Read the summary and the most important questions on Samenvatting Efi

• 1 The AISB and its Conceptual Framework

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• What's the function of the IFRS Interpretations Committee (IFRIC)?

  The IFRS Interpretations Committee (IFRIC) issues interpretations of and guidance on the requirements of IFRS. They also provide authoritative guidance on the issue concerned.

• What's the process for issuing new IFRS's?

  
  1. Setting the agenda
  2. Planning the project - undertake the project by itself or jointly
  3. Developing and publishign the discussion papaer - not mandatory
  4. Developing and publishing the exposure draft - ED is mandatory
  5. Developing and publishing the standard - regular meetings with interested parties to help understand unaticipated issues
  6. Procedures involving consultations and evaluation after an IFRS has been issued

• The purpose of a conceptual framework

  
  - To provide a coherent set of principles
  - To assist in the development of a consistent set of accounting standards for he preparation of financial statements
  - To assist in the application of standards and dealing with topics not covered
  - To assist auditors in forming an opinion about compliance to standards
  - To assist users in the interpretation of financial statements

• Objective of financial reporting

  IFRS exist to serve the information needs of users for using financial reporting - general purpose of financial reporting. It is about providing financial information that is useful to users in making decisions in providing resources.

• Faithful representations is attained when:

  
  1. Complete
  2. Neutrality
  3. Free from material error

• Different measurement bases

  
  - Historical cost
  - Current cost
  - Realisable value
  - Present value
  - Fair value

• 3 Fair Value Measurement (IFRS 13)

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• What's the primary goal of IFRS 13 - Fair value measurement?

  The primary goal is to increase the consistency and comparability of fair value measurements used in financial reporting. The standard should be applied whenever another accounting standard requires or permits an element to be measured or disclosed at fair value.

• Difference between transaction costs and transportation costs

  Transaction costs are not characteristics of the asset or liability, whereas transportation costs are. The location of an asset is a definite characteristic; hence cost of transportation is included in the fair vlaue measurement and should be subtracted from its fair value. Transaction costs are not considered to be a characteristic, but incremental direct costs - essential to the transaction, but attributable to the sale or transfer, thus considered being a cost.

• In-combination valuation premise

  Here the market participant will obtain maximum value by using the asset in combination with other assets and liabilities. As such, the fair value is measured by the price that would be received in a current transaction to sell the asset such that the pruchased could use it whit other assets/liabilities as a group. If such an asset is to be used on conjuntion, the fair value would be measured on an in-use basis - cash flows expected to receive from use.

• What should you do when the obligation is legally restricted from being transferred or not intended to be transferred?

  
  The fair value generally equals the fair value of a properly defined corresponding asset.
  
  * Identical item held by another party as an asset: measure FV from market participant's perspective that holds the asset.
  * Identical item not held by another party: measure FV using a valuation technique from a market participant that owes the liability.