Assignment on International Accounting Standards

Course Title: Intermediate Accounting

Course Code: ACT315
Section : 03
Submitted to
Sharmeen Akhter
Lecturer, School of Business Studies, Southeast University

Submitted by
Sanjida Yesmin Jhinuk, ID: 2019010000137
(Objective, Limitations & Scope)
Mahfuzul Hasan Rahat Sarkar, ID: 2019010000004
(Introduction, Overview of the topic & Conclusion)
Istiak Hasan, ID: 2017010000078
(Definition & Analysis and Learning from the report)

School of Business Studies, Southeast University

Table of Contents:

SL Content Page

1 Introduction 3

2 Objectives of the Study 3

3 Overview of the Study 4

4 Scope 4

5 Limitation 5

6 Definition & Analysis 6-9

7 Learning from the study 9-21

8 Conclusion 22

9 Lack of the Study 22

10 Reference 22
Introduction: The International Accounting Standards Committee (IASC) was formed in
1973 to develop worldwide accounting standards. Its came into existence as a result of an
agreement among professional accountancy bodies in Australia, Canada, France, Germany,
Japan, Mexico, the Netherlands, the United Kingdom and Ireland, and United States of America.
The objective of the IASC was to harmonize the world's accounting standards and eliminate
those differences that cannot be explained by legitimate environmental variables. Accounting
bodies of most of the countries, including the Institute of Chartered Accountants of India, are
members of this body and these members have resolved to conform to the standards developed
by IASC, subject to variations needed due to local conditions or laws. Subsequently, IASC
experienced a structural change similar to the structure of Financial Accounting Standards Board
(FASB) of the United States. In March 2000, a new IASC constitution was approved and the
name of the international standard setting body was changed to International Accounting
Standards Board (IASB). The new board (IASB) is a part of IASC Foundation and assumed its
duties in April 2001. With the restructuring of the IASC in 2001, the new developed standards of
IASB are no longer called International Accounting Standards but are called International
Financial Reporting Standards (IFRS). Many countries notably the United Kingdom, Germany,
and Australia - already allow listed companies to publish their accounts in accordance with
IFRS.

Objectives of the Study:

The main objectives of International Accounting Standards are:

 To prepare and publish accounting standards that can be worldwide accepted by everyone
can be practiced by all.
 To help to improve and harmonize the accounting standards and procedures related to
representation of financial statements.
 To develop, in the public interest, a single set of high quality, understandable,
enforceable and globally accepted financial reporting standards based upon clearly
articulated principles. These standards should require high quality, transparent and
comparable information in financial statements and other financial reporting to help
investors, other participants in the world’s capital markets and other users of financial
information make economic decisions.
  To promote the use and rigorous application of those standards.
 To promote and facilitate adoption of IFRSs, being the standards and interpretations
issued by the IASB. Through the convergence of national accounting standards and
IFRSs

Overview of the study: IFRS is the international accounting framework within which to
properly organize and report financial information. It is derived from the pronouncements of the
London-based International Accounting Standards Board (IASB). It is currently the required
accounting framework in more than 120 countries.

Scope:
 IASB Standards are known as International Financial Reporting Standards.
 All International Accounting Standards (IAS) and interpretations issued by the former
IASC and SIC continue to be applicable unless and until they are amended or withdrawn.
 IFRSs apply to the general purpose financial statements and other financial reporting by
profit - oriented entities those engaged in commercial, industrial, financial and similar
activities of their legal form.
 Entities other than profit - oriented business entities may also find IFRSs appropriate.
 General purpose financial statements are intended to meet the common needs to
shareholders, creditors, employees , and the public at large for information about my
entity’s financial position, performance , and cash flows.
 Other financial reporting includes information provided outside financial statements that
assists in the interpretation of a complete set of financial statements or improves user's
ability to make efficient economic decisions.
 IFRS apply to individual company and consolidated financial statements.
 A complete set of financial statements includes a statement of financial position, a
statement of comprehensive income, a statement of cash flows, a statement of changes in
equity. When a separate income statement is presented in accordance with IAS 1 (2007),
it is part of that complete set.
 In developing Standards, IASB intends not to permit choices in accounting treatment.
Further, IASB intends to reconsider the choices in existing IASs with a view to reducing
the number of those choices.
Limitations:
Political Environments
 Differences in government.
 Difficult to combine together.
 A huge distance.

