Ateneo de Naga University

College of Business and Accountancy

Department of Accountancy
A/Y 2017 – 2018

Summary of
Philippine Accounting
Standards & Philippine
Financial Reporting
Standards

In partial fulfilment of the requirements in ACCM451

Auditing Problems

Submitted by:
Guinoo, Sharmaine L.

October 2017
 Table of Contents

PAS 1 (Presentation of Financial Statements) ....................................................................................... 4

PAS 2 (Inventories) ............................................................................................................................... 10
PAS 7 (Cash Flow Statement) ............................................................................................................... 12
PAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors)........................................ 14
PAS 10 (Events after the Reporting Period) ......................................................................................... 16
PAS 11 (Construction Contracts) .......................................................................................................... 18
PAS 12 (Income Taxes) ......................................................................................................................... 19
PAS 16 (Property, Plant and Equipment) ............................................................................................. 20
PAS 17 (Leases) ..................................................................................................................................... 22
PAS 18 (Revenue) ................................................................................................................................. 27
PAS 19 (Employee Benefits) ................................................................................................................. 29
PAS 20 (Accounting For Government Grants and Disclosure of Government Assistance) ................ 33
PAS 21 (The Effects of Changes in Foreign Exchange Rates) .............................................................. 35
PAS 23 (Borrowing Costs) ..................................................................................................................... 38
PAS 24 (Related Party Disclosures) ...................................................................................................... 40
PAS 26 (Accounting and Reporting by Retirement Benefit Plans) ...................................................... 43
PAS 27 (Separate Financial Statements) ............................................................................................. 45
PAS 28 (Investment in Associates and Joint Venture) ......................................................................... 47
PAS 29 (Financial Reporting In Hyperinflationary Economies) ........................................................... 49
PAS 32 (Financial Instruments: Presentation) ..................................................................................... 51
PAS 34 (Interim Financial Reporting)................................................................................................... 54
PAS 36 (Impairment of Assets)............................................................................................................. 56
PAS 37 (Provisions, Contingent Liabilities and Contingent Assets) .................................................... 58
PAS 38 (Intangible Assets) ................................................................................................................... 61
PAS 39 (Financial Instruments: Recognition and Measurement) ....................................................... 64
PAS 40 (Investment Property) .............................................................................................................. 68
PAS 41 (Agriculture) ............................................................................................................................. 71
PFRS 1 (First-time Adoption of International Financial Reporting Standard) .................................... 74
PFRS 2 (Share-based Payment) ............................................................................................................ 76
PFRS 3 (Business Combinations) .......................................................................................................... 78
PFRS 4 (Insurance Contracts) ............................................................................................................... 80

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PFRS 5 (Non-Current Asset Held for Sale and Discontinued Operations) ........................................... 81
PFRS 6 (Exploration for and Evaluation of Mineral Resource)............................................................ 83
PFRS 7 (Financial Instruments: Disclosures) ........................................................................................ 85
PFRS 8 (Operating Segments) .............................................................................................................. 90
PFRS 9 (Financial Instruments) ............................................................................................................ 93
PFRS 10 (Consolidated Financial Statements) ..................................................................................... 96
PFRS 11 (Joint Arrangements).............................................................................................................. 98
PFRS 12 (Disclosure of Interests in Other Entities) .............................................................................. 99
PFRS 13 (Fair Value Measurement) ................................................................................................... 101
PFRS 14 (Regulatory Deferral Accounts) ........................................................................................... 102
PFRS 15 (Revenue from Contracts with Customers) .......................................................................... 104
PFRS 16 (Leases) ................................................................................................................................. 106

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 PAS 1 (Presentation of Financial Statements)
I. Objectives

Outline the basis for presentation of general purpose financial statements to

ensure comparability both with the entity’s financial statements of previous
periods and with the financial statements of other entities.

Set out:
(1) the overall requirements for the presentation of financial statements
(2) guidelines for their structure
(3) minimum requirements for their content
II. Scope
a) This Standard:
i) Applies to:
(1) to general purpose financial statements based on Philippine Financial
Reporting Standards (IFRSs)
(2) equally to all entities, including those under PAS 27
ii) Does not apply to:
(1) condensed interim financial statements under PAS 34 except paragraphs 15–
35 that apply to such financial statements.

Financial statements
III. Purpose and Objective
a) a structured representation of the financial position and financial performance of an
entity.
b) 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
IV. Components of a complete set of financial statements that shall be presented with
equal prominence:
a) Statement of Financial Position
b) Statement of Comprehensive Income
c) Statement of Changes in Equity
d) Statement of Cash Flows
e) Accounting Policies and Explanatory Notes
V. Compliance with PFRS
a) Present fairly the financial position, performance and cash flow of the entity
b) To be prepared on an accrual and going concern basis
VI. Overall Considerations
a) Going concern
i) An assessment of the enterprise’s ability to continue as a going concern must be
made at each reporting date
ii) Financial statements shall be prepared on a going concern basis unless the
business will cease or liquidate

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 iii) Disclosure needed in the following:
(1) There are uncertainties about the entity’s ability to continue as a going
concern
(2) The basis and reason when financial statements are not prepared on a going
concern basis
b) Accrual basis
i) Applies to the preparation of all financial statements, except for the cash flow
statement
ii) Materiality and aggregation
(1) Material items
(a) presented separately in the financial statements
(b) Information is material if its non-disclosure could influence the economic
decision of users.
(2) Immaterial Items
(a) aggregated with amounts similar to their nature and function
(b) PAS does not apply to immaterial items.
c) Offsetting
i) Assets and liabilities or income and expenses shall not be offset unless
specifically required or permitted by PFRS.
ii) Income and expense items are to be offset only when:
(1) PAS requires or permits offsetting
(2) gains, losses and related expenses arising from similar transaction are not
material inn which case these amounts shall be aggregated
d) Frequency of reporting
i) An entity shall present a complete set of financial statements (including
comparative information) at least annually.
ii) When an entity changes the end of its reporting period and presents financial
statements for a period longer or shorter than one year, an entity shall disclose,
in addition to the period covered by the financial statements:
(1) the reason for using a longer or shorter period
(2) the fact that amounts presented in the financial statements are not entirely
comparable
e) Accounting Policies
i) Must comply with all applicable PAS and SIC Interpretations.
ii) Accounting policies describe:
(1) the measurement basis (bases) used in preparing the financial statements
(2) Any specific accounting policy that is necessary for a proper understanding of
the financial statements
f) Consistency of presentation
i) Retention of the presentation and classification of items in the financial
statements shall be made from one period to the next unless:
(1) the enterprise significantly changes the nature of its operation; or
(2) a change is required by a PAS or SIC Interpretation.
VII. Identification of Financial Statements
a) Statement of financial position
a) Current Assets

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 (1) expected to be realized, consumed or disposed of in the normal course of the
enterprise’s operating cycle; or
(2) held primarily for trading purposes or short-term and expected to be realized
within 12 months after the balance sheet date; or
(3) expected to be realized within twelve months after the balance sheet date
(4) Cash or cash equivalent assets not restricted in use
*An entity shall classify all other assets as non-current.
ii) Current Liabilities
(1) expected to be settled in its normal operating cycle;
(2) held primarily for the purpose of trading;
(3) due to be settled within twelve months after the reporting period, even if:
(a) the original term was for a period longer than twelve months, and
(b) an agreement to refinance, or to reschedule payments, on a long-term
basis is completed after the reporting period and before the financial
statements are authorized for issue
(4) the entity does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting period
*An entity shall classify all other liabilities as non-current.
iii) Items that must, at a minimum, be presented on the face of the balance sheet:
(1) Property, plant and equipment
(2) Intangible assets
(3) Financial assets
(4) Equity investment
(5) Inventories
(6) Trade and other receivable
(7) Cash and cash equivalents
(8) Issued capital and reserves
(9) Minority interest
(10) Non-current interest bearing liabilities
(11) Provisions
(12) Tax liabilities and assets
(13) Trade and other payables
*No prescribed order or format in which an entity presents these items.
However, the entity makes the judgment on how these items are ordered
through the assessment of:
 The nature and liquidity of assets;
 The function of assets within the entity; and
 The amounts, nature and timing of liabilities
iv) Information to be presented either in the notes..
(1) Either in the notes or in the statement of financial statement:
(a) further sub-classifications of the line items presented
(b) separately present amounts payable to and receivable from parent,
subsidiaries, associates and other related parties
(2) Either in the statement of financial position or changes in equity, or in the
notes:
(a) for each class of share capital:
(i) number of shares authorized;

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 (ii) the number of shares issued and fully paid, and issued but not fully
paid;
(iii) par value per share, or that the shares have no par value;
(iv) a reconciliation of the number of shares outstanding at the beginning
and at the end of the period;
(v) the rights, preferences and restrictions
(vi) treasury shares
(vii) shares held for options and sale contracts
(b) nature and purpose of each reserve within equity
(c) proposed dividends
(d) cumulative preference dividends not recognized
b) Statement of Comprehensive Income/Income Statement
i) Items that must, as a minimum, be presented on the face of the statement of
comprehensive income:
(1) Revenue
(2) Results from operating activities
(3) Finance costs
(4) Share of profits and losses of associates and joint ventures accounted for
using the equity method
(5) Tax expense
(6) The total of:
(a) the post-tax profit or loss from discontinued operations; and
(b) the post-tax gain or loss recognized:
(i) on the measurement to fair value less cost to sell; or
(ii) on the disposal of the assets or disposal group constituting the
discontinued operation
(7) Profit or loss
(8) Minority interest
(9) Net profit and loss for the period
(10) Share of the other comprehensive income of associates and joint
ventures accounted for using the equity method
ii) All items of income and expense recognized shall be presented either:
(1) in a single statement of comprehensive income, or
(2) in two statements:
(a) a statement displaying components of profit or loss (separate statement
of comprehensive income); and
(b) a second statement beginning with profit or loss and displaying
components of current period. IAS 8 specifies two such circumstances:
the correction of errors and the effect of changes in
iii) Information to be presented in the statement of comprehensive income or in the
notes:
(1) nature and amount of material income and expense items separately
(2) an analysis of expenses that can be done using:
(a) nature of expense
(i) expenses are aggregated according to their nature (e.g., depreciation,
transportation, salaries and wages, advertising expense).
*Sample:

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 Revenue X
Other income X
Changes in inventories of finished goods and work in progress X
Raw materials and consumables used X
Employee benefits expense X
Depreciation and amortization expense X
Other expenses X
Total expenses (X)
Profit before tax X

(b) function of expense/cost of sales

(i) expenses are classified according to their functions as part of cost of
sales, distribution or administrative activities
*Sample
Revenue X
Cost of sales (X)
Gross profit
X
Other income X
Distribution costs (X)
Administrative expenses (X)
Other expenses (X)
Profit before tax X
(3) dividends per share (declare or proposed)
(4) earnings per share (for publicly listed companies)
c) Changes in Equity
i) Must show either:
(1) All changes in equity:
(a) resulting from:
(i) net profit or loss for the period
(ii) income, expenses, gains and losses (including prior period
adjustments) recognized directly in equity and total of these items,
and
(iii) the cumulative effect of changes in accounting policies and the
correction of fundamental errors.
(b) must also be disclosed as either part of the statement or in the notes
(i) capital transactions with owners and distributions to owners
(ii) the balance of accumulated profit or loss at the beginning of the
period and at the balance sheet date and the movements for the
period, and
(iii) a reconciliation of changes in:
1. each class of equity
2. share premium
3. each reserve
(2) Changes other than those arising from capital transactions with owners and
distributions to owners.
d) Notes to Financial Statements

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i) Should:
(1) be cross-referenced to the balance sheet, income and cash flow statement
and is be presented in the following order:
(a) Statement of compliance with PAS.
(b) Statement of measurement bases and accounting policies
(c) Supporting items for information presented in the basic statements
(d) Other disclosures including:
(i) Contingencies, commitments and other financial disclosure, and
(ii) Non-financial disclosure.
(2) Present basis of preparation and accounting policies (including measurement
basis), information required by PAS and additional useful information not
presented elsewhere.
(a) If not disclosed elsewhere in information published with the financial
statements, the following must be disclosed by the entity:
(i) the domicile and legal form of the enterprise, its country of
incorporation and the address of
(ii) registered office (or, if different, the address of its principal place of
business);
(iii) a description of its operations and principal activities;
(iv) the name of its parent enterprise and ultimate parent enterprise; and
(v) either the number of employees at the end of the period or the
average for the period.

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PAS 2 (Inventories)

I. Objective
a) To prescribe the accounting treatment for inventories, including cost determination
and expense recognition
b) To provide guidance on the cost formulas that are used to assign costs to inventories
II. Scope
a) Standard applies to all inventories, except:
i) Work in progress arising under construction contracts, including directly related
service contracts
ii) Financial instruments
iii) Biological assets related to agricultural activity and agricultural produce at the
point of harvest
b) This Standard does not apply to the measurement of inventories held by:
i) Producers of agricultural and forest products, agricultural produce after harvest,
and minerals and mineral products, to the extent that they are measured at net
realizable value in accordance with well-established practices in those industries.
ii) Commodity broker-traders who measure their inventories at fair value less costs
to sell.
III. Forms
a) Raw materials (for use in a subsequent manufacturing process)
b) Work in process (for partly manufactured goods)
c) Finished goods (completed goods ready for sale and resale to customers)
IV. Valuation
a. The inventory shall be valued at the lower of:
i) Cost
(1) Includes:
(a) Purchase cost
(b) Conversion cost (materials, labour and overheads)
(c) Other costs necessary to bring inventory to its present location and
condition, but not foreign exchange differences.
(2) How determined
(a) For not interchangeable inventory items, specific costs are attributed to
the specific individual items of inventory.
(b) For Interchangeable items, either:
(i) First-In First-Out (FIFO)
(ii) Weighted Average
*Last In First Out (LIFO) is not permitted.
ii) Net realizable value
NRV = ESP – ECOC - ECOS
Where,
NRV – Net realizable value
ESP – Estimated selling price
ECOC – Estimated cost of completion
ESC – Estimated cost of selling
*If SP < cost price, inventory should be valued at their selling price.

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 *Stock is never valued at selling price when the selling price is greater than
the cost.
V. Other Key Principles
a) The carrying amount is recognized as an expense in the period in which the related
revenue is recognized when the inventory is sold.
b) Write-downs to NRV are recognized as an expense in the period of the write-down.
Reversals arising from an increase in NRV are recognized as a reduction of the
inventory expense in the period in which they occur

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PAS 7 (Cash Flow Statement)

I. Objective
a) To require the presentation of information about historical changes in an entity’s
cash and cash equivalents
b) To provide guidance in the preparation of a statement of cash flows that classifies
cash flows during the period according to operating, investing and financing
activities.
II. Scope
III. Categories
a) Operating activities – the main revenue generating activities of the business,
together with the payment of interest and tax
b) Investing activities – the acquisition and disposal of long term assets and other
investing activities.
c) Financing activities – receipts from the issue of new shares, payments for the
redemption of shares and changes in long term borrowings.
IV. Format of the Statement
a) Must include the following:
i) Operating activities
Profit from operations (profit before deduction of tax and interest)
+ Depreciation charge for the year.
+ Loss on sale of non- current assets (or deduct gain on sale of non –
current assets)
- Investment income
+- changes in inventories, trade and other receivables or payables
- Interest paid
- Taxes paid on income (usually corporation tax)
= Net cash provided by operating activities
ii) Investing activities
(1) Inflows from proceeds from sale of non-current assets, both tangible and
intangible, together with other long-term non-current assets.
(2) Outflows from cash used to purchase non-current assets, both tangible and
intangible, together with other long-term non-current assets.
(3) Interest received
(4) Dividends received
iii) Financing activities
(1) Inflows from:
(a) cash received from the issue of share capital
(b) raising or increasing loans
(2) Outflows from:
(a) repayment of share capital
(b) repayment of loans and finance lease liabilities
(3) Dividends paid

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b) At the end of the statement the net increase in cash and cash equivalent is shown,
both at the start and end of the period under review.
i) Cash: cash on hand and demand deposits
ii) Cash equivalents: short term, highly liquid investments that can easily be
converted into cash. This is usually taken to mean money held in a term deposit
account that can be withdrawn within three months from the date of deposit.
Bank overdrafts - usually repayable on demand – are included as part of the cash
and cash equivalents.
c) This statement of cash flows is presented with some allowable variations:
i) Cash flows from interest and dividends received and paid can be shown as
operating or investing or financing activities. Whichever is chosen must be
applied consistently.
ii) Cash flows arising from taxes on income are always classified as operating
activities unless they can be specifically identified with financing and/or investing
activities.

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PAS 8 (Accounting Policies, Changes in Accounting Estimates and
Errors)

I. Objective
a) To prescribe:
i) the criteria for selecting and changing accounting policies
ii) the accounting treatment and disclosure of changes in accounting policies,
changes in estimates, and errors.
II. Scope
a) This Standard prescribes the following:
i) classification,
ii) disclosure and
iii) accounting treatment of items in the income statement.
b) This Standard also specifies the:
i) treatment of changes in accounting estimates,
ii) fundamental errors, and
iii) changes in accounting policies
III. Key Principles
a. Accounting Policies
i) The specific principles, bases, conventions, rules and practices applied by an
entity in preparing and presenting financial statements
ii) In selecting and applying policies, requirements are:
(1) Where an accounting policy is given in an accounting standard then that
policy must apply.
(2) If none, the directors of the entity must use their judgement to give relevant
and reliable information.
(3) Any other standards or interpretations or to other standard setting bodies to
must be referred to in order to assist them.
*The subsequent interpretation or recommended method of treatment for the
transaction must be ensured that it does not result in conflict with
international standards or interpretations.
b) Accounting Principles
i) the broad concepts that apply to almost all financial statements such as:
(1) going concern
(2) materiality
(3) prudence
(4) consistency
c) Accounting Bases
i) The methods developed for applying the accounting principles to financial
statements. They are intended to reduce subjectivity by identifying and applying
acceptable methods.
*Once an entity adopts an accounting policy then it must be applied consistently
for similar transactions.
IV. Dealing with Changes
a) Changes in accounting policy
i) Can only occur if:

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 (1) if the change is required by a standard or interpretation.
(2) the change results in the financial statements providing more reliable and
relevant information.
ii) Effect
(1) Retrospective application
(2) The previous figure for equity and other figures in the income statement and
balance sheet must be altered.
b) Changes in Accounting Estimate
i) Result from new information or new developments and, accordingly, are not
corrections of errors.
ii) Effect
(1) Prospective application
(2) Included in the profit or loss in:
(a) the period of the change, if the change affects that period only; or
(b) the period of the change and future periods, if the change affects both.
c) Errors
i) Mathematical mistakes, mistakes in applying policies, oversights or
misinterpretation of the facts. It also includes fraud.
ii) Effect
(1) Retrospective application
(2) The entity must correct material errors from prior periods in the next set of
financial statements. Thus, comparative amounts from prior from prior
periods must be restated.

