international accounting standards

International Accounting StandardsNameIssued

IAS1Presentation of Financial Statements2007*

IAS2Inventories2005*

IAS 3Consolidated Financial StatementsSuperseded in 1989 by IAS 27 and IAS 281976

IAS 4Depreciation AccountingWithdrawn in 1999

IAS 5Information to Be Disclosed in Financial StatementsSuperseded by IAS 1 effective 1 July 19981976

IAS 6Accounting Responses to Changing PricesSuperseded by IAS 15, which was withdrawn December 2003

IAS7Statement of Cash Flows1992

IAS8Accounting Policies, Changes in Accounting Estimates and Errors2003

IAS 9Accounting for Research and Development ActivitiesSuperseded by IAS 38 effective 1 July 1999

IAS10Events After the Reporting Period2003

IAS11Construction ContractsWill be superseded by IFRS 15 as of 1 January 20171993

IAS12Income Taxes1996*

IAS 13Presentation of Current Assets and Current LiabilitiesSuperseded by IAS 1 effective 1 July 1998

IAS14Segment ReportingSuperseded by IFRS 8 effective 1 January 20091997

IAS 15Information Reflecting the Effects of Changing PricesWithdrawn December 20032003

IAS16Property, Plant and Equipment2003*

IAS17Leases2003*

IAS18RevenueWill be superseded by IFRS 15 as of 1 January 20171993*

IAS19Employee Benefits(1998)Superseded by IAS 19 (2011) effective 1 January 20131998

IAS19Employee Benefits(2011)2011*

IAS20Accounting for Government Grants and Disclosure of Government Assistance1983

IAS21The Effects of Changes in Foreign Exchange Rates2003*

IAS 22Business CombinationsSuperseded by IFRS 3 effective 31 March 20041998*

IAS23Borrowing Costs2007*

IAS24Related Party Disclosures2009*

IAS 25Accounting for InvestmentsSuperseded by IAS 39 and IAS 40 effective 2001

IAS26Accounting and Reporting by Retirement Benefit Plans1987

IAS27Separate Financial Statements(2011)2011

IAS27Consolidated and Separate Financial StatementsSuperseded by IFRS 10, IFRS 12 and IAS 27 (2011) effective 1 January 20132003

IAS28Investments in Associates and Joint Ventures (2011)2011

IAS28Investments in AssociatesSuperseded by IAS 28 (2011) and IFRS 12 effective 1 January 20132003

IAS29Financial Reporting in Hyperinflationary Economies1989

IAS 30Disclosures in the Financial Statements of Banks and Similar Financial InstitutionsSuperseded by IFRS 7 effective 1 January 20071990

IAS31Interests In Joint VenturesSuperseded by IFRS 11 and IFRS 12 effective 1 January 20132003*

IAS32Financial Instruments: Presentation2003*

IAS33Earnings Per Share2003*

IAS34Interim Financial Reporting1998

IAS 35Discontinuing OperationsSuperseded by IFRS 5 effective 1 January 20051998

IAS36Impairment of Assets2004*

IAS37Provisions, Contingent Liabilities and Contingent Assets1998

IAS38Intangible Assets2004*

IAS39Financial Instruments: Recognition and MeasurementSuperseded by IFRS 9 effective 1 January 2018 where IFRS 9 is applied

2003*

IAS40Investment Property2003*

IAS41Agriculture2001

IAS 2 InventoriesOverviewIAS 2Inventoriescontains the requirements on how to account for most types of inventory. The standard requires inventories to be measured at the lower of cost and net realizable value (NRV) and outlines acceptable methods of determining cost, including specific identification (in some cases), first-in first-out (FIFO) and weighted average cost.A revised version of IAS 2 was issued in December 2003 and applies to annual periods beginning on or after 1 January 2005.History of IAS 2DateDevelopmentComments

September1974Exposure Draft E2Valuation and Presentation of Inventories in the Context of the Historical Cost Systempublished

October1975IAS 2Valuation and Presentation of Inventories in the Context of the Historical Cost Systemissued

August1991Exposure Draft E38Inventoriespublished

December1993IAS 9 (1993)InventoriesissuedOperative for annual financial statements covering periods beginning on or after 1 January 1995

18December2003IAS 2InventoriesissuedEffective for annual periods beginning on or after 1 January 2005

Related Interpretations IFRIC 20Stripping Costs in the Production Phase of a Surface Mine SIC-1Consistency - Different Cost Formulas for Inventories.SIC-1 was superseded by and incorporated into IAS 2 (Revised 2003).Summary of IAS 2Objective of IAS 2The objective of IAS 2 is to prescribe the accounting treatment for inventories. It provides guidance for determining the cost of inventories and for subsequently recognising an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.ScopeInventories include assets held for sale in the ordinary course of business (finished goods), assets in the production process for sale in the ordinary course of business (work in process), and materials and supplies that are consumed in production (raw materials). [IAS 2.6]However, IAS 2 excludes certain inventories from its scope: [IAS 2.2] work in process arising under construction contracts (seeIAS 11Construction Contracts) financial instruments (seeIAS 39Financial Instruments: Recognition and Measurement) biological assets related to agricultural activity and agricultural produce at the point of harvest (seeIAS 41Agriculture).Also, while the following are within the scope of the standard, IAS 2 does not apply to the measurement of inventories held by: [IAS 2.3] producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products, to the extent that they are measured at net realisable value (above or below cost) in accordance with well-established practices in those industries. When such inventories are measured at net realisable value, changes in that value are recognised in profit or loss in the period of the change commodity brokers and dealers who measure their inventories at fair value less costs to sell. When such inventories are measured at fair value less costs to sell, changes in fair value less costs to sell are recognised in profit or loss in the period of the change.Fundamental principle of IAS 2Inventories are required to be stated at the lower of cost and net realisable value (NRV). [IAS 2.9]Measurement of inventoriesCost should include all: [IAS 2.10] costs of purchase (including taxes, transport, and handling) net of trade discounts received costs of conversion (including fixed and variable manufacturing overheads) and other costs incurred in bringing the inventories to their present location and conditionIAS23Borrowing Costsidentifies some limited circumstances where borrowing costs (interest) can be included in cost of inventories that meet the definition of a qualifying asset. [IAS 2.17 and IAS 23.4]Inventory cost should not include: [IAS 2.16 and 2.18] abnormal waste storage costs administrative overheads unrelated to production selling costs foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency interest cost when inventories are purchased with deferred settlement terms.The standard cost and retail methods may be used for the measurement of cost, provided that the results approximate actual cost. [IAS 2.21-22]For inventory items that are not interchangeable, specific costs are attributed to the specific individual items of inventory. [IAS 2.23]For items that are interchangeable, IAS 2 allows the FIFO or weighted average cost formulas. [IAS 2.25] The LIFO formula, which had been allowed prior to the 2003 revision of IAS 2, is no longer allowed.The same cost formula should be used for all inventories with similar characteristics as to their nature and use to the entity. For groups of inventories that have different characteristics, different cost formulas may be justified. [IAS 2.25]Write-down to net realisable valueNRV is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. [IAS 2.6] Any write-down to NRV should be recognised as an expense in the period in which the write-down occurs. Any reversal should be recognised in the income statement in the period in which the reversal occurs. [IAS 2.34]Expense recognitionIAS 18Revenueaddresses revenue recognition for the sale of goods. When inventories are sold and revenue is recognised, the carrying amount of those inventories is recognised as an expense (often called cost-of-goods-sold). Any write-down to NRV and any inventory losses are also recognised as an expense when they occur. [IAS 2.34]DisclosureRequired disclosures: [IAS 2.36] accounting policy for inventories Carrying amount, generally classified as merchandise, supplies, materials, work in progress, and finished goods. The classifications depend on what is appropriate for the entity carrying amount of any inventories carried at fair value less costs to sell amount of any write-down of inventories recognised as an expense in the period amount of any reversal of a write-down to NRV and the circumstances that led to such reversal carrying amount of inventories pledged as security for liabilities cost of inventories recognised as expense (cost of goods sold).IAS 2 acknowledges that some enterprises classify income statement expenses by nature (materials, labour, and so on) rather than by function (cost of goods sold, selling expense, and so on). Accordingly, as an alternative to disclosing cost of goods sold expense, IAS 2 allows an entity to disclose operating costs recognised during the period by nature of the cost (raw materials and consumables, labour costs, other operating costs) and the amount of the net change in inventories for the period). [IAS 2.39] This is consistent withIAS 1Presentation of Financial Statements, which allows presentation of expenses by function or nature.

