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IFRSOcto Radian Putra(125020305111005)Tyas Ardy Rahayu (125020307111008)Fisabela Apriliasari (125020307111022)

IFRS?

International Convergence of Financial ReportingReduce diversity and harmonize accounting standards and practices internationally

Convergence as the Buzz Word in International Financial ReportingHarmonization : Some people see it as the same as standardization.De jure harmonization & De facto harmonizationConvergence : adoption of one set of standards internationally.Reducing international differences in accounting standards by developing high-quality standards in partnership with national standard-setters.

Major Harmonization EffortsIOSCOIFACEUIASC

Creation of the IASBTook over from IASC as the creator of international accounting standards, which were to be called IFRS on April , 2001.Process restructuring the IASC to IASB took over 5 yearsFormation of the IASB in 2001, marked the beginning of a new era in international financial reporting

The IASB FrameworkTo establish the concepts underlying the preparation and presentation of IFRS-based financial statementObjective of financial statements and underlying assumptionsQualitative characteristic that affect the usefulness of financial statementsDefinition, recognition, and measurement o.t financial statements elementsConcepts of capital and capital maintenance

International Financial Reporting Standards First IFRS was issued by IASB in 2003, providing guidance on the important question of how a company goes about restating its financial statement when adopts IFRS for the first time.IASB doesnt have ability to enforce its standards. Instead, IASB develops IFRS for the public good, making them available to any country/company that might choose to adopt them.

Arguments for ConvergenceComparability of financial statement worldwide is necessary for the globalization of capital marketsSimplify the evaluation by multinational company of possible foreign take over targetsReduce financial reporting costRaise the quality level of accounting practices internationally

Argument against ConvergenceNationalismBecause different environmental influences, different in accounting across countries might be appropriate and necessary (dilemma of global harmonization)

International Convergence toward IFRSThree different convergence strategiesReplacing national GAAP with IFRSAdopting IFRS as national GAAP on a standard-by-standard basisEliminating differences between national GAAP and IFRS when possible & practicable

Major concerns when achieving IFRS convergence: Complicated nature of particular standardsUsing IFRS as the basis for taxation is seen as a problemDisagreement with certain significant IFRSInsufficient guidance on first-time application of IFRSLimited capital markets, little benefit to be derived from using IFRSSatisfaction among investors/usersIFRS language translation difficulties

The Adoption of IFRSAll companies; IFRS replace national GAAPParent companies in preparing consolidated financial statements; national GAAP is used in parent company-only financial statementsStock exchange listed companies in preparing consolidated financial statements.Foreign companies listing on domestic stock exchangesDomestic companies that list on foreign stock exchanges

IFRS in the EUIFRS for listed companies only.Difficulty : lack of organized and liquid markets for many assets and obligations

IFRS in the U.SJoint projectsShort-term convergence projectLiaison IASB memberMonitoring of IASB projectsThe convergence research projectConsideration of convergence potential in board agenda decisions

IFRS vs GAAPDefinitionRecognizedMeasurementAlternativesLack of requirement or guidancePresentationDisclosure

Measurements and Recognation StandartsInventoryPlant and equipmentInvestment propertyImpairment of assetIntangible assetsGoodwillBorrowing costLeases

Inventory costsNon-inventory costsINVENTORIESCosts

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Recognition of initial and subsequent costsMeasurement at initial recognitionMeasurement after initialDepreciation and DerecognitionProperty, plant, and equipment

Measurement after initialFrequency of revaluationDetermination of fair valueSelection of assets to be revaluedAccumulated depreciation

Aspects of Accounting for Fixed Assets

Recognition of initial and subsequent costsMeasurement at initial recognitionMeasurement after initialDepreciation and DerecognitionProperty, plant, and equipment

Measurement of impairment lossReversal of Impairment LossesImpairment of asset

Operating leaseFinance LeaseLeases

IAS 37, Provisions, Contingent Liabilities and Contingent AssetsIAS 37, Provisions, Contingent Liabilities and Contingent Assets, attempts to provide a consistent framework and approach for accounting for liabilities (and assets) for which the timing, amount, or existence is uncertain.IAS 37 also contains specific rules related to onerous contracts and restructuring costs.