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PAS 10 (Events after the Reporting Period)

I. Objective
a) To prescribe:
i) When an entity should adjust its financial statements for events after the end of
the reporting period; and
ii) Disclosures about the date when the financial statements were authorised for
issue and about events after the end of the reporting period.
II. Scope
a) Shall be applied in accounting for:
i) events occurring after the balance sheet date
ii) but before the date the financial statements are authorized for issue
b) Specifies::
i) when an enterprise should adjust its financial statements for events occurring
after the balance sheet date; and
ii) the disclosures that should be made about events occurring after the balance
sheet date.
III. Types of Events
c) Adjusting events
i) If, at the date of the balance sheet, evidence of conditions existed that would
materially affect the financial statements then the financial statements should be
changed to reflect these conditions.
ii) Examples:
(1) settlement after the balance sheet date of a court case which confirms that a
present obligation existed at the date of the balance sheet.
(2) the determination after the date of the balance sheet of the purchase price
or sale price of a non-current asset bought or sold before the year end.
(3) inventories where the net realizable value falls below the cost price
(4) assets where a valuation shows that impairment is required
(5) trade receivables where a customer has become insolvent
(6) the discovery of fraud or errors which show the financial statements to be
incorrect
d) Non – Adjusting Events
i) No adjustment is made to the financial statements for such events.
ii) If material, they are disclosed by way of notes to the financial statements.
iii) Examples:
(1) major purchase of assets.
(2) losses of production capacity caused by fire, floods or strike action by
employees
(3) announcement or commencement of a major reconstruction of the business
(4) changes in tax rates
(5) entering into significant commitments or contingent liabilities
(6) commencing litigation based on events arising after the date of the balance
sheet
(7) major share transactions
IV. Additional Considerations

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a) Dividends declared or proposed after the balance sheet date are no longer
recognized as a liability in the balance sheet. They are non-adjusting events and are
now to be shown by way of a note to the accounts.
b) If, after the balance sheet date, the directors determine that the business intends to
liquidate or cease trading and that there is no alternative to this course of action,
then the financial statements cannot be prepared on a going concern basis.
c) Entities must disclose the date when the financial statements were authorised for
issue and who gave that authorisation. If anyone had the power to amend the
financial statements after their authorisation then this fact must also be disclosed.

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PAS 11 (Construction Contracts)

I. Objectives
a) To prescribe the contractor’s accounting treatment of revenue and costs associated
with construction contracts
b) The allocation of contract revenue and contract costs shall be accounted for in the
accounting periods in which construction work is performed.
II. Scope
a) Contracts for the rendering of services which are directly related to the construction
of asset
b) Contracts for the destruction or restoration of assets, and the restoration of the
environment following the demolition of assets
III. Methods being used in Revenue and Expense Recognition
a) Percentage of Completion
ii) Total revenue, past and future costs, and the stage of completion of a contract
can be measured or estimated reliably.
iii) Revenues and costs shall be recognized by stage of completion/percentage of
completion.*
iv) Expected losses shall be recognized immediately.
b) Cost Recovery Method
ii) The outcome cannot be measured reliably.
iii) Costs shall be expensed, and revenues shall be recognized to the extent that
costs are recoverable.
*When it is probable that total contract costs will exceed the total contract
revenue, the expected loss is recognized as an expense immediately.
IV. Required disclosures
i) Amount of contract revenue recognized
iii) Method for determining that revenue
iv) Method for determining stage of completion
v) Aggregate costs incurred, recognized profits or losses, advances received, and
retentions (for contracts in progress)
vi) Gross amount due from customers under the contract
vii) Gross amount owned to customers under the contract

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PAS 12 (Income Taxes)

I. Objectives
a) To prescribe the accounting treatment for income taxes.
b) To establish the principles and provide guidance in accounting for the current and
future tax consequences of:
i) the future recovery (settlement) of carrying amounts of assets (liabilities)
recognized in an entity’s statement of financial position, and
ii) transactions and other events of the current period that are recognized in an
entity’s financial statements
II. Scope
a) Applies to accounting for income taxes or taxes that are based on taxable profits.
b) Income taxes Include all domestic and foreign taxes that are based on taxable profits
III. Key Principles
a) Unpaid current tax for current and prior periods is recognized as a liability.
b) Overpayment of current tax is recognized as an asset.
IV. Requirements
a) Accrue deferred tax liability for nearly all taxable temporary differences.
b) Accrue deferred tax asset for nearly all deductible temporary differences if it is
probable that a tax benefit will be realized.
c) Accrue unused tax losses and tax credits if it is probable that they will be
realized.
d) Formula for temporary difference computation
TD=TBOA/L-CA
Where,
TD – Temporary Difference
TBOA/L – Tax base of an asset or liability (amount attributed to that asset or
liability for tax purposes)
CA – Carrying amount.
V. Recognition
a) Accrue the following:
i) Deferred Tax Liability arises if an entity will pay tax if it recovers the carrying
amount of another asset or liability.
ii) Deferred Tax Asset arises if an entity:
(1) will pay less tax if it recovers the carrying amount of another asset or
liability; or
(2) has unused tax losses or unused tax credits
*Use tax rates expected when the asset is realized or the liability is settled.
*Deferred tax assets and liabilities are not discounted.
iii) Capital gains at expected rate
b) No accrual on the following:
i) Non-deductible goodwill
ii) Unremitted earnings of subsidiaries, associates, and joint ventures
c) Government grants or other assets or liabilities whose initial recognition differs
from initial tax base are not "grossed up".

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PAS 16 (Property, Plant and Equipment)
I. Objectives
a) To prescribe the principles for the initial recognition and subsequent accounting for
property, plant and equipment.
II. Scope
a) Applies to separable property, plant and equipment
b) Does not apply to:
i) forests and similar regenerative natural resources;
ii) or mineral rights, the exploration for and extraction of minerals, oil, natural
gas and similar non-regenerative resources.
III. PPE are:
a) Tangible items
b) Held for use in the production or supply of goods or services, for rental to others, or
for administrative purposes
c) Expected to be used during more than one period.
d) Includes bearer plants related to agricultural activity
IV. Recognize PPE when:
a) It is probable that future benefits will flow from it, and
b) Its cost can be measured reliably.
V. Measurement
a) Initial measurement is at cost.
i) its purchase price, including import duties and non-refundable purchase taxes,
after deducting trade discounts and rebates;
ii) any costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by
management; and
iii) the estimated costs of dismantling and removing the item and restoring the site
on which it is located, unless those costs relate to inventories produced during
that period.
b) Subsequent measurement is either under the:
i) Cost Model
Year-end value = Cost less any accumulated depreciation less any accumulated
impairment losses
ii) Revaluation Model
Year-end value = Revalued Amount
Revalued Amount = fair value at the date of the revaluation less any subsequent
accumulated depreciation and subsequent accumulated impairment losses
* Revaluation increases are recognized in other comprehensive income and
accumulated in equity, unless they reverse a previous revaluation decrease.
*Revaluation decreases are recognized in profit or loss unless they reverse a
previous revaluation increase.
VI. Depreciation
a) Long-lived assets other than land are depreciated on a systematic basis over their
useful lives.
b) Depreciation base is cost less estimated residual value.

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c) The depreciation charge for each period is recognized in profit or loss unless it is
included in the carrying amount of another asset
d) The depreciation method should reflect the pattern in which the asset's economic
benefits are consumed by the enterprise.
e) If assets are revalued, depreciation is based on the revalued amount.
f) The useful life should be reviewed periodically and any change should be reflected in
the current period and prospectively. Significant costs to be incurred at the end of an
asset's useful life should either be reflected by reducing the estimated residual value
or by charging the amount as an expense over the life of the asset.
g) To determine whether an item of property, plant and equipment is impaired, apply
PAS 36.

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PAS 17 (Leases)
I. Objectives
a) To prescribe, for lessees and lessors, the appropriate accounting policies and
disclosures for finance and operating leases.
II. Scope
a) lease agreements to explore for or use natural resources such as oil, gas, timber,
metals and other mineral rights;
b) licensing agreements for such items as motion picture films, video recordings, plays,
manuscripts, patents and copyrights.
III. Key Principles
a) Lease – an agreement whereby the lessor conveys to the lessee, in return for
payments, the right to use an asset for an agreed period of time.
b) Inception of the lease – the earlier of:
i) the date of the least agreement; or
ii) the date of a commitment by the parties to the principal provisions of the lease
c) Lease term – non-cancellable period for which the lessee has contracted to lease the
asset
d) Non-cancelable lease – cancellable only:
i) upon the occurrence of some remote contingency,
ii) with the permission of the lessor,
iii) if the lessee enters into a new lease for the same or equivalent asset with the
same lessor, or
iv) upon payment by the lessee of an additional amount such that, at inception,
continuation of the lease is reasonably certain.
e) Minimum lease payments
i) payments over the lease term
ii) payment required to exercise the purchase option
iii) in the case of the:
(1)Lessor – any residual value guaranteed to the lessor by either the lessee, a
third party related to the lessee, or an independent third party,
(2)Lessee – any amounts guaranteed by the lessee or by a party related to the
lessee.
iv) Does not include:
(1)contingent rents,
(2)costs for services and taxes to be paid by and reimbursed to the lessor
f) Sale and Leaseback transactions
i) Definition
(1) The owner of the property (seller-lessee) sells the property; and,
(2) Immediately leases all or part of it back from the new owner (buyer-lessor)
ii) Benefits:
(1) For the seller-lessee,
(a) the gain on the sale of the property
(b) the deductibility of the lease payments which are usually larger than the
depreciation that was previously recorded
(2) For the buyer-lessor,
(a) Higher rental payment

22
 (b) Larger depreciable basis
iii) For a sale and leaseback that results in a finance lease, any excess of proceeds
over carrying amount should be deferred and amortised over the lease term.
IV. Classification of leases
a) Finance Lease
i) A lease is a finance lease when:
(1)The lease transfers substantially all the risks and rewards of ownership of the
asset to the lessee by the end of the lease term;
(2)The lessee has a bargain purchase option.
(3)The lease term is for the major part of the economic life of the leased asset;
(4)At the inception of the lease, the present value of the minimum lease
payments amounts to substantially all of the fair value of the leased asset; or
(5)The leased assets are of a specialized nature such that only the lessee can use
them without major modifications being made.
ii) Additional indicators
(1)The lessee can cancel the lease and the lessor’s losses associated with the
cancellation are borne by the lessee.
(2)Gains or losses from the fluctuations in the fair value fall to the lessee.
(3)The lessee has the ability to continue the lease for a secondary period at a
rent which is substantially lower than market rent.
iii) Treatment
(1)Sale – POV of lessor
(2)Purchase – POV lessee
b) Operating Lease
i) A lease is an operating lease when:
(1)The lessor does not take any risk but does not have any advantages related
with the asset’s ownership,
(2)Assets, rented on the basis of the current lease’s terms, are included in the
balance sheet of the lessor
ii) Additional indicators
(1)Land title is not expected to pass to the lessee,
(2)Building title is not expected to pass to the lessee, or
(3)Rents are periodically adjusted to market value.
*The overriding criterion is which party bears the risks and rewards of ownership.
*Buildings have a finite useful life and are more likely to be the subject of a finance
lease.
*Land has an infinite useful life and leases of land will generally be operating
leases.
V. Accounting treatment
a) Lessee’s FS under the following:
i) Operating Leases
(1) Lease payments are recognized as an expense on a straight-line basis over
the lease term unless another systematic basis is more representative of the
time pattern of the user’s benefit.
(2) Disclosure requirements:
(a) Total future minimum lease payments under non-cancelable operating
leases for each of the following periods:

23
 i. Due in one year or less
ii. Due in more than one year but no more than five years
iii. Due in more than five years
(b) The total future minimum sublease payments expected to be received
under non-cancelable subleases at the balance sheet date.
(c) Lease and sublease payments included in profit or loss for the period,
with separate amounts of minimum lease payments, contingent rents,
and sublease payments
(d) A general description of the lessee’s significant leasing arrangements
including, but not necessarily limited to the following:
i. The basis for determining contingent rentals
ii. The existence and terms of renewal or purchase options
iii. Restrictions imposed by lease arrangements such as on dividends or
assumption of further debt or on further leasing.
ii) Finance Lease
(1) Assets and liabilities are recognized at the commencement of the lease term
at amounts:
(a) equal to the fair value of the leased property; or,
(b) if lower, the present value of the minimum lease payments, each
determined at the inception of the lease
(2) The leased asset is to be depreciated:
(a) If title does not transfer to the lessee – whichever is shorter between:
(i) the lease term or
(ii) useful life
(b) If title transfers to the lessee – over the useful life
(3) The asset recognized shall include any initial direct costs of the lessee.
(4) Minimum lease payments are apportioned between the finance charge and
the reduction of the outstanding liability.
(5) The finance charge is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining balance of the
liability.
(6) Contingent rents are charged as expenses in the periods in which they are
incurred.
(7) A finance lease gives rise to depreciation expense for the recognized lease
assets as well as finance expense for each accounting period.
(8) Disclosure Requirements:
(a) For each class of asset, the net carrying amount at balance sheet date
(b) A reconciliation between the total of minimum lease payments at the
balance sheet date, and their present value. In addition, an enterprise
should disclose the total of the minimum lease payments at the balance
sheet date, their present value, for each of the following periods:
(i) Due in one year or less
(ii) Due in more than one but no more than five years
(iii) Due in more than five years
(c) Contingent rents included in profit or loss for the period
(d) The total minimum sublease payments to be received in the future under
non-cancelable subleases as of the balance sheet.

24
 (e) A general description of the lessee’s significant leasing arrangements
including, but not necessarily limited to the following:
(i) The basis for determining contingent rentals
(ii) The existence and terms of renewal or purchase options and
escalation clauses
(iii) Restrictions imposed by lease arrangements such as on dividends or
assumptions of further debt or further leasing
b) Lessor’s FS under the following:
i) Operating Lease
(1) Leased property shall be presented under the caption “Investment in leased
property”.
(2) Leased assets are depreciated in accordance with PAS 16 and PAS 38.
(3) Lease income is recognized on a straight-line basis over the lease term, unless
another systematic basis is more representative of the time pattern in which
the benefit derived from the leased asset is diminished.
(4) Disclosure requirements:
(a) the gross carrying amount, the accumulated depreciation and
accumulated impairment losses at the balance sheet date
(i) Depreciation recognized in income for the period
(ii) Impairment losses recognized in income for the period
(iii) Impairment losses reversed in income for the period
(b) Depreciation recognized on assets held for operating lease use during the
period
(c) The future minimum lease payments held under non-cancelable
operating leases, in the aggregate and classified into:
(i) Those due in no more than one year
(ii) Those due in more than one but not more than five years
(iii) Those due in more than five years
(d) Total contingent rentals included in income for the period
(e) A general description of leasing arrangements to which it is a party.
ii) Finance Lease
(1) Assets held under a finance lease are recognized and are presented as a
receivable at an amount equal to the net investment in the lease.
(2) Finance income is recognized based on a pattern reflecting a constant
periodic rate of return on the lessor’s net investment in the finance lease.
(3) Manufacturer or dealer lessors recognize selling profit or loss in accordance
with the policy followed by the entity for outright sales.
(4) Disclosure requirements:
(a) A reconciliation between the total gross investment in the lease at the
balance sheet date, and the present value of minimum lease payments
receivable as of the balance sheet date, categorized into
(i) those due in one year or less
(ii) those due in more than one year but not more than five years
(iii) those due beyond five years
(b) Unearned finance income
(c) The accumulated allowance for uncollectible minimum lease payments
receivable

25
(d) Total contingent rentals included in income
(e) A general description of the lessor’s significant leasing arrangements

26
PAS 18 (Revenue)
I. Objective
a) To prescribe the accounting treatment for revenue arising from sales of goods,
rendering of services and from interest, royalties and dividends.
II. Scope
a) Shall be applied in accounting for revenue arising from the following transactions
and events:
i) the sale of goods;
ii) the rendering of services; and
iii) the use by others of enterprise assets yielding interest, royalties and dividends.
III. Revenue Measurement
a) Measured at fair value of consideration received or receivable
b) Discounting is needed if the inflow of cash is significantly deferred without interest.
c) If dissimilar goods or services are exchanged (as in barter transactions), revenue is:
iv) the fair value of the goods or services received; or,
v) the fair value of the goods or services given up
IV. Revenue arises from:
a) Sale of goods
i) significant risks and rewards of ownership are transferred to the buyer;
ii) managerial involvement and control have passed;
iii) the amount of revenue can be measured reliably;
iv) it is probable that economic benefits will flow to the enterprise; and
v) the costs of the transaction (including future costs) can be measured reliably.
b) Rendering of services
i) Similar conditions apply by stage of completion if:
(1) the amount of revenue can be reliably measured
(2) it is probable that the economic benefits will now flow to the seller
(3) at the balance sheet date, the stage of completion can be reliably measured
(4) the costs incurred in and the costs to complete the transaction can be
reliably measured.
c) Interest, dividends and royalties
i) Necessary considerations
(1) it is probable that the economic benefits will flow to the entity
(2) the amount of revenue can be reliably measured.
ii) If met, the amount to be recognized is as follows:
(1) For interest – using a time basis to calculate the interest (effective interest
rate)
(2) For dividends – when the shareholder’s right to receive payment is
established
(3) For royalties – on an accruals basis in line with the royalty agreement.
V. Other Consideration
a) Bad debt expense should be recognized If collectibility of a portion of the recognized
revenue is doubtful.
b) Revenues and related expenses must observe the matching principle. The revenue
recognition should be deferred if future related expenses cannot be measured
reliably.