IAS 8 Accounting Policies, Changes in Accounting Estimates and ErrorsOverviewIAS 8Accounting Policies, Changes in Accounting Estimates and Errorsis applied in selecting and applying accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors.The standard requires compliance with any specific IFRS applying to a transaction, event or condition, and provides guidance on developing accounting policies for other items that result in relevant and reliable information. Changes in accounting policies and corrections of errors are generally retrospectively accounted for, whereas changes in accounting estimates are generally accounted for on a prospective basis.IAS 8 was reissued in December 2005 and applies to annual periods beginning on or after 1 January 2005.History of IAS 8October1976Exposure Draft E8The Treatment in the Income Statement of Unusual Items and Changes in Accounting Estimates and Accounting Policies

February1978IAS 8Unusual and Prior Period Items and Changes in Accounting Policies

July1992Exposure Draft E46Extraordinary Items, Fundamental Errors and Changes in Accounting Policies

December1993IAS 8 (1993)Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies(revised as part of the 'Comparability of Financial Statements' project)

1January1995Effective date of IAS 8 (1993)

18December2003Revised version of IAS 8 issued by the IASB


Related Interpretations IAS 8(2003) supersedesSIC-2Consistency - Capitalisation of Borrowing Costs IAS 8(2003) supersedesSIC-18Consistency - Alternative Methods.Amendments under consideration by the IASB Disclosure initiative Principles of disclosure(research project) Disclosure initiative Materiality(research project)Summary of IAS 8Key definitions [IAS 8.5] Accounting policiesare the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. A change in accounting estimateis an adjustment of the carrying amount of an asset or liability, or related expense, resulting from reassessing the expected future benefits and obligations associated with that asset or liability. International Financial Reporting Standardsare standards and interpretations adopted by the International Accounting Standards Board (IASB). They comprise: International Financial Reporting Standards (IFRSs) International Accounting Standards (IASs) Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC) and approved by the IASB. Materiality.Omissions or misstatements of items are material if they could, by their size or nature, individually or collectively, influence the economic decisions of users taken on the basis of the financial statements. Prior period errorsare omissions from, and misstatements in, an entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that was available and could reasonably be expected to have been obtained and taken into account in preparing those statements. Such errors result from mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.Selection and application of accounting policiesWhen a Standard or an Interpretation specifically applies to a transaction, other event or condition, the accounting policy or policies applied to that item must be determined by applying the Standard or Interpretation and considering any relevant Implementation Guidance issued by the IASB for the Standard or Interpretation. [IAS 8.7]In the absence of a Standard or an Interpretation that specifically applies to a transaction, other event or condition, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. [IAS 8.10]. In making that judgement, management must refer to, and consider the applicability of, the following sources in descending order: the requirements and guidance in IASB standards and interpretations dealing with similar and related issues; and the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the Framework. [IAS 8.11]Management may also consider the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards, other accounting literature and accepted industry practices, to the extent that these do not conflict with the sources in paragraph 11. [IAS 8.12]Consistency of accounting policiesAn entity shall select and apply its accounting policies consistently for similar transactions, other events and conditions, unless a Standard or an Interpretation specifically requires or permits categorization of items for which different policies may be appropriate. If a Standard or an Interpretation requires or permits such categorization, an appropriate accounting policy shall be selected and applied consistently to each category. [IAS 8.13]Changes in accounting policiesAn entity is permitted to change an accounting policy only if the change: is required by a standard or interpretation; or Results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance, or cash flows. [IAS 8.14]Note that changes in accounting policies do not include applying an accounting policy to a kind of transaction or event that did not occur previously or were immaterial. [IAS 8.16]If a change in accounting policy is required by a new IASB standard or interpretation, the change is accounted for as required by that new pronouncement or, if the new pronouncement does not include specific transition provisions, then the change in accounting policy is applied retrospectively. [IAS 8.19]Retrospective application means adjusting the opening balance of each affected component of equity for the earliest prior period presented and the other comparative amounts disclosed for each prior period presented as if the new accounting policy had always been applied. [IAS 8.22] However, if it is impracticable to determine either the period-specific effects or the cumulative effect of the change for one or more prior periods presented, the entity shall apply the new accounting policy to the carrying amounts of assets and liabilities as at the beginning of the earliest period for which retrospective application is practicable, which may be the current period, and shall make a corresponding adjustment to the opening balance of each affected component of equity for that period. [IAS 8.24] Also, if it is impracticable to determine the cumulative effect, at the beginning of the current period, of applying a new accounting policy to all prior periods, the entity shall adjust the comparative information to apply the new accounting policy prospectively from the earliest date practicable. [IAS 8.25]Disclosures relating to changes in accounting policiesDisclosures relating to changes in accounting policy caused by a new standard or interpretation include: [IAS 8.28] 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: for each financial statement line item affected, and for basic and diluted earnings per share (only if the entity is applying IAS 33) the amount of the adjustment relating to periods before those presented, to the extent practicable if retrospective application is impracticable, an explanation and description of how the change in accounting policy was applied.Financial statements of subsequent periods need not repeat these disclosures.Disclosures relating to voluntary changes in accounting policy include: [IAS 8.29] the nature of the change in accounting policy the reasons why applying the new accounting policy provides reliable and more relevant information for the current period and each prior period presented, to the extent practicable, the amount of the adjustment: for each financial statement line item affected, and for basic and diluted earnings per share (only if the entity is applying IAS 33) the amount of the adjustment relating to periods before those presented, to the extent practicable if retrospective application is impracticable, an explanation and description of how the change in accounting policy was applied.Financial statements of subsequent periods need not repeat these disclosures.If an entity has not applied a new standard or interpretation that has been issued but is not yet effective, the entity must disclose that fact and any and known or reasonably estimable information relevant to assessing the possible impact that the new pronouncement will have in the year it is applied. [IAS 8.30]Changes in accounting estimatesThe effect of a change in an accounting estimate shall be recognized prospectively by including it in profit or loss in: [IAS 8.36] the period of the change, if the change affects that period only, or the period of the change and future periods, if the change affects both.However, to the extent that a change in an accounting estimate gives rise to changes in assets and liabilities, or relates to an item of equity, it is recognized by adjusting the carrying amount of the related asset, liability, or equity item in the period of the change. [IAS 8.37]Disclosures relating to changes in accounting estimatesDisclose: 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. [IAS 8.39-40]ErrorsThe general principle in IAS 8 is that an entity must correct all material prior period errors retrospectively in the first set of financial statements authorised for issue after their discovery by: [IAS 8.42] restating the comparative amounts for the prior period(s) presented in which the error occurred; or if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity for the earliest prior period presented.However, if it is impracticable to determine the period-specific effects of an error on comparative information for one or more prior periods presented, the entity must restate the opening balances of assets, liabilities, and equity for the earliest period for which retrospective restatement is practicable (which may be the current period). [IAS 8.44]Further, if it is impracticable to determine the cumulative effect, at the beginning of the current period, of an error on all prior periods, the entity must restate the comparative information to correct the error prospectively from the earliest date practicable. [IAS 8.45]Disclosures relating to prior period errorsDisclosures relating to prior period errors include: [IAS 8.49] the nature of the prior period error for each prior period presented, to the extent practicable, the amount of the correction: for each financial statement line item affected, and for basic and diluted earnings per share (only if the entity is applying IAS 33) the amount of the correction at the beginning of the earliest prior period presented if retrospective restatement is impracticable, an explanation and description of how the error has been corrected.Financial statements of subsequent periods need not repeat these disclosures.

