6/28/2013 Presented by Jaswinder Singh

FINANCIAL STATEMENT ANALYSIS

Understanding Financial Statements

OBJECTIVE OF FINANCIAL STATEMENTS

6/28/2013

The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.
IIASB, Framework for the Preparation and Presentation of Financial Statements, par.12

Presented by Jaswinder Singh

NATURE OF FINANCIAL STATEMENT

6/28/2013

The data exhibited by financial statements are affected by

a) Recorded facts b) Accounting Concepts, Conventions & Principles

Presented by Jaswinder Singh

c) Personal Judgment

However they do not provide all the information because

a) They largely portray the financial effects of past events b) They do not provide information of non-financial nature

ACCOUNTING PRINCIPLES
6/28/2013

Accounting concept Accounting Conventions a) Entity Concept a) Disclosure b) Going Concern Concept b) Materiality c) Accounting period concept c) Consistency d) Money Measurement Concept d) Conservatism e) Cost Concept f) Cost Attach Concept g) Dual Aspect Concept h) Accrual concept i) Periodic Matching of cost and Revenue Concept j) Realization Concept k) Verifiable Objective Evidence Concept

Presented by Jaswinder Singh

ESSENTIAL QUALITIES OF FINANCIAL

STATEMENTS
6/28/2013

1. 2. 3. 4. 5. 6.

Relevance Understandability : Reliability and Accuracy Comparability Completeness Timeliness

Presented by Jaswinder Singh

LIMITATIONS OF FINANCIAL STATEMENTS

6/28/2013

1. 2. 3. 4. 5. 6. 7.

Lack of Precision Lack of Exactness Incomplete Information Interim Reports Hiding of Real Position or Window Dressing Lack of Comparability Historical Costs

Presented by Jaswinder Singh

FINANCIAL VERSUS MANAGEMENT

ACCOUNTING
6/28/2013

Financial accounting (FA) -> external financial

reporting

Presented by Jaswinder Singh

Management

Accounting

(MA)

->

financial

information useful in internal decision and management processes

Starting from the same source data + FA is frame of reference for MA

ANNUAL FINANCIAL STATEMENTS

6/28/2013

Income statement Balance sheet Notes to the accounts Cash flow statement Statement of changes in equity Audit report

Presented by Jaswinder Singh

FINANCIAL POSITION
6/28/2013

Assets Assets are the resources controlled by an enterprise as a result of past events, from which future economic benefits are expected to flow to the enterprise. Liabilities Liabilities are the present obligations of the enterprise ,arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. Equity Equity is the residual interest in the assets of the enterprise after deducting all its liabilities.

Presented by Jaswinder Singh

ACCOUNTING EQUATION
6/28/2013

The relationship among asset , liability and

equity can be expressed by the following equation

Presented by Jaswinder Singh

Assets = Liabilities + Owners Equity The effect of all business transactions is reflected in this equation.

ELEMENTS OF FINANCIAL STATEMENTS

6/28/2013

Financial Position -- Assets -- Liabilities --Equity Performance -- Income -- Expenses Cash Flows

Presented by Jaswinder Singh

CHARACTERISTICS
6/28/2013

Assets
1. They represent potential to contribute , directly or indirectly, to the flow of cash or cash equivalents to the enterprise. 2. Physical form not essential to the existence of the asset. 3. Legal right of ownership not essential in establishing the existence of asset. 4. Purchasing or producing not always essential to obtain asset. 5. Expenditure incurred for seeking future economic benefits may not result in asset.

Presented by Jaswinder Singh

CHARACTERISTICS CONTD.
6/28/2013

Liabilities
1. Its a present obligation to be settled in future 2. Obligations may be due to a binding contract or statutory requirement 3. A present obligation and a future commitment differ from each other 4. Careful estimates are required to measure

Presented by Jaswinder Singh

provisions.