27
VI. Disclosure requirements
a) Revenue recognition accounting policies
b) Amount of each significant category of revenue recognized
c) Amount of revenue from exchanges of goods or services

28
PAS 19 (Employee Benefits)
I. Objective
a) To prescribe the accounting and disclosure for employee benefits including:
i) short-term benefits
(1) wages
(2) annual leave
(3) sick leave
(4) annual profit-sharing
(5) bonuses and non-monetary benefits
ii) pensions
iii) post-employment life insurance and medical benefits
i) other long-term employee benefits:
(1) long-service leave
(2) disability
(3) deferred compensation
(4) long-term profit-sharing and bonuses
(5) termination benefits
II. Scope
a) Applies to:
ii) Short –term employee benefits
iii) Post- employment benefits
iv) Other long term employee benefits
v) Termination benefits
vi) Equity compensation benefits
b) Does not apply to:
i) Reporting by employee benefit plans
ii) Employee benefits under PFRS 2
(1) All forms of consideration given by an enterprise in exchange of services
rendered by employees which include compensation in the form of financial
assets, goods and services and equity instruments of the employer.
III. Recognition and Measurement
a) Short- term employee benefits
i) Recognized as a liability and an expense unless another PAS permits the costs to
be capitalized as part of the cost of an asset
ii) Measured at the undiscounted amount expected to be paid
iii) Short-term Compensated Absences
(1) Recognize when:
(a) Accumulating, employees render service that increase their entitlement
(i) Measured as the additional amount the enterprise expects to pay as a
result of the unused entitlement that has accumulated at balance
date
(ii) Generally not material unless taken as a paid vacation or on
termination
(b) Non accumulating absences occur
iv) Profit Sharing and Bonus Plans
(1) Recognize if:

29
 (a) The enterprise has a legal or constructive obligation to make payments
(b) A reliable estimate of the obligation can be made
b) Post- employment benefits
i) Classification
(1) Defined Contribution plans
(a) An enterprise pays fixed contributions into a separate entity (a fund)
(b) Has no legal or constructive obligation to pay further contributions if the
fund does not hold sufficient assets to pay all employee benefits relating
to employee service in the current and prior periods
(c) Recognized as a liability and an expense unless another PAS permits the
costs to be capitalized as part of the cost of an asset
(2) Defined Benefit Plans
(a) Known as promised benefit plans
(b) The employer effectively agrees to a promised level of benefits – this
expenses the enterprise to actuarial and investment risks
(c) Steps in recognition and measurement:
(i) Estimating the amount of benefit employees have earned in the
current and prior periods
(ii) Discounting the benefit to determine the present value of the
obligation and the current service cost (expense)
(iii) Determining the fair value of any plan assets
(iv) Determining the total amount of actuarial gains and losses and the
amount of those actuarial gains and losses that should be recognized
(v) Where a plan has been introduced or changed, determining the
resulting past service cost
(vi) Where a plan has been curtailed or settled, determining the resulting
gain or loss
*Projected Unit Credit Method is used to measure defined benefit
obligations and the current and past service costs.
IV. Actuarial Valuations
a) Requirements
i) Actuarial Assumptions
(1) Make estimates of the variables that will determine the ultimate cost of
providing post-employment benefits.
(a) Discount rate based on the market yield on high quality corporate bonds.
(b) Salaries –include estimated future salary increases
(c) Benefits –include any changes to the terms that have occurred before the
balance sheet date
(d) Medical costs –include estimated future changes in the cost of medical
services
ii) Actuarial Gains and Losses
(1) Can result from increases or decreases in either the present value of a
defined benefit obligation or the fair value of any related plan assets
(2) Causes include:
(a) Unexpectedly high or low rates of employee turnover, early retirement or
mortality or of salary increases and the effect of changes in estimates
thereof

30
 (b) Effects of changes in the discount rate
(c) Differences between the actual return on plan assets and the expected
return
(3) This Standard permits an entity to recognize, as expense or revenue, a
portion of the actuarial gains and losses if the net cumulative unrecognized
actuarial gains and losses at the end of the previous reporting period
exceeded the greater of:
(a) 10% of the PV of the defined benefit obligation at that date (before
deducting plan assets
(b) 10% of the fair value of plan assets at that date
(4) Alternative Recognition Scenarios
(a) An entity can adopt any systematic method that results in faster
recognition of actuarial gains and losses, but the method must be
consistently applied.
iii) Past Service Cost
(1) change in the defined benefit liability for employee service in prior periods
resulting from the introduction of, or changes to, a defined benefit plan
(2) Recognized as an expense on a straight-line basis over the average period
until the benefits become vested.
*If the benefits vest immediately, the past service cost is recognized
immediately
iv) Plan Assets
(1) Measured at fair value for the purpose of determining the amount to be
recognized as the defined benefit liability.
*In the absence of observable market prices for plan assets, the entity is to
use estimation techniques, such as discounted cash flows, to determine fair
value.
v) Curtailments and Settlements
(1) Gains and losses on the curtailment or settlement of a defined benefit plan
are to be recognized immediately.
(2) Include:
(a) any resulting change in the PV of the defined benefit obligation
(b) any resulting change in the fair value of the plan assets
(c) any related actuarial gains and losses that had not previously been
recognized
vi) Offsetting
(1) Can be done only when the entity:
(a) has a legally enforceable right to use a surplus in one plan to settle
obligations under the other plan
(b) intends either to settle the obligations on a net basis, or to realize the
surplus in one plan and settle its obligation under the other plan
vii) Termination Benefits
(1) Recognized as a liability and expense when the enterprise is demonstrably
committed to either:
(a) terminate the employment of employees before the normal retirement
date

31
 (b) provide termination benefits as a result of an offer made to encourage
voluntary redundancy
(2) The liability must be measured at PV if the benefits fall due more than 12
months after balance date
(3) For a voluntary redundancy offer, termination benefits must be measured
based on the number of employees expected to accept the offer
V. Transitional Provisions
a) Traditional liability for defined benefit plan
PV of the obligation minus fair value of plan assets minus any past service
costs that should be recognized in later period
(1) The transitional liability is compared with the liability that would have been
recognized under the enterprise’s previous policy.
(a) If it is less, the decrease should be recognized immediately in accordance
with PAS 8.
(b) If it is more, the enterprise makes an irrevocable choice to recognize the
increase immediately or amortize it on a straight line basis over 5 years
from the date of adoption.
VI. Financial Statement Presentation
a) Balance Sheet
i) The amount recognized as a defined benefit liability is the net total of :
The PV of the defined benefit liability at balance sheet date
+ Plus any actuarial gains (less any actuarial losses) not recognized
- any past service cost not yet recognized
- the fair value at balance date of plan assets
ii) If the amount to be recognized is negative, the asset is to be measured at:
(1) The net total amount determined above
(2) The net total of any unrecognized actuarial losses and past service cost and
the present value of any refunds or reductions in future contributions
available from the plan
iii) Actuarial gains and losses and past service costs are recognized immediately.
iv) The liability for other long-term benefits is measured at present value of the
defined benefit obligation less the fair value of plan assets (if any.
b) Income Statement
i) The net total of the following amounts is to be recognized as income or expense
(1) current service cost
(2) interest cost
(3) the expected return on plan assets
(4) recognized actuarial gains and losses
(5) recognized past service cost
(6) the effect of any curtailments or settlements

32
PAS 20 (Accounting For Government Grants and Disclosure of
Government Assistance)
I. Objective
a) To prescribe the accounting for, and disclosure of, government grants and other
forms of government assistance.
II. Scope
a) Applies to:
i) Government grants and other forms of government assistance.
b) Does not apply to:
i) The special problems reflecting the effects of changing prices or in
supplementary information of a similar nature
ii) Government assistance that is provided for an entity in the form of benefits that
are available in determining taxable profit or tax loss, or are determined or
limited on the basis of income tax liability such as:
(1) income tax holidays
(2) investment tax credits
(3) accelerated depreciation allowances
(4) reduced income tax rates
iii) government participation in the ownership of the entity.
iv) government grants covered by PAS 41 Agriculture.
III. Key Principles
a) Government grants
i) Government grants, including non-monetary grants at fair value, shall not be
recognized until there is reasonable assurance that:
(1) the entity will comply with the conditions attaching to them; and
(2) the grants will be received
b) Government assistance
i) Does not include:
(1) certain forms of government assistance which cannot reasonably have a
value placed upon them and transactions with government which cannot be
distinguished from the normal trading transactions of the entity such as
(a) free technical or marketing advice
(b) provision of guarantees
(c) a government procurement policy that is responsible for a portion of the
entity’s sales
(2) provision of infrastructure by improvement to the general transport and
communication network
(3) supply of improved facilities such as irrigation or water reticulation which is
available on an ongoing indeterminate basis for the benefit of an entire local
community
IV. Valuation
a) Government grants
i) Recognized in profit or loss on a systematic basis over the periods in which the
entity recognizes as expenses the related costs for which the grants are intended
to compensate

33
 ii) Become receivable as compensation for expenses or losses already incurred or
for the purpose of giving immediate financial support to the entity with no future
related costs shall be recognized in profit or loss of the period in which it
becomes receivable
iii) May take the form of a transfer of a non-monetary asset, such as land or other
resources, for the use of the entity.
*In these circumstances, it is usual to assess the fair value of the non-monetary
asset and to account for both grant and asset at that fair value.
iv) Grants related to income are presented as part of profit or loss, either separately
or under a general heading such as ‘Other income’; alternatively, they are
deducted in reporting the related expense.
v) A government grant that becomes repayable shall be accounted for as a change
in accounting estimate.
vi) Repayment of a grant related to income shall be applied first against any
unamortised deferred credit recognized in respect of the grant.
(1) If repayment> deferred credit=recognized immediately in profit or loss.
(2) Recognized by increasing the carrying amount of the asset or reducing the
deferred income balance by the amount repayable
vii) The cumulative additional depreciation that would have been recognized in
profit or loss to date in the absence of the grant shall be recognized immediately
in profit or loss.
V. Required disclosures
a) the accounting policy adopted for government grants, including the methods of
presentation adopted in the financial statements;
b) the nature and extent of government grants recognized in the financial statements
and an indication of other forms of government assistance from which the entity has
directly benefited; and
c) unfulfilled conditions and other contingencies attaching to government assistance
that has been recognized.

34
PAS 21 (The Effects of Changes in Foreign Exchange Rates)
I. Objective
a) To prescribe the accounting treatment for an entity’s foreign currency transactions
and foreign operations.
II. Scope
a) Applies in:
i) accounting for transactions and balances in foreign currencies, except for those
derivative transactions and balances that are within the scope of PFRS 9 Financial
Instruments;
ii) translating the results and financial position of foreign operations that are
included in the financial statements of the entity by consolidation or the equity
method and in translating an entity’s results and financial position into a
presentation currency.
iii) those foreign currency derivatives that are not within the scope of PFRS 9
iv) the presentation of an entity’s financial statements in a foreign currency and sets
out requirements for the resulting financial statements to be described as
complying with (PFRSs).
*For translations of financial information into a foreign currency that do not meet
these requirements, this Standard specifies information to be disclosed.
b) Does not apply to:
i) hedge accounting for foreign currency items, including the hedging of a net
investment in a foreign operation
ii) the presentation in a statement of cash flows of the cash flows arising from
transactions in a foreign currency, or to the translation of cash flows of a foreign
operation
III. Key Principles
a) Functional Currency
i) the currency of the primary economic environment in which the entity operates
ii) Factors in determining its functional currency:
(1) the currency that mainly influences sales prices for goods and services of the
country whose competitive forces and regulations mainly determine the sales
prices of its goods and services
(2) the currency that mainly influences labour, material and other costs of
providing goods or services
b) Net investment in a foreign operation
i) An entity may have a monetary item that is receivable from or payable to a
foreign operation.
ii) Exchange differences arising on a monetary item that forms part of a reporting
entity’s net investment in a foreign operation shall be recognized in profit or loss
in the separate financial statements of the reporting entity or the individual
financial statements of the foreign operation, as appropriate.
iii) In the financial statements that include the foreign operation and the reporting
entity, such exchange differences shall be recognized initially in other
comprehensive income and reclassified from equity to profit or loss on disposal
of the net investment.
c) Monetary items

35
 i) A right to receive (or an obligation to deliver) a fixed or determinable number of
units of currency.
ii) Examples include:
(1) pensions and other employee benefits to be paid in cash
(2) provisions that are to be settled in cash
(3) lease liabilities
(4) cash dividends that are recognized as a liability
d) Non-monetary items
i) The absence of a right to receive (or an obligation to deliver) a fixed or
determinable number of units of currency
ii) Examples include:
(1) amounts prepaid for goods and services
(2) goodwill
(3) intangible assets
(4) inventories
(5) property, plant and equipment
(6) right-of-use assets
(7) provisions that are to be settled by the delivery of a non-monetary asset.
IV. Valuation
a) Initial recognition
i) Foreign currency transaction
(1) transaction that is denominated or requires settlement in a foreign currency,
including transactions arising when an entity:
(a) buys or sells goods or services whose price is denominated in a foreign
currency;
(b) borrows or lends funds when the amounts payable or receivable are
denominated in a foreign currency; or
(c) acquires or disposes of assets, or incurs or settles liabilities, denominated
in a foreign currency
(2) Shall be recorded by applying to the foreign currency amount the spot
exchange rate between the functional currency and the foreign currency at
the date of the transaction.
b) Subsequent recognition
i) Shall be translated using the closing rate;
(1) Non-monetary items that are measured in terms of historical cost in a foreign
currency shall be translated using the exchange rate at the date of the
transaction; and
(2) Non-monetary items that are measured at fair value in a foreign currency
shall be translated using the exchange rates at the date when the fair value
was measured.
c) Exchange differences
i) Shall be recognized in profit or loss in the period in which they arise, except as
described in net investment in a foreign operation.
ii) If arising on the settlement of monetary items or on translating monetary items
at rates different from those at which they were translated on initial recognition
during the period or in previous financial statements shall be recognized in profit

36
 or loss in the period in which they arise, except as described in Net investment in
a foreign operation.
d) Change in functional currency
i) Prospective application
ii) Use of a presentation currency other than the functional currency
(1) If the presentation currency differs from the entity’s functional currency, it
translates its results and financial position into the presentation currency.
iii) Translation to the presentation currency
(1) The results and financial position of an entity whose functional currency is
not the currency of a hyperinflationary economy shall be translated into a
different presentation currency using the following procedures:
(a) assets and liabilities for each statement of financial position presented (ie
including comparatives) shall be translated at the closing rate at the date
of that statement of financial position;
(b) income and expenses for each statement presenting profit or loss and
other comprehensive income (ie including comparatives) shall be
translated at exchange rates at the dates of the transactions; and
(c) all resulting exchange differences shall be recognized in other
comprehensive income.
(2) Any goodwill arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and liabilities arising on
the acquisition of that foreign operation shall be treated as assets and
liabilities of the foreign operation. Thus they shall be expressed in the
functional currency of the foreign operation and shall be translated at the
closing.
iv) Disposal of a foreign operation
(1) the cumulative amount of the exchange differences relating to that foreign
operation, recognized in other comprehensive income and accumulated in
the separate component of equity, shall be reclassified from equity to profit
or loss (as a reclassification adjustment) when the gain or loss on disposal is
recognized
(2) On the partial disposal of a subsidiary that includes a foreign operation, the
entity shall re-attribute the proportionate share of the cumulative amount of
the exchange differences recognized in other comprehensive income to the
non-controlling interests in that foreign operation. In any other partial
disposal of a foreign operation the entity shall reclassify to profit or loss only
the proportionate share of the cumulative amount of the exchange
differences recognized in other comprehensive income.
V. Required disclosures
a) the amount of exchange differences recognized in profit or loss except for those
arising on financial instruments measured at fair value through profit or loss in
accordance with PAS 39; and
b) net exchange differences recognized in other comprehensive income and
accumulated in a separate component of equity, and a reconciliation of the amount
of such exchange differences at the beginning and end of the period.

