differences of pfrs for smes

8/19/2019 Differences of PFRS for SMEs

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Similarities and Differences of

Full PFRS and PFRS for SMEs

Full PFRS PFRS for SMEs

Financial

Statements

A statement of changes in equity is

required, presenting a reconciliation of

equity items between the beginning

and end of the period.

Same requirement. However, if the only

changes to the equity during the period

are a result of profit or loss, payment of

dividends, correction of prior-period

errors or changes in accounting policy, a

combined statement of income andretained earnings can be presented

instead of both a statement of

comprehensive income and a statement

of changes in equity.

Business

Combinations

Transaction costs are excluded under

!"S # $revised%.&ontingent

consideration is recogni'ed regardless

of the probability of payment.

Transaction costs are included in the

acquisition costs. &ontingent

considerations are included as part of

the acquisition cost if it is probable that

the amount will be paid and itsfair value can be measured reliably.

Investments in

associates

and joint ventures

(nvestments in associates are

accounted for using the equity

method. The cost and fair value model

are not permitted except in separate

financial statements. To account for a

)ointly controlled entity, either the

proportionate consolidation method or

the equity method are allowed. The

cost and fair value model are

not permitted.

An entity may account of its

investments in

associates or )ointly controlled entities

using one of the following*

+ The cost model $cost less any

accumulated impairment losses%.

+ The equity method.

+ The fair value through profit or loss

model.

Financial

instruments –

derivatives and

hedging

!inancial instruments* "ecognition

and measurement, distinguishes four

measurement categories of

financial instruments that is,

financial assets or liabilities at fair

value through profit or loss, held-to-

maturity investments, loans and

receivables and available-for-sale

financial assets.

There are two sections dealing with

financial instruments* a section for

simple payables and receivables,

and other basic financial instruments/

and a section for other, more complex

financial instruments. 0ost of the basic

financial instruments are measured at

amorti'ed cost/ the complex instruments

are generally measured at fair value

through profit

or loss.



Non-financial

assets and

goodwill

!or tangible and intangible assets,

there is an accounting policy choice

between the cost model and the

revaluation model. 1oodwill and other intangibles with indefinite lives are

reviewed for impairment and not

amorti'ed.

The cost model is the only permitted

model. All intangible assets, including

goodwill, are assumed to have finite

lives and are amorti'ed.

Emploee

benefits – defined

benefit plans

2mployee benefits, actuarial gains or

losses can be recogni'ed immediately

or amorti'ed into profit or loss over

the expected remaining wor3ing lives

of participating employees.

The use of an accrued benefit

valuation method $the pro)ected unit

credit method% is required for

calculating defined benefit

obligations.

"equires immediate recognition and

splits the expense into different

components.

The circumstance-driven approach isapplicable, which means that the use of

an accrued benefit valuation method

$the pro)ected unit credit method% is

required if the information that is

needed to ma3e such a calculation is

already available, or if it can be

obtained without undue cost or effort. (f

not, simplifications

are permitted in which future salary

progression, future service or

possible mortality during an employees

period of service are not considered.

Income ta!es A deferred tax asset is only recogni'ed

to the extent that it is probable that

there will be sufficient future taxable

profit to enable recovery of the

deferred tax asset.

There is no specific guidance on

uncertain tax positions.

(n practice, management will record

the liability measured as either

a single best estimate or a weighted

average probability of the possible

outcomes, if the li3elihood is greaterthan 456.

A valuation allowance is recogni'ed so

that the net carrying amount of the

deferred tax asset equals the highest

amount that is more li3ely than not to be

recovered. The net carrying amount of

deferred tax asset is li3ely to be the

same between full !"S and !"S for

S02s.

0anagement recognises the effect of the

possible outcomes of a review by the

tax authorities. (t should be measured

using the probability-weighted average

amount of all the possible outcomes.

There is no probable recognitionthreshold.

"ecognition

of the elements of

the financial

Same as !"S for S02s. (n

addition, regard needs to

be given to the materiality

"ecognition is the process of

incorporating in the balance sheet or

income statement an item



statements considerations. that meets the definition of an element

and satisfies the following criteria*

+ (t is probable that any future economic

benefit associated with the item will

flow to or from the entity.+ The item has a cost or a value that can

be measured reliably.

A failure to recogni'e an item that

satisfies these criteria is not rectified by

disclosure of accounting policies used

or by notes or explanatory materials.

An item that fails to meet the

recognition criteria may qualify for

recognition at a later date as a result ofsubsequent circumstances or events.

#easurement

bases

The measurement bases include

historical cost, current cost, reali'able

value and present value. The

measurement basis most commonly

adopted is historical cost. However,

certain items are valued at fair

value $for example, investment

property, biological assets and

certain categories of financial

instrument%.

(tems are usually accounted for at their

historical cost. However, certain

categories of financial instruments,

investments in associates and )oint

ventures, investment property and

agricultural assets are valued at fair

value. All items other than those carried

at fair value through profit or loss are

sub)ect to impairment

$ransition

to %F"S for

S#Es&%F"S

The first-time adopter of !"S

is an entity that presents

its first annual financial

statements that conform to

!"S.

The mandatory exceptions are

the same as in !"S for S02s/

the optional exemptions are

similar but not exactly the

same as a result of differences

between the sections in the

!"S for S02s and full !"S.

The first-time adopter of the !"S for

S02s is an entity that presents its first

annual financial statements that

conform with the !"S for S02s

regardless of whether its previous

accounting framewor3 was full !"S or

another set of generally accepted

accounting principles.

!irst-time adoption requires full

retrospective application of the (!"S for

S02s effective at the reporting date for

an entitys first (!"S for S02s financial

statements. There are five mandatory

exceptions, 78 optional exemptions and

one general exemption to therequirement for retrospective

application.

The entity is not permitted to benefit

more than once from the special first-



time adoption measurement and

restatement exemptions.

Group 3

Javier, Joy Angelique

Blanco, Anne Julia

Marzol, Elaine race

Resurreccion, !atrina

Englatera, !armela

"ito, #$ester

differences of pfrs for smes

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