Book Review: IFRS Student Manual 2010

Steve Collings reviews the new book IFRS Student Manual 2010 by PWC (published by CCH).

Students of corporate reporting papers have the arduous and often complicated task of revising accounting standards.  With most jurisdictions these days adopting International Financial Reporting Standards (IFRS) due to global convergence, the difficulty of this task is often accentuated by the fact that a lot of students currently work with domestic Generally Accepted Accounting Practice (GAAP), for example, UK Financial Reporting Standards (FRS), Statements of Standard Accounting Practice (SSAP) and Urgent Issues Task Force abstracts (UITF).  The result is that due to the major…

Accounting for Intangible Assets

Steve Collings looks at the fundamental principles in accounting for goodwill and intangible assets and also looks at some fundamental differences between current UK GAAP, IFRS and the proposed IFRS for SMEs.

As accountants we are all aware that an intangible asset does not have any physical form and accounting for such assets has always been a major issue for the accounting profession for many years.  Goodwill particularly has always posed problems.

Goodwill

Goodwill can primarily take two forms: purchased goodwill and internally-generated goodwill.  Goodwill is accounted for under the provisions in FRS 10 ‘Goodwill and Intangible Assets’…

Accounting for Leases and Hire Purchase Contracts

In this article we take a look at the accounting treatment for leases and Hire Purchase contracts from the perspective of both the lessee and the lessor.

Accounting for leases and hire purchase contracts are dealt with in the provisions in SSAP 21 ‘Accounting for Leases and Hire Purchase Contracts’ and IAS 17 ‘Leases’.  In some instances some lease transactions can form part of a complex arrangement or which contain options, provisions and guarantees which could well fall within the scope of FRS 5 ‘Reporting the Substance of Transactions’.  It should be noted at this point that where such…

Dealing with Foreign Exchange Transactions

In this article, Steve Collings discusses the method used to deal with foreign exchange transactions under the prescribed standard, IAS 21.

Students dealing with financial reporting papers will often come across issues relating to the buying and selling of goods and services to other entities who are located in overseas locations – such transactions will often give rise to translation differences.  The objective of IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’ is to prescribe how an entity, who carries on foreign activities will account for the changes in foreign exchange rates.

Functional Currency

The first…

Provisions and Contingencies

Provisions, contingent liabilities and contingent assets can often cause confusion among accountants, particularly in deciphering when to recognise a provision or disclosing a contingency.  This article looks at the provisions laid down in FRS 12 and IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ and FRS 21 / IAS 10 ‘Events After the Reporting Date’ and discusses when and when not to recognise a provision.

Definitions

A provision is a liability that is of uncertain timing or amount, to be settled by the transfer of economic benefits.

A contingent liability is:

(a) A possible obligation arising from…