37
PAS 23 (Borrowing Costs)
I. Objective
a) To prescribe the accounting treatment for borrowing costs.
II. Scope
a) Applies to: borrowing costs
b) Does not apply to:
i) the actual or imputed cost of equity, including preferred capital not classified as
a liability
ii) to borrowing costs directly attributable to the acquisition, construction or
production of:
(1) a qualifying asset measured at fair value, for example a biological asset within
the scope of PAS 41 Agriculture; or
(2) Inventories that are manufactured, or otherwise produced, in large quantities
on a repetitive basis.
III. Key Principles
a) Borrowing costs are interest and other costs that an entity incurs in connection with
the borrowing of funds.
i) Include:
(1) interest expense calculated using the effective interest method as described
in PFRS 9;
(2) interest in respect of lease liabilities recognized in accordance with PFRS 16
Leases; and
(3) exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest costs
ii) Capitalized as part of the cost of a qualifying asset on the commencement date if
the entity first meets all of the following conditions:
(1) it incurs expenditures for the asset;
(2) it incurs borrowing costs; and
(3) it undertakes activities that are necessary to prepare the asset for its
intended use or sale.
b) A qualifying asset is an asset that necessarily takes a substantial period of time to
get ready for its intended use or sale.
i) Includes:
(1) Inventories
(2) manufacturing plants
(3) power generation facilities
(4) intangible assets
(5) investment properties
(6) bearer plants
ii) Does not include:
(1) Financial assets, and inventories that are manufactured or produced, over a
short period of time; and
(2) Assets that are ready for their intended use or sale when acquired are not
qualifying assets.
IV. Valuation

38
 a) An entity shall capitalize borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset as part of the cost of
that asset.
b) An entity shall recognize other borrowing costs as an expense in the period in which
it incurs them.
c) Specific borrowing
i) The entity shall determine the amount of borrowing costs eligible for
capitalization.
ii) Actual borrowing costs incurred on that borrowing during the period less any
investment income on the temporary investment of those borrowings
d) General borrowing
i) The entity shall determine the amount of borrowing costs eligible for
capitalization by applying a capitalization rate to the expenditures on that asset.
ii) The capitalization rate shall be the weighted average of the borrowing costs
applicable to the borrowings of the entity that are outstanding during the period,
other than borrowings made specifically for the purpose of obtaining a qualifying
asset.
iii) The amount of borrowing costs that an entity capitalizes during a period shall
not exceed the amount of borrowing costs it incurred during that period.
e) The carrying amount is written down or written off when the carrying amount or the
expected ultimate cost of the qualifying asset exceeds its recoverable amount or net
realizable value
f) An entity shall suspend capitalisation of borrowing costs during extended periods in
which it suspends active development of a qualifying asset.
g) No capitalization of borrowing costs if all the activities necessary to prepare the
qualifying asset for its intended use or sale are complete.
V. Required Disclosures
a) the amount of borrowing costs capitalised during the period; and
b) the capitalisation rate used to determine the amount of borrowing costs eligible for
capitalisation.

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PAS 24 (Related Party Disclosures)
I. Objective
a) To ensure that financial statements draw attention to the possibility that the
financial position and results of operations may have been affected by the existence
of related parties.
II. Scope
a) Applies in:
i) identifying related party relationships and transactions;
ii) identifying outstanding balances, including commitments, between an entity and
its related parties;
iii) identifying the circumstances in which disclosure of the items in (a) and (b) is
required; and
iv) determining the disclosures to be made about those items
v) applies to individual financial statements
III. Key Principles
a) This requires disclosure of related party relationships, transactions and outstanding
balances, including commitments, in the consolidated and separate financial
statements of a parent or investors with joint control of, or significant influence
over, an investee.
i) Control is the power to govern the financial and operating policies of an entity so
as to obtain benefits from its activities.
ii) Joint control is the contractually agreed sharing of control over an economic
activity.
iii) Significant influence is the power to participate in the financial and operating
policy decisions of an entity, but is not control over those policies. Significant
influence may be gained by share ownership, statute or agreement.
iv) Government refers to government, government agencies and similar bodies
whether local, national or international.
v) A government-related entity is an entity that is controlled, jointly controlled or
significantly influenced by a government.
vi) Related party
(1) A person or a close member of that person’s family is related to a reporting
entity if that person:
(a) has control or joint control of the reporting entity;
(b) has significant influence over the reporting entity; or
(c) is a member of the key management personnel of the reporting entity or
of a parent of the reporting entity.
(2) An entity is related to a reporting entity if any of the following conditions
applies:
(a) The entity and the reporting entity are members of the same group
(which means that each parent, subsidiary and fellow subsidiary is related
to the others).
(b) One entity is an associate or joint venture of the other entity (or an
associate or joint venture of a member of a group of which the other
entity is a member).
(c) Both entities are joint ventures of the same third party.

40
 (d) One entity is a joint venture of a third entity and the other entity is an
associate of the third entity.
(e) The entity is a post-employment benefit plan for the benefit of
employees of either the reporting entity or an entity related to the
reporting entity. If the reporting entity is itself such a plan, the sponsoring
employers are also related to the reporting entity.
(f) The entity is controlled or jointly controlled by a person identified in (a).
(g) A person has significant influence over the entity or is a member of the
key management personnel of the entity (or of a parent of the entity).
(h) The entity, or any member of a group of which it is a part, provides key
management personnel services to the reporting entity or to the parent
of the reporting entity.
(3) A related party transaction is a transfer of resources, services or obligations
between a reporting entity and a related party, regardless of whether a price
is charged.
(4) Close members of the family of a person are those family members who may
be expected to influence, or be influenced by, that person in their dealings
with the entity and include:
(a) that person’s children and spouse or domestic partner;
(b) children of that person’s spouse or domestic partner; and
(c) dependents of that person or that person’s spouse or domestic partner
(5) Not related partie:
(a) two entities simply because they have a director or other member of key
management personnel in common or because a member of key
management personnel of one entity has significant influence over the
other entity
(b) two joint venturers simply because they share joint control of a joint
venture
(c) a customer, supplier, franchisor, distributor or general agent with whom
an entity transacts a significant volume of business, simply by virtue of
the resulting economic dependence.
b) Compensation includes all employee benefits.
i) All forms of consideration paid, payable or provided by the entity, or on behalf of
the entity, in exchange for services rendered to the entity
(1) short-term employee benefits
(2) post-employment benefits
(3) other long-term employee benefits
(4) termination benefits; and
(5) share-based payment
ii) Consideration paid on behalf of a parent of the entity in respect of the entity.
Compensation includes:
IV. Required Disclosures
a) Relationships between a parent and its subsidiaries irrespective of whether there
have been transactions between them
b) The name of its parent and, if different, the ultimate controlling party. If neither of
them is not available for public use, the name of the next most senior parent that
does so shall also be disclosed.

41
c) The different categories in which an entity shall disclose key management personnel
compensation
d) The nature of the related party relationship as well as information about those
transactions and outstanding balances, including commitments, necessary for users
to understand the potential effect of the relationship on the financial statements.
e) At a minimum, disclosures shall include:
i) the amount of the transactions;
ii) the amount of outstanding balances, including commitments, and:
iii) their terms and conditions, including whether they are secured, and the nature
of the consideration to be provided in settlement; and
iv) details of any guarantees given or received;
v) provisions for doubtful debts related to the amount of outstanding balances; and
vi) the expense recognized during the period in respect of bad or doubtful debts due
from related parties.
f) Amounts incurred by the entity for the provision of key management personnel
services that are provided by a separate management entity shall be disclosed.
g) The disclosures required shall be made separately for each of the following
categories:
i) the parent;
ii) entities with joint control of, or significant influence over, the entity;
iii) subsidiaries;
iv) associates;
v) joint ventures in which the entity is a joint venturer;
vi) key management personnel of the entity or its parent; and
vii) other related parties.
h) If a reporting entity applies the exemption mentioned related to government-related
entities, it shall disclose the following about the transactions and related outstanding
balances:
i) the name of the government and the nature of its relationship with the reporting
entity (ie control, joint control or significant influence);
ii) the following information in sufficient detail to enable users of the entity’s
financial statements to understand the effect of related party transactions on its
financial statements:
(1) the nature and amount of each individually significant transaction; and
(2) for other transactions that are collectively, but not individually, significant, a
qualitative or quantitative indication of their extent.

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PAS 26 (Accounting and Reporting by Retirement Benefit Plans)
I. Objective
a) To specify the measurement and disclosure principles for the financial reports of
retirement benefit plans
II. Scope
a) Applies in the financial statements of retirement benefit plans or various other
names such as ‘pension schemes’, ‘superannuation schemes’ or ‘retirement benefit
schemes’ where financial statements are prepared.
b) Applies to retirement benefit plans
c) Deals with accounting and reporting by the plan to all participants as a group.
d) Does not deal with:
i) reports to individual participants about their retirement benefit rights
ii) other forms of employment benefits such as:
(1) employment termination indemnities,
(2) deferred compensation arrangements
(3) long-service leave benefits
(4) special early retirement or redundancy plans
(5) health and welfare plans or bonus plans
iii) government social security type arrangements
III. Key Principles
a) Retirement benefit plans
i) arrangements whereby an entity provides benefits for employees on or after
termination of service (either in the form of an annual income or as a lump sum)
ii) such benefits, or the contributions towards them, can be determined or
estimated in advance of retirement from the provisions of a document or from
the entity’s practices.
iii) Types:
(1) Defined contribution plans
(a) Amounts to be paid as retirement benefits are determined by
contributions to a fund together with investment earnings thereon
(b) Financial statements shall contain:
(i) a statement of net assets available for benefits and a description of
the funding policy
(ii) a description of significant activities for the period and the effect of
any changes relating to the plan, and its membership and terms and
conditions;
(iii) statements reporting on the transactions and investment
performance for the period and the financial position of the plan at
the end of the period; and
(iv) a description of the investment policies.
(2) Defined benefit plans
(a) Amounts to be paid as retirement benefits are determined by reference
to a formula usually based on employees’ earnings and/or years of
service.
(b) Financial statements shall contain either:

43
 (i) a statement that shows:
1. the net assets available for benefits;
2. the actuarial present value of promised retirement benefits,
distinguishing between vested benefits and non-vested benefits;
and
3. the resulting excess or deficit; or
(ii) a statement of net assets available for benefits including either:
1. a note disclosing the actuarial present value of promised
retirement benefits, distinguishing between vested benefits and
non-vested benefits; or
2. a reference to this information in an accompanying actuarial
report.
*If an actuarial valuation has not been prepared at the date of the
financial statements, the most recent valuation shall be used as a
base and the date of the valuation disclosed.
IV. Valuation
a) Under a defined contribution plan,
i) The amount of a participant’s future benefits is determined by the contributions
paid by the employer, the participant, or both, and the operating efficiency and
investment earnings of the fund
ii) An employer’s obligation is usually discharged by contributions to the fund.
iii) An actuary’s advice is not normally required although such advice is sometimes
used to estimate future benefits that may be achievable based on present
contributions and varying levels of future contributions and investment earnings.
iv) Actuarial present value of promised retirement benefits shall be based on the
benefits promised under the terms of the plan on service rendered to date using
either current salary levels or projected salary levels with disclosure of the basis
used.
b) Plan Assets
i) Retirement benefit plan investments shall be carried at fair value.
ii) In the case of marketable securities fair value is market value.
iii) Where plan investments are held for which an estimate of fair value is not
possible disclosure shall be made of the reason why fair value is not used.
V. Required disclosures
a) a statement of changes in net assets available for benefits;
b) a summary of significant accounting policies; and
c) a description of the plan and the effect of any changes in the plan during the period.

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PAS 27 (Separate Financial Statements)
I. Objective
a) To prescribe how to account for investments in subsidiaries, joint ventures and
associates in separate financial statements.
II. Scope
a) Applies:
i) In accounting for investments in subsidiaries, joint ventures and associates when
an entity elects, or is required by local regulations, to present separate financial
statements
ii) when an entity prepares separate financial statements that comply with PFRS
III. Key Principles
a) Separate financial statements
i) Those presented in addition to consolidated financial statements or in addition
to the financial statements of an investor that does not have investments in
subsidiaries but has investments in associates or joint ventures in which the
investments in associates or joint ventures are required by PAS 28 to be
accounted for using the equity method.
ii) All other entities that are exempted from applying equity method may present
separate financial statements as its only financial statements.
iii) An investment entity that is required, throughout the current period and all
comparative periods presented, to apply the exception to consolidation for all of
its subsidiaries presents separate financial statements as its only financial
statements.
b) Not separate financial statements
i) The financial statements of an entity that does not have a subsidiary, associate or
joint venturer’s interest in a joint venture are not separate financial statements.
IV. Valuation
a) When an entity prepares separate financial statements, it shall account for
investments in subsidiaries, joint ventures and associates either:
i) at cost;
ii) in accordance with PFRS 9; or
iii) using the equity method as described in PAS 28
b) The entity shall apply the same accounting for each category of investments.
i) Investments accounted for at cost or using the equity method shall be accounted
for in accordance with PFRS 5 Non-current Assets Held for Sale and Discontinued
Operations when they are classified as held for sale or for distribution (or
included in a disposal group that is classified as held for sale or for distribution).
ii) The measurement of investments accounted for in accordance with PFRS 9 is not
changed in such circumstances.
iii) If an entity elects, to measure its investments in associates or joint ventures at
fair value through profit or loss in accordance with PFRS 9, it shall also account
for those investments in the same way in its separate financial statements.
c) When a parent ceases to be an investment entity, it shall account for the change
from the date when the change in status occurred, as follows:
i) The date of the change of status shall be the deemed acquisition date.

45
 ii) The fair value of the subsidiary at the deemed acquisition date shall represent
the transferred deemed consideration when accounting for the investment.
d) When an entity becomes an investment entity, it shall account for an investment in a
subsidiary at fair value through profit or loss in accordance with PFRS 9.
i) The difference between the previous carrying amount of the subsidiary and its
fair value at the date of the change of status of the investor shall be recognized
as a gain or loss in profit or loss.
ii) The cumulative amount of any gain or loss previously recognized in other
comprehensive income in respect of those subsidiaries shall be treated as if the
investment entity had disposed of those subsidiaries at the date of change in
status.
e) Dividends
i) Dividends from a subsidiary, a joint venture or an associate are recognized in the
separate financial statements of an entity when the entity’s right to receive the
dividend is established.
ii) The dividend is recognized in profit or loss unless the entity elects to use the
equity method, in which case the dividend is recognized as a reduction from the
carrying amount of the investment.

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PAS 28 (Investment in Associates and Joint Venture)
I. Objective
a) To define significant influence for investments in associates and to prescribe
investor’s accounting for investments in associates and joint ventures.
II. Scope
a) Applies in accounting for investments in associates.
b) Does not apply to investments in associates held by:
i) venture capital organisations, or
ii) mutual funds, unit trusts and similar entities including investment-linked
insurance funds
III. Key Principles
a) Associate – an entity, including an unincorporated entity such as a partnership, over
which the investor has significant influence and that is neither a subsidiary nor an
interest in a joint venture
b) Consolidated financial statements – the financial statements of a group presented
as those of a single economic entity
c) Control – the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities
d) Significant influence – the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those policies.
i) Criteria for having Significant Influence
(1) 20 % or more of the voting power of the investee
(2) representation on the board of directors or equivalent governing body of the
investee;
(3) participation in policy-making processes, including participation in decisions
about dividends or other distributions;
(4) material transactions between the investor and the investee;
(5) interchange of managerial personnel; or
(6) provision of essential technical information
IV. Valuation
a) Equity Method
i) Investment is initially recognized at cost and adjusted thereafter for the post-
acquisition change in the investor’s share of net assets of the investee.
ii) The profit or loss of the investor includes the investor's share of the profit or loss
of the investee.
b) When investor ceases to have significant influence,
i) The investor shall measure at fair value any investment the investor retains in
the former associate.
ii) The investor shall recognize in profit or loss any difference between:
(1) the fair value of any retained investment and any proceeds from disposing of
the part interest in the associate; and
(2) the carrying amount of the investment at the date when significant influence
is lost
V. Required Disclosures

47
a) the fair value of investments in associates for which there are published price
quotations;
b) summarized financial information of associates, including the aggregated amounts of
assets, liabilities, revenues and profit or loss;
c) the reasons why the presumption that an investor does not have significant
influence is overcome if the investor holds, directly or indirectly through subsidiaries,
less than 20 per cent of the voting or potential voting power of the investee but
concludes that it has significant influence;
d) the reasons why the presumption that an investor has significant influence is
overcome if the investor holds, directly or indirectly through subsidiaries, 20 per cent
or more of the voting or potential voting power of the investee but concludes that it
does not have significant influence;
e) the end of the reporting period of the financial statements of an associate, when
such financial statements are used in applying the equity method and are as of a
date or for a period that is different from that of the investor, and the reason for
using a different date or different period;
f) the nature and extent of any significant restrictions (eg resulting from borrowing
arrangements or regulatory requirements) on the ability of associates to transfer
funds to the investor in the form of cash dividends, or repayment of loans or
advances;
g) the unrecognized share of losses of an associate, both for the period and
cumulatively, if an investor has discontinued recognition of its share of losses of an
associate;
h) the fact that an associate is not accounted for using the equity method; and
i) summarized financial information of associates, either individually or in groups, that
are not accounted for using the equity method, including the amounts of total
assets, total liabilities, revenues and profit or loss

48
PAS 29 (Financial Reporting In Hyperinflationary Economies)
I. Objective
a) To provide specific guidance for entities reporting in the currency of a
hyperinflationary economy, so that the financial information provided is meaningful.
II. Scope
a) Financial statements, including the consolidated financial statements, of any entity
whose functional currency is the currency of a hyperinflationary economy.
III. Key Principles
a) Characteristics of a Hyperinflationary Economy
i) the general population prefers to keep its wealth in non-monetary assets or in a
relatively stable foreign currency. Amounts of local currency held are
immediately invested to maintain purchasing power;
ii) the general population regards monetary amounts not in terms of the local
currency but in terms of a relatively stable foreign currency. Prices may be
quoted in that currency;
iii) sales and purchases on credit take place at prices that compensate for the
expected loss of purchasing power during the credit period, even if the period is
short;
iv) interest rates, wages and prices are linked to a price index; and
v) the cumulative inflation rate over three years is approaching, or exceeds, 100%
IV. Financial Statement Restatement
a) Statement of Financial Position
i) Stated using the general price index
ii) Monetary items are not restated
iii) Assets and liabilities linked by agreement to changes in prices, such as index
linked bonds and loans, are adjusted in accordance with the agreement in order
to ascertain the amount outstanding at the end of the reporting period. These
items are carried at this adjusted amount in the restated statement of financial
position.
iv) Some non-monetary assets are restated at the amount current at the end of the
reporting period, e.g net realizable value and market value
v) Non-monetary assets are carried at cost or cost of depreciation, restated using
currency at the date of acquisition
vi) An investee that is accounted for under the equity method may report in the
currency of a hyperinflationary economy. The statement of financial position and
statement of comprehensive income of such an investee are restated in
accordance with this Standard in order to calculate the investor’s share of its net
assets and profit or loss. Where the restated financial statements of the investee
are expressed in a foreign currency they are translated at closing rates.
vii) Equity, except retained earnings and revaluation surplus, are restated using the
currency at the date they are contributed
b) Statement of Comprehensive Income

49
 i) All items in the statement of comprehensive income are expressed in terms of
the measuring unit current at the end of the reporting period.
ii) Gain or loss on Net Monetary Position – included in the profit or loss
c) Statement of Cash Flow – measuring unit current at the end of the reporting period
d) Consolidated Financial Statement
i) The financial statements of any such subsidiary need to be restated by applying a
general price index of the country in whose currency it reports before they are
included in the consolidated financial statements issued by its parent.
V. Required Disclosures
a) the fact that the financial statements and the corresponding figures for previous
periods have been restated for the changes in the general purchasing power of the
functional currency and, as a result, are stated in terms of the measuring unit current
at the end of the reporting period;
b) whether the financial statements are based on a historical cost approach or a
current cost approach; and
c) the identity and level of the price index at the end of the reporting period and the
movement in the index during the current and the previous reporting period.