CHARACTERISTICS CONTD.
6/28/2013

Equity
It is dependent on the measurement of assets and liabilities A change in net assets results in a change in the equity

Presented by Jaswinder Singh

CHARACTERISTICS CONTD.
6/28/2013

Income :- It represents the increase in economic

benefits in the form of increase in assets or decrease in liabilities

Presented by Jaswinder Singh

Expenses:- It represents decrease in economic benefits in the form of outflows or depletion of assets or increase in liabilities ( Expense vs. Expenditure )

CHARACTERISTICS CONTD.
6/28/2013

Income; 1.Both revenue and gains 2. Revenue arises in the ordinary course of business 3.Gains may or may not arise in the ordinary course of business
Expenses 1. It includes both expenses and losses. 2. It arises in the ordinary course of business. 3. Losses may or may not arise in the ordinary course of business

Presented by Jaswinder Singh

USERS OF FINANCIAL STATEMENTS

6/28/2013

Employees Shareholders Trade creditors

Presented by Jaswinder Singh

Government

Management

Customers

Loan providers Potential Investors

Public

USERS FOCUS ON INVESTORS

6/28/2013

Employees Shareholders/ Investors Trade creditors

Presented by Jaswinder Singh

Government

Management

Customers

Loan providers Potential Investors

Public

6/28/2013 Presented by Jaswinder Singh

FINANCIAL REPORTING & REGULATIONS

INTRODUCTION TO USGAAP
6/28/2013

Generally

Accepted

Accounting

Principles,

US

GAAP

or

simply GAAP are terms for the "generally accepted accounting principles" and rules used in the United States

Presented by Jaswinder Singh

The Financial Accounting Standards Board (FASB) establishes rules for public and private companies, and non-profit organizations;

The

Governmental

Accounting

Standards

Board(GASB)

determines a different set of assumptions, principles for local and state governments

The Federal Accounting Standards Advisory Board (FASAB)

performs a similar role for federal government entities

INTRODUCTION TO IFRS
6/28/2013

An independent, not-for-profit private sector organization working in the public interest.

Its principal objectives are:
to develop an international financial reporting standards (IFRSs) through its standard-setting body, the IASB to promote the its use and application. to meet the needs of emerging economies and SMEs to promote and facilitate adoption of IFRSs

Presented by Jaswinder Singh

IFRS IMPLEMENTATION AROUND THE WORLD (2005)

IFRS or fixed date for implementation Convergence plans

U.S. GAAP and/or convergence intended No/unknown convergence plans

22

IFRS IMPLEMENTATION AROUND THE WORLD (2009)

IFRS permitted or required Convergence plans

U.S. GAAP and/or convergence intended No/unknown convergence plans

23

WAVE II IS COMING

Korea2011:

IFRS mandatory for listed businesses 2009: IFRS permitted Japan Large publicly-traded companies given option to earlyadopt IFRS for years ending March 31, 2010 China Convergence with IFRS with some differences India Convergence with IFRS for public interest entities for 2011 Brazil Listed companies and banks required to use IFRS starting from 2010, IFRS to be incorporated into Brazilian GAAP Canada 2011: Reporting under IFRS for publicly-accountable entities, private companies permitted to use IFRS Mexico 2012: Working to converge Mexican GAAP with IFRS U.S. 2015 or 2016 ???

24

IFRS VERSUS FASB STANDARDS

6/28/2013

IFRS: More 'principles-based' standards with limited application guidance.

GAAP: More 'rule-based' standards with more specific application guidance

Presented by Jaswinder Singh

IFRS IN INDIA
6/28/2013

The Institute of Chartered Accountants of India (ICAI) has announced that IFRS will be mandatory in India for financial statements for the periods beginning on or after 1 April 2012, but this plan has been failed and IFRS/IND-AS (Converged IFRS) are still not applicable. There was a roadmap as given below but still Indian companies are following old Indian GAAP. There is no clear new date of adoption of IFRS
Reserve Bank of India has stated that financial statements of banks need to be IFRS-compliant for periods beginning on or after 1 April 2011.

Presented by Jaswinder Singh

MOST DIFFERENCES ARE NOT IN WRITING

6/28/2013

Since US GAAP is much more detailed and specific there are many contractual clauses that are covered in US GAAP that are not addressed in writing in IFRS.
International auditors sometimes, but not always, look to US GAAP when IFRS is silent about a particular issue.

