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Differences Between Full IFRS and IFRS for SMEs

Differences Between Full IFRS and IFRS for SMEs

Differences Between Full IFRS and IFRS for SMEs: Here we will talk about the basic difference and we will give you a overview of of the differences in between these below:

IFRS SMEsIFRS
Section 1 Small and Medium-sized EntitiesIAS 1 Presentation of Financial Statements
Section 2 Concepts and Pervasive PrinciplesFramework for the Preparation and Presentation of Financial Statements
Section 3 Financial Statement PresentationIAS 1 Presentation of Financial Statements
Section 4 Statement of Financial PositionIAS 1 Presentation of Financial Statements
Section 5 Statement of Comprehensive Income and Income StatementIAS 1 Presentation of Financial Statements
Section 6 Statement of Changes in Equity and Statement of Income and Retained EarningsIAS 1 Presentation of Financial Statements
Section 7 Statement of Cash FlowsIAS 7 Statement of Cash Flows
Section 7 Statement of Cash FlowsIAS 7 Statement of Cash Flows
Section 8 Notes to the Financial Statements
Section 10 Accounting Policies, Estimates and ErrorsIAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Section 32 Events after the End of the Reporting PeriodIAS 10 Events after the Reporting Period
Section 33 Related Party DisclosuresIAS 24 Related Party Disclosures
Section 31 HyperinflationIAS 29 Financial Reporting in Hyperinflationary Economies

 

Differences Between Full IFRS and IFRS for SMEs

Differences Between Full IFRS and IFRS for SMEs

Differences Between Full IFRS and IFRS for SMEs

The concepts and principles of IFRS for SMEs are based on the Framework for the Preparation and Presentation of Financial Statements (the Framework) and therefore are very similar to full IFRS. Likewise, the statements needed to comprise a complete set of financial statements under IFRS for SMEs are also very similar to that required by IFRS. The most significant difference in the presentation of financial statements for SMEs is that there are less disclosure requirements in some instances. IFRS for SMEs also permits some of the statements required to be omitted or merged with other statements under certain circumstances, which will reduce the disclosure requirements for SMEs. The detailed requirements are set out in the followings.

Differences Between Full IFRS and IFRS for SMEs

IFRS for SMEs Section 1 Small and Medium-sized EntitiesIFRS IAS 1 Presentation of Financial Statements
Scope An SME is defined as an entity that: • Does not have public accountability and • Publishes general-purpose financial statements for external users. Public accountability is further defined as an entity that: • Has debt or equity instruments traded in a public market (or it is in the process of issuing such instruments) or • Holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses.An entity applies IAS 1 when preparing and presenting general-purpose financial statements in accordance with IFRS.

 

Differences Between Full IFRS and IFRS for SMEs: Concepts and pervasive principles

IFRS for SMEs Section 2 Concepts and Pervasive PrinciplesIFRS Framework for the Preparation and Presentation of Financial Statements IAS 1 Presentation of Financial Statements
Objective of financial statements The objective of the financial statements of an SME is to provide information about the financial position, financial performance and cash flows of the entity that is useful for economic decisionmaking by a broad range of users who are not in a position to demand reports tailored to meet their particular information needs. Financial statements also show the results of the stewardship of management.The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial statements also show the results of management’s stewardship of the resources entrusted to it.
Qualitative characteristics The qualitative characteristics of financial statements listed in the standard are: • Understandability • Relevance • Materiality • Reliability • Substance over form • Prudence • Completeness • Comparability • Timeliness • Balance between benefit and cost.The Framework lists similar qualitative characteristics and considerations as IFRS for SMEs. In addition, the Framework deals with the following issues: • Faithful representation • Balance between the qualitative characteristics.
Elements of financial statements In the statement of financial position, the elements are defined as assets, liabilities and equity. For the purposes of performance, the elements described are income and expenses.In the statement of financial position, the elements are defined as assets, liabilities and equity. For the purposes of performance, the elements described are income and expenses. Furthermore, the Framework considers capital maintenance adjustments.
IFRS for SMEs Section 2 Concepts and Pervasive PrinciplesIFRS Framework for the Preparation and Presentation of Financial Statements IAS 1 Presentation of Financial Statements
Recognition of elements The underlying recognition criteria of the elements of financial statements are that: • It is probable that any future economic benefit associated with the item will flow to or from the entity • The item has a cost or value that can be measured reliably. The standard further considers the probability of future economic benefit and reliability of measurement. Thereafter, the recognition of assets, liabilities, income, expense and total comprehensive income/profit and loss is considered.The underlying recognition criteria of the elements of financial statements are that: • It is probable that any future economic benefit associated with the item will flow to or from the entity • The item has a cost or value that can be measured reliably. The Framework further considers the probability of future economic benefit and reliability of measurement. Thereafter, the recognition of assets, liabilities, income and expense is considered.
Measurement IFRS for SMEs specifies two common measurement bases, which are amortised historical cost and fair value. In most cases the standard specifies which measurement must be used in different sections.The Framework considers different measurement bases that may be used in the determination of monetary amounts of elements in the financial statements.
Accrual basis An entity must prepare its financial statements, except for cash flow information, using the accrual basis of accounting.An entity prepares its financial statements (other than the cash flow statement) using the accrual basis of accounting.
Offsetting The standard specifically disallows offsetting of assets and liabilities, and income and expense, unless required or permitted in the relevant section.IAS 1 contains specific disclosures in respect of offsetting of assets and liabilities, and income and expense.

Differences Between Full IFRS and IFRS for SMEs

we consider business combinations and group financial statements and compare the following sections of the IFRS for SMEs with the relevant standard under full IFRS: Whilst IFRS for SMEs applies a purchase method of accounting for business combinations, there are a number of differences between the accounting treatment under IFRS for SMEs and IFRS 3 Business Combinations.

Perhaps the most significant difference is that goodwill is amortised over its useful life under IFRS for SMEs. Where this can’t be reliably estimated, a useful life of 10 years is assumed. This is likely to significantly reduce the work required for preparers as impairment tests will only be required where there are indicators of impairment.

Differences Between Full IFRS and IFRS for SMEs: The other key difference compared to full IFRS is that acquisition costs will be capitalised, resulting in higher goodwill balances being recorded. IFRS for SMEs provides preparers with a wider choice of accounting treatment for interests in jointly controlled entities and associates.

Whilst IFRS requires the use of the equity method in the consolidated accounts (or proportionate consolidation for JCEs), under IFRS for SMEs, entities can use the cost model, the equity method or the fair value model, which gives entities much greater flexibility to select a policy most appropriate to their business. These differences may be significant to some entities that have large group structures or are highly acquisitive and therefore the different requirements should be considered prior to adopting IFRS for SMEs.

Differences Between Full IFRS and IFRS for SMEs

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