50
PAS 32 (Financial Instruments: Presentation)
I. Objective
a) To prescribe principles for classifying and presenting financial instruments as
liabilities or equity, and for offsetting financial assets and liabilities.
II. Scope
a) Applies in the presentation of the financial instruments
b) Does not apply to investment in subsidiaries, associates, and interest in joint venture
III. Key Principles
a) Financial instrument – a contract the gives rise to a financial asset of one entity and
a financial liability or equity of another
i) Financial Asset – any asset that is:
(1) Cash;
(2) A contractual right to receive cash or another financial asset from another
entity;
(3) A contractual right to exchange financial asset or financial liability with
another entity under conditions that are potentially favourable to the entity;
(4) An equity instrument of another entity
ii) Financial Liability – any liability that is a contractual obligation:
(1) To deliver cash or another financial asset to another entity
(2) To exchange financial assets or financial liabilities with another entity under
conditions that is potentially favourable to the entity
b) Equity Financial Instrument
i) There is no contractual obligation to deliver cash or another financial asset to
another entity;
ii) If the instrument will or may be settled in the issuer’s own equity instruments
such as:
(1) A non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments
(2) A derivative that will be settled only by the issuer exchanging a fixed amount
of cash or another financial asset for a fixed number of its own equity
instruments.
IV. Valuation
a) The issuer of a financial instrument shall classify the instrument as a financial
liability, a financial asset or an equity instrument in accordance with the substance of
the contractual arrangement and the definitions of a financial liability, a financial
asset and an equity instrument.
b) The issuer of a non-derivative financial instrument shall evaluate the terms of the
financial instrument to determine whether it contains both a liability and an equity
component. Such components shall be classified separately as financial liabilities,
financial assets or equity instruments

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PAS 33 (Earnings per Share)
I. Objective
a) To prescribe principles for determining and presenting earnings per share (EPS)
amounts in order to improve performance comparisons between different entities in
the same period and between different accounting periods for the same entity.
II. Scope
a) Applies to publicly-traded entities, entities in the process of issuing such shares, and
any other entity voluntarily presenting EPS.
b) Applies to:
i) the separate or individual financial statements of an entity or the consolidated
financial statements of a group with a parent
(1) whose ordinary shares or potential ordinary shares are traded in a public
market (a domestic or foreign stock exchange or an over-the-counter market,
including local and regional markets) or
(2) that files, or is in the process of filing, its financial statements with a
securities commission or other regulatory organisation for the purpose of
issuing ordinary shares in a public market; and
III. Key Principles
a) Basic earnings per share
i) Profit or loss attributable to ordinary equity holders of the parent entity
ii) Computed by dividing the profit or loss attributed to ordinary equity holders
(numerator) by the weighted average of outstanding ordinary shares for the
period (denominator).
b) Diluted earnings per share
i) The entity shall adjust profit or loss attributable to ordinary equity holders of the
parent entity, and the weighted average number of shares outstanding, for the
effects of all dilutive potential ordinary shares
c) If the number of ordinary or potential ordinary shares outstanding increases as a
result of a capitalization, bonus issue or share split, or decreases as a result of a
reverse share split, the calculation of basic and diluted earnings per share for all
periods presented shall be adjusted retrospectively.
d) If these changes occur after the reporting period but before the financial statements
are authorized for issue, the per share calculations for those and any prior period
financial statements presented shall be based on the new number of shares. The fact
that per share calculations reflect such changes in the number of shares shall be
disclosed. In addition, basic and diluted earnings per share of all periods presented
shall be adjusted for the effects of errors and adjustments resulting from changes in
accounting policies accounted for retrospectively.
IV. Financial Statement Presentation
a) Computed basic earnings per share and diluted earnings per share shall be presented
in the comprehensive income.
b) A discontinued operation shall disclose the basic and diluted amounts per share for
the discontinued operation either in the statement of comprehensive income or in
the notes

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 c) Shall present basic and diluted earnings per share, even if the amounts are negative
V. Required Disclosures
a) the amounts used as the numerators in calculating basic and diluted earnings per
share, and a reconciliation of those amounts to profit or loss attributable to the
parent entity for the period. The reconciliation shall include the individual effect of
each class of instruments that affects earnings per share
b) the weighted average number of ordinary shares used as the denominator in
calculating basic and diluted earnings per share, and a reconciliation of these
denominators to each other. The reconciliation shall include the individual effect of
each class of instruments that affects earnings per share
c) instruments (including contingently issuable shares) that could potentially dilute
basic earnings per share in the future, but were not included in the calculation of
diluted earnings per share because they are anti-dilutive for the period(s) presented
d) a description of ordinary share transactions or potential ordinary share transactions,
other than those accounted for in accordance with paragraph 64, that occur after
the reporting period and that would have changed significantly the number of
ordinary shares or potential ordinary shares outstanding at the end of the period if
those transactions had occurred before the end of the reporting period.

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PAS 34 (Interim Financial Reporting)
I. Objective
a) To prescribe the minimum content of an interim financial report and the recognition
and measurement principles for an interim financial report.
II. Scope
a) Applies to publicly traded entities for the purpose of:
i) to provide interim financial reports at least as of the end of the first half of their
financial year; and
ii) to make their interim financial reports available not later than 60 days after the
end of the interim period.
III. Key Principles
a) Components of Interim Financial report
i) a condensed statement of financial position;
ii) a condensed statement or condensed statements of profit or loss and other
comprehensive income;
(1) a condensed single statement; or
(2) a condensed separate income statement and a condensed statement of
comprehensive income;
iii) a condensed statement of changes in equity;
iv) condensed statement of cash flows; and
v) selected explanatory notes
b) Shall apply the same accounting principles as used in the annual financial statements
except for policies that have been changed from the most recent annual financial
statements
c) Interim reports shall not affect the amount presented in the annual report
d) Requires use of greater estimation
IV. Disclosure Requirements
a) Compliance with the standards shall be disclosed
b) Significant events and transactions
i) the write-down of inventories to net realizable value and the reversal of such a
write-down;
ii) recognition of a loss from the impairment of financial assets, property, plant and
equipment, intangible assets, or other assets, and the reversal of such an
impairment loss;
iii) the reversal of any provisions for the costs of restructuring;
iv) acquisitions and disposals of items of property, plant and equipment;
v) commitments for the purchase of property, plant and equipment;
vi) litigation settlements;
vii) corrections of prior period errors;
viii) changes in the business or economic circumstances that affect the fair value of
the entity’s financial assets and financial liabilities, whether those assets or
liabilities are recognised at fair value or amortised cost;
ix) any loan default or breach of a loan agreement that has not been remedied on or
before the end of the reporting period; and
x) related party transactions;

54
 xi) transfers between levels of the fair value hierarchy used in measuring the fair
value of financial instruments;
xii) changes in the classification of financial assets as a result of a change in the
purpose or use of those assets; and
xiii) changes in contingent liabilities or contingent assets

55
PAS 36 (Impairment of Assets)
I. Objective
a) To ensure that assets are carried at no more than their recoverable amount and to
prescribe how recoverable amount, impairment loss or its reversal is calculated
II. Scope
a) Applies to all assets except:
i) Inventories
ii) assets arising from construction contracts
iii) deferred tax assets
iv) assets arising from employee benefits
v) financial assets
vi) investment property measured at fair value
vii) biological assets related to agricultural activity measured at fair value less costs
to sell
viii) deferred acquisition costs and intangible assets arising from insurance contracts
ix) non-current assets classified as held for sale (see IFRS 5).
III. Key Principles
a) Test for impairment
i) Test the asset for any indication of impairment at the end of the reporting
period.
ii) Regardless if there is any indication, intangible assets having indefinite useful life
shall be tested for impairment by comparing its carrying amount and recoverable
amount.
iii) External causes:
(1) Drastic change in the market value of an asset
(2) Changes in in technology, markets, economy, or laws
(3) Increases in market interest rates
(4) net assets of the company higher than market capitalization
iv) Internal sources:
(1) Obsolescence or physical damage
(2) Asset is idle, part of a restructuring or held for disposal
(3) Worse economic performance than expected for investments in subsidiaries,
joint ventures or associates, the carrying amount is higher than the carrying
amount of the investee's assets, or a dividend exceeds the total
comprehensive income of the investee
IV. Valuation
a) Assets shall be carried at recoverable amount – whichever is higher of:
i) Fair value less cost to sell
(1) price in a binding sale agreement
(2) asset’s market price less the costs of disposal
ii) Value in use
(1) an estimate of the future cash flows the entity expects to derive from the
asset;
(2) expectations about possible variations in the amount or timing of those
future cash flows;

56
 (3) the time value of money, represented by the current market risk-free rate of
interest;
(4) the price for bearing the uncertainty inherent in the asset; and
(5) other factors, such as illiquidity, that market participants would reflect in
pricing the future cash flows the entity expects to derive from the asset.
b) At the end of each reporting period, assets are reviewed to look for any indication
that an asset may be impaired. If impairment is indicated, the asset’s recoverable
amount is calculated.
c) Goodwill and other intangibles with indefinite useful lives are tested for impairment
at least annually, and recoverable amount calculated.
d) If it is not possible to determine the recoverable amount for an individual asset, then
the recoverable amount of the asset’s cash-generating unit is determined. The
impairment test for goodwill is performed at the lowest level within the entity at
which goodwill is monitored for internal management purposes, provided that the
unit or group of units to which goodwill is allocated is not larger than an operating
segment under PFRS 8.
e) If the carrying amount of the asset exceed its recoverable amount, then there is an
impairment loss and it shall be recognized immediately in the profit or loss
f) Reversal of prior years’ impairment losses is required in certain instances (prohibited
for goodwill).
g) The reversal of impairment loss shall not exceed to the carrying amount of the asset
had no impairment loss been recognized.

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PAS 37 (Provisions, Contingent Liabilities and Contingent Assets)
I. Objective
a) To ensure that appropriate recognition criteria and measurement bases are applied
to provisions, contingent liabilities and contingent assets
b) To ensure that sufficient information is disclosed in the notes to the financial
statements to enable users to understand their nature, timing and amount.
II. Scope
a) This standard:
i) shall be applied by all entities except:
(1) those resulting from executory contracts, except where the contract is
onerous; and
*Executory contracts are contracts under which neither party has performed
any of its obligations or both parties have partially performed their
obligations to an equal extent.
(2) those covered by another Standard
ii) does not apply to:
(1) financial instruments (including guarantees) that are within the scope of PAS
39
(2) the recognition of revenue
(3) the treatment of expenditures as assets or expense
iii) deals with a specific type of provision, contingent liability or contingent asset, an
entity applies that Standard instead of this Standard. For example,
(1) construction contracts
(2) income taxes
(3) leases
(4) employee benefits
(5) insurance contracts
iv) neither prohibits nor requires capitalization of the costs recognised when a
provision is made.
v) applies to provisions for restructurings (including discontinued operations).
III. Key Principles
a) Provision – a liability of uncertain timing or amount
b) Contingent Liability
i) A possible obligation that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain
future that is not within the control of the entity
ii) A present obligation that arises from past events but is not recognized if:
(1) it is not probable that an outflow of resources embodying economic benefits
will be required to settle the obligation
(2) The amount of the obligation cannot be measured with sufficient reliability.
c) Contingent Asset
i) A possible asset that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain
future that is not within the control of the entity
IV. Recognition and Measurement

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a) Provision
i) Recognized when:
(1) an entity has a present obligation (legal or constructive) as a result of a past
event
(2) it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation
(3) a reliable estimate can be made of the amount of the obligation
ii) Not recognized for future operating losses
iii) Measured at the “best estimate” of the expenditure required to settle the
obligation at the balance sheet date
*Best Estimate is the amount the enterprise would rationally pay to settle the
obligation at balance sheet date or to transfer it to a third party.
iv) Gains from the expected disposal of assets are not to be included in the
measurement of provision
v) Future events that may affect the amount required to settle an obligation shall
be reflected in the amount of a provision where there is sufficient objective
evidence that they will occur.
vi) For present value, when the effect of the time value of money is material, the
amount of a provision shall be the present value of the expenditures expected to
be required to settle the obligation.
vii) Shall be reviewed at the end of each reporting period and be adjusted to reflect
the current best estimate
viii) If it is no longer probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, the provision shall be reversed.
*Where discounting is used, the carrying amount of a provision increases in each
period to reflect the passage of time. This increase is recognized as borrowing
cost.
b) An entity shall not recognized contingent liabilities and contingent assets but
adequate disclosure is needed in certain circumstances
c) Reimbursement shall be recognized only when it is already certain that it will be
received. This shall be recognized as a separate asset and the amount recognized
for the reimbursement shall not exceed the amount of the provision.
d) Restructuring:
i) A provision for restructuring costs will only be recognized as a liability if the
restructuring plan gives rise to a legal or constructive obligation.
ii) Constructive Obligation
(1) an obligation that derives from an enterprise’s actions, rather than legally
imposed
(2) will only arise when an entity:
(a) has a detailed formal plan for restructuring and identifying a number of
significant components of the plan
(b) has raised valid expectation in those affected by the plan that it will carry
out the restructuring
(c) When the restructuring constitutes the sale of a business, an obligation
does not arise until the entity is committed to a sale
(3) A restructuring provision can only include direct expenditures arising from
the restructuring

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V. Required Disclosures
a) For each class of provisions:
i) Balance of and changes in the provisions during the period
ii) Nature of the obligations underlying the provisions
iii) Components of the liability
iv) Amount of any expected reimbursements
b) For Contingent Liability, the entity should disclosed information about the amount
and timing of contingent liabilities unless the possibility of settlement is remote.
c) For Contingent Assets, if the inflow of economic events is probable, the entity should
disclosed information about the nature and if possible, the amount of contingent
assets.
d) If the information would prejudice the position of the entity in a dispute with other
entities, disclosure of such information is not needed but disclosure of the general
nature of the dispute, as well as the reason why such information is not disclosed,
should be made.

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PAS 38 (Intangible Assets)
I. Objectives
a) To prescribe the accounting treatment for recognizing, measuring and disclosing all
intangible assets that are not dealt with specifically in another PFRS
II. Scope
a) This standard excludes:
i) Intangibles covered by other PAS
ii) Financial Assets
iii) Mineral rights and expenditure on exploration, development and extraction of
minerals, oil, natural gas and similar non-regenerative resources
b) This standard does not apply to the following:
i) Those held for sale in the ordinary course of business
ii) Deferred tax assets
iii) Leases
iv) Those arising from employee benefits
v) Goodwill arising in business combination
III. Key Principles
a) Intangible Assets
i) Identifiable non-monetary asset without physical substance held for use in the
production of goods or services, for rental to others or for administrative
purposes
IV. Recognition and Measurement:
a) Intangible assets
i) recognized if and only if:
(1) It is probable that future economic benefits will flow to the entity
(2) The cost of the asset can be measured reliably
ii) initially measured at cost
b) Internally generated intangible assets
i) Classification:
(1) Research phase
(a) No intangible asset arising from this phase shall be recognized
(b) Research expenditures are recognized as expense when incurred
(2) Development phase
(a) Intangible assets arising from this phase shall be recognized if and only if
it exhibits the following:
i. Technical feasibility
ii. Intention to complete and use or sell
iii. Ability to use or sell
iv. Ability to generate probable economic benefits
v. Availability of adequate technical, financial and other resources to
complete development
vi. Ability to measure attributable expenditure reliably during
development
*If an entity cannot distinguish the research phase from the development
phase, the entity shall treat the expenditure on that project as if it were
incurred in the research phase only.