Presented by Jaswinder Singh

COMPONENTS OF FINANCIAL STATEMENTS

6/28/2013

Component Balance Sheet Income Stat. Statement of Recognized Income & Exp. Statement of changes in share holders equity CF Statement Acc. Policies Notes

IFRS Required Required Required1

US GAAP Required Required Other Comp. income & acc. Other comp. income2 Required

Indian GAAP Required Required Not Required

Presented by Jaswinder Singh

Required1

Required3

Required Required Required

Required4 Required Required

Required3 Required Required

6/28/2013 Presented by Jaswinder Singh

COMPONENTS OF FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN US GAAP, INDIAN GAAP AND INTERNATIONAL ACCOUNTING STANDARDS.

Particulars
1. Revenue Recognition

Indian GAAP
Revenues are recognized when all significant risks and rewards of ownership are transferred or on a percentage of completion basis. No detailed industry specific guidelines. Conforms to statute and captions are in the following order : --Equity and reserves --Debt --Fixed assets --Investments --Net current assets --Deferred expenditure and --Accumulated losses Required only for the current year with the prior year comparatives. Include effect in current year income Statement.

US GAAP
Industry specific revenue recognition guidelines. Could be different from what I-GAAP has recognized.

IFRS
Revenues are recognized when all significant risks and rewards of ownership are transferred.

2. Balance sheet

Balance sheet captions are presented in order of liquidity starting with the most liquid assets, cash. Also requires disclosure of movements in stockholders equity, including the number of shares outstanding for all years presented.

Balance sheet captions are presented in the inverse order of liquidity i.e.illiquid items appear earlier.Requires disclosure of either changes in equity or changes in equity other than those arising from capital transactions with owners and distribution of owners.

3. Correction of fundamental errors

Restate comparatives.Adjustments required to be made topreviously issued financial statements.

Include cumulative effect in current year income statement. For material items, restate comparatives. Similar to US GAAP. Except, ineffectiveness of non-derivatives recognized in equity.

4.Derivative and other financial instrumentMeasurement of hedges of foreign entity investments.

No definitive standard yet. New standard on financial instruments: Recognition and Measurement is presently under formulation.

Gains/losses on hedges of foreign entity investments recognized in equity. All hedge ineffectiveness recognize in the income statement. Gains/losses held in equity must be transferred to the income statement on disposal of investment.

30

Particulars
5. Comprehensive income

Indian GAAP
No standards, not required.

US GAAP
Unrealized gains/losses on investment and Foreign currency translation disclosed as a separate component of equity.

IFRS
Option to present a statement that shows all changes or only those changes in equity that did not arise from capital transactions with owners or distributions to owners. Similar to US GAAP. Gains/losses on hedge instrument used to hedge forecast transaction, included in the cost of asset/liability ( basis adjustment ).

6. Derivatives and other financial instruments measurement of derivative instruments and hedging activities.

No definitive standard yet. New Standard on financial instruments: Recognition and Measurement is presently under formulation.

Measure derivatives and hedge instrument at fair value: recognize changes in fair value in income statement except for effective cash flow hedges, defer in equity until effect of the underlying transaction is recognized in the income statement. Gains/losses on hedge instrument used to hedge forecast transaction, included in cost of asset/liability.

7. Business Combinations

Restricts the use of pooling of interest method to circumstances which meet the criteria listed for an amalgamation in the nature of a merger. In all other cases, the purchase method is used.

Only accounted for by the purchase method. Several differences can arise in terms of date of combination, calculation Of share value to use for purchase price, especially if the I-GAAP method is amalgamation. Mandatory for all entities.

Business combinations under IFRS should be accounted for as an acquisition (purchase method). Where an acquirer cannot be identified then the pooling of interests method should be adopted.

8. Cash Flow Statement

Mandatory only for listed companies and companies meeting certain turnover conditions.

Mandatory for all entities.

31

Particulars
9. Property, Plant and Equipment

Indian GAAP
Use historical costs or revalued amounts. On revaluation, an entire class of assets is revalued, or selection of assets for revaluation is made on a systematic basis. No current restriction on frequency of valuation.

