IFRS Flashcards
(9 cards)
IFRS 1 - Adoption of IFRS
Provides guidance for companies transitioning to the IFRS for the first time
Objective is to ensure that an entity’s first IFRS financial statements contain high quality information that is transparent, comparable, and can be generated at a cost that does not exceed the benefits
Requires retrospective application with some exemptions
IFRS 7 - Financial Instruments, Disclosures
Requires disclosures about financial instruments including risks, significance and accounting policies
Enables users of FS to evaluate the significance of financial instruments to the company’s financial position
Qualitative disclosures provide information about management objectives, policies and procedures
Quantitative disclosure provide information about the company’s exposure to risk
IFRS 8 - Operating Segments: Objective
Requires disclosure of information about operating segments, products/services, geographic areas, and major customers.
Provides financial data by business segment to help users understand the company’s performance across different operations.
Enhances transparency and helps stakeholders evaluate performance by segment.
IFRS 8 - Segment Reporting
Reportable segments must meet at least one of the following thresholds:
Revenue (external + inter-segment) ≥ 10% of total segment revenue
Profit or loss ≥ 10% of:
total profit (of profitable segments), or
total loss (of loss-making segments)
Assets ≥ 10% of total segment assets
IFRS 15 - Revenue from Contracts with Customers - Objective
To establish revenue from customer contracts recognition via a 5-step model
Aims to provide more informative and relevant disclosures about revenue and cash flows.
It encourages more consistency in revenue recognition practices across different entities and industries.
It helps users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows
IFRS 15 - Revenue from Contracts with Customers: 5 steps
Five step model:
1) Identify the contract(s) with a customer.
2) Identify performance obligations.
3) Determine transaction price.
4) Allocate transaction price to obligations.
5) Recognise revenue when/as obligations are satisfied.
IFRS 15 - Revenue from Contracts with Customers: Additional Guidance
Capitalise incremental costs to obtain contracts.
Disclose timing, amount, and judgement involved in revenue recognition.
Recognise revenue only if outcome can be measured reliably.
Advance payments = liability, customer arrears = asset.
IFRS 16 - Leases: Objective
Requires recognition of lease assets and liabilities by lessees for most leases.
IFRS 16 Leases: Key Policies
Lessee: Recognises right-of-use asset and lease liability.
Exceptions: leases <12 months or low value → straight-line expense.
Lessor: Continues classification as operating or finance lease.
Supports the concept of “substance over form”.
Ends “off-balance sheet” lease finance for lessees.