Economic Factors
 National fiscal capacity.
 Developed capital market.
 Corporate capital structure.
 Economic development level.

Cultural Environments
 Reporting of financial information.
 Auditor’s perspective and attitude.
 System for management control.
 Rules and laws.
Definition and Analysis:
Definition:
International accounting standards are a set of internationally agreed principles and procedures
relating to the way that companies present their accounts. International Accounting Standards
mandated how various accounting transactions were to be recorded and reported in an
organization's financial statements. Their intent was to reduce differences in the accounting
for transactions and financial statement presentation around the world, which in turn could
improve the investment climate. The standards were promulgated by the International
Accounting Standards Committee and were issued from 1973 to 2001. The standards were no
longer released after that committee was disbanded, resulting in a set of 41 standards covering
such topics as financial statement presentation, inventories, and agriculture. The committee's
replacement is the International Accounting Standards Board (IASB), which now issues
International Financial Reporting Standards. The IASB has adopted all of the International
Accounting Standards. Strictly speaking, the ‘International Accounting Standards’ (‘IAS’) are a
specific set of norms for the presentation of financial accounts, developed by the International
Accounting Standards Board (IASB). Since 2001, those standards have been released under the
name ‘International Financial Reporting Standards’ (IFRS). But, more generally, the term
‘international accounting standards’ might be used to refer to any accounting standard that
applies to organizations across borders. As we shall explain below, this can include other sets of
accounting standards, such as GAAP in the United States. The push for international accounting
standards first arose in the years following World War Two, where record levels of international
investment encouraged countries to seek consistency in the way that financial information is
reported. The International Accounting Standards Committee (IASC) was formed in 1973 as the
first international standard-setting body. From that point on the ‘IAS’ were issued. A re-
organization in 2001 replaced this body with the IASB. From that point on the international
standards that were issued were renamed as ‘IFRS’. Compliance with the IFRS is either required
or permitted in over 140 countries around the world, including across the European Union.
However, there are significant jurisdictions where IFRS have not been accepted. This includes
the United States (which applies ‘Generally Accepted Accounting Principles’ or ‘GAAP’), China
and Japan.
Analysis:
International Accounting Standards (IAS) were the first international accounting standards that
were issued by the International Accounting Standards Committee (IASC), formed in 1973. The
goal then, as it remains today, was to make it easier to compare businesses around the world,
increase transparency and trust in financial reporting, and foster global trade and investment.
Globally comparable accounting standards promote transparency, accountability, and efficiency
in financial markets around the world. This enables investors and other market participants to
make informed economic decisions about investment opportunities and risks and improves
capital allocation. Universal standards also significantly reduce reporting and regulatory costs,
especially for companies with international operations and subsidiaries in multiple countries.
There are 41 accounting standards in international accounting standard, which are given below:

IAS 1: Presentation of Financial Statements. (June 2005)

IAS 2: Inventories. (December 2003)

IAS 3: Consolidated Financial Statements. Originally issued 1976, effective 1 Jan 1977. No
longer effective. Superseded in 1989 by IAS 27 and IAS 28

IAS 4: Depreciation Accounting. Withdrawn in 1999, replaced by IAS 16, 22, and 38, all of
which were issued or revised in 1998.

IAS 5: Information to Be Disclosed in Financial Statements. Originally issued October 1976,

effective 1 January 1997. No longer effective. Superseded by IAS 1 in 1997.

IAS 6: Accounting Responses to Changing Prices. Superseded by IAS 15.

IAS 7: Cash Flow Statements. (1992)

IAS 8: Accounting Policies, Changes in Accounting Estimates, and Errors. (December 2003)

IAS 9: Accounting for Research and Development Activities. Superseded by IAS 38 effective
1.7.99.