US GAAP
Revaluations not permitted. Tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

IFRS
Use historical cost or revalued amounts. . On revaluation, an entire class of assets is revalued.

10. Share Issue Expenses

May be accounted for as deferred expenses and amortized.

Dividends are reflected in the financial statements of the year to which they Relate even if proposed or approved after the year end.

Expenses are written off when incurred against proceeds of capital.

Dividends are accounted for when approved by the Board/shareholders. If the approval is after the year end, the dividend is not considered as a subsequent event to adjust the financials. Leases are classified as capital and operating leases as per certain criteria. Capital leases are included under property, plant and equipment of the lessor. Lease rentals on operating leases are expensed as incurred. Quantitative thresholds have been defined.

There is no specific requirement under IFRS.

Dividends are classified as a financial liability and are reported in the income statement as an expense. If dividends are declared subsequent to the balance sheet date, it is not recognized as a liability. Similar to US except that the criteria for distinguishing between capital and revenue leases is different.

11. Dividends

12. Leases

Similar to US GAAP but, no quantitative thresholds defined.

13. Prior period adjustments

Prior period items are separately disclosed in the current statement of Profit and Loss together with their nature and amount in a manner that their impact on current profit and loss can be perceived.

Correction of an error in previously issued financial statement is recognized by restating previously issued financial statements.

Prior period errors are generally corrected in the current financial statements. However, where the error is of such significance that the prior period financial statements cannot be considered to have been reliable at the date of their issue, the error should be corrected by adjusting the opening retained earnings.

32

Particulars
14. Accounting for Foreign Currency Transactions

Indian GAAP
Exchange differences on foreign currency transactions are recognized in the profit and loss account with the exception that exchange differences related to the acquisition of fixed assets adjusted to the carrying cost of the relevant fixed asset. Goodwill is capitalized and tested for impairment annually. Except for goodwill from amalgamation, which is amortized over 3-5 years.

US GAAP
All exchange differences are included in determining net income for the period in which differences arise.

IFRS
All exchange differences are included in determining net income for the period in which differences arise.

15. Goodwill

Goodwill is not amortized but goodwill is to be tested for impairment annually.

Goodwill is amortized to expense on a systematic basis over its useful life with a maximum of twenty years. The straight line method should be adopted unless the use of any other method can be justified. Negative goodwill that relates to expectations of future losses and expenses should be recognized as income when the future losses and expenses are recognized. Where it does not relate to identifiable future losses and expenses, an amount not exceeding the fair values of the acquired identifiable non-monetary Assets should be recognized as income on a systematic basis over the remaining weighted average useful life of such assets and the balance, if any immediately charged to income.

16. Negative Goodwill (i.e. the excess of the fair value of net assets acquired over the aggregate purchase consideration)

Negative goodwill is credited to the capital reserve account, which is a component of stockholders equity.

Negative goodwill is allocated to reduce proportionately the value assigned to non-current assets. Any remaining excess Is considered to be extraordinary gain.

17. Related parties

Determined by ability to control or to exercise significant influence over the other party. Detailed disclosure required of all material related party transactions. Mandatory for listed companies and companies meeting certain turnover threshold.

Related parties are determined based on common ownership and control. Disclosure required of all material related party transactions, in particular, the nature of relationship involved, a description of the transactions, the amounts of the transactions, the amounts of the transactions for the financial year and the amount due from or to related parties at the end of the financial year.

Similar to US GAAP except that the existence of related parties are to be disclosed even if there are no transactions during the period.

33

Particulars
18.Pension / Gratuity / Post Retirement Benefits

Indian GAAP
Required to be mandatorily provided Based on either actuarial valuation or Contribution to a defined plan. Follows AS15, Acturial gain/losses are recognized immediately.

US GAAP
To be provided for and funded based on acturial valuation. Significant disclosure requirements exist. Acturial gains/losses are amortized.

IFRS
To be provided for and funded based on acturial valuation. Significant disclosure requirements exist. Acturial gains/losses are amortized.

19. Stock Options to NonEmployees

No specific guidance

Complex guidance with respect to measurement date and timing of recognition of expense.

Disclosures required but, no guidance on recognition and measurement.

