International Financial Reporting Standards (IFRS)

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards (IFRS) are principles-based Standards, Interpretations and the Framework (1989) adopted by the International Accounting Standards Board (IASB).

International Financial Reporting Standards comprise:

• International Financial Reporting Standards (IFRS)—standards issued after 2001
• International Accounting Standards (IAS)—standards issued before 2001
• Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC)—issued after 2001
• Standing Interpretations Committee (SIC)—issued before 2001
• Framework for the Preparation and Presentation of Financial Statements (1989)

Qualitative characteristics of financial statements

• Understandability
• Reliability
• Comparability
• Relevance
• True and Fair View/Fair Presentation

Qualitative characteristics of financial statements include:

• Understandability
• Reliability
• Comparability
• Relevance
• True and Fair View/Fair Presentation

Measurement of the Elements of Financial Statements

a) Historical cost. Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances (for example, income taxes), at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business.

(b) Current cost. Assets are carried at the amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset was acquired currently. Liabilities are carried at the undiscounted amount of cash or cash equivalents that would be required to settle the obligation currently.

(c) Realisable (settlement) value. Assets are carried at the amount of cash or cash equivalents that could currently be obtained by selling the asset in an orderly disposal. Assets are carried at the present discounted value of the future net cash inflows that the item is expected to generate in the normal course of business. Liabilities are carried at the present discounted value of the future net cash outflows that are expected to be required to settle the liabilities in the normal course of business.