial Statement Disclosures
US GAAP Comparison

27 Earnings Per Share

Introduction
Scope
Definitions of Terms
Concepts, Rules and Examples
Example of Financial Statement Disclosures
US GAAP Comparison

28 Operating Segments

Introduction
Scope
Definitions of Terms
Identification
Concepts and Requirements Under IFRS 8
Disclosure Requirements
Example of Financial Statement Disclosures Under Ifrs
US GAAP Comparison

29 Related Party Disclosures

Introduction
Definitions of Terms
Identification
Disclosures
Example of Financial Statement Disclosures
US GAAP Comparison

30 Accounting and Reporting By Retirement Benefit Plans

Introduction
Definitions of Terms
Scope
Defined Contribution Plans
Defined Benefit Plans
Disclosures
US GAAP Comparison

31 Agriculture

Introduction
Scope
Definitions of Terms
Identification
Recognition and Measurement
Examples of Financial Statement Disclosures

32 Extractive Industries

Introduction
Definitions of Terms
Exploration and Evaluation of Mineral Resources
Assets Subject To IFRS 6
Example of Financial Statement Disclosures
IFRIC 20, Stripping Cost in the Production Phase of A Surface Mine
Example of Financial Statement Disclosures
US GAAP Comparison

33 Accounting for Insurance Contracts

Introduction
Definitions of Terms
Insurance Contracts
Recognition and Measurement Guidance
Disclosure
Future Developments
US GAAP Comparison

34 Interim Financial Reporting

Introduction
Scope
Definitions of Terms
Objectives of Interim Financial Reporting
Application of Accounting Policies
Presentation
Recognition and Measurement Issues
US GAAP Comparison

35 Hyperinflation

Introduction
Financial Reporting in Hyperinflationary Economies
US GAAP Comparison
Appendix: Monetary vs. Non-Monetary Items

36 First-Time Adoption of International Financial Reporting Standards

Introduction
Definitions of Terms
First-Time Adoption Guidance
Optional Exemptions
Presentation and Disclosure

Index

End User License Agreement

ABOUT THE AUTHORS

Salim Alibhai, FCCA, CPA (K), is an audit partner at PKF Kenya and heads the IT assurance including methodology function across the Eastern Africa PKF member firms.

Erwin Bakker, RA, is international audit partner of PKF Wallast in the Netherlands, and acts as audit partner, mainly for international (group) audits. He serves as chairman of the IFRS working group of PKF Wallast and is a member of the Technical Bureau of PKF Wallast in the Netherlands.

T V Balasubramanian, FCA, CFE, CFIP, is a senior partner in PKF Sridhar & Santhanam LLP, Chartered Accountants, India, and previously served as a member of the Auditing and Assurance Standards Board of the ICAI, India. He is a part of the technical team of the firm engaged in transition to Ind AS (the converged IFRS Standards).

Kunal Bharadva, FCCA, CPA (K), ACA, is a Director at PKF Kenya and is responsible for technical training across the Eastern Africa PKF member firms.

Asif Chaudhry, FCCA, CPA (K), MBA, is an audit partner at PKF Kenya and heads the technical and quality control functions across the Eastern Africa PKF member firms. He is also a member of the Kenyan Institute’s Professional Standards Committee and the PKF International Africa Professional Standards Committee.

Danie Coetsee, CA (SA), is Professor of Accounting at the University of Johannesburg, specialising in financial accounting. He is the chair of the Financial Reporting Technical Committee of the Financial Reporting Standards Council of South Africa.

James Dougherty, MAcc, CPA, CGMA is an audit partner at JLK Rosenberger LLP with specialists skills for single audits under Uniform Guidance, P&C insurance and is a qualified peer reviewer. He is also a member of the AICPA, CalCPA and Insurance Accounting and Systems Association (IASA). Active in the community, he is a board member of the Glendale Chamber of Commerce in Glendale, California.

Chris Johnstone is a member of the ICAEW and also holds ICAEW’s Diploma in IFRS. She is the Audit Technical Director at Johnston Carmichael. She joined Johnston Carmichael in 2014 having previously worked at Baker Tilly and MacIntyre Hudson in London. She is also a member of the Accounting and Auditing Technical Committee of the PKF firms in the United Kingdom and Republic of Ireland and ICAS’s Corporate and Financial Reporting Panel.

Patrick Kuria, B/Ed (Hons), CPA (K), is an audit partner at PKF Kenya and specialises in the audits of financial services and the not-for-profit sector. He is a member of the Institute of Certified Public Accountants of Kenya (ICPAK). He is a member of PKF Eastern Africa Technical Committee and also serves as the chair of PKF Eastern Africa CSR Committee. He is also a Life Member of Award Holders Alumni (AHA) − President’s Award Kenya and a member of the finance committee for President’s Awards Kenya.

Christopher Naidoo, CA (SA), is a member of the South African Institute of Chartered Accountants, serves as the International Accounting and Assurance Technical Specialist at PKF International Ltd. He is also a member of PKF’s International Professional Standards Committee (IPSC), Assurance Strategy Group and Risk Advisory Group.

J Ramanarayanan, FCA, Cert. in IFRS (ICAEW), is a partner in PKF Sridhar & Santhanam LLP, Chartered Accountants, India. He is a part of the technical team of the firm engaged in transition to Ind AS (the converged IFRS Standards).

Edward Rands, FCA, was for eleven years the Risk and Professional Standards partner at PKF Cooper Parry. He led the firm’s technical team, which was responsible for maintaining and updating accounting knowledge and for dealing with complex problems and queries as they arose. He was also the founder chairman of the Accounting and Auditing Technical Committee of the PKF firms in the United Kingdom and Republic of Ireland. He now works as an independent consultant, advising firms on technical and regulatory matters.

Darshan Shah, FCCA, CPA (K), CPA (U), ACA, is an audit partner at PKF Kenya and the Head of Audit and Assurance for the Eastern Africa PKF member firms. He also heads the technical training function across the Eastern Africa.

Minette van der Merwe, CA (SA), is PKF South Africa’s IFRS technical expert responsible for the interpretation and application of IFRS within the Southern African region.