IAS 10 Events After the Reporting PeriodOverviewIAS 10Events after the Reporting Periodcontains requirements for when events after the end of the reporting period should be adjusted in the financial statements. Adjusting events are those providing evidence of conditions existing at the end of the reporting period, whereas non-adjusting events are indicative of conditions arising after the reporting period (the latter being disclosed where material).IAS 10 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005.History of IAS 10July1977Exposure Draft E10Contingencies and Events Occurring After the Balance Sheet Date

October1978IAS 10Contingencies and Events Occurring After the Balance Sheet Dateeffective 1 January 1980

1994IAS 10 (1978) was reformatted

August1997Exposure Draft E59Provisions, Contingent Liabilities and Contingent Assets

September1998IAS 37Provisions, Contingent Liabilities and Contingent Assets

1July1999Effective date of IAS 37, which superseded those portions of IAS 10 (1978) dealing with contingencies

November1998Exposure Draft E63Events After the Balance Sheet Date

May1999IAS 10 (1999)Events After the Balance Sheet Datesuperseded those portions of IAS 10 (1978) dealing with events after the balance sheet date



1January2005Effective date of IAS 10 (Revised 2003)

6September2007RetiledEvents after the Reporting Periodas a consequential amendment resulting from revisions toIAS 1

Related Interpretations NoneSummary of IAS 10Key definitionsEvent after the reporting period:An event, which could be favourable or unfavourable, that occurs between the end of the reporting period and the date that the financial statements are authorised for issue. [IAS 10.3]Adjusting event:An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of the enterprise is not appropriate. [IAS 10.3]Non-adjusting event:An event after the reporting period that is indicative of a condition that arose after the end of the reporting period. [IAS 10.3]Accounting Adjust financial statements for adjusting events - events after the balance sheet date that provide further evidence of conditions that existed at the end of the reporting period, including events that indicate that the going concern assumption in relation to the whole or part of the enterprise is not appropriate. [IAS 10.8] Do not adjust for non-adjusting events - events or conditions that arose after the end of the reporting period. [IAS 10.10] If an entity declares dividends after the reporting period, the entity shall not recognise those dividends as a liability at the end of the reporting period. That is a non-adjusting event. [IAS 10.12]Going concern issues arising after end of the reporting periodAn entity shall not prepare its financial statements on a going concern basis if management determines after the end of the reporting period either that it intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to do so. [IAS 10.14]DisclosureNon-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. [IAS 10.21]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. [IAS 10.19]Companies must disclose the date when the financial statements were authorised for issue and who gave that authorisation. If the enterprise's owners or others have the power to amend the financial statements after issuance, the enterprise must disclose that fact. [IAS 10.17]

IAS 11 Construction ContractsOverviewIAS 11Construction Contractsprovides requirements on the allocation of contract revenue and contract costs to accounting periods in which construction work is performed. Contract revenues and expenses are recognised by reference to the stage of completion of contract activity where the outcome of the construction contract can be estimated reliably, otherwise revenue is recognised only to the extent of recoverable contract costs incurred.IAS 11 was reissued in December 1993 and is applicable for periods beginning on or after 1 January 1995.History of IAS 11December1977Exposure Draft E11Accounting for Construction Contracts

March1979IAS 11Accounting for Construction Contracts

1January1980Effective date of IAS 11

May1992Exposure Draft E42Construction Contracts

December1993IAS 11 (1993)Construction Contracts(revised as part of the 'Comparability of Financial Statements' project)


1 January 2017IAS 11 will be superseded byIFRS 15Revenue from Contracts with Customers

Related Interpretations IFRIC 15Agreements for the Construction of Real Estate IFRIC 12Service Concession ArrangementsSummary of IAS 11Objective of IAS 11The objective of IAS 11 is to prescribe the accounting treatment of revenue and costs associated with construction contracts.What is a construction contract?A construction contract is a contract specifically negotiated for the construction of an asset or a group of interrelated assets. [IAS 11.3]Under IAS 11, if a contract covers two or more assets, the construction of each asset should be accounted for separately if (a) separate proposals were submitted for each asset, (b) portions of the contract relating to each asset were negotiated separately, and (c) costs and revenues of each asset can be measured. Otherwise, the contract should be accounted for in its entirety. [IAS 11.8]Two or more contracts should be accounted for as a single contract if they were negotiated together and the work is interrelated. [IAS 11.9]If a contract gives the customer an option to order one or more additional assets, construction of each additional asset should be accounted for as a separate contract if either (a) the additional asset differs significantly from the original asset(s) or (b) the price of the additional asset is separately negotiated. [IAS 11.10]What is included in contract revenue and costs?Contract revenue should include the amount agreed in the initial contract, plus revenue from alternations in the original contract work, plus claims and incentive payments that (a) are expected to be collected and (b) that can be measured reliably. [IAS 11.11]Contract costs should include costs that relate directly to the specific contract, plus costs that are attributable to the contractor's general contracting activity to the extent that they can be reasonably allocated to the contract, plus such other costs that can be specifically charged to the customer under the terms of the contract. [IAS 11.16]AccountingIf the outcome of a construction contract can be estimated reliably, revenue and costs should be recognised in proportion to the stage of completion of contract activity. This is known as the percentage of completion method of accounting. [IAS 11.22]To be able to estimate the outcome of a contract reliably, the entity must be able to make a reliable estimate of total contract revenue, the stage of completion, and the costs to complete the contract. [IAS 11.23-24]If the outcome cannot be estimated reliably, no profit should be recognised. Instead, contract revenue should be recognised only to the extent that contract costs incurred are expected to be recoverable and contract costs should be expensed as incurred. [IAS 11.32]The stage of completion of a contract can be determined in a variety of ways - including the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, surveys of work performed, or completion of a physical proportion of the contract work. [IAS 11.30]An expected loss on a construction contract should be recognised as an expense as soon as such loss is probable. [IAS 11.22 and 11.36]Disclosure amount of contract revenue recognised; [IAS 11.39(a)] method used to determine revenue; [IAS 11.39(b)] method used to determine stage of completion; [IAS 11.39(c)] and for contracts in progress at balance sheet date: [IAS 11.40] aggregate costs incurred and recognised profit amount of advances received amount of retentionsPresentationThe gross amount due from customers for contract work should be shown as an asset. [IAS 11.42]The gross amount due to customers for contract work should be shown as a liability. [IAS 11.42]

IAS 12 Income Taxes

OverviewIAS 12Income Taxesimplements a so-called 'comprehensive balance sheet method' of accounting for income taxes which recognises both the current tax consequences of transactions and events and the future tax consequences of the future recovery or settlement of the carrying amount of an entity's assets and liabilities. Differences between the carrying amount and tax base of assets and liabilities, and carried forward tax losses and credits, are recognised, with limited exceptions, as deferred tax liabilities or deferred tax assets, with the latter also being subject to a 'probable profits' test.IAS12 was reissued in October 1996 and is applicable to annual periods beginning on or after 1 January 1998.History of IAS12DateDevelopmentComments

April1978Exposure Draft E13Accounting for Taxes on Incomepublished

July1979IAS12Accounting for Taxes on Incomeissued

January1989Exposure Draft E33Accounting for Taxes on Incomepublished

1994IAS12 (1979) was reformatted

October1994Exposure Draft E49Income Taxespublished

October1996IAS12Income TaxesissuedOperative for financial statements covering periods beginning on or after 1 January 1988

October2000Limited Revisions to IAS12 published (tax consequences of dividends)Operative for financial statements covering periods beginning on or after 1 January 2001

31March2009Exposure Draft ED/2009/2Income TaxpublishedComment deadline 31 July 2009(proposals were not finalised)

10September2010Exposure Draft ED/2010/11Deferred Tax: Recovery of Underlying Assets (Proposed amendments to IAS 12)publishedComment deadline 9 November 2010

20December2010Amended byDeferred Tax: Recovery of Underlying AssetsEffective for annual periods beginning on or after 1 January 2012