20. Balance sheet

Does not need segregation of current and non-current portions of assets and liabilities. . SEBI requires compensation cost to be recognized based on intrinsic value or fair value. Not mandatory for un-listed companies.

Segregation necessary.

Disclosed only as part of the footnotes.

21. Stock based Compensation

US GAAP had similar rules as what SEBI later required. However, there is new standard effective 2005, which requires fair value to be expensed for all options.

Compensation costs to be disclosed. Recognition of compensation costs is not mandatory.

22. Investment and Marketable Securities.

Only unrealized depreciation on AFS ( Available-For-Sale ) securities is recognized in the income statement.

Both appreciation and depreciation ( if unrealized ) is recognized as Other Comprehensive Income. Separate standard for treatment of cost of development of computer software.

Similar to US GAAP. Except option to recognize gains/losses in AFS e either income statement or equity. However, the selection is a one-time option. No guideline under IFRS. 34

Particulars
23. Segment Information

Indian GAAP
Specific requirements govern the format and content of a reportable segment and the basis of identification of a reportable segment. The information for disclosure is to be prepared in conformity with the accounting standards used for the company as a whole.

US GAAP
Disclose revenues, profits and assets identified by product and geographically of each reportable segment. Segments based on information reviewed by CODM (Chief Operating Decision Maker)

IFRS
Largely similar to US GAAP requirements however, mandatory only for listed companies. Segment liabilities are also to be shown.

24. JV ( Jointly controlled assets or corporation )

Allows proportionate consolidation

Generally only uses Equity method of accounting except certain specified industries such as Oil and Gas. Research costs can be capitalized and amortized as intangible assets in the following cases: Research costs related to activities conducted for others, costs unique to extractive industries and cost of intangibles which have alternative future uses. All other costs are Charged to expense as and when incurred.

Allows either Equity method or proportionate consolidation.

25. Research and development costs

Deferred where technical or commercial feasibility is established and the enterprise has adequate resources to enable the product or process to be marketed.

Deferred where technical or commercial feasibility is established and the enterprise has adequate resources to enable the product or process to be marketed.

35

IAS 1 COMPREHENSIVE INCOME

6/28/2013

IFRS: Statement of changes in equity is required. A grand total of "comprehensive income" is permitted but not required. GAAP: Must present grand total of "comprehensive income". Can present in income statement, statement of comprehensive income, or changes in equity.

Presented by Jaswinder Singh

IAS 1 EXTRAORDINARY ITEMS

6/28/2013

IFRS: Prohibited.
US: Extraordinary items are permitted but restricted to items that are both infrequent in occurrence and unusual in nature.

Presented by Jaswinder Singh

IAS 2 METHOD FOR DETERMINING

INVENTORY COST
6/28/2013

IFRS: LIFO is prohibited.

US: LIFO is permitted.

Presented by Jaswinder Singh

IAS 32 CLASSIFICATION OF CONVERTIBLE

DEBT INSTRUMENTS BY THE ISSUER
6/28/2013

IFRS: Split the instrument into its liability and equity components at issuance.
GAAP: Classify the entire instrument as a liability. However, the intrinsic value of the conversion feature at the commitment date of the instrument, if any, is recognized as additional paid-in capital.

Presented by Jaswinder Singh

IAS 39 HEDGING GAIN OR LOSS ON NET

INVESTMENT IN A FOREIGN ENTITY
6/28/2013

IFRS: The portion determined to be an effective hedge is recognized in equity.

GAAP: Gains and losses relating to hedge ineffectiveness is recognized in profit or loss immediately.

Presented by Jaswinder Singh

IAS 39 MACRO HEDGING

6/28/2013

IFRS: Fair value hedge accounting treatment for a portfolio hedge of interest rate risk is allowed if certain specified conditions are met. GAAP: Hedge accounting treatment is prohibited, though similar results may be achieved by designating specific assets or liabilities as hedged items.

Presented by Jaswinder Singh

IAS 39 USE OF "PARTIAL-TERM HEDGES"

6/28/2013

(hedge of a fair value exposure for only a part of the term of a hedged item)

Presented by Jaswinder Singh

IFRS: Allowed. GAAP: Prohibited.

