اذهب الي المحتوي

أرجو المساعدة في ترجمة المقالات التالية و لكم جزيل الشكر


المشاركات الموصى بها

Learning objectives

On completion of this chapter you will be able to:

· explain and appraise the meaning of an income statement which identifies

Discontinued operations, prior period adjustments and non-current assets held

For resale

• explain how adjustments are made for changes in accounting policy and prior

period errors

• disclose assets 'held for sale'

· present information regarding discontinued operations

• identify how companies provide a segmental analysis of their results

· explain the purpose of segmental information and appraise its usefulness

1 lAS 8: Accounting policies, changes in accounting

Estimates and errors

Changes in accounting policy and prior period errors should be dealt with retrospectively . Changes in accounting estimates should be dealt with prospectively.

1.1 Accounting policies

Accounting policies are the specific principles. bases conventions. rules and practices adopted by an entity in preparing and presenting financial statements

Accounting pclicier determined pv applying the relevant IFRS or IFRIC and considering any relevant

implementation Guidance issued bythe IASB forthat lFFlS’lFRlC.

Vi/here there is no appucahle IFRS or lFl;ilC management should use its judgement in developing and

applying an accounting policy that results in information that is relevant and reliable. Management

should refer to.

(al The requirements and guidance in lFRSs and lFRlCs dealing with similar and related

issues ‘

lb) The definitions, recognition criteria and measurement concepts for assets, liabilities and

expenses in the Framework

Management may also consider the most recent pronouncements of other standard setting bodies that

use ¤ s ·**lar conceptual framework to develop standards. other accounting literature and accepted

industry practices if these do not conflict with the sources above.

An entity must select and apply its accounting policies for a period consistently for similar transactions,

other events and conditions, unless an lFFtS or an lFltlC specifically requires or permits categorisation of

items for which ditlereot policies may he appropriate ll an lFFiS or an lFRlC requires or permits

categorisation ol items, an appropriate accounting policy must be selected and applied consistently to

each category.

1.2 Changes in accounting policies

The same accounting policies are usually adopted from period to period, to allow users to analyse trends over time in profit, cash flows and financial position. Changes in accounting policy will therefore be rare and should be made only if required by one of three things.

(a) By statute

(B) By an accounting standard setting body

© if the change will result in a more appropriate presentation of events or transactions in the financial statements of the entity

The standard highlights two types of event which do not constitute changes in accounting policy.

(a) Adopting an accounting policy for a new type of transaction or event not dealt with

previously by the entity.

(B) Adopting a new accounting policy for a transaction or event which has not occurred in the past or which was not material.

in the case of tangible non-current assets, if a policy of revaluation is adopted for the first time then this is treated, not as a change of accounting policy under IAS 8, but as a revaluation under IAS 16 Property, plant and equipment (see Chapter 8). The following paragraphs do not therefore apply to a change in policy to adopt revaluations.

IAS 8 requires retrospective application, unless it is impracticable to determine the cumulative amount of charge. Any resulting adjustment should be reported as an adjustment to the opening balance of retained earnings. Comparative information should be restated unless it is impracticable to do so.

This means that all comparative information must be restated as if the new policy had always been in force, with amounts relating to earlier periods reflected in an adjustment to opening reserves of the earliest period presented.

Prospective application is allowed only when it is impracticable to determine the cumulative effect of the change.

Certain disclosures are required when a change in accounting policy has a material effect on the current period or any prior period presented, or when it may have a material effect in subsequent periods.

(a) Reasons for the change

(B) Amount of the adjustment for the current period and for each period presented

© Amount of the adjustment relating to periods prior to those included in the comparative information

(d) The fact that comparative information has been restated or that it is lmpracticable to do so

An entity should also disclose information relevant to assessing the impact of new IFRS on the financial statements where these have not yet come into force.

1.3 Changes in accounting estimates

Estimates arise in relation to business activities because of the uncertainties inhcrent within them. Judgements are made based on the most up to date information and the use of such estimates is a necessary part of the preparation of financial statements. it does not undermine their reliability. Here are some examples of accounting estimates.

(a) A necessary bad debt allowance

(B) Useful lives of depreciable assets

© Allowance for obsolescence of inventory

The rule here is that the effect of a change in an accounting estimate should be included in the determination of net profit or loss in one of:

(a) The period of the change, if the change affects that period only

(B) The period of the change and future periods, if the change affects both

Changes may occur in the circumstances which were in force at the time the estimate was calculated or perhaps additional information or subsequent developments have come to light.

An example of a change in accounting estimate which affects only the current period is the bad debt estimate. However, a revision in the life over which an asset is depreciated would affect both the current and future periods, in the amount of the depreciation expense.

Reasonably enough, the effect of a change in an accounting estimate should be included in the same income statement classification as was used previously for the estimate. This rule helps to ensure consistency between the financial statements of different periods.

The materiality of the change is also relevant. The nature and amount of a change in an accounting estimate that has a material effect in the current period (or which is expected to have a material effect in subsequent periods) should be disclosed. If it is not possible to quantify the amount, this impracticability should be disclosed.

1.4 Errors

Errors discovered during a current period which relate to a prior period may arise through:

(a) Mathematical mistakes

(B) Mistakes in the application of accounting policies

© Misinterpretation of facts

(d) Oversights

(e) Fraud

most of the time these errors can be corrected through net profit or loss for the current period. Where they are material prior period errors. however, this is not appropriate. The standard considers two possible treatments.

Prior period errors: correct retrospectively.

