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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.
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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
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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
$ransition
to %F"S for
S#Es&%F"S
The first-time adopter of !"S
is an entity that presents
its first annual financial
statements that conform to
!"S.
The mandatory exceptions are
the same as in !"S for S02s/
the optional exemptions are
similar but not exactly the
same as a result of differences
between the sections in the
!"S for S02s and full !"S.
The first-time adopter of the !"S for
S02s is an entity that presents its first
annual financial statements that
conform with the !"S for S02s
regardless of whether its previous
accounting framewor3 was full !"S or
another set of generally accepted
accounting principles.
!irst-time adoption requires full
retrospective application of the (!"S for
S02s effective at the reporting date for
an entitys first (!"S for S02s financial
statements. There are five mandatory
exceptions, 78 optional exemptions and
one general exemption to therequirement for retrospective
application.
The entity is not permitted to benefit
more than once from the special first-
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time adoption measurement and
restatement exemptions.
Group 3
Javier, Joy Angelique
Blanco, Anne Julia
Marzol, Elaine race
Resurreccion, !atrina
Englatera, !armela
"ito, #$ester