IAS 10: Events after the Balance Sheet Date. (1999)

IAS 11: Construction Contracts. (1993)

IAS 12: Income Taxes. (2000)

IAS 13: Presentation of Current Assets and Current Liabilities. Superseded by IAS 1.

IAS 14: Segment Reporting. (1997)

IAS 15: Information Reflecting the Effects of Changing Prices. Withdrawn December 2003
IAS 16: Property, Plant and Equipment. (December 2003)

IAS 17: Leases. (December 2003)

IAS 18: Revenue. (1993)

IAS 19: Employee Benefits. (December 2004)

IAS 20: Accounting for Government Grants and Disclosure of Government Assistance. (1983)

IAS 21: The Effects of Changes in Foreign Exchange Rates. (December 2003)

IAS 22: Business Combinations. Superseded by IFRS 3 effective 31 March 2004. (1998)

IAS 23: Borrowing Costs. (1993)

IAS 24: Related Party Disclosures. (December 2003)

IAS 25: Accounting for Investments. Superseded by IAS 39 and IAS 40 effective 2001.

IAS 26: Accounting and Reporting by Retirement Benefit Plans. (1987)

IAS 27: Consolidated and Separate Financial Statements. (December 2003)

IAS 28: Investments in Associates. (December 2003)

IAS 29: Financial Reporting in Hyperinflationary Economies. (1989)

IAS 30: Disclosures in the Financial Statements of Banks and Similar Financial Institutions.
Superseded by IFRS 7 effective 2007. (1990)

IAS 31: Interests in Joint Ventures. (December 2003)

IAS 32: Financial Instruments: Disclosure and Presentation. Disclosure provisions superseded by
IFRS 7 effective 2007. (August 2005)

IAS 33: Earnings per Share. (December 2003)

IAS 34: Interim Financial Reporting. (1998)

IAS 35: Discontinuing Operations. Superseded by IFRS 5 effective 2005. (1998)

IAS 36: Impairment of Assets. (March 2004)

IAS 37: Provisions, Contingent Liabilities and Contingent Assets. (1998)

IAS 38: Intangible Assets. (March 2004)

IAS 39: Financial Instruments: Recognition and Measurement. (August 2005)

IAS 40: Investment Property. (March 2004)

IAS 41: Agriculture. (2001)

Learning from the Study:

International accounting is a vital component of the overall profession in the current economy.
Improvements in digital technology and supply chains, as well as international trade agreements,
have all made commerce across national borders more efficient and faster than in the past. No
matter the industries in which businesses operate, their size or operational goals, companies need
accountants to help them manage the many complex, vital concerns related to their finances.
What we learned from the 41 standards of the international accounting standard are given below:
we have summarized the 41 standards of the international accounting standard.
Which follows as:
Summary of IAS 1: The objective of IAS 1 (2007) 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.
To meet that objective, financial statements provide information about an entity’s:
Assets, liabilities, equity, income and expenses, including gains and losses, cash flows.
A complete set of financial statements should include:
A statement of financial position (balance sheet) at the end of the period.
A statement of comprehensive income for the period (or an income statement and a
statement of comprehensive income).
Regarding issued share capital and reserves, the following disclosures are required:
Numbers of shares authorized, issued and fully paid, and issued but not fully paid.
Per 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 equity.
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.
Summary of IAS 2: IAS2 (Inventories) (International Accounting Standard) deals with
inventory and stock in trade.
To compute cost of sales in periodic system purchases are recorded in the purchase account.
Opening balance of inventory is added to that amount and an inventory count is performed at
year end. This inventory count gives an amount of closing inventory. In perpetual system
accountant updates the balance of closing inventory after every transaction involving inventory.
It means after every purchase and sales accountant get to know about the inventory balance.
Summary of IAS 3: Disclosures required in consolidated financial statements:
The nature of the relationship between the parent and a subsidiary when the parent does not own,
directly or indirectly through subsidiaries, more than half of the voting power, the reasons why
the ownership, directly or indirectly through subsidiaries, of more than half of the voting or
potential voting power of an investee does not constitute control, the reporting date of the
financial statements of a subsidiary when such financial statements are used to prepare
consolidated financial statements and are as of a reporting date or for a period that is different
from that of the parent, and the reason for using a different reporting date or period, and the
nature and extent of any significant restrictions on the ability of subsidiaries to transfer funds to
the parent in the form of cash dividends or to repay loans or advances.
Summary of IAS 4: The objective of IAS 16 is to prescribe the accounting treatment for
property, plant, and equipment.
The principal issues are the recognition of assets, the determination of their carrying amounts,
and the depreciation charges and impairment losses to be recognized in relation to them.
Disclosure: For each class of property, plant, and equipment, disclose: 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 or
decreases impairment losses, reversals of impairment losses, Depreciation.
Summary of IAS 5: Disclosures:
Numbers of shares authorized, issued and fully paid, and issued but not fully paid.
Per 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 equity
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.
Summary of IAS 6: The objective of IAS 15 is to specify disclosures reflecting the effects of
changing prices on the measurements used in the determination of an enterprise’s results of
operations and its financial position. The following items should be disclosed, at a minimum,
based on the chosen method for reflecting the effects of changing prices:
Adjustment to depreciation
Adjustment to cost of sales
Adjustments relating to monetary items
The overall effect on net income of the above three items
Current cost of property, plant and equipment and of inventories, if the current cost
approach is used
Description of the methods used to compute the above adjustments
The disclosures can be made on a supplementary basis or in the primary financial statements.
Summary of IAS 7: A cash flow statement provides information on changes in cash and cash
equivalents during a reporting period. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash and subject to an insignificant risk of
changes in value. Operating activities are the principal revenue-producing activities of the entity.
They also include activities that are not investing or financing activities. Cash flows from
Operating activities are reported using either:
The direct method, whereby major classes of gross cash receipts and gross cash payments
are disclosed.
Or,
The indirect method, whereby profit or loss for the period is adjusted for non-cash items,
and its Cash flows are usually reported gross. Cash flows from interest and dividends are
disclosed separately as either operating, investing or financing activities.
Cash flows from taxes on income are also disclosed separately within operating activities.ms of
income or expense related to investing and financing activities. IAS 7 specifies disclosures about
cash and cash equivalents and certain non-cash transactions.
Summary of IAS 8: Disclosures Relating to Changes in Accounting Policies
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:
o For each financial statement line item affected, and
o For basic and diluted earnings per share

Disclosure:
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.