61
 ii) Internally generated goodwill shall not be recognized as an asset, as well as
internally generated brands, mastheads, publishing titles, customer lists and
similar items.
iii) The cost of an internally generated intangible asset comprises all directly
attributable costs necessary to create, produce, and prepare the asset.
c) Separate Acquisition
i) The price an entity pays to acquire separately an intangible asset will reflect
expectations about the probability that the expected future economic benefits
embodied in the asset will flow to the entity.
ii) The entity expects there to be an inflow of economic benefits, even if there is
uncertainty about the timing or the amount of the inflow.
iii) The cost can usually be measured reliably and this comprises the following:
(1) Its purchase price, including import duties and non-refundable purchase
taxes, after deducting trade discounts and rebates
(2) Any directly attributable cost of preparing the asset for its intended use.
iv) If an intangible asset is acquired in a business combination, the cost of that
intangible asset is its fair value at the acquisition date.
(1) Fair value
(a) In an active market, the quoted market prices provide the best estimate
in determining the fair value of an intangible asset. The most appropriate
is the current bid price.
(b) If the current bid price is unavailable or cannot be determined, the price
of the most recent similar transaction will be used.
(c) If there are no active markets, the fair value would be the amount the
entity would have paid for the asset at the acquisition date.
(2) Expenditures incurred separately or in a business combination and
recognized as an intangible asset is:
(a) Expensed when incurred if it is:
i. a research expenditure
ii. a development expenditure that does not qualify as an intangible
asset
*Expenditures that are initially recognized as expense shall not be
recognized as part of the cost of an intangible asset at a later date.
(b) Added to the carrying amount if it is a development expenditure that
qualifies as an intangible asset
d) Measurement after recognition
i) Cost Model – cost less any accumulated amortization and any accumulated
impairment losses
ii) Revaluation model – fair value at the date of the revaluation less any subsequent
accumulated amortization and any subsequent accumulated impairment losses
(1) If an intangible asset cannot be revalued because there is no active market
for this asset, the asset shall be carried at its cost less any accumulated
amortization and impairment losses.
(2) If the fair value of a revalued intangible asset can no longer be determined by
reference to an active market, the carrying amount of the asset shall be its
revalued amount at the date of the last revaluation by reference to the active

62
 market less any subsequent accumulated amortization and any subsequent
accumulated impairment losses.
V. Required Disclosures
a) An entity shall disclose the following for each class of intangible assets,
distinguishing between internally generated intangible assets and other intangible
assets:
i) whether the useful lives are indefinite or finite and, if finite, the useful lives or
the amortization rates used
ii) the amortization methods used for intangible assets with finite useful lives
iii) the gross carrying amount and any accumulated amortization (aggregated with
accumulated impairment losses) at the beginning and end of the period;
iv) the line item(s) of the statement of comprehensive income in which any
amortization of intangible assets is included;
v) a reconciliation of the carrying amount at the beginning and end of the period
showing:
(1) additions, indicating separately those from internal development, those
acquired separately, and those acquired through business combinations;
(2) assets classified as held for sale or included in a disposal group classified as
held for sale in accordance with PFRS 5 and other disposals
(3) increases or decreases during the period resulting from revaluations under
paragraphs 75, 85 and 86 and from impairment losses recognized or reversed
in other comprehensive income
(4) impairment losses recognized in profit or loss during the period
(5) impairment losses reversed in profit or loss during the period
(6) any amortization recognized during the period;
(7) net exchange differences arising on the translation of the financial
statements into the presentation currency, and on the translation of a
foreign operation into the presentation currency of the entity;
(8) other changes in the carrying amount during the period
b) If intangible assets are accounted for at revalued amounts, an entity shall disclose
the following:
i) by class of intangible assets:
(1) the effective date of the revaluation
(2) the carrying amount of revalued intangible assets
(3) the carrying amount that would have been recognized had the revalued class
of intangible assets been measured after recognition using the cost model
ii) the amount of the revaluation surplus that relates to intangible assets at the
beginning and end of the period, indicating the changes during the period and
any restrictions on the distribution of the balance to shareholders
iii) the methods and significant assumptions applied in estimating the assets’ fair
values.

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PAS 39 (Financial Instruments: Recognition and Measurement)
I. Objectives
a) To establish principles for recognizing, derecognizing and measuring financial assets
and financial liabilities.
II. Scope:
a) This Standard applies to financial instruments, whether recognized or unrecognized,
other than:
i) Interests in subsidiaries, associates and joint-ventures
ii) Rights and obligations under leases
iii) Rights and obligations under insurance contracts
iv) Employers’ assets and liabilities under employee benefit plans
v) Equity instruments issued by the reporting enterprise
vi) Financial guarantee contracts, including letters of credit, that provide for
payments in case of debtor’s failure
vii) Contracts for Contingent Consideration in a Business Combination
viii) Weather derivatives – contracts requiring payment based on a climatic,
geological, or other physical variables
III. Recognition and Measurement:
a) Initial Recognition
i) An entity must recognize a financial asset or a financial liability (including a
derivative) when it becomes a party to the instrument’s contractual provisions.
ii) Regular Way Contracts
(1) contracts for the purchases or sale of financial assets that requires delivery of
the assets within the time frame generally established by regulation or
convention in the market place concerned
(a) “Regular way” purchase of financial assets - recognized using trade date
accounting or settlement date accounting
*Financial assets and liabilities are recognized on the date the enterprise
commits to the purchase.
(b) “Regular way” sale of financial assets - recognized using settlement date
accounting
*Financial assets are recognized on the date it is delivered
b) Derecognition
i) Removing a financial asset or liability, or a portion of a financial asset or liability,
from an entity’s balance sheet.
ii) A financial asset is derecognized only when the entity loses control of the
contractual rights that comprise the financial asset. An enterprise loses control if
it realizes the rights to benefits specified in the contract, the rights expire, or the
enterprise surrenders those rights.
iii) On derecognition, the difference between the carrying amount of an asset or a
portion of an asset transferred to another party and the sum of the proceeds
received or receivable and any prior adjustment to fair value of that asset that
had been reported in equity should be included in net profit or loss for the
period.
iv) If an entity transfers a part of a financial asset to others while retaining a part,
the carrying amount of the financial asset should be allocated between the part

64
 retained and the part sold based on their relative fair values on the date of sale.
A gain or loss should be recognized based on the proceeds for the portion sold.
(1) With a new financial asset or financial liability
(a) If the transfer of a financial asset results in the creation of a new financial
asset or the assumption of a new financial liability, the new asset or
liability is recognized at its fair value.
(b) The gain or loss should be recognized on the transaction based on the
difference between:
i. the proceeds
ii. the carrying amount of the financial asset sold plus the fair value of
any new financial liability assumed, minus the fair value of any new
financial asset acquired, and plus or minus any adjustment that had
previously been reported in equity to reflect the fair value of that
asset.
c) Initial Measurement
i) All financial assets and liabilities must be initially measured at cost, which is the
fair value of the consideration given or received for it.
*Transaction costs are included in the initial measurement of all financial assets
and liabilities
d) Subsequent Measurement
i) Financial Assets not Designated as Hedges
(1) After initial recognition, an entity should measure financial assets, including
derivatives that are assets, at their fair values, without any deduction for
transaction costs that it may incur on sale or other disposal, except for the
following:
(a) loans and receivables originated by the enterprise and not held for
trading
(b) held-to-maturity investments
(c) Any financial asset that does not have a quoted market price in an active
market and whose fair value cannot be reliably measured.
(2) Amortized cost of a financial asset or financial liability is amount at initial
recognition minus principal repayments plus or minus the cumulative
amortization of any difference between that initial amount and the maturity
amount, and minus any write-down for impairment or uncollectibility.
ii) Loans and Receivables Originated by the Enterprises and Held-to-Maturity
Investments – amortized cost using the effective interest rate method if they
have a fixed maturity
iii) Held for Trading and Available-for-Sale
(1) If can be reliably measured, must be subsequently measured at fair value
(without deduction of disposal costs).
(2) If a “held for trading” or “available for sale” financial asset does not have a
quoted market price in an active market and its fair value cannot be reliably
measured, it must be subsequently measured as follows:
(a) If it has a fixed maturity, measure the financial asset at amortized cost
using the effective interest rate method and review for impairment at
each balance date

65
 (b) If it has no fixed maturity, measures the financial asset at cost and review
for impairment at each balance date.
iv) Financial Liabilities not Designated as Hedges
(1) Financial liabilities other than those that are “held for trading” and
derivatives that are liabilities must be subsequently measured at amortized
cost.
(2) After initial recognition, an entity should measure liabilities held for trading
and derivatives that are liabilities at fair value, except for a derivative liability
that is linked to and that must be settled by delivery of an unquoted equity
instrument whose fair value cannot be measurably measured, which should
be measured at cost.
e) Gains and losses on re-measuring financial instruments to fair value
i) Gains and losses on re-measuring “held for trading” financial assets and liabilities
must be recognized in net profit/loss in the period in which they arise.
f) Testing for Impairment
i) At each reporting date, an enterprise must test for impairment of financial
assets.
ii) If evidence of impairment exists, the entity must estimate the recoverable
amount of that asset and recognize any impairment loss.
g) For “loans and receivables” and “held-to-maturity investments” carried at amortized
cost, recoverable amount is measured as the present value of the expected future
cash flows, discounted at the instruments’ original effective interest rate.
h) For financial assets carried at cost or amortized cost because fair value cannot be
reliably measured, recoverable amount is measured as the present value of the
expected future cash flows, discounted at the current market rate for similar
financial assets.
i) Hedging
i) Hedging involves designating a financial instrument as an offset, in whole or in
part, to changes in the fair value of, or cash flows from, a hedged item. Financial
instruments can, provided certain criteria are met, be designated as hedges of:
(1) Recognized assets or liabilities;
(2) Firm commitments; or
(3) Forecasted transactions
ii) A hedged item is an asset, liability, firm commitment, or forecasted future
transaction that:
(1) Exposes the enterprise to risk of changes in fair value or changes in future
cash flows
(2) Is designated as being hedged for hedge accounting purposes
iii) Hedge Accounting
(1) Three types of hedging relationships:
(a) a fair value hedge, which is a hedge of exposure to changes in the fair
value of a recognized asset or liability; or an identified portion of such an
asset or liability that is attributable to a particular risk and that will affect
reported net income
(b) a cash flow hedge, which is a hedge of exposure to cash flow variability of
a recognized asset or liability or a forecasted transaction; and
(c) a hedge of a net investment in a foreign entity

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(2) A hedge relationship qualifies for hedge accounting only when:
(a) certain formal documentation is in place at inception;
(b) the hedge is expected to be highly effective in offsetting changes in the
fair value or cash flows of the hedged item, and the hedge effectiveness
can be reliably measured;
(c) the hedge is assessed on an ongoing basis and determined actually to
have been highly effective during the reporting period; and
(d) for a cash flow hedge of a forecasted transaction, the forecasted
transaction is highly probable and represents exposure to variations in
cash flows that could ultimately affect net profit/loss;
(e) the effectiveness of the hedge can be reliably measured
(3) Fair Value Hedge –re-measuring the hedging instrument to fair value, with
any gain or loss recognized immediately in net profit/loss
(4) Cash Flow Hedge – recognize that portion of the gain or loss on the hedging
instrument determined to be an effective hedge directly in equity
(a) The ineffective portion is recognized:
i. Immediately in net profit/loss if the hedging instrument is a derivative
ii. if the hedging instrument is not a derivative, either in net profit or loss
or directly in equity
(5) Net Investment in Foreign Entity
(a) Hedges of net investments in foreign entities are treated in the same way
as cash flow hedges. Therefore, that portion of any gain or loss on the
hedging instrument determined to be an effective hedge is recognized
directly in equity.
i. The ineffective portion is recognized:
1. Immediately in net profit/loss if the hedging instrument is a
derivative
2. Directly in equity until disposal of the net investment if the hedging
instrument is not a derivative.
(b) The gain or loss on the hedging instrument relating to the effective
portion of the hedge should be classified in the same manner as the
foreign currency translation gain or loss.

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PAS 40 (Investment Property)
I. Objectives
a) To prescribe the accounting treatment for investment property and related
disclosures.
II. Scope:
a) This standard does not deal and apply to the following:
i) Classification of leases as finance leases or operating leases
ii) Measurement in a lessee’s financial statements of property interests held under
a lease accounted for ass operating lease
iii) Measurement in a lessor’s financial statements of its net investment in a finance
lease
iv) Recognition of lease income
v) Accounting for sale and leaseback transactions
vi) Disclosure about finance leases and operating leases
vii) Biological assets related to agricultural activities
viii) Mineral rights and mineral reserves
III. Key Principles
a) Investment property
i) Property, land or a building (part/whole), held to earn rentals or for capital
appreciation rather than for:
(1) Use in the production or supply of goods or services or for administrative
purposes
(2) Sale in the ordinary course of business
IV. Recognition and Measurement
a) Investment properties should be recognized as an asset when and only when:
i) Future economic benefits are probable
ii) Cost can be measured reliably
b) Investment Properties should be measured initially at cost.
i) Transaction costs should be included.
ii) The cost of a purchased investment property comprises its purchase price and
any directly attributable expenditure.
iii) If payment for an investment property is deferred, its cost is the cash price
equivalent. The difference between this amount and the total payments is
recognized as interest expense over the period of credit.
iv) The initial cost of a property interest held under a lease and classified as an
investment property shall be recognised at the lower of the fair value of the
property and the present value of the minimum lease payments. An equivalent
amount shall be recognized for the liability as well.
*Any premiums paid for a lease is treated as part of the minimum lease payments
therefore it is included in the cost of the asset.
c) After recognition
i) An entity can either choose the Fair Value model or the Cost Model as its
Accounting Policy for:
(1) all investment property backing liabilities that pay a return linked directly to
the fair value of, or returns from, specified assets including that investment
property

68
 (2) all other investment property, regardless of the choice made in (a)
ii) Fair value model
(1) Gains or losses arising from a change in the fair value of investment property
shall be recognized in profit or loss for the period in which it arises.
(2) The fair value of investment property shall reflect market conditions at the
end of the reporting period
(3) Fair Value is not determinable
(a) If the fair value of an investment property under construction is not
reliably determinable but expects the fair value of the property to be
reliably determinable when construction is complete, it shall measure
that investment property under construction at cost until either its fair
value becomes reliably determinable or construction is completed,
whichever is earlier.
(b) If the fair value of an investment property is not reliably determinable on
a continuing basis, the entity shall measure that investment property
using the cost model. The entity shall apply PAS 16 until disposal of the
investment property.
*If an entity has previously measured an investment property at fair
value, it shall continue to measure the property at fair value until disposal
or until the property becomes owner-occupied property or the entity
begins to develop the property for subsequent sale in the ordinary course
of business.
iii) Cost Model
(1) All investment properties shall be measured in accordance with PAS 16’s
requirements. Investment properties that meet the criteria to be classified as
held for sale (or are included in a disposal group that is classified as held for
sale) shall be measured in accordance with PFRS 5.
d) Disposal
i) Gains or losses to profit or loss
ii) Measures as difference between carrying amount and proceeds
V. Requires Disclosures
a) The entity should disclose the following:
i) Methods and significant assumptions used to determine the fair value of the
investment property
ii) Extent to which the valuations was performed by external independent valuers
iii) Rental income and direct operating expenses generated from investment
properties
iv) Reconciliation of the carrying amount at the beginning and end of the period
v) Investment property carried at cost, depreciation and the useful lives
b) Fair value model – additional disclosures:
i) Reconciliation of the carrying amount of the investment property at the
beginning and end of the period including the gains and losses
ii) Separate reconciliation of carrying amounts, a description of the property and an
explanation of why the fair value cannot be determined
iii) Range of fair value estimates within which the fair value of the property is based
c) Cost model – additional disclosures:

69
a. Reconciliation of the carrying amount of the investment property at the
beginning and end of the period
b. Depreciation and impairment charges for the period
c. Fair Value of the Investment property

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PAS 41 (Agriculture)
I. Objectives
a) To prescribe accounting for agricultural activity – the management of the biological
transformation of biological assets (living plants and animals) into agricultural
produce.
II. Scope
a) This Standard shall be applied to account for the following when they relate to
agricultural activity:
i) biological assets
ii) agricultural produce at the point of harvest
iii) Government grants
b) This Standard does not apply to:
i) land related to agricultural activities
ii) Intangible assets related to agricultural activities
III. Recognition and Measurement
a) A biological asset is recognized when:
i) The entity controls the asset as a result of past events.
ii) It is probable that future economic benefits associated with the asset will flow to
the entity;
iii) The fair value or cost of the asset can be measured reliably.
b) Recognition
i) A biological asset shall be measured on at its fair value less costs to sell at the
end of each reporting period.
ii) If the fair value cannot be measured reliably, the biological asset shall be
measured at its cost less any accumulated depreciation and any accumulated
impairment losses.
*Costs to sell are the incremental costs directly attributable to the disposal of an
asset, excluding finance costs and income taxes
iii) If an entity has previously measured a biological asset at its fair value less costs
to sell, that biological asset will be continued to be measured as it is until its
disposal.
iv) An agricultural produce harvested from the entity’s biological assets shall be
measured at its fair value less costs to sell at the point of harvest in all cases in
the view that the fair value of the biological asset can be measured reliably.
(1) Determination of Fair Value
(a) If an active market exists, in its present location and condition, the
quoted price in that market becomes the basis in determining the fair
value of that biological asset. If an entity has access to different active
markets, the entity uses the most relevant one
(b) If an active market does not exist, an entity uses one or more of the
following, when available, in determining fair value:
i. The most recent market transaction price, provided that there has not
been a significant change in economic circumstances between the
date of the transaction and of the end of the reporting period;
ii. Market prices for similar assets with adjustment to reflect differences
iii. Sector benchmarks

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 (c) If the market-determined prices or values are not available, an entity shall
use the present value of expected net cash flows from the asset
discounted at a current market-determined rate in determining fair
value.
i. In determining the present value of expected net cash flows, an entity
should include the net cash flows that market participants would
expect the asset to generate in its most relevant market. An entity
should not include any cash flows for financing the assets, taxation or
re-establishing biological assets after harvest.
(d) There are times that cost may approximate the fair value. This happens
particularly when:
i. little biological transformation has taken place since initial cost
incurrence
ii. the impact of the biological transformation on price is not expected to
be material
(e) Gains and Losses
i. A gain or loss arising on initial recognition of a biological asset at fair
value less costs to sell and from a change in fair value less costs to sell
of a biological asset shall be included in profit or loss for the period in
which it arises.
(f) Government Grants
i. Unconditional government grant - profit or loss when, and only when,
the government grant becomes receivable.
ii. Conditional government grant - profit or loss when, and only when,
the conditions attaching to the government grant are met.
iii. If a government grant relates to a biological asset measured at its cost
less any accumulated depreciation and any accumulated impairment
losses, PAS 20 is applied.
IV. Required Disclosures
a) An entity shall disclose the following:
i) Aggregate gain or loss arising during the current period on initial recognition of
biological assets and agricultural produce and from the change in fair value less
costs to sell of biological assets.
ii) Methods and significant assumptions applied in determining the fair value of each
group of agricultural produce at the point of harvest and each group of biological
assets.
iii) Fair value less costs to sell of agricultural produce harvested during the period,
determined at the point of harvest.
iv) The existence and carrying amounts of biological assets whose title is restricted,
and the carrying amounts of biological assets pledged as security for liabilities;
v) The amount of commitments for the development or acquisition of biological
assets
vi) Financial risk management strategies related to agricultural activity.
b) An entity shall also present a reconciliation of changes in the carrying amount of
biological assets between the beginning and the end of the current period. The
reconciliation shall include the following:
i) the gain or loss arising from changes in fair value less costs to sell

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 ii) increases due to purchases;
iii) decreases attributable to sales and biological assets classified as held for sale (or
included in
iv) a disposal group that is classified as held for sale
v) decreases due to harvest;
vi) increases resulting from business combinations;
vii) net exchange differences arising on the translation of financial statements into a
different
viii) presentation currency, and on the translation of a foreign operation into the
presentation
ix) currency of the reporting entity
x) Other changes
c) Description of each group of biological assets should be provided.
d) If not disclosed, an entity shall describe:
i) the nature of its activities involving each group of biological assets; and
ii) Non-financial measures or estimates of the physical quantities of each group of
the entity’s biological assets at the end of the period and output of agricultural
produce during the period.
e) For biological asset measured at their cost less any accumulated depreciation and any
accumulated impairment losses,
i) The entity shall disclose the following:
(1) description of the biological asset
(2) explanation of why fair value cannot be measured reliably
(3) if possible, the range of estimates within which fair value is highly likely to lie
(4) the depreciation method used
(5) the useful lives or the depreciation rates used
(6) The gross carrying amount and the accumulated depreciation (aggregated with
accumulated Impairment losses) at the beginning and end of the period.
f) Gains or losses recognized on disposal of the biological assets and the reconciliation
required shall disclose amounts separately. In addition, the reconciliation shall also
include the following amounts included in profit or loss:
i) impairment losses;
ii) reversals of impairment losses; and
iii) depreciation
g) If the fair value becomes reliably measurable during the current period, an entity shall
disclose for those biological assets the following:
i) description of the biological assets;
ii) an explanation of why fair value has become reliably measurable; and
iii) The effect of the change.
h) Government Grants
i) the nature and extent of government grants recognized in the financial statements
ii) unfulfilled conditions and other contingencies attaching to government grants
iii) Significant decreases expected in the level of government grants.

