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AFAR-22 (Full PFRS vs. PFRS for SMEs)
AFAR-22 (Full PFRS vs. PFRS for SMEs)
4. Recognizing and measuring assets acquired and liabilities assumed on initial recognition
Identifiable intangible • Recognized separately from • Requires recognition if their fair
assets goodwill if it is either value can be measured
contractual-legal or separable reliably
6. Accounting Method
Terms Used • Acquisition Method • Purchase Method
Measuring goodwill/ Options:
bargain purchase gain 1. Full fair Value
(Full-Goodwill)
2. Proportionate share of Proportionate share of
identifiable net assets identifiable net assets
(Partial- Goodwill) (Partial-Goodwill)
Valuation of goodwill • Cost less impairment losses • Cost less impairment losses and
amortization (life should be
presumed to be 10 years)
Foreign Currency
Full PFRSs and the PFRS for SMEs share the same principles for accounting and reporting. The key differences
are:
1. Simplified language and application guidance in the PFRS for SMEs.
2. The PFRS for SMEs does not allow or require cumulative exchange differences that relate to a
foreign operation that were previously recognized in other comprehensive income to be
reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss
on disposal of the foreign operation is recognized. The Full PFRSs does.
Hedging
Some of the key differences between Full PFRSs and PFRS for SMEs are as follows:
1. The IFRS for SMEs gives SMEs a choice of following Sections 11 and 12 or PFRS 9 in accounting for
all of their financial instruments.
2. Hedge accounting is not permitted with an option-based hedging strategy. Because hedging
with options involves incurring a cost, SMEs are more likely to use forward contracts as hedging
instruments than options.
Hyperinflation
Full PFRSs and the PFRS for SMEs share the same principles for accounting and reporting. The key differences
are:
1. Simplified language and application guidance in the PFRS for SMEs.
2. The PFRS for SMEs does not set out specific procedures for the translation of the results and
financial position of an entity whose functional currency is the currency of a hyperinflationary
economy into a different presentation currency. Full PFRSs does.