Summary of IAS 9: The objective of IAS 9 is to prescribe the accounting treatment for
intangible assets that are not dealt with specifically in another IFRS. The Standard requires an
entity to recognize an intangible asset if, and only if, certain criteria are met. The Standard also
specifies how to measure the carrying amount of intangible assets and requires certain
disclosures regarding intangible assets.
Disclosure of Research and Development Information:
(a) The amount of deferred research and development costs at the end of the period; and
(b) The basis for amortizing any deferred research and development costs.
Summary of IAS 10: Non-adjusting events should be disclosed if they are of such importance
that non-disclosure would affect the ability of users to make proper evaluations and decisions.
The required disclosure is (a) the nature of the event and (b) an estimate of its financial effect or
a statement that a reasonable estimate of the effect cannot be made. A company should update
disclosures that relate to conditions that existed at the end of the reporting period to reflect any
new information that it receives after the reporting period about those conditions. Companies
must disclose the date when the financial statements were authorized for issue and who gave that
authorization. If the enterprise’s owners or others have the power to amend the financial
statements after issuance, the enterprise must disclose that fact
Summary of IAS 11: The objective of IAS 11 is to prescribe the accounting treatment of
revenue and costs associated with construction contracts. If the outcome of a construction
contract can be estimated reliably, revenue and costs should be recognized in proportion to the
stage of completion of contract activity.
Disclosure:
Amount of contract revenue recognized.
Method used to determine revenue.
Method used to determine stage of completion.
Summary of IAS 12: IAS 12 prescribes the accounting treatment for income taxes, that is, taxes
that are based on taxable profit. Income taxes include all domestic and foreign income taxes
including foreign withholding taxes payable by a subsidiary, associate or joint venture on
distributions to the reporting entity. Therefore, the standard applies to UK corporation tax that is
assessed on an entity’s profits. IAS 1 requires disclosures on the face of the statement of
financial position about current tax assets, current tax liabilities, deferred tax assets, and deferred
tax liabilities
Summary of IAS 13: Current assets are cash; cash equivalent; assets held for collection, sale, or
consumption within the entity’s normal operating cycle; or assets held for trading within the next
12 months. All other assets are noncurrent. Current liabilities are those expected to be settled
within the entity’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.
Summary of IAS 14: IAS 14 has detailed guidance as to which items of revenue and expense
are included in segment revenue and segment expense. All companies will report a standardized
measure of segment result – basically operating profit before interest, taxes, and head office
expenses. For an entity’s primary segments, revised IAS 14 requires disclosure of:
Sales revenue (distinguishing between external and intersegment)
Result
Assets
The basis of intersegment pricing
Liabilities
Capital additions
Revenue
Summary of IAS 15: The objective of IAS 15 is to specify disclosures reflecting the effects of
changing prices on the measurements used in the determination of an enterprise’s results of
operations and its financial position.
The following items should be disclosed, at a minimum, based on the chosen method for
reflecting the effects of changing prices:
Adjustment to depreciation
Adjustment to cost of sales
Adjustments relating to monetary items
The overall effect on net income of the above three items
Summary of 16: The objective of IAS 16 is to prescribe the accounting treatment for property,
plant, and equipment. For each class of property, plant, and equipment, discloses:
Basis for measuring carrying amount
Depreciation method(s) used
Useful lives or depreciation rates
Gross carrying amount and accumulated depreciation and impairment losses
Summary of IAS 17: The objective of IAS 17 (1997) is to prescribe, for lessees and lessors, the
appropriate accounting policies and disclosures to apply in relation to finance and operating
leases.
Disclosure: Lessees – Finance Lease and operating leases
Carrying amount of asset
Reconciliation between total minimum lease payments and their present value
Contingent rent recognized as an expense
Total future minimum sublease income under non-cancellable subleases:
o Beyond five years
Amounts of minimum lease payments at balance sheet date under non-cancellable
operating leases for:
o The next year
o Years 2 through 5 combined

