MN-2052

FINANCIAL ACCOUNTING 1A
IAS 1 Presentation of Financial Statements
Forms the skeleton of IFRS, since it defines basis for presentation of financial
statements. It sets the requirements for presentation of financial statements, gives
guidance on the structure and form of financial statements and sets minimum
requirements for their content.

IAS 1 does NOT deal with recognition, measurement and specific disclosures for
various types of transactions – these aspects are covered by other IASs / IFRSs.

IAS 2 – Inventories
Prescribes accounting treatment of inventories, guidance on the determination of
cost and subsequent recognition as an expense, guidance on write-down of
inventories and cost formulas used to assign costs to inventories.

IAS 2 states that inventories should be valued at the lower of cost or net realisable
value.

Net realisable value is the value of goods that a third party is willing to pay.

IAS 10 – Events after the Reporting Period

Explains the duties of companies and directors in looking for and adjusting for events
after the reporting period.

IAS 16 – Property, Plant and Equipment

Deals with accounting treatment of property, plant and equipment with focus on
recognition of assets, determination of their carrying amounts, depreciation charges
and impairment losses to be recognised.

IFRS 16 – Leases
Prescribes accounting policies to be applied in relation to finance and short-term
leases.

IAS 23 – Borrowing Costs

Prescribes the accounting treatment for borrowing costs. Generally it requires
recognition as an expense, however if the borrowing cost relates to an asset that
takes a substantial period of time to get ready for use or sale, the borrowing costs
should be capitalised.

IAS 20 – Accounting for Government Grants

Explains the accounting treatment for government assistance received by
companies, and the disclosure required for the government assistance.

IAS 40 – Investment Property

Prescribes the accounting treatment for investment property and related disclosure
requirements.

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IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations
The aim of this standard is to give guidance on the presentation of non-current
assets held for sale and to give rules on discontinued operations. Only discontinued
operations would be potentially examinable for this module.

For every IAS/IFRS you need to know

 When to recognise the item in the financial statements

 How to measure it
 When you first put it into the financial statements
 At each subsequent reporting date
 Where to present it

Exam questions will require you to explain how items should be treated and
you MUST be able to explain all requirements.