This involves:

(a) Either restatrng the comparative amounts for the prior period(s) in which the error occurred.

(B) Or, when the error occurred before the earliest prior period presented. restating the opening balances of assets abilities and equity for that period

so that the financial statements are presented as if the error had never occurred.

Only where it is impracticable to determine the cumulative effect of an error on prior periods can an entity correct an error prospectively.

Various disclosures are required. providing information about the nature of the error and its effect on the financial results.

2 IFRS 5: Non-current assets held for sale and

discontinued operations

IFRS 5 requires assets 'held for sale` to be presented separately on the face of the balance sheet.

2.1 Background

IFRS 5 is the result of a short-term convergence project with the US Financial Accounting Standards Board (FASB).

IFRS 5 requires assets and groups of assets that are ‘held for sale’ to be presented separately on the face of the balance sheet and the results of discontinued operations to be presented separately in the income statement. This is required so that users of financial statements will be better able to make

projections about the financial position, profits and cash flows of the entity.

IFRS 5 does not apply to certain assets covered by other accounting standards including:

• Deferred tax assets (IAS 12)

• Investment properties accounted for in accordance with the fair value model (IAS 40)

2.2 Classification of assets held for sale

A non-current asset (or disposal group) should be classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. A number of

detailed criteria must be met:

(a) The asset must be available for immediate sale in its present condition.

(B) Its sale must be highly probable (ie , significantly more likely than not).

Disposal group: a group of assets to be disposed of. By sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction.

I (in practice a disposal group could be a subsidiary. a cash-generating unit or a single operation within an entity.)

For the sale to be highly probable, the following must apply.

(a) Management must be committed to a plan to sell the asset

(B) There must be an active programme to locate a buyer.

© The asset must be marketed for sale at a price that is reasonable in relation to its current fair value. ·

(d) The sale should be expected to take place within one year from the date of classification.

(e) It is unlikely that significant changes to the plan will be made or that the plan will be

withdrawn.

An asset (or disposal group) can still be classified as held for sale, even if the sale has not actually taken place within one year. However, the delay must have been caused by events or circumstances beyond the entity's control and there must be sufficient evidence that the entity is still committed to sell the asset or disposal group. Otherwise the entity must cease to classify the asset as held for sale

lf an entity acquires a disposal group (eg . a subsidiary) exclusively with a view to its subsequent disposal it can classify the asset as held for sale only if the sale is expected to take place within one year and it is highly probable that all the other criteria will be met within a short time (normally three months).

An asset that is to be abandoned should not be classified as held for sale. This is because its carrying amount will be recovered principally through continuing use. However, a disposal group to be abandoned may meet the definition of a discontinued operation and therefore separate disclosure may be required

(see below)

On l December 20x3. a company became committed to a plan to sell a manufacturing facility and has already found a cotential buyer. The company does not intend to discontinue the operations currently carried out in the facility. At 31 December 20X3 there is a backlog of uncompleted customer orders.The company will not be able to transfer the facility to the buyer until after it ceases to operate the facility and has eliminated the backlog of uncompleted customer orders. This is not expected to occur until spring.20X4.

Required

Can the manufacturing facility be classified as 'held for sale‘ at 31 December 2OX3?

2.3 Measurement of assets held for sale

· Fair value: the amount for which an asset could be exchanged, or a liability settled, between knowleggeable,willing parties in an arm’s length transaction.

• Costs to sell: the incremental costs directly attributable to the disposal of an asset (or disposal group). excluding finance costs and income tax expense.

• Recoverable amount: the higher of an asset’s fair value less costs to sell and its value in use.

• Value in use: the present value of estimated future cash flows expected to arise from the

Continuing use of an asset and from its disposal at the end of its useful life.

A non-current asset (or disposal group) that is held for sale should be measured at the lower of its

carrying amount and fair value less costs to sell. Fair value less costs to sell is equivalent to net realisable value.

An impairment loss should be recognised where fair value less costs to sell is lower than carrying amount.

(see Chaptar8)

Non-current assets held for sale should not be depreciated, even if they are still being used by the entity

A non-current assets (or disposal group) that is no longer classified as held for sale (for example, because the sale has not taken place within a one year) is measured at the lower of:

(a) its carrying amount before it was classified as held for sale, adjusted for any depreciation that would have been charged had the asset not been held for sale

(B) its recoverable amount at the date of the decision not to sell

2.4 Presentation of a non-current asset or disposal group classified as held for sale

Non-current assets and disposal groups classified as held for sale should be presented separately from other assets in the balance sheet The liabilities of a disposal group should be presented separately from other liabilities in IME balance sheet.

رابط هذا التعليق
شارك على مواقع اخرى

أخي العزيز

يمكنك الإستعانة بأحد برامج الترجمة مثل المترجم الفوري ( easy lingo) أو الوافي

أنا حاولت ارفع لك برنامج المترجم الفوري لكن حجمه كبير وفشلت في رفعه

تحياتي

wael el-iraqi

Director of finance & accounting

SAUDI ARABIA

waelaleraky@hotmail.com

رابط هذا التعليق
شارك على مواقع اخرى

انشئ حساب جديد او قم بتسجيل دخولك لتتمكن من اضافه تعليق جديد

يجب ان تكون عضوا لدينا لتتمكن من التعليق

انشئ حساب جديد

سجل حسابك الجديد لدينا في الموقع بمنتهي السهوله .

سجل حساب جديد

تسجيل دخول

هل تمتلك حساب بالفعل ؟ سجل دخولك من هنا.

سجل دخولك الان
×
×
  • اضف...