IAS 39 HEDGING FOREIGN CURRENCY RISK IN A HELD-TO-MATURITY INVESTMENT

6/28/2013

IFRS: Can qualify for hedge accounting.

GAAP: Cannot qualify for hedge accounting

Presented by Jaswinder Singh

IAS 39 OPTION TO DESIGNATE ANY FINANCIAL

ASSET OR FINANCIAL LIABILITY TO BE MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS

6/28/2013

IFRS: Option is allowed. GAAP: No such option

Presented by Jaswinder Singh

OPTION TO DESIGNATE LOANS AND

RECEIVABLES AS AVAILABLE FOR SALE TO BE MEASURED AT FAIR VALUE THROUGH EQUITY
6/28/2013

IFRS: Option is allowed.

GAAP: No such option.

Presented by Jaswinder Singh

INVESTMENTS IN UNLISTED EQUITY

INSTRUMENTS
6/28/2013

IFRS: Measured at fair value if reliably measurable; otherwise at cost.

GAAP: Measured at cost.

Presented by Jaswinder Singh

IAS 39 SUBSEQUENT REVERSAL OF AN

IMPAIRMENT LOSS
6/28/2013

IFRS: Required for loans and receivables, held-tomaturity, and available-for-sale debt instruments if certain criteria are met. GAAP: Prohibited for held-to-maturity and available-for-sale securities. Reversal of valuation allowances on loans is recognized in the income statement.

Presented by Jaswinder Singh

IAS 39 USE OF "QUALIFYING SPES"

6/28/2013

IFRS: No such category of SPEs.

GAAP: Necessary for derecognition of financial assets if transferee is not free to sell or pledge transferred assets.

Presented by Jaswinder Singh

IAS INTERNATIONAL ACCOUNTING STANDARDS

6/28/2013 Presented by Jaswinder Singh

Conceptual Framework CF Main standards

6/28/2013

Framework for the Preparation and Presentation of Financial Statements Presentation of Financial Statements Inventories Cash Flow Statements Accounting Policies, Changes in Accounting Estimates and Errors Events after the Balance Sheet Date Constructions Contracts Income Taxes Segment Reporting Property, Plant and Equipment Leases Revenue

IAS 1 IAS 2 IAS 7 IAS 8 IAS 10 IAS 11 IAS 12 IAS 14 IAS 16 IAS 17 IAS 18

Presented by Jaswinder Singh

IAS 19
IAS 20 IAS 21 IAS 23

Employee Benefits
Accounting for Government Grants and Disclosure of Govt. Assistance The Effects of Changes in Foreign Exchange Rates Borrowing Costs

IAS 24

Related Party Disclosures

IAS CONTD.
6/28/2013

Main standards (continued)

IAS 26 IAS 27 IAS 28 Accounting and Reporting by Retirement Benefit Plans Consolidated and Separate Financial Statements Investments in Associates

Presented by Jaswinder Singh

IAS 29
IAS30 IAS 32 IAS 33

Financial Reporting in Hyperinflationary Economies

Disclosure in the Financial Statements of Banks and Similar Financial Institutions Financial Instruments: Disclosure and Presentation Earnings per Share

IAS 34
IAS 36 IAS 37 IAS 38

Interim Financial Reporting

Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Assets

IAS 39
IAS 40 IAS 41

Financial Instruments: Recognition and Measurement

Investment Property Agriculture

IAS 1 PRESENTATION OF FINANCIAL STATEMENTS

6/28/2013

IAS 1 Presentation of Financial Statements sets out the

overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete set of financial statements to comprise a statement of financial position, a

Presented by Jaswinder Singh

statement of profit or loss and other comprehensive income, a

statement of changes in equity and a statement of cash flows.

IAS 1 was reissued in September 2007 and applies to annual

periods beginning on or after 1 January 2009.

IAS 2 INVENTORIES
6/28/2013

IAS 2 Inventories contains the requirements on how to

account for most types of inventory. The standard requires inventories to be measured at the lower of cost and net

Presented by Jaswinder Singh

realisable value (NRV) and outlines acceptable methods of

determining cost, including specific identification (in some cases), first-in first-out (FIFO) and weighted average cost.