Contingent Liabilities and ProvisionsA provision is defined as a liability of uncertain timing or amount. A provision should be recognized when :The entity has a present obligation as a result of a past event;It is probable (more likely than not) that an outflow of resources embodying economic events will be required to settle the obligation.A reliable estimate of the obligation can be made.

Contingent liabilities are defined asPossible obligations that arise from past events and whose existence will be confirmed by the occurrence or nonoccurrence of a future event, orApresent obligation that is not recognized because (1) it is not probable that an outflow of resources will be required to settle the obligation or (2) the amount of the obligation cannot be measured with sufficient reliability.

Contingent AssetsA contingent asset is a probable asset that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of a future event. Contingent assets should not be recognized, but should be disclosed when the inflow of economic benefits is probable.

RestructuringA difference exists between IAS 37 and U.S. GAAP with respect to when a provision should be recognized related to a restructuring plan. IAS 37 indicates that the provision should be recognized only when (1) a detailed formal plan exists, and (2) the plans main features have been announced to those affected by it or implementation of the plan has begun.U.S. GAAP does not allow recognition of a restructuring provision until a liability has been incurred. The existence of a restructuring plan and its announcement does not necessarily create a liability. Thus, the recognition of a restructuring provision may occur at a later date under U.S. GAAP.

IAS 19, Employee BenefitsIAS 19, Employee Benefits, is a comprehensive standard covering the following types of employee benefits:1. Short-term employee benefits (such as compensated absences and bonuses).2. Postemployment benefits (pensions, medical benefits, and other postemployment benefits).3. Other long-term employee benefits.4. Termination benefits (such as severance pay and early retirement benefits).

IFRS 2, Share-based PaymentIFRS 2, Share-based Payment, sets out measurement principles and specific requirements for three types of share-based payment transactions:Equity-settled share-based payment transactions, in which the entity receives goods or services as consideration for equity instruments of the entity (including stock options granted to employees).Cash-settled share-based payment transactions, in which the entity acquires goods or services by incurring liabilities to the supplier of those goods or services for amounts that are based on the price (or value) of the entitys shares or other equity instruments of the entity (e.g., share appreciation rights).Transactions in which the entity receives or acquires goods or services and the terms of the arrangement provide either the entity or the supplier of those goods or services with a choice of whether the entity settles the transaction in cash or by issuing equity instruments.

Stock Options Granted to EmployeesIFRS 2 requires the fair value method to be used in accounting for stock options granted to employees.Under this method, total compensation expense is computed as the fair value of the options expected to vest on the date the options are granted.

IAS 12, Income TaxesIAS 12, Income Taxes, and U.S. GAAP take a similar approach to accounting for income taxes. Both standards adopt an asset-and-liability approach that recognizes deferred tax assets and liabilities for temporary differences and for operating loss and tax credit carryforwards. However, differences do exist. The accounting for income taxes is a very complex topic, and only some of the major differences are discussed here.

IAS 18, RevenueIAS 18, Revenue, is a single standard that covers most revenues, in particular revenues from the sale of goods; the rendering of services; and interest, royalties, and dividends. There is no similar single standard in U.S. GAAP. U.S. rules related to revenue recognition are found in various authoritative pronouncements; making a direct comparison between IAS 18 and U.S. GAAP is difficult.

IAS 32 and IAS 39, Financial InstrumentsIAS 32, Financial Instruments: Disclosure and Presentation, and IAS 39, Financial Instruments: Recognition and Measurement, were developed on the basis of U.S.GAAP. Both sets of standardsRequire financial assets and liabilities to be measured and reported at fair value.Allow the use of hedge accounting when certain criteria are met. (Hedge accounting is discussed in Chapter 6 of this book.)

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Pertanyaan 2:1.

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Pertanyaan 4:Sebutkan 7 perbedaan dari IFRS dan GAAP?

Pertanyaan 5:Apa yang termasuk dari biaya bukan persediaan ?

Pertanyaan 6:Apa aspek-aspek dari aktiva tetap?

Pertanyaan 7:1.