Summary of IAS 18: IAS 18 prescribes the accounting treatment for revenue arising from:
The sale of goods; the rendering of services; and the use by others of entity assets yielding
interest, royalties and dividends.
Disclosure:
Accounting policy for recognizing revenue
Amount of each of the following types of revenue:
Sale of goods
Summary of IAS 19: An IAS 19 Employee benefit prescribes the accounting and disclosure by
employers for employee benefits (i.e. all forms of consideration given by an entity in exchange
for service rendered by an employee.) Such consideration will include wages and salaries and
other forms of remuneration as well as pension benefits, and termination benefits.
Summary of IAS 20: IAS 20 is long established and became operative for financial statements
covering periods beginning on or after 1 January 1984. It provides guidance on the accounting
treatment of government grants (which is very similar to that in the equivalent standard in the
United Kingdom – SSAP 4) and on the disclosure requirements for government grants and other
forms of government assistance.
Summary of IAS 21: The objective of IAS 21 is to prescribe how to include foreign currency
transactions and foreign operations in the financial statements of an entity and how to translate
financial statements into a presentation currency.
Disclosure:
The amount of exchange differences recognized in profit or loss.
Net exchange differences recognized in other comprehensive income and accumulated in
a separate component of equity, and a reconciliation of the amount of such exchange
differences at the beginning and end of the period.
Summary of IAS 22: The objective of IAS 22 is to prescribe the accounting treatment for
business combinations. The Standard covers both an acquisition of one enterprise by another (an
acquisition) and also the rare situation where an acquirer cannot be identified (a uniting of
interests).
These disclosures apply to all business combinations:
Names and descriptions of the combining enterprises.
Method of accounting for the combination.
Effective date of the merger.
Plans to dispose of a portion of the combined enterprise
Summary of IAS 23: Borrowing costs are interest and other costs incurred by an entity in
connection with the borrowing of funds.
Disclosure:
The accounting policy adopted [required only until 1 January 2009 if immediate
expensing model was used]
Amount of borrowing cost capitalized during the period, capitalization rate used.
Summary of IAS 24: The objective of IAS 24 is to ensure that an entity’s financial statements
contain the disclosures necessary to draw attention to the possibility that its financial position
and profit or loss may have been affected by the existence of related parties and by transactions
and outstanding balances with such parties. Relationships between parents and subsidiaries.
Regardless of whether there have been transactions between a parent and a subsidiary, an entity
must disclose the name of its parent and, if different, the ultimate controlling party. If neither the
entity’s parent nor the ultimate controlling party produces financial statements available for
public use, the name of the next most senior parent that does so must also be disclosed.
Summary of IAS 25: IAS 40 covers investment property held by all enterprises and is not
limited to enterprises whose main activities are in this area. Investment property is property (land
or a building or part of a building – or both) held (by the owner or by the lessee under a finance
lease) to earn.
Disclosure:
Whether the fair value or the cost model is used
If the fair value model is used, whether property interests held under operating leases are
classified and accounted for as investment property
If classification is difficult, the criteria to distinguish investment property from owner-
occupied property and from property held for sale
Summary of IAS 26: IAS 26 Accounting and Reporting by Retirement Benefit Plans applies to
the financial statements of retirement benefit plans and thus has limited application to the
entities, funds, accounts and flows covered by the IFRS FReM. It will be of relevance to the
resource accounts prepared by the major schemes within central government
Summary of IAS 27: The nature of the relationship between the parent and a subsidiary when
the parent does not own, directly or indirectly through subsidiaries, more than half of the voting
power, the reasons why the ownership, directly or indirectly through subsidiaries, of more than
half of the voting or potential voting power of an investee does not constitute control, the
reporting date of the financial statements of a subsidiary when such financial statements are used
to prepare consolidated financial statements .
Summary of IAS 28: IAS 28 applies to all investments in which an investor has significant
influence but not control or joint control except for investments held by a venture capital
organization, mutual fund, unit trust, and similar entity that are designated under IAS 39 to be at
fair value with fair value changes recognized in profit or loss.
The following disclosures are required:
Fair value of investments in associates for which there are published price quotations
Summarized financial information of associates, including the aggregated amounts of
assets, liabilities, revenues, and profit or loss.
Summary of IAS 29: IAS 29 will be interpreted in the same way as FRS 24 – in that as all
entities covered by this Manual have a functional currency of pounds sterling, HM Treasury will
notify classification of hyperinflationary economy if appropriate.
 Gain or loss on monetary items [IAS 29.9]
The fact that financial statements and other prior period data have been restated for
changes in the general purchasing power of the reporting currency.
Whether the financial statements are based on an historical cost or current cost approach
Summary of IAS 30: The objective of IAS 30 is to prescribe appropriate presentation and
disclosure standards for banks and similar financial institutions (hereafter called ‘banks’), which
supplement the requirements of other Standards.
Presentation and Disclosure
A bank’s income statement should group income and expenses by nature. A bank’s income
statement or notes should report the following specific amounts:
Interest income
Interest expense
Dividend income
Fee and commission income
Fee and commission expense
Net gains/losses from securities dealing
Net gains/losses from investment securities
Net gains/losses from foreign currency dealing

Summary of IAS 31:

 A joint venture is a contractual arrangement subject to joint control. These are of three
types:
o Jointly controlled operations.
o Jointly controlled assets.
o Jointly controlled entities.
 Jointly controlled operations should be recognised by the venture by including the
assets and liabilities that it controls and the expenses that it incurs and its share of the
income that it earns from the sale of goods or services by the venture.
 Jointly controlled assets should be recognised on a proportional basis.
 Jointly controlled entities should be recognised in consolidated financial statements as
follows:
o The benchmark treatment is proportional consolidation.
o The allowed alternative is the equity method.
  However, interests held for resale or under severe long-term restrictions should be treated
as investments.