Related Interpretations IFRIC 7Applying the Restatement Approach under IAS 29 'Financial Reporting in Hyperinflationary Economies' SIC-21Income Taxes Recovery of Revalued Non-Depreciable Assets(SIC-21 was incorporated into IAS12 and withdrawn by the December 2010 amendments made byDeferred Tax: Recovery of Underlying Assets) SIC-25Income Taxes Changes in the Tax Status of an Enterprise or its ShareholdersAmendments under consideration by the IASB IAS12 Recognition of deferred tax assets for unrealised losses Research project Income taxes(longer term)Summary of IAS12Objective of IAS12The objective of IAS12 (1996) is to prescribe the accounting treatment for income taxes.In meeting this objective, IAS 12 notes the following: It is inherent in the recognition of an asset or liability that that asset or liability will be recovered or settled, and this recovery or settlement may give rise to future tax consequences which should be recognised at the same time as the asset or liability An entity should account for the tax consequences of transactions and other events in the same way it accounts for the transactions or other events themselves.Key definitions[IAS12.5]Tax baseThe tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes

Temporary differencesDifferences between the carrying amount of an asset or liability in the statement of financial position and its tax bases

Taxable temporary differencesTemporary differences that will result in taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled

Deductible temporary differencesTemporary differences that will result in amounts that are deductible in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled

Deferred tax liabilitiesThe amounts of income taxes payable in future periods in respect of taxable temporary differences

Deferred tax assetsThe amounts of income taxes recoverable in future periods in respect of:

1. deductible temporary differences2. the carryforward of unused tax losses, and3. the carryforward of unused tax credits

Current taxCurrent tax for the current and prior periods is recognised as a liability to the extent that it has not yet been settled, and as an asset to the extent that the amounts already paid exceed the amount due. [IAS12.12] The benefit of a tax loss which can be carried back to recover current tax of a prior period is recognised as an asset. [IAS12.13]Current tax assets and liabilities are measured at the amount expected to be paid to (recovered from) taxation authorities, using the rates/laws that have been enacted or substantively enacted by the balance sheet date. [IAS12.46]Calculation of deferred taxesFormulaeTemporary difference=Carrying amount-Tax base-Tax base

Deferred tax asset or liability=Temporary difference x Tax ratexTax rate

Deferred tax assets and deferred tax liabilities can be calculated using the following formulae:The following formula can be used in the calculation of deferred taxes arising from unused tax losses or the following formula can be used in the calculation of deferred taxes arising from unused tax losses or unused tax credits:

Deferred tax asset=Unused tax loss or unused tax credits x Tax ratexTax rate

Tax basesThe tax base of an item is crucial in determining the amount of any temporary difference, and effectively represents the amount at which the asset or liability would be recorded in a tax-based balance sheet. IAS 12 provides the following guidance on determining tax bases: Assets. The tax base of an asset is the amount that will be deductible against taxable economic benefits from recovering the carrying amount of the asset. Where recovery of an asset will have no tax consequences, the tax base is equal to the carrying amount. [IAS 12.7] Revenue received in advance. The tax base of the recognised liability is its carrying amount, less revenue that will not be taxable in future periods [IAS 12.8] Other liabilities. The tax base of a liability is its carrying amount, less any amount that will be deductible for tax purposes in respect of that liability in future periods [IAS 12.8] Unrecognized items. If items have a tax base but are not recognised in the statement of financial position, the carrying amount is nil [IAS 12.9] Tax bases not immediately apparent. If the tax base of an item is not immediately apparent, the tax base should effectively be determined in such as manner to ensure the future tax consequences of recovery or settlement of the item is recognised as a deferred tax amount [IAS 12.10] Consolidated financial statements. In consolidated financial statements, the carrying amounts in the consolidated financial statements are used, and the tax bases determined by reference to any consolidated tax return (or otherwise from the tax returns of each entity in the group). [IAS 12.11]ExamplesThe determination of the tax base will depend on the applicable tax laws and the entity's expectations as to recovery and settlement of its assets and liabilities. The following are some basic examples: Property, plant and equipment.The tax base of property, plant and equipment that is depreciable for tax purposes that is used in the entity's operations is the unclaimed tax depreciation permitted as deduction in future periods Receivables. If receiving payment of the receivable has no tax consequences, its tax base is equal to its carrying amount Goodwill. If goodwill is not recognised for tax purposes, its tax base is nil (no deductions are available) Revenue in advance. If the revenue is taxed on receipt but deferred for accounting purposes, the tax base of the liability is equal to its carrying amount (as there are no future taxable amounts). Conversely, if the revenue is recognised for tax purposes when the goods or services are received, the tax base will be equal to nil Loans. If there are no tax consequences from repayment of the loan, the tax base of the loan is equal to its carrying amount. If the repayment has tax consequences (e.g. taxable amounts or deductions on repayments of foreign currency loans recognised for tax purposes at the exchange rate on the date the loan was drawn down), the tax consequence of repayment at carrying amount is adjusted against the carrying amount to determine the tax base (which in the case of the aforementioned foreign currency loan would result in the tax base of the loan being determined by reference to the exchange rate on the draw down date).

Recognition and measurement of deferred taxesRecognition of deferred tax liabilitiesThe general principle in IAS12 is that a deferred tax liability is recognised for all taxable temporary differences. There are three exceptions to the requirement to recognise a deferred tax liability, as follows: liabilities arising from initial recognition of goodwill [IAS12.15(a)] liabilities arising from the initial recognition of an asset/liability other than in a business combination which, at the time of the transaction, does not affect either the accounting or the taxable profit [IAS12.15(b)] liabilities arising from temporary differences associated with investments in subsidiaries, branches, and associates, and interests in joint arrangements, but only to the extent that the entity is able to control the timing of the reversal of the differences and it is probable that the reversal will not occur in the foreseeable future. [IAS12.39]ExampleAn entity undertaken a business combination which results in the recognition of goodwill in accordance withIFRS3Business Combinations. The goodwill is not tax depreciable or otherwise recognised for tax purposes.As no future tax deductions are available in respect of the goodwill, the tax base is nil. Accordingly, a taxable temporary difference arises in respect of the entire carrying amount of the goodwill. However, the taxable temporary difference does not result in the recognition of a deferred tax liability because of the recognition exception for deferred tax liabilities arising from goodwill.

Recognition of deferred tax assetsA deferred tax asset is recognised for deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised, unless the deferred tax asset arises from: [IAS12.24] the initial recognition of an asset or liability other than in a business combination which, at the time of the transaction, does not affect accounting profit or taxable profit.Deferred tax assets for deductible temporary differences arising from investments in subsidiaries, branches and associates, and interests in joint arrangements, are only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and that taxable profit will be available against which the temporary difference will be utilised. [IAS12.44]The carrying amount of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable profit will be available. [IAS12.37]A deferred tax asset is recognised for an unused tax loss carryforward or unused tax credit if, and only if, it is considered probable that there will be sufficient future taxable profit against which the loss or credit carryforward can be utilised. [IAS12.34]Measurement of deferred taxDeferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates/laws that have been enacted or substantively enacted by the end of the reporting period. [IAS12.47] The measurement reflects the entity's expectations, at the end of the reporting period, as to the manner in which the carrying amount of its assets and liabilities will be recovered or settled. [IAS12.51]IAS 12 provides the following guidance on measuring deferred taxes: Where the tax rate or tax base is impacted by the manner in which the entity recovers its assets or settles its liabilities (e.g. whether an asset is sold or used), the measurement of deferred taxes is consistent with the way in which an asset is recovered or liability settled [IAS 12.51A] Where deferred taxes arise from revalued non-depreciable assets (e.g. revalued land), deferred taxes reflect the tax consequences of selling the asset [IAS 12.51B] Deferred taxes arising from investment property measured at fair value underIAS40Investment Propertyreflect the rebuttable presumption that the investment property will be recovered through sale [IAS 12.51C-51D] If dividends are paid to shareholders, and this causes income taxes to be payable at a higher or lower rate, or the entity pays additional taxes or receives a refund, deferred taxes are measured using the tax rate applicable to undistributed profits [IAS 12.52A]Deferred tax assets and liabilities cannot be discounted. [IAS12.53]Recognition of tax amounts for the periodAmount of income tax to recogniseThe following formula summarises the amount of tax to be recognised in an accounting period:

Tax to recognise for the period=Current tax for the period+Movement in deferred tax balances for the period

Where to recognise income tax for the periodConsistent with the principles underlying IAS 12, the tax consequences of transactions and other events are recognised in the same way as the items giving rise to those tax consequences. Accordingly, current and deferred tax is recognised as income or expense and included in profit or loss for the period, except to the extent that the tax arises from: [IAS12.58] transactions or events that are recognised outside of profit or loss (other comprehensive income or equity) - in which case the related tax amount is also recognised outside of profit or loss [IAS 12.61A] a business combination - in which case the tax amounts are recognised as identifiable assets or liabilities at the acquisition date, and accordingly effectively taken into account in the determination of goodwill when applyingIFRS3Business Combinations. [IAS 12.66]ExampleAn entity undertakes a capital raising and incurs incremental costs directly attributable to the equity transaction, including regulatory fees, legal costs and stamp duties. In accordance with the requirements ofIAS32Financial Instruments: Presentation, the costs are accounted for as a deduction from equity.Assume that the costs incurred are immediately deductible for tax purposes, reducing the amount of current tax payable for the period. When the tax benefit of the deductions is recognised, the current tax amount associated with the costs of the equity transaction is recognised directly in equity, consistent with the treatment of the costs themselves.

