Ifrs for Smes

IFRS for small and medium-sized entities

A comparison with IFRS — the basics

Contents

Introduction Chapter one — Preparation and presentation of financial statements Chapter two — Business combinations and group financial statements Chapter three — Elements of the statement of financial position Chapter four — Elements of the statement of comprehensive income Chapter five — Transition to the IFRS for SMEs Contents by section 3 4 26 52 102 114 118

Introduction

Shortly after its inception in 2001, the International Accounting Standards Board (IASB) started a project to consider reporting issues for small and medium-sized entities (SMEs). Following a Discussion Paper in 2004, and an Exposure Draft in 2007, the IFRS for SMEs standard was issued in July 2009. Possibly the greatest shift in the final standard was that the IASB considered this to be a standalone standard that is separate from full IFRS (full IFRS is the collective term used for all other standards and interpretations issued by the IASB). In this guide, we take a top-level review of the IFRS for SMEs standard and provide an overview of the differences between IFRS for SMEs and full IFRS. In addition, we provide a commentary of the possible effects that the adoption of IFRS for SMEs may have on a reporting entity, if its previous generally accepted accounting principles (GAAP) had been full IFRS. It would be near impossible to produce a publication that compares two broad sets of accounting frameworks and includes all differences that could arise in accounting for the myriad of business transactions that could possibly occur. The existence of any differences — and their materiality to an entity’s financial statements — depends on a variety of specific factors including: the nature of the entity; the detailed transactions it enters into; its interpretation of accounting principles; its industry practices; and its accounting policy elections where IFRS for SMEs and IFRS offer a choice. Therefore,...