Summary of IAS 32:

Presentation:

 Financial instruments should be classified by issuers into liabilities and equity, which
includes splitting compound instruments into these components.
 Classification reflects substance, not form.
 An obligation to deliver cash or other financial asset is debt.
 Mandatorily redeemable preferred stock is debt.
 Split accounting is required for compound financial instruments (such as convertible
securities).
 The cost of a financial liability (interest) is deducted in measuring net profit or loss.
 The cost of equity financing (dividends) are a distribution of equity.
 Offsetting on the balance sheet is permitted only if the holder of the financial instrument
can legally settle on a net basis.

Disclosures

 Terms and conditions.

 Interest rate risk (reprising and maturity dates, fixed and floating interest rates,
maturities).
 Credit risk (maximum exposure and significant concentrations).
 Fair values of financial instruments.

Summary of IAS 33:

 IAS 33 applies only to publicly-listed companies.

 Disclose basic (undiluted) and diluted net income per ordinary share on the face of the
income statement with equal prominence.
 For each class of common having different dividend rights.
 Diluted EPS reflects potential reduction of EPS from options, warrants, rights,
convertible debt, convertible preferred, and other contingent issuances of ordinary shares.
 Numerator for basic EPS is profit after minority interest and preference dividends.
 Denominator for basic EPS is weighted average outstanding ordinary shares.
 "If converted method" to compute dilution from convertibles.
 "Treasury stock method" to compute dilution of options and warrants.
 Pro forma EPS to reflect issuances, exercises, and conversions after balance sheet date.
Use net income to assess whether dilutive.
  Will be effective for financial reporting periods beginning on or after 1 January 1998.

Summary of IAS 34: IAS 34, Interim Financial Reporting:

 Contains both presentation and a measurement guidance,

 Defines the minimum content of an interim financial report, and
 Debts out the accounting recognition and measurement principles to be followed in any
interim financial statements.

Summary of IAS 35: The objectives of IAS 35 are to establish a basis for segregating
information about a major operation that an enterprise is discontinuing from information about
its continuing operations and to specify minimum disclosures about a discontinuing operation.
IAS 35 is a presentation and disclosure Standard. It focuses on how to present a discontinuing
operation in an enterprise's financial statements and what information to disclose. It does not
establish any new principles for deciding when and how to recognise and measure the income,
expenses, cash flows, and changes in assets and liabilities relating to a discontinuing operation.
Instead, it requires that enterprises follow the recognition and measurement principles in other
International Accounting Standards.
Summary of IAS 36: IAS 36 addressed mainly accounting for impairment of goodwill,
intangible assets and property, plant and equipment. The Standard includes requirements for
identifying an impaired asset, measuring its recoverable amount, recognising or reversing any
resulting impairment loss, and disclosing information on impairment losses or reversals of
impairment losses. IAS 36 prescribes how an enterprise should test its assets for impairment, that
is:

 The procedures that an enterprise should apply to ensure that its assets are not overstated
in the financial statements;
 How an enterprise should assess the amount to be recovered from an asset (the
"recoverable amount"); and
 When an enterprise should account for an impairment loss identified by this assessment.

Summary of IAS 37: IAS 37 requires that:

 Provisions should be recognised in the balance sheet when, and only when: an enterprise
has a present obligation (legal or constructive) as a result of a past event; it is probable
(i.e. more likely than not) that an outflow of resources embodying economic benefits will
be required to settle the obligation; and a reliable estimate can be made of the amount of
the obligation;
 Provisions should be measured in the balance sheet at 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, or to transfer it to
 a third party, at that date. For this purpose, an enterprise should take risks and
uncertainties into account. However, uncertainty does not justify the creation of excessive
provisions or a deliberate overstatement of liabilities. An enterprise should discount a
provision where the effect of the time value of money is material and should take future
events, such as changes in the law and technological changes, into account where there is
sufficient objective evidence that they will occur;
 The amount of a provision should not be reduced by gains from the expected disposal of
assets (even if the expected disposal is closely linked to the event giving rise to the
provision) nor by expected reimbursements (for example, through insurance contracts,
indemnity clauses or suppliers warranties). When it is virtually certain that
reimbursement will be received if the enterprise settles the obligation, the reimbursement
should be recognised as a separate asset; and
 A provision should be used only for expenditures for which the provision was originally
recognised and should be reversed if an outflow of resources is no longer probable.