IAS 12 provides the following additional guidance on the recognition of income tax for the period: Where it is difficult to determine the amount of current and deferred tax relating to items recognised outside of profit or loss (e.g. where there are graduated rates or tax), the amount of income tax recognised outside of profit or loss is determined on a reasonable pro-rata allocation, or using another more appropriate method [IAS 12.63] In the circumstances where the payment of dividends impacts the tax rate or results in taxable amounts or refunds, the income tax consequences of dividends are considered to be more directly linked to past transactions or events and so are recognised in profit or loss unless the past transactions or events were recognised outside of profit or loss [IAS 12.52B] The impact of business combinations on the recognition of pre-combination deferred tax assets are not included in the determination of goodwill as part of the business combination, but are separately recognised [IAS 12.68] The recognition of acquired deferred tax benefits subsequent to a business combination are treated as 'measurement period' adjustments (seeIFRS3Business Combinations) if they qualify for that treatment, or otherwise are recognised in profit or loss [IAS 12.68] Tax benefits of equity settled share based payment transactions that exceed the tax effected cumulative remuneration expense are considered to relate to an equity item and are recognised directly in equity. [IAS 12.68C]PresentationCurrent tax assets and current tax liabilities can only be offset in the statement of financial position if the entity has the legal right and the intention to settle on a net basis. [IAS12.71]Deferred tax assets and deferred tax liabilities can only be offset in the statement of financial position if the entity has the legal right to settle current tax amounts on a net basis and the deferred tax amounts are levied by the same taxing authority on the same entity or different entities that intend to realise the asset and settle the liability at the same time. [IAS12.74]The amount of tax expense (or income) related to profit or loss is required to be presented in the statement(s) of profit or loss and other comprehensive income. [IAS 12.77]The tax effects of items included in other comprehensive income can either be shown net for each item, or the items can be shown before tax effects with an aggregate amount of income tax for groups of items (allocated between items that will and will not be reclassified to profit or loss in subsequent periods). [IAS 1.91]DisclosureIAS12.80 requires the following disclosures: major components of tax expense (tax income) [IAS12.79] Examples include: current tax expense (income) any adjustments of taxes of prior periods amount of deferred tax expense (income) relating to the origination and reversal of temporary differences amount of deferred tax expense (income) relating to changes in tax rates or the imposition of new taxes amount of the benefit arising from a previously unrecognised tax loss, tax credit or temporary difference of a prior period write down, or reversal of a previous write down, of a deferred tax asset amount of tax expense (income) relating to changes in accounting policies and corrections of errors.IAS12.81 requires the following disclosures: aggregate current and deferred tax relating to items recognised directly in equity tax relating to each component of other comprehensive income explanation of the relationship between tax expense (income) and the tax that would be expected by applying the current tax rate to accounting profit or loss (this can be presented as a reconciliation of amounts of tax or a reconciliation of the rate of tax) changes in tax rates amounts and other details of deductible temporary differences, unused tax losses, and unused tax credits temporary differences associated with investments in subsidiaries, branches and associates, and interests in joint arrangements for each type of temporary difference and unused tax loss and credit, the amount of deferred tax assets or liabilities recognised in the statement of financial position and the amount of deferred tax income or expense recognised in profit or loss tax relating to discontinued operations tax consequences of dividends declared after the end of the reporting period information about the impacts of business combinations on an acquirer's deferred tax assets recognition of deferred tax assets of an acquiree after the acquisition date.Other required disclosures: details of deferred tax assets [IAS12.82] tax consequences of future dividend payments. [IAS12.82A]In addition to the disclosures required by IAS12, some disclosures relating to income taxes are required byIAS1Presentation of Financial Statements, as follows: Disclosure on the face of the statement of financial position about current tax assets, current tax liabilities, deferred tax assets, and deferred tax liabilities [IAS 1.54(n) and (o)] Disclosure of tax expense (tax income) in the profit or loss section of the statement of profit or loss and other comprehensive income (or separate statement if presented). [IAS 1.82(d)]

IAS 14 Segment Reporting (Superseded)OverviewIAS 14Segment Reportingrequires reporting of financial information by business or geographical area. It requires disclosures for 'primary' and 'secondary' segment reporting formats, with the primary format based on whether the entity's risks and returns are affected predominantly by the products and services it produces or by the fact that it operates in different geographical areas.IAS 14 was issued in August 1997, was applicable to annual periods beginning on or after 1 July 1998, and was superseded byIFRS 8Operating Segmentswith effect from annual periods beginning on or after 1 January 2009.History of IAS 14March1980Exposure Draft E15Reporting Financial Information by Segment

August1981IAS 14Reporting Financial Information by Segment



December1995Exposure Draft E51Reporting Financial Information by Segment

August1997IAS 14Segment Reporting

1July1998Effective date of IAS 14 (1997)

30November2006IAS 14 is superseded byIFRS 8Operating Segmentseffective for annual periods beginning 1 January 2009