A revised version of IAS 2 was issued in December 2003 and applies to annual periods beginning on or after 1 January 2005

IAS 7 STATEMENT OF CASH FLOWS

6/28/2013

IAS 7 Statement of Cash Flows requires an entity to present a

statement of cash flows as an integral part of its primary financial statements. Cash flows are classified and presented into operating activities (either using the 'direct' or 'indirect' method), investing activities or financing activities, with the latter two categories generally presented on a gross basis.

Presented by Jaswinder Singh

IAS 7 was reissued in December 1992, retitled in September 2007, and is operative for financial statements covering

periods beginning on or after 1 January 1994.

IAS 8 ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS

6/28/2013

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors is applied in selecting and applying accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors.

Presented by Jaswinder Singh

The standard requires compliance with any specific IFRS applying to a

transaction, event or condition, and provides guidance on developing accounting policies for other items that result in relevant and reliable information. Changes in accounting policies and corrections of errors are generally retrospectively accounted for, whereas changes in accounting estimates are generally accounted for on a prospective basis.

IAS 8 was reissued in December 2005 and applies to annual periods beginning on or after 1 January 2005.

IAS 10 EVENTS AFTER THE REPORTING PERIOD

6/28/2013

IAS 10 Events After The Reporting Period contains

requirements for when events after the end of the end of the reporting period should be adjusted in the financial statements. Adjusting events are those providing evidence of conditions existing at the end of the reporting period, whereas non-adjusting events are indicative of conditions arising after the reporting period (the latter being disclosed where material).

Presented by Jaswinder Singh

IAS 10 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005.

IAS 11 CONSTRUCTION CONTRACTS

6/28/2013

IAS 11 Construction Contracts provides requirements on the

allocation of contract revenue and contract costs to accounting periods in which construction work is performed. Contract revenues and expenses are recognised by reference to the stage of completion of contract activity where the outcome of the construction contract can be estimated reliably, otherwise revenue is recognised only to the extent of recoverable contract costs incurred.

Presented by Jaswinder Singh

IAS 11 was reissued in December 1993 and is applicable for periods beginning on or after 1 January 1995.

IAS 16 PROPERTY, PLANT AND EQUIPMENT

6/28/2013

IAS 16 Property, Plant and Equipment outlines the

accounting treatment for most types of property, plant and equipment. Property, plant and equipment

Presented by Jaswinder Singh

is initially measured at its cost, subsequently

measured either using a cost or revaluation model, and depreciated so that its depreciable amount is

allocated on a systematic basis over its useful life.

IAS 16 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005.

IAS 36 IMPAIRMENT OF ASSETS

6/28/2013

IAS 36 Impairment of Assets seeks to ensure that an entity's assets are not carried at more than their recoverable amount (i.e. the higher of fair value less costs of disposal and value in use). With the exception of goodwill and certain intangible assets for which an annual impairment test is required, entities are

Presented by Jaswinder Singh

required to conduct impairment tests where there is an indication of

impairment of an asset, and the test may be conducted for a 'cash-generating unit' where an asset does not generate cash inflows that are largely independent of those from other assets.

IAS 36 was reissued in March 2004 and applies to goodwill and intangible assets acquired in business combinations for which the agreement date is on or

after 31 March 2004, and for all other assets prospectively from the beginning
of the first annual period beginning on or after 31 March 2004.

IFRS
6/28/2013

IFRS 1 IFRS 2 IFRS 3 IFRS 4 IFRS 5 IFRS 6 IFRS 7 IFRS 8 IFRS 9 IFRS 10 IFRS 11

First-time Adoption of International Financial Reporting Standards Share-based Payment Business Combinations Insurance Contracts Non-current Assets Held for and Discontinued Operations Exploration for and Evaluation of Mineral Resources Financial Instruments: Disclosures Operating Segments Financial Instruments Consolidated Financial Statements Joint Arrangements

Presented by Jaswinder Singh

IFRS 12 IFRS 13

Disclosure of Interests in Other Entities Fair Value Measurement

6/28/2013 Presented by Jaswinder Singh