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PFRS 1 (First-time Adoption of International Financial Reporting
Standard)
I. Objectives
a) To prescribe the procedures when an entity adopts IFRSs for the first time as the
basis for preparing its general purpose financial statements.
II. Scope:
a) An entity shall apply this PFRS in:
i) its first PFRS financial statements; and
ii) each interim financial report, if any, that it presents in accordance with PAS 34
for part of the period covered by its first IFRS financial statements.
III. Recognition and Measurement:
a) An entity shall prepare and present an opening PFRS statement of financial position
at the date of transition to PFRSs.
b) Accounting Policies
i) An entity shall use the same accounting policies in its opening PFRS statement of
financial position and throughout all periods presented in its first PFRS financial
statements.
ii) Retrospective application is prohibited in some aspects of other PFRSs
(1) Exceptions:
(a) derecognition of financial assets and financial liabilities – PAS 39
(b) hedge accounting
i. measure all derivatives at fair value
ii. eliminate all deferred losses and gains arising on derivatives that were
reported in accordance with previous GAAP as if they were assets or
liabilities.
(c) non-controlling interests – PAS 27
c) Estimates
i) should be consistent with estimates made for the same date in accordance with
previous GAAP unless there is objective evidence that those estimates were in
error
IV. Presentation:
a) Comparative Information:
a) three statements of Financial Position
b) two statements of profit or loss and other comprehensive income
c) two separate statements of profit or loss
d) two statements of cash flows
e) two statements of changes in equity and related notes, including comparative
information.
b) An entity shall explain how the transition from previous GAAP to PFRSs affected its
reported financial position, financial performance and cash flows.
V. Required Disclosures

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a) Designation of financial assets or financial liabilities
b) Use of fair value as deemed cost
c) Use of deemed cost for investments in subsidiaries, jointly controlled entities and
associates
d) Use of deemed cost for oil and gas assets
e) Use of deemed cost for operations subject to rate regulation

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PFRS 2 (Share-based Payment)
I. Objectives
a) To prescribe the accounting for transactions in which an entity receives or acquires
goods or services either as consideration for its equity instruments or by incurring
liabilities for amounts based on the price of the entity’s shares or other equity
instruments of the entity.
II. Scope:
a) This standard shall apply to:
i) equity-settled share-based payment transactions,
ii) cash-settled share-based payment transactions, and
iii) transactions in which the entity receives or acquires goods or services and the
terms of the arrangement provide either the entity or the supplier of those goods
or services with a choice of whether the entity settles the transaction in cash (or
other assets) or by issuing equity instruments
III. Recognition and Measurement:
a) Goods or services received or acquired in a share-based payment transaction are
recognized when:
i) goods are obtained or
ii) services are received
(1) Increase in equity - goods or services were received in an equity-settled share-
based payment transaction
(2) Increase in liability - goods or services were acquired in a cash-settled share-
based payment transaction.
b) Goods or services received or acquired in a share-based
payment transaction that do not qualify for recognition as
assets shall be recognized as an expense.
c) Equity-settled share-based payment transactions
i) fair value of the goods received
ii) fair value cannot be estimated reliably – fair value of the equity instruments
granted
d) Cash-settled share-based payment transactions
ii) Fair value of the liability
*Until the liability is settled, the entity shall re-measure the fair value of the liability
at each end of the reporting period and at the date of settlement, with any changes
in fair value recognized in profit or loss for the period.
e) Share-based payment transactions with cash alternatives
iii) Accounted as a:
(1) Cash-settled share-based payment transaction - the entity has incurred a
liability to settle in cash or other assets
(2) Equity-settled share-based payment transaction - no liability has been
incurred.
IV. Required Disclosures
a) nature and extent of the share-based payment arrangements
b) fair value of the goods or services received, or the fair value of the equity instruments
granted, during the period was determined.

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c) effect of share-based payment transactions on the entity’s profit or loss for the period
and on its financial position.

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PFRS 3 (Business Combinations)
I. Objectives
a) To ensure that the acquirer of a business recognizes the assets acquired and
liabilities assumed at their acquisition-date fair values and discloses information that
enables users to evaluate the nature and financial effects of the acquisition
II. Scope:
a) Applies to transactions or other events that meets the definition of a business
combination
b) Does not apply to:
i) the formation of a joint venture.
ii) the acquisition of an asset or a group of assets that does not constitute a business.
iii) combination of entities or businesses under common control
III. Recognition and Measurement
a) Acquisition Method
i) Requires:
(1) Identification of the acquirer;
(2) Determination of the acquisition date;
(3) Recognition and measurement of the identifiable assets acquired, liabilities
assumed and any non-controlling interest in the acquiree
(4) Recognition and measurement of goodwill or gain from a bargain purchase.
ii) As of the acquisition date, the acquirer shall recognize, separately from goodwill,
the identifiable assets acquired, the liabilities assumed and any non-controlling
interest in the acquiree.
(1) Measurement:
(a) fair value; or
(b) the present ownership instruments' proportionate share in the recognized
amounts of the acquiree's identifiable net assets
iii) Exceptions:
(1) For recognition and measurement
(a) Reacquired rights
(b) Share-based payment awards
(c) Assets held for sale
(2) For measurement only
(a) Income Taxes
(b) Employee benefits
(c) Indemnification assets
(3) For recognition only
(a) Contingent Liabilities
iv) Goodwill or a gain from a bargain purchase
(1) Measured as the excess of:
(a) the aggregate of:
i. the consideration transferred which generally requires acquisition-
date fair value
ii. the amount of any non-controlling interest in the acquiree
iii. in a business combination achieved in stages, the acquisition-date fair
value of the acquirer’s previously held equity interest in the acquiree.

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 Over the:
(b) Net of the acquisition date amounts of the identifiable assets acquired and
the liabilities assumed measured.
b) Measurement Period
i) During the measurement period the acquirer shall:
(1) retrospectively adjust the provisional amounts recognized at the acquisition
date
(2) recognize additional assets or liabilities if new information is obtained about
facts and circumstances that existed as of the acquisition date
ii) Measurement period shall not exceed one year from the acquisition date
IV. Required Disclosures
a) Nature and Financial effects of the business combination that occurs either:
i) During the current period
ii) After the end of the reporting period but before the financial statements are
authorized to issue
b) Adjustments recognized in the current reporting period that relate to business
combinations that occurred in the period or previous reporting periods

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PFRS 4 (Insurance Contracts)
I. Objectives
a) To prescribe the financial reporting for insurance contracts until the IASB completes
the second phase of its project on insurance contracts.
II. Scope:
a) This shall apply to:
i) insurance contracts , including reinsurance contracts
ii) financial instruments with a discretionary participation feature
b) Does not apply to:
i) product warranties issued directly by a manufacturer, dealer or retailer
ii) employers’ assets and liabilities under employee benefit plans
iii) Shared-Based Payments and retirement benefit obligations reported by defined
benefit retirement plans
iv) contractual rights or contractual obligations that are contingent on the future use
of, or right to use, a non-financial
v) contingent consideration payable or receivable in a business combination
vi) direct insurance contracts
III. Recognition and Measurement:
a) Liability Adequacy test
i) An assessment of whether the carrying amount of an insurance liability needs to
be increased (or the carrying amount of related deferred acquisition costs or
related intangible assets decreased), based on a review of future cash flows.
ii) An insurer shall assess at the end of each reporting period whether its recognized
insurance liabilities are adequate, using current estimates of future cash flows
under its insurance contracts.
iii) If that assessment shows that the carrying amount of its insurance liabilities is
inadequate in the light of the estimated future cash flows, the entire deficiency
shall be recognized in profit or loss.
b) Change in Accounting Policies
i) An insurer may change its accounting policies for insurance contracts if, and only
if, the change makes the financial statements more relevant to the economic
decision-making needs of users and no less reliable, or more reliable and no less
relevant to those needs.
IV. Required Disclosures
a) Explanation of recognized amounts
b) Nature and extent of risks arising from insurance contracts

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PFRS 5 (Non-Current Asset Held for Sale and Discontinued
Operations)
I. Objectives
a) To specify the accounting for asset held-for-sale and the presentation and disclosure
of discontinued operations.
b) To determine the criteria to be classified as held for sale to be measured at lower of
carrying amount and fair value less costs to sell and deprecation on such asset to
cease and to be presented separately in the statement of financial position and the
result of discontinued operations in the OCI
II. Scope
a) This standard applies to all recognised non-current asset and to all disposal group of
an entity.
b) The measurement provision of this standard does not apply to the following assets:
i) Deferred tax assets (PAS 12)
ii) Assets arising from employee benefits (PAS 9)
iii) Financial assets (PAS 39)
iv) Non-current assets that are accounted for in accordance with the fair value
model in PAS 40
v) Non-current assets that are measured at fair value less costs to sell in PAS 41
vi) Contractual rights under insurance contracts (PFRS 4).
b) The classification, presentation and measurement is also applicable to non-current
asset/disposal group that is classified as held for distribution to owners.
c) The entity must be committed to the distribution, the asset must be available for
immediate distribution and must be highly probable
III. Recognition and Measurement
a) Held for sale classification
i) Management is committed to a plan to sell
ii) The asset is available for immediate sale
iii) An active programme to locate a buyer is initiated
iv) The sale is highly probable, within 12 months of classification as held for sale
v) The asset is being actively marketed for sale at a sales price reasonable in
relation to its fair value
vi) Actions required to complete the plan indicated that it is unlikely that plan will
be significantly changed or withdrawn.
vii) The assets need to be disposed of through sale. Therefore, operations that are
expected to be wound down or abandoned would not meet the definition but
may be classified as discontinued once abandoned.
viii) An entity that is committed to a sale involving loss of control of a subsidiary that
qualifies for held-for-sale classification under PFRS 5 classifies all of the assets
and liabilities of that subsidiary as held for sale, even if the entity will retain a
non-controlling interest in its former subsidiary after the sale.
b) Disposal group concept

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 i) A group of assets, possibly with some associated liabilities, which an entity
intends to dispose of in a single transaction.
ii) The measurement id applied to the group as a whole
iii) Any impairment loss would reduce the carrying amount of the non-current asset
in the disposal group in the order of allocation required by PAS 36.
iv) Measurement of a non-current asset (or disposal group)
(1) At the time of classification as held for sale/distribution. the carrying amount
of the asset will be measured in accordance with applicable PFRS
(2) After classification as held for sale/distribution. The asset will be measure at
lower of its carrying amount and fair value less costs to sell/distribute.
(3) At the time of classification. Prior classification, impairment is measured or
recognised in accordance with applicable PFRSs. Any impairment loss is
recognised in P/L unless asset had been measured a revalued amount where
impairment is treated as revaluation decrease
(4) Subsequently. Any impairment loss is based on the difference between the
adjusted carrying amount and fair value less costs to sell and shall be
recognise in P/L, even for assets previously carried at revalued amounts
(5) Assets carried at fair value prior to initial classification are required to deduct
the costs to sell and may result in an immediate charge to P/L
(6) Subsequent increase in fair value less costs to sell can be recognised in the
P/L to the extent that it is not in excess of the cumulative impairment loss
that has been recognised.
(7) A gain or loss not previously recognize at the date of sale of non-current
asset shall be recognised at the date of derecognition.
(8) Assets classified as held for sale are not depreciated.
(9) Assets classified as held for sale, and the assets and liabilities included within
a disposal group classified as held for sale, must be presented separately on
the face of the statement of financial position.
(10) Asset that no longer meet the criteria shall cease to be classified as
held for sale shall be measured at the lower of its:
(a) carrying amount before it was classified as held for sale, adjusted for any
depreciation, amortisation or revaluation that would have been
recognised had the asset not been classified as held for sale and
(b) its recoverable amount at the date of subsequent decision not to sell
c) A discontinued operation is a component of an entity that either has been disposed
of, or is classified as held for sale:
i) Represents a separate major line of business or geographical area of operations,
ii) Is part of a single co-ordinated plan to dispose of a separate major line of
business or geographical area of operations
iii) Is a subsidiary acquired exclusively with a view to resale
d) Gain/loss on the remeasurement of the asset held for sale shall be included in P/L
from continuing operations

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PFRS 6 (Exploration for and Evaluation of Mineral Resource)
I. Objectives
a) To specify the financial reporting for the exploration for and evaluation of mineral
resources
II. Scope
a) The PFRS requires:
i) Limited improvements to existing accounting practices for exploration for and
evaluation of mineral resources
ii) Entity that recognize exploration and evaluation assets to assess such assets for
impairment in accordance with this PFRS and measure any impairment in
accordance with PAS 36 Impairment of Assets.
iii) disclosures that identify and explain the amounts in the entity’s financial
statements arising from the exploration for and evaluation of mineral resources
and help users of those financial statements understand the amount, timing and
certainty of future cash flows from any exploration and evaluation assets
recognised.
b) It shall apply to exploration and evaluation that it incurs
c) It shall not apply to expenditures incurred:
i) Before the exploration for and evaluation of mineral resources
ii) After technical feasibility and commercial viability of extracting a mineral
resources are demonstrable.
III. Recognition and Measurement
a) Exploration for and evaluation of mineral resources means the search for mineral
resources, including minerals, oil, natural gas and similar non-regenerative resources
after the entity has obtained legal rights to explore in a specific area and the
determination of the technical feasibility and commercial viability of extracting the
mineral resources
b) This standard permits an entity to develop an accounting policy for recognition of
exploration and evaluation expenditures as assets without specifically considering
the requirements of PAS 8.
c) An entity adopting PFRS 6 may continue to use accounting policies applied
immediately before adopting the PFRS which includes continuing use of recognition
and measurement practices
d) It shall be measured at cost.
e) The following are expenditures that might be included in the initial measurement:
i) Acquisition of rights to explore
ii) Topographical, geological, geochemical and geophysical studies;
iii) Exploratory drilling;
iv) Trenching
v) Sampling;
vi) Activities in relation to evaluating the technical feasibility and commercial
viability of extracting a mineral resource.

83
 f) Expenditures related to development of mineral resources are not recognized as
exploration and evaluation assets.
g) An entity shall apply either the cost model or the revaluation model after recognition.
h) Impairment
i) Entities are required to perform an impairment test on asset when specific facts
and circumstances indicate an impairment test is required. Example:
(1) The period for which the entity has the right to explore in the specific area has
expired during the period or will expire in the near future, and is not expected
to be renewed.
(2) Substantive expenditure on further exploration for and evaluation of mineral
resources in the specific area is neither budgeted nor planned.
(3) Exploration for and evaluation of mineral resources in the specific area have
not led to the discovery of commercially viable quantities of mineral resources
and the entity has decided to discontinue such activities in the specific area.
(4) Sufficient data exist to indicate that, although a development in the specific
area is likely to proceed, the carrying amount of the exploration and evaluation
asset is unlikely to be recovered in full from successful development or by sale.
ii) Any impairment loss is measured, presented and disclosed in accordance with PAS
36.
IV. Presentation
a) An entity shall classify exploration and evaluation assets as tangible or intangible
according to the nature of the assets acquired and apply the classification consistently.
b) An exploration and evaluation asset shall no longer be classified as such when the
technical feasibility and commercial viability of extracting a mineral resource are
demonstrable. Exploration and evaluation assets shall be assessed for impairment,
and any impairment loss recognised, before reclassification.