Related Interpretations NoneSummary of IAS 14Objective of IAS 14The objective of IAS 14 (Revised 1997) is to establish principles for reporting financial information by line of business and by geographical area. It applies to entities whose equity or debt securities are publicly traded and to entities in the process of issuing securities to the public. In addition, any entity voluntarily providing segment information should comply with the requirements of the Standard.ApplicabilityIAS 14 must be applied by entities whose debt or equity securities are publicly traded and those in the process of issuing such securities in public securities markets. [IAS 14.3]If an entity that is not publicly traded chooses to report segment information and claims that its financial statements conform to IFRSs, then it must follow IAS 14 in full. [IAS 14.5]Segment information need not be presented in the separate financial statements of a (a) parent, (b) subsidiary, (c) equity method associate, or (d) equity method joint venture that are presented in the same report as the consolidated statements. [IAS 14.6-7]Key definitionsBusiness segment:a component of an entity that (a) provides a single product or service or a group of related products and services and (b) that is subject to risks and returns that are different from those of other business segments. [IAS 14.9]Geographical segment:a component of an entity that (a) provides products and services within a particular economic environment and (b) that is subject to risks and returns that are different from those of components operating in other economic environments. [IAS 14.9]Reportable segment:a business segment or geographical segment for which IAS 14 requires segment information to be reported. [IAS 14.9]Segment revenue:revenue, including intersegment revenue, that is directly attributable or reasonably allocable to a segment. Includes interest and dividend income and related securities gains only if the segment is a financial segment (bank, insurance company, etc.). [IAS 14.16]Segment expenses:expenses, including expenses relating to intersegment transactions, that (a) result from operating activities and (b) are directly attributable or reasonably allocable to a segment. Includes interest expense and related securities losses only if the segment is a financial segment (bank, insurance company, etc.). Segment expenses do not include: interest losses on sales of investments or debt extinguishments losses on investments accounted for by the equity method income taxes general corporate administrative and head-office expenses that relate to the entity as a whole [IAS 14.16]Segment result: segment revenue minus segment expenses, before deducting minority interest. [IAS 14.16]Segment assets and segment liabilities: those operating assets (liabilities) that are directly attributable or reasonably allocable to a segment. [IAS 14.16]Identifying business and geographical segmentsAn entity must look to its organisational structure and internal reporting system to identify reportable segments. In particular, IAS 14 presumes that segmentation in internal financial reports prepared for the board of directors and chief executive officer should normally determine segments for external financial reporting purposes. Only if internal segments are not along either product/service or geographical lines is further disaggregation appropriate. [IAS 14.26]Geographical segments may be based either on where the entity's assets are located or on where its customers are located. [IAS 14.14] Whichever basis is used, several items of data must be presented on the other basis if significantly different. [IAS 14.71-72]Primary and secondary segmentsFor most entities one basis of segmentation is primary and the other is secondary, with considerably less disclosure required for secondary segments. The entity should determine whether business or geographical segments are to be used for its primary segment reporting format based on whether the entity's risks and returns are affected predominantly by the products and services it produces or by the fact that it operates in different geographical areas. The basis for identification of the predominant source and nature of risks and differing rates of return facing the entity will usually be the entity's internal organisational and management structure and its system of internal financial reporting to senior management. [IAS 14.26-27]Which segments are reportable?The entity's reportable segments are its business and geographical segments for which a majority of their revenue is earned from sales to external customers and for which: [IAS 14.35] revenue from sales to external customers and from transactions with other segments is 10% or more of the total revenue, external and internal, of all segments; or segment result, whether profit or loss, is 10% or more the combined result of all segments in profit or the combined result of all segments in loss, whichever is greater in absolute amount; or assets are 10% or more of the total assets of all segments.Segments deemed too small for separate reporting may be combined with each other, if related, but they may not be combined with other significant segments for which information is reported internally. Alternatively, they may be separately reported. If neither combined nor separately reported, they must be included as an unallocated reconciling item. [IAS 14.36]If total external revenue attributable to reportable segments identified using the 10% thresholds outlined above is less than 75% of the total consolidated or entity revenue, additional segments should be identified as reportable segments until at least 75% of total consolidated or entity revenue is included in reportable segments. [IAS 14.37]Vertically integrated segments (those that earn a majority of their revenue from intersegment transactions) may be, but need not be, reportable segments. [IAS 14.39] If not separately reported, the selling segment is combined with the buying segment. [IAS 14.41]IAS 14.42-43 contains special rules for identifying reportable segments in the years in which a segment reaches or loses 10% significance.What accounting policies should a segment follow?Segment accounting policies must be the same as those used in the consolidated financial statements. [IAS 14.44]If assets used jointly by two or more segments are allocated to segments, the related revenue and expenses must also be allocated. [IAS 14.47]What must be disclosed?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 standardised 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: [IAS 14.51-67] sales revenue (distinguishing between external and intersegment) result assets the basis of intersegment pricing liabilities capital additions depreciation and amortisation significant unusual items non-cash expenses other than depreciation equity method incomeSegment revenue includes "sales" from one segment to another. Under IAS 14, these intersegment transfers must be measured on the basis that the entity actually used to price the transfers. [IAS 14.75]For secondary segments, disclose: [IAS 14.69-72] revenue assets capital additionsOther disclosure matters addressed in IAS 14: Disclosure is required of external revenue for a segment that is not deemed a reportable segment because a majority of its sales are intersegment sales but nonetheless its external sales are 10% or more of consolidated revenue. [IAS 14.74] Special disclosures are required for changes in segment accounting policies. [IAS 14.76] Where there has been a change in the identification of segments, prior year information should be restated. If this is not practicable, segment data should be reported for both the old and new bases of segmentation in the year of change. [IAS 14.76] Disclosure is required of the types of products and services included in each reported business segment and of the composition of each reported geographical segment, both primary and secondary. [IAS 14.81]An entity must present a reconciliation between information reported for segments and consolidated information. At a minimum: [IAS 14.67] segment revenue should be reconciled to consolidated revenue segment result should be reconciled to a comparable measure of consolidated operating profit or loss and consolidated net profit or loss segment assets should be reconciled to entity assets Segment liabilities should be reconciled to entity liabilities.

IAS 15 Information Reflecting the Effects of Changing PricesWithdrawn December 2003December2003Withdrawn effective 1 January 2005

IAS 16 Property, Plant and EquipmentOverviewIAS 16Property, Plant and Equipmentoutlines the accounting treatment for most types of property, plant and equipment. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over its useful life.IAS 16 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005.History of IAS 16DateDevelopmentComments

August1980Exposure Draft E18Accounting for Property, Plant and Equipment in the Context of the Historical Cost Systempublished

March1982IAS 16Accounting for Property, Plant and EquipmentissuedOperative for financial statements covering periods beginning on or after 1 January 1983

1January1992Exposure Draft E43Property, Plant and Equipmentpublished

December1993IAS 16Property, Plant and Equipmentissued(revised as part of the 'Comparability of Financial Statements' project)Operative for financial statements covering periods beginning on or after 1 January 1995

April and July 1998Amended to be consistent withIAS 22,IAS 36andIAS 37Operative for annual financial statements covering periods beginning on or after 1 July 1999

18December2003IAS 16Property, Plant and EquipmentissuedEffective for annual periods beginning on or after 1 January 2005

22May2008Amended byImprovements to IFRSs(routine sales of assets held for rental)Effective for annual periods beginning on or after 1 January 2009

17May2012Amended byAnnual Improvements 2009-2011 Cycle(classification of servicing equipment)Effective for annual periods beginning on or after 1 January 2013

12December2013Amended byAnnual Improvements to IFRSs 20102012 Cycle(proportionate restatement of accumulated depreciation under the revaluation method)Effective for annual periods beginning on or after 1 July 2014

12 May 2014Amended byClarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)Effective for annual periods beginning on or after 1 January 2016

30 June 2014Amended byAgriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)Effective for annual periods beginning on or after 1 January 2016