IAS 37 prohibits the recognition of contingent liabilities and contingent assets. An enterprise
should disclose a contingent liability, unless the possibility of an outflow of resources
embodying economic benefits is remote, and disclose a contingent asset if an inflow of economic
benefits is probable

Summary of IAS 38: IAS 38 applies to all intangible assets that are not specifically dealt with in
other International Accounting Standards. It applies, among other things, to expenditures on:

 Advertising,
 Training,
 Start-up, and
 Research and development (R&D) activities.

IAS 38 supersedes IAS 9, Research and Development Costs. IAS 38 does not apply to financial
assets, insurance contracts, mineral rights and the exploration for and extraction of minerals and
similar non-regenerative resources. Investments in, and awareness of the importance of,
intangible assets have increased significantly in the last two decades.

Summary of IAS 39:

 Under IAS 39, all financial assets and financial liabilities are recognised on the balance
sheet, including all derivatives. They are initially measured at cost, which is the fair value
of whatever was paid or received to acquire the financial asset or liability.
 An enterprise should recognise normal purchases and sales of financial assets in the
market place either at trade date or settlement date. Certain value changes between trade
and settlement dates are recognised for purchases if settlement date accounting is used.
  Transaction costs should be included in the initial measurement of all financial
instruments.
 Subsequent to initial recognition, all financial assets are re-measured to fair value, except
for the following, which should be carried at amortised cost:

(a) Loans and receivables originated by the enterprise and not held for trading;

(b) Other fixed maturity investments with fixed or determinable payments, such as debt
securities and mandatorily redeemable preferred shares, that the enterprise intends and is
able to hold to maturity; and

(c) financial assets whose fair value cannot be reliably measured (generally limited to
some equity securities with no quoted market price and forwards and options on
unquoted equity securities).

Summary of IAS 40:

 IAS 40 covers investment property held by all enterprises and is not limited to enterprises
whose main activities are in this area.

 Investment property is property (land or a building - or part of a building - or both) held

(by the owner or by the lessee under a finance lease) to earn rentals or for capital
appreciation or both.

Summary of IAS 41:

Disclosure: The Standard includes the following new disclosure requirements for biological
assets measured at cost less any accumulated depreciation and any accumulated impairment
losses:

 A separate reconciliation of changes in the carrying amount of those biological assets;

 A description of those biological assets;

 An explanation of why fair value cannot be measured reliably;

 The range of estimates within which fair value is highly likely to lie (if possible);

 The gain or loss recognised on disposal of the biological assets;

 The depreciation method used;

  The useful lives or the depreciation rates used; and

 The gross carrying amount and the accumulated depreciation at the beginning and end of
the period.

Conclusion: From the above we can conclude that accounting not only helps an enterprise to
conduct its day to day activities smoothly but also helps in its future growth. At the same time
financial statements produced by various accounting systems are used by multiple stakeholders
to take economic decisions. Accountants who have a strong background in international
accounting can serve well in this role and potentially stand out from other candidates during the
hiring process. Companies are routinely expanding beyond the borders of their home country –
whether from a foreign nation in the U.S. or an American organization expanding internationally
– for financial and operational reasons. It’s easy to recognize why multinational companies reach
into new markets as a way to sell more products, but the reasons for such growth are far more
varied than that one example, as popular as it is.

Lack of the Study:

 Little team effort

Reference:
The information that contains in this assignment was acquired from some sources, which are:
1. assignmentpoint.com
2. investopedia.com
3. businessdegrees.uab.edu
4. Wikipedia
The End