Related Interpretations IFRIC 20Stripping Costs in the Production Phase of a Surface Mine SIC-6Costs of Modifying Existing Software.SIC-6 was superseded by and incorporated into IAS 16 (2003). SIC-14Property, Plant and Equipment Compensation for the Impairment or Loss of Items.SIC-14 was superseded by and incorporated into IAS 16 (2003). SIC-23Property, Plant and Equipment - Major Inspection or Overhaul Costs.SIC-23 was superseded by and incorporated into IAS 16 (2003).Amendments under consideration by the IASB noneSummary of IAS 16Objective of IAS 16The 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 recognised in relation to them.ScopeIAS 16 applies to the accounting for property, plant and equipment, except where another standards requires or permits differing accounting treatments, for example: assets classified as held for sale in accordance withIFRS5Non-current Assets Held for Sale and Discontinued Operations biological assets related to agricultural activity accounted for underIAS41Agriculture exploration and evaluation assets recognised in accordance withIFRS6Exploration for and Evaluation of Mineral Resources mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative resources.The standard does apply to property, plant, and equipment used to develop or maintain the last three categories of assets. [IAS 16.3]The cost model in IAS 16 also applies to investment property accounted for using the cost model underIAS40Investment Property. [IAS 16.5]The standard does apply to bearer plants but it does not apply to the produce on bearer plants. [IAS 16.3]Note: Bearer plants were brought into the scope of IAS 16 byAgriculture: Bearer Plants (Amendments to IAS 16 and IAS 41), which applies to annual periods beginning on or after 1 January 2016.RecognitionItems of property, plant, and equipment should be recognised as assets when it is probable that: [IAS 16.7] it is probable that the future economic benefits associated with the asset will flow to the entity, and the cost of the asset can be measured reliably.This recognition principle is applied to all property, plant, and equipment costs at the time they are incurred. These costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it.IAS 16 does not prescribe the unit of measure for recognition what constitutes an item of property, plant, and equipment. [IAS 16.9] Note, however, that if the cost model is used (see below) each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately. [IAS 16.43]IAS 16 recognises that parts of some items of property, plant, and equipment may require replacement at regular intervals. The carrying amount of an item of property, plant, and equipment will include the cost of replacing the part of such an item when that cost is incurred if the recognition criteria (future benefits and measurement reliability) are met. The carrying amount of those parts that are replaced is derecognised in accordance with the derecognition provisions of IAS 16.67-72. [IAS 16.13]Also, continued operation of an item of property, plant, and equipment (for example, an aircraft) may require regular major inspections for faults regardless of whether parts of the item are replaced. When each major inspection is performed, its cost is recognised in the carrying amount of the item of property, plant, and equipment as a replacement if the recognition criteria are satisfied. If necessary, the estimated cost of a future similar inspection may be used as an indication of what the cost of the existing inspection component was when the item was acquired or constructed. [IAS 16.14]Initial measurementAn item of property, plant and equipment should initially be recorded at cost. [IAS 16.15] Cost includes all costs necessary to bring the asset to working condition for its intended use. This would include not only its original purchase price but also costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site (seeIAS 37Provisions, Contingent Liabilities and Contingent Assets). [IAS 16.16-17]If payment for an item of property, plant, and equipment is deferred, interest at a market rate must be recognised or imputed. [IAS 16.23]If an asset is acquired in exchange for another asset (whether similar or dissimilar in nature), the cost will be measured at the fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up. [IAS 16.24]Measurement subsequent to initial recognitionIAS 16 permits two accounting models: Cost model.The asset is carried at cost less accumulated depreciation and impairment. [IAS 16.30] Revaluation model.The asset is carried at a revalued amount, being its fair value at the date of revaluation less subsequent depreciation and impairment, provided that fair value can be measured reliably. [IAS 16.31]The revaluation modelUnder the revaluation model, revaluations should be carried out regularly, so that the carrying amount of an asset does not differ materially from its fair value at the balance sheet date. [IAS 16.31]If an item is revalued, the entire class of assets to which that asset belongs should be revalued. [IAS 16.36]Revalued assets are depreciated in the same way as under the cost model (see below).If a revaluation results in an increase in value, it should be credited to other comprehensive income and accumulated in equity under the heading "revaluation surplus" unless it represents the reversal of a revaluation decrease of the same asset previously recognised as an expense, in which case it should be recognised in profit or loss. [IAS 16.39]A decrease arising as a result of a revaluation should be recognised as an expense to the extent that it exceeds any amount previously credited to the revaluation surplus relating to the same asset. [IAS 16.40]When a revalued asset is disposed of, any revaluation surplus may be transferred directly to retained earnings, or it may be left in equity under the heading revaluation surplus. The transfer to retained earnings should not be made through profit or loss. [IAS 16.41]Depreciation (cost and revaluation models)For all depreciable assets:The depreciable amount (cost less residual value) should be allocated on a systematic basis over the asset's useful life [IAS 16.50].The residual value and the useful life of an asset should be reviewed at least at each financial year-end and, if expectations differ from previous estimates, any change is accounted for prospectively as a change in estimate under IAS 8. [IAS 16.51]The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the entity [IAS 16.60]; a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. [IAS 16.62A]Note: The clarification regarding the revenue-based depreciation method was introduced byClarification of Acceptable Methods of Depreciation and Amortisation, which applies to annual periods beginning on or after 1 January 2016.The depreciation method should be reviewed at least annually and, if the pattern of consumption of benefits has changed, the depreciation method should be changed prospectively as a change in estimate under IAS 8. [IAS 16.61] Expected future reductions in selling prices could be indicative of a higher rate of consumption of the future economic benefits embodied in an asset. [IAS 16.56]Note: The guidance on expected future reductions in selling prices was introduced byClarification of Acceptable Methods of Depreciation and Amortisation, which applies to annual periods beginning on or after 1 January 2016.Depreciation should be charged to profit or loss, unless it is included in the carrying amount of another asset [IAS 16.48].Depreciation begins when the asset is available for use and continues until the asset is derecognised, even if it is idle. [IAS 16.55]Recoverability of the carrying amountIAS16Property, Plant and Equipmentrequires impairment testing and, if necessary, recognition for property, plant, and equipment. An item of property, plant, or equipment shall not be carried at more than recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and its value in use.Any claim for compensation from third parties for impairment is included in profit or loss when the claim becomes receivable. [IAS 16.65]Derecognition (retirements and disposals)An asset should be removed from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. The gain or loss on disposal is the difference between the proceeds and the carrying amount and should be recognised in profit and loss. [IAS 16.67-71]If an entity rents some assets and then ceases to rent them, the assets should be transferred to inventories at their carrying amounts as they become held for sale in the ordinary course of business. [IAS 16.68A]DisclosureInformation about each class of property, plant and equipmentFor each class of property, plant, and equipment, disclose: [IAS 16.73] 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 net foreign exchange differences on translation other movementsAdditional disclosuresThe following disclosures are also required: [IAS 16.74] restrictions on title and items pledged as security for liabilities expenditures to construct property, plant, and equipment during the period contractual commitments to acquire property, plant, and equipment compensation from third parties for items of property, plant, and equipment that were impaired, lost or given up that is included in profit or loss.IAS 16 also encourages, but does not require, a number of additional disclosures. [IAS 16.79]Revalued property, plant and equipmentIf property, plant, and equipment is stated at revalued amounts, certain additional disclosures are required: [IAS 16.77] the effective date of the revaluation whether an independent valuer was involved for each revalued class of property, the carrying amount that would have been recognised had the assets been carried under the cost model the revaluation surplus, including changes during the period and any restrictions on the distribution of the balance to shareholders.

IAS 17 LeasesOverviewIAS 17Leasesprescribes the accounting policies and disclosures applicable to leases, both for lessees and lessors. Leases are required to be classified as either finance leases (which transfer substantially all the risks and rewards of ownership, and give rise to asset and liability recognition by the lessee and a receivable by the lessor) and operating leases (which result in expense recognition by the lessee, with the asset remaining recognised by the lessor).IAS 17 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005.History of IAS 17October1980Exposure Draft E19Accounting for Leases

September1982IAS 17Accounting for Leases



April1997Exposure Draft E56, Leases

December1997IAS 17Leases

1January1999Effective date of IAS 17 (1997) Leases


1January2005Effective date of IAS 17 (Revised 2003)

16April2009IAS 17 amended forAnnual Improvements to IFRSs 2009about classification of land leases

1January2010Effective date of the April 2009 revisions to IAS 17, with early application permitted (with disclosure)

Related Interpretations IFRIC 4Determining Whether an Arrangement Contains a Lease SIC-15Operating Leases Incentives SIC-27Evaluating the Substance of Transactions in the Legal Form of a LeaseAmendments under consideration by the IASB Leases Comprehensive projectSummary of IAS 17Objective of IAS 17The 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.ScopeIAS 17 applies to all leases other than lease agreements for minerals, oil, natural gas, and similar regenerative resources and licensing agreements for films, videos, plays, manuscripts, patents, copyrights, and similar items. [IAS 17.2]However, IAS 17 does not apply as the basis of measurement for the following leased assets: [IAS 17.2] property held by lessees that is accounted for as investment property for which the lessee uses the fair value model set out in IAS 40 investment property provided by lessors under operating leases (see IAS 40) biological assets held by lessees under finance leases (see IAS 41) biological assets provided by lessors under operating leases (see IAS 41)Classification of leasesA lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership. All other leases are classified as operating leases. Classification is made at the inception of the lease. [IAS 17.4]Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form. Situations that would normally lead to a lease being classified as a finance lease include the following: [IAS 17.10] the lease transfers ownership of the asset to the lessee by the end of the lease term the lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than fair value at the date the option becomes exercisable that, at the inception of the lease, it is reasonably certain that the option will be exercised the lease term is for the major part of the economic life of the asset, even if title is not transferred at the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset the lease assets are of a specialised nature such that only the lessee can use them without major modifications being madeOther situations that might also lead to classification as a finance lease are: [IAS 17.11] if the lessee is entitled to cancel the lease, the lessor's losses associated with the cancellation are borne by the lessee gains or losses from fluctuations in the fair value of the residual fall to the lessee (for example, by means of a rebate of lease payments) the lessee has the ability to continue to lease for a secondary period at a rent that is substantially lower than market rentWhen a lease includes both land and buildings elements, an entity assesses the classification of each element as a finance or an operating lease separately. In determining whether the land element is an operating or a finance lease, an important consideration is that land normally has an indefinite economic life [IAS 17.15A]. Whenever necessary in order to classify and account for a lease of land and buildings, the minimum lease payments (including any lump-sum upfront payments) are allocated between the land and the buildings elements in proportion to the relative fair values of the leasehold interests in the land element and buildings element of the lease at the inception of the lease. [IAS 17.16] For a lease of land and buildings in which the amount that would initially be recognised for the land element is immaterial, the land and buildings may be treated as a single unit for the purpose of lease classification and classified as a finance or operating lease. [IAS 17.17] However, separate measurement of the land and buildings elements is not required if the lessee's interest in both land and buildings is classified as an investment property in accordance with IAS 40 and the fair value model is adopted. [IAS 17.18]Accounting by lesseesThe following principles should be applied in the financial statements of lessees: at commencement of the lease term, finance leases should be recorded as an asset and a liability at the lower of the fair value of the asset and the present value of the minimum lease payments (discounted at the interest rate implicit in the lease, if practicable, or else at the entity's incremental borrowing rate) [IAS 17.20] finance lease payments should be apportioned between the finance charge and the reduction of the outstanding liability (the finance charge to be allocated so as to produce a constant periodic rate of interest on the remaining balance of the liability) [IAS 17.25] the depreciation policy for assets held under finance leases should be consistent with that for owned assets. If there is no reasonable certainty that the lessee will obtain ownership at the end of the lease the asset should be depreciated over the shorter of the lease term or the life of the asset [IAS 17.27] for operating leases, the lease payments should be recognised as an expense in the income statement over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern of the user's benefit [IAS 17.33]Incentives for the agreement of a new or renewed operating lease should be recognised by the lessee as a reduction of the rental expense over the lease term, irrespective of the incentive's nature or form, or the timing of payments. [SIC-15]Accounting by lessorsThe following principles should be applied in the financial statements of lessors: at commencement of the lease term, the lessor should record a finance lease in the balance sheet as a receivable, at an amount equal to the net investment in the lease [IAS 17.36] the lessor should recognise finance income based on a pattern reflecting a constant periodic rate of return on the lessor's net investment outstanding in respect of the finance lease [IAS 17.39] assets held for operating leases should be presented in the balance sheet of the lessor according to the nature of the asset. [IAS 17.49] Lease income should be recognised over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern in which use benefit is derived from the leased asset is diminished [IAS 17.50]Incentives for the agreement of a new or renewed operating lease should be recognised by the lessor as a reduction of the rental income over the lease term, irrespective of the incentive's nature or form, or the timing of payments. [SIC-15]Manufacturers or dealer lessors should include selling profit or loss in the same period as they would for an outright sale. If artificially low rates of interest are charged, selling profit should be restricted to that which would apply if a commercial rate of interest were charged. [IAS 17.42]Under the 2003 revisions to IAS 17, initial direct and incremental costs incurred by lessors in negotiating leases must be recognised over the lease term. They may no longer be charged to expense when incurred. This treatment does not apply to manufacturer or dealer lessors where such cost recognition is as an expense when the selling profit is recognised.Sale and leaseback transactionsFor a sale and leaseback transaction that results in a finance lease, any excess of proceeds over the carrying amount is deferred and amortised over the lease term. [IAS 17.59]For a transaction that results in an operating lease: [IAS 17.61] if the transaction is clearly carried out at fair value - the profit or loss should be recognised immediately if the sale price is below fair value - profit or loss should be recognised immediately, except if a loss is compensated for by future rentals at below market price, the loss it should be amortised over the period of use if the sale price is above fair value - the excess over fair value should be deferred and amortised over the period of use if the fair value at the time of the transaction is less than the carrying amount a loss equal to the difference should be recognised immediately [IAS 17.63]Disclosure: lessees finance leases [IAS 17.31] carrying amount of asset reconciliation between total minimum lease payments and their present value amounts of minimum lease payments at balance sheet date and the present value thereof, for: the next year years 2 through 5 combined beyond five years contingent rent recognised as an expense total future minimum sublease income under noncancellable subleases general description of significant leasing arrangements, including contingent rent provisions, renewal or purchase options, and restrictions imposed on dividends, borrowings, or further leasingDisclosure: lessees operating leases [IAS 17.35] amounts of minimum lease payments at balance sheet date under noncancellable operating leases for: the next year years 2 through 5 combined beyond five years total future minimum sublease income under noncancellable subleases lease and sublease payments recognised in income for the period contingent rent recognised as an expense general description of significant leasing arrangements, including contingent rent provisions, renewal or purchase options, and restrictions imposed on dividends, borrowings, or further leasingDisclosure: lessors finance leases [IAS 17.47] reconciliation between gross investment in the lease and the present value of minimum lease payments; gross investment and present value of minimum lease payments receivable for: the next year years 2 through 5 combined beyond five years unearned finance income unguaranteed residual values accumulated allowance for uncollectible lease payments receivable contingent rent recognised in income general description of significant leasing arrangementsDisclosure: lessors operating leases [IAS 17.56] amounts of minimum lease payments at balance sheet date under noncancellable operating leases in the aggregate and for: the next year years 2 through 5 combined beyond five years contingent rent recognised as in income general description of significant leasing arrangements

IAS 18 RevenueOverviewIAS 18Revenueoutlines the accounting requirements for when to recognise revenue from the sale of goods, rendering of services, and for interest, royalties and dividends. Revenue is measured at the fair value of the consideration received or receivable and recognised when prescribed conditions are met, which depend on the nature of the revenue.IAS 18 was reissued in December 1993 and is operative for periods beginning on or after 1 January 1995.History of IAS 18April1981Exposure Draft E20Revenue Recognition

December1982IAS 18Revenue Recognition


May1992E41Revenue Recognition

December1993IAS 18Revenue Recognition(revised as part of the 'Comparability of Financial Statements' project)

1January1995Effective date of IAS 18 (1993)Revenue Recognition

December1998Amended by IAS 39Financial Instruments: Recognition and Measurement, effective 1 January 2001

16April2009Appendix to IAS 18 amended forAnnual Improvements to IFRSs 2009. It now provides guidance for determining whether an entity is acting as a principal or as an agent.

1 January 2017IAS 18 will be superseded byIFRS 15Revenue from Contracts with Customers

Related Interpretations IFRIC 18Transfers of Assets from Customers IFRIC 15Agreements for the Construction of Real Estate IFRIC 13Customer Loyalty Programmes IFRIC 12Service Concession Arrangements SIC-27Evaluating the Substance of Transactions in the Legal Form of a Lease SIC-31Revenue Barter Transactions Involving Advertising ServicesSummary of IAS 18Objective of IAS 18The objective of IAS 18 is to prescribe the accounting treatment for revenue arising from certain types of transactions and events.Key definitionRevenue:the gross inflow of economic benefits (cash, receivables, other assets) arising from the ordinary operating activities of an entity (such as sales of goods, sales of services, interest, royalties, and dividends). [IAS 18.7]Measurement of revenueRevenue should be measured at the fair value of the consideration received or receivable. [IAS 18.9] An exchange for goods or services of a similar nature and value is not regarded as a transaction that generates revenue. However, exchanges for dissimilar items are regarded as generating revenue. [IAS 18.12]If the inflow of cash or cash equivalents is deferred, the fair value of the consideration receivable is less than the nominal amount of cash and cash equivalents to be received, and discounting is appropriate. This would occur, for instance, if the seller is providing interest-free credit to the buyer or is charging a below-market rate of interest. Interest must be imputed based on market rates. [IAS 18.11]Recognition of revenueRecognition, as defined in the IASBFramework, means incorporating an item that meets the definition of revenue (above) in the income statement when it meets the following criteria: it is probable that any future economic benefit associated with the item of revenue will flow to the entity, and the amount of revenue can be measured with reliabilityIAS 18 provides guidance for recognising the following specific categories of revenue:Sale of goodsRevenue arising from the sale of goods should be recognised when all of the following criteria have been satisfied: [IAS 18.14] the seller has transferred to the buyer the significant risks and rewards of ownership the seller retains neither conti

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