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PFRS 7 (Financial Instruments: Disclosures)
I. Objectives
a) To prescribe disclosures that enable financial statement users to evaluate:
i) The significance of financial instruments for the entity’s financial position and
performance; and
ii) The nature and extent of risks arising from financial instruments to which the entity
is exposed during the period and at the end of the reporting period, and how the
entity manages those risks.
II. Scope
a) This Standard shall be applied to all types of financial instruments except:
i) Those interests in subsidiaries, associates and joint ventures that are accounted for
in accordance with PAS 27, PAS 28 or PAS 31. However, entities shall also apply this
Standard to all derivatives linked to interests in subsidiaries, associates or joint
ventures.
ii) Employers’ rights and obligations under employee benefit plans, to which PAS 19
applies.
iii) Insurance contracts as defined in PFRS 4 Insurance Contracts. However, this
Standard applies to derivatives that are embedded in insurance contracts if PAS 39
requires the entity to account for them separately.
iv) Financial instruments that are within the scope of PFRS 4 because they contain a
discretionary participation feature only exempt from applying to these features
paragraphs 15–32 and AG25–AG35 of this Standard regarding the distinction
between financial liabilities and equity instruments but subject to all other PAS 32
requirements.
v) Contracts and obligations under share-based payment transactions to which PFRS 2
applies, except for:
(1) When accounting for treasury share purchased, sold, issued or cancelled by
employee share option plans or similar arrangements
vi) It also applies to contracts to buy or sell a non-financial item that are within the
scope of PAS 39.
III. Disclosures
a) An entity shall group financial instruments into classes that are appropriate to the
nature of the information disclosed and that take into account the characteristics of
those financial instruments.
b) Two main categories:
i) Information about the significance of financial instruments
ii) Information about the nature and extent of risks arising from financial instrument
c) Statement of financial position

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 i) Financial asset/financial liabilities measure at FVPL, showing separately those held
for trading and those designated at initial recognition
ii) Held-to-maturity
iii) Loans and receivables
iv) Financial liabilities measured at amortised cost
v) Other disclosures
(1) Special disclosure about financial asset/liabilities at FVPL including the credit
risks and market risks, changes in FV attributable to these risks and the method
of measurements
(2) Reclassification about financial assets pledged as collateral and about financial or
non-financial asset held as collateral
(3) Reconciliation of allowance account for losses (bad debts) by class of financial
assets
(4) Information about compound financial instruments with multiple embedded
derivatives
(5) Breach of terms of loan agreements
d) Statement of comprehensive income
i) Items of income, expenses, gains and losses with separate disclosure of gains and
losses from
ii) Financial asset/liabilities measured at FVPL, showing separate those held for trading
and those designated at the initial recognition
iii) Held-to-maturity investments
iv) Loans and receivables
v) Available-for-sale assets
vi) Financial liability measured at amortised cost
vii) Other disclosure
(1) Total interest expense and income for those financial instruments that are not
measured at FVPL
(2) Fee income and expenses
(3) Amount of impairment losses by class of financial assets
(4) Interest income on impaired financial assets
(5) Other disclosures
(a) Accounting policies for financial instruments
(b) Information about hedge accounting, including:
(c) A description of each type of hedge, hedging instruments and their fair
values at the end of the reporting period; and the nature of the risks being
hedged.
(6) For cash flow hedges, an entity shall disclose:
(a) The periods when the cash flows are expected to occur and when they are
expected to affect profit or loss;

86
 (b) A description of any forecast transaction for which hedge accounting had
previously been used, but which is no longer expected to occur;
(c) The amount that was recognised in other comprehensive income during the
period;
(d) The amount that was reclassified from equity to profit or loss for the period,
showing the amount included in each line item in the statement of
comprehensive income;
(e) The amount that was removed from equity during the period and included in
the initial cost or other carrying amount of a non-financial asset or non-
financial liability whose acquisition or incurrence was a hedged highly
probable forecast transaction
(7) For FV hedges,
(a) information about FV changes of the hedging instrument and the hedge item
(b) Hedge ineffectiveness recognised in P/L
(c) Information about FV of each class of financial asset and liability, along with:
(d) Comparable CA
(e) Description of how FV was determined
(f) Reconciliations of movements between levels of FV measurement hierarchy
additional disclosures for financial instruments whose FV is determined using
level 3 inputs including impacts on P/L, OCI and sensitivity analysis
(g) Information if FV cannot be reliably measured
(h) Disclosures of fair value are not required:
(i) When the carrying amount is a reasonable approximation of fair value,
for example, for financial instruments such as short-term trade
receivables and payables;
(ii) For an investment in equity instruments that do not have a quoted
market price in an active market, or derivatives linked to such equity
instruments, that is measured at cost in accordance with PAS 39 because
its fair value cannot be measured reliably; or
(iii) For a contract containing a discretionary participation feature if the fair
value of that feature cannot be measured reliably.
(8) Nature and extent of exposure to risks arising from financial instruments
e) Qualitative disclosures
i) Risk exposure for each type of financial instruments
ii) Management’s objectives, policies and process for managing those risks
iii) Changes from the prior period
f) Quantitative disclosures
i) Summary quantitative data about exposure to each risk at the reporting date
ii) Disclosures about credit risk, liquidity risk and market risk and how these risks are
managed
iii) Concentrations of risks
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 (1) Credit risks
(a) Maximum amount of exposure, description of collateral, information about
credit quality of financial assets that are neither past due nor impaired and
information about credit quality of FA whose terms have renegotiated
(b) Analytical disclosure for FA that are past due
(c) Information about collateral or other credit enhancements obtained
(2) Liquidity risk
(a) Maturity analysis of financial liabilities
(b) Description of approach to risk management
(3) Market risks
(a) Disclosure shall include:
(b) A sensitivity analysis of each type of market risk the entity is exposed to
(c) The methods and assumptions used in preparing the sensitivity analysis; and
(d) Changes from the previous period in the methods and assumptions used, and
the reasons for such changes.
iv) Transfers of financial assets
(1) The nature of the transferred assets.
(2) The nature of the risks and rewards of ownership to which the entity is exposed.
(3) A description of the nature of the relationship between the transferred assets
and the associated liabilities, including restrictions arising from the transfer on
the reporting entity’s use of the transferred assets.
(4) When the counterparty (counterparties) to the associated liabilities has (have)
recourse only to the transferred assets, a schedule that sets out the fair value of
the transferred assets, the fair value of the associated liabilities and the net
position (the difference between the fair value of the transferred assets and the
associated liabilities).
(5) When the entity continues to recognise all of the transferred assets, the carrying
amounts of the transferred assets and the associated liabilities.
(6) When the entity continues to recognise the assets to the extent of its continuing
involvement, the total carrying amount of the original assets before the transfer,
the carrying amount of the assets that the entity continues to recognise, and the
carrying amount of the associated liabilities.
(7) Transfer financial assets that are derecognised in their entirety
(8) Disclosures include:
(a) CA of the assets and liabilities recognised,
(b) FV of asset and liabilities that represent continuing involvement,
(c) Maximum exposure to loss from the continuing involvement as well as
maturity analysis of the undiscounted cash flows to repurchase the
derecognised financial assets.
(9) Additional disclosure for:
(a) Gain or loss recognised at the date of transfer of the assets
88
(b) Income or expenses recognised from the entity’s continuing involvement in
the derecognised financial assets as well as details of uneven distribution of
proceed from transfer activity throughout the reporting period

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PFRS 8 (Operating Segments)
I. Objectives
a) To require an entity to disclose information to enable users of its financial statements to
evaluate the nature and financial effects of the business activities in which it engages
and the economic environments in which it operates.
II. Scope
a) This standard shall apply:
i) the separate or individual financial statements of an entity:
(1) whose debt or equity instruments are traded in a public market (a domestic or
foreign stock exchange or an over-the-counter market, including local and
regional markets), or
(2) that files, or is in the process of filing, its financial statements with a securities
commission or other regulatory organisation for the purpose of issuing any class
of instruments in a public market; and
ii) the consolidated financial statements of a group with a parent:
(1) whose debt or equity instruments are traded in a public market (a domestic or
foreign stock exchange or an over-the-counter market, including local and
regional markets), or
(2) that files, or is in the process of filing, the consolidated financial statements with
a securities commission or other regulatory organisation for the purpose of
issuing any class of instruments in a public market.
III. Recognition and Measurement
a) An operating segment is a component of an entity:
i) that engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other
components of the same entity),
ii) whose operating results are regularly reviewed by the entity’s chief operating
decision maker to make decisions about resources to be allocated to the segment
and assess its performance, and
iii) for which discrete financial information is available
b) An operating segment may engage in business activities for which it has yet to earn
revenues
c) Aggregation Criteria
i) Two or more operating segments can be aggregated into one when:
(1) the nature of the products and services;
(2) the nature of the production processes;
(3) the type or class of customer for their products and services;
(4) the methods used to distribute their products or provide their services; and
(5) if applicable, the nature of the regulatory environment, for example, banking,
insurance or public utilities.

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 d) Quantitative thresholds
i) Its reported revenue, including both sales to external customers and intersegment
sales or transfers, is 10 per cent or more of the combined revenue, internal and
external, of all operating segments.
ii) The absolute amount of its reported profit or loss is 10 per cent or more of the
greater, in absolute amount, of:
(1) the combined reported profit of all operating segments that did not report a loss
and
(2) the combined reported loss of all operating segments that reported a loss.
iii) Its assets are 10 per cent or more of the combined assets of all operating segments.
e) Adjustments and eliminations made in preparing an entity’s financial statements and
allocations of revenues, expenses, and gains or losses shall be included in determining
reported segment profit or loss only if they are included in the measure of the
segment’s profit or loss that is used by the chief operating decision maker.
f) Only those assets and liabilities that are included in the measures of the segment’s
assets and segment’s liabilities that are used by the chief operating decision maker shall
be reported for that segment. If amounts are allocated to reported segment profit or
loss, assets or liabilities, those amounts shall be allocated on a reasonable basis.
g) An entity shall provide reconciliations of all of the following:
i) the total of the reportable segments’ revenues to the entity’s revenue
ii) the total of the reportable segments’ measures of profit or loss to the entity’s profit
or loss before tax expense (tax income) and discontinued operations. However, if an
entity allocates to reportable segments items such as tax expense (tax income), the
entity may reconcile the total of the segments’ measures of profit or loss to the
entity’s profit or loss after those items
iii) the total of the reportable segments’ assets to the entity’s assets
iv) the total of the reportable segments’ liabilities to the entity’s liabilities if segment
liabilities are reported in accordance with paragraph 23 of this standard
v) the total of the reportable segments’ amounts for every other material item of
information disclosed to the corresponding amount for the entity.
IV. Required Disclosures
a) General information:
i) factors used to identify the entity’s reportable segments, including the basis of
organization (for example, whether management has chosen to organize the entity
around differences in products and services, geographical areas, regulatory
environments, or a combination of factors and whether operating segments have
been aggregated), and
ii) types of products and services from which each reportable segment derives its
revenues

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iii) information about reported segment profit or loss, including specified revenues and
expenses included in reported segment profit or loss, segment assets, segment
liabilities and the basis of measurement
iv) reconciliations of the totals of segment revenues, reported segment profit or loss,
segment assets, segment liabilities and other material segment items to
corresponding entity amounts

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PFRS 9 (Financial Instruments)
I. Objectives
a) To set out requirements for recognition and measurement, impairment, derecognition
and general hedge accounting.
b) To carry forward the requirements in IAS 39 related to the recognition and
derecognition of financial assets and financial liabilities.
II. Scope
a) This Standard shall be applied to all types of financial instruments except:
i) Those interests in subsidiaries, associates and joint ventures that are accounted for
in accordance with PAS 27, PAS 28 or PAS 31. However, entities shall also apply this
Standard to all derivatives linked to interests in subsidiaries, associates or joint
ventures.
ii) Employers’ rights and obligations under employee benefit plans, to which PAS 19
applies.
iii) Insurance contracts as defined in PFRS 4 Insurance Contracts. However, this
Standard applies to derivatives that are embedded in insurance contracts if PAS 39
requires the entity to account for them separately.
iv) Financial instruments that are within the scope of PFRS 4 because they contain a
discretionary participation feature only exempt from applying to these features
paragraphs 15–32 and AG25–AG35 of this Standard regarding the distinction
between financial liabilities and equity instruments but subject to all other PAS 32
requirements.
v) Contracts and obligations under share-based payment transactions to which PFRS 2
applies, except for:
(1) When accounting for treasury share purchased, sold, issued or cancelled by
employee share option plans or similar arrangements
vi) It also applies to contracts to buy or sell a non-financial item that are within the
scope of PAS 39.
III. Recognition and Measurement
a) All financial instruments are initially measured at fair value plus or minus, in the case of
a financial asset or financial liability not at fair value through profit or loss,
transaction costs.
b) Two classifications of financial assets:
i) those measured at amortized cost
ii) those measured at fair value
(1) Gains and losses are either recognized either:
(a) entirely in profit or loss (fair value through profit or loss, FVTPL)
(b) in other comprehensive income (fair value through other comprehensive
income, FVTOCI).

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c) Equity investments should be classified as FVTPL, unless FVTOCI classification is elected
except for those equity investments for which the entity has elected to present value
changes in ‘other comprehensive income’.
i) If an equity investment is not held for trading, an entity can make an irrevocable
election at initial recognition to measure it at FVTOCI with only dividend income
recognised in profit or loss.
(1) A debt instrument is measured at amortized cost unless the asset is designated
at FVTPL under the fair value option if:
(a) is held within a business model whose objective is to hold the financial asset
to collect the contractual cash flows and
(b) has contractual terms that give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount
outstanding
(2) A debt instrument must be measured at FVTOCI, unless the asset is designated
at FVTPL under the fair value option.
(a) is held within a business model whose objective is achieved both by
collecting contractual cash flows and selling financial assets and
(b) has contractual terms that give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount
outstanding
(3) All other debt instruments must be measured at fair value through profit or loss
(FVTPL).
d) All derivatives in scope of PFRS 9, including those linked to unquoted equity
investments, are measured at fair value. Value changes are recognized in profit or loss
unless the entity has elected to apply hedge accounting by designating the derivative as
a hedging instrument in an eligible hedging relationship.
e) Embedded derivatives that under PAS 39 would have been separately accounted for at
FVTPL because they were not closely related to the host financial asset will no longer be
separated. Instead, the contractual cash flows of the financial asset are assessed in their
entirety, and the asset as a whole is measured at FVTPL if the contractual cash flow
characteristics test is not passed. Embedded derivatives not closely related to financial
liabilities will be accounted for separately at fair value in the case of financial liabilities
not designated at FVTPL (as in PAS 39).
f) The hedge accounting requirements in PFRS 9 are optional. If certain eligibility and
qualification criteria are met, hedge accounting allows an entity to reflect risk
management activities in the financial statements by matching gains or losses on
financial hedging instruments with losses or gains on the risk exposures they hedge.
i) Three types of hedging relationships:
(1) fair value hedge; (
(2) cash flow hedge and
(3) hedge of a net investment in a foreign operation
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 ii) A hedging relationship qualifies for hedge accounting only if all of the following
criteria are met:
(1) the hedging relationship consists only of eligible hedging instruments and eligible
hedged items;
(2) at the inception of the hedging relationship there is formal designation and
documentation of the hedging relationship and the entity’s risk management
objective and strategy for undertaking the hedge;
(3) the hedging relationship meets all of the hedge effectiveness requirements.
iii) In order to qualify for hedge accounting, the hedge relationship must meet the
following effectiveness criteria:
(1) there is an economic relationship between the hedged item and the hedging
instrument; (
(2) the effect of credit risk does not dominate the value changes that result from
that economic relationship; and
(3) the hedge ratio of the hedging relationship is the same as that actually used in
the economic hedge.
g) The impairment model in PFRS 9 is based on expected credit losses and it applies
equally to debt instruments measured at amortised cost or FVTOCI, lease receivables,
contract assets within the scope of PFRS 15 and certain written loan commitments and
financial guarantee contracts.
i) Expected credit losses (with the exception of purchased or original credit-impaired
financial assets) are required to be measured through a loss allowance at an amount
equal to:
(1) the 12-month expected credit losses or
(2) full lifetime expected credit losses. The latter applies if credit risk has increased
significantly since initial recognition of the financial instrument
ii) Interest revenue is calculated by applying the effective interest rate to the
amortised cost (which is the gross carrying amount minus loss allowance) for credit-
impaired financial assets while for all other instruments, it is calculated based on the
gross carrying amount.

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PFRS 10 (Consolidated Financial Statements)
I. Objectives
a) IFRS 9 sets out requirements for recognition and measurement, impairment,
derecognition and general hedge accounting.
II. Scope
a) This standard:
i) requires an entity (the parent) that controls one or more other entities (subsidiaries)
to present consolidated financial statements;
ii) defines the principle of control, and establishes control as the basis for
consolidation;
iii) sets out how to apply the principle of control to identify whether an investor
controls an investee and therefore must consolidate the investee; and
iv) sets out the accounting requirements for the preparation of consolidated financial
statements.
III. Key Principles
a) An investor controls an investee when the investor is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee
b) An investing entity is an entity that:
i) obtains funds from one or more investors for the purpose of providing investment
management services;
ii) its business purpose is to invest funds solely for returns from capital appreciation,
investment income, or both; and
iii) measures and evaluates the performance of its investments on a fair value basis
c) This standard determines the principle of control and the control basis for identifying
entities that are consolidated in the consolidated financial statements. Requirements to
apply control principle:
i) in circumstances when voting rights or similar rights give an investor power,
including situations where the investor holds less than a majority of voting rights
and in circumstances involving potential voting rights
ii) in circumstances when an investee is designed so that voting rights are not the
dominant factor in deciding who controls the investee, such as when any voting
rights relate to administrative tasks only and the relevant activities are directed by
means of contractual arrangements
iii) in circumstances involving agency relationships
iv) in circumstances when the investor has control over specified assets of an investee.
d) Presentation of Consolidated Financial Statements

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 i) When the controlling entity prepares the consolidated financial statements, the
entity must use uniform accounting principles on transactions and other events in
similar circumstances.
ii) Intercompany transactions and balances are to be eliminated.
iii) The consolidated financial statement shall present the non-controlling interest in
subsidiaries in the equity section of the financial position separately from the
parent’s equity.
e) Loss of control
i) When the parent or controlling entity losses its control over its subsidiary then the
parent shall:
(1) derecognize the assets and liabilities of the former subsidiary from the
consolidated statement of financial position
(2) recognize any investment retained in the former subsidiary at its fair value when
control is lost and subsequently accounts for it and for any amounts owed by or
to the former subsidiary in accordance with relevant IFRSs. That fair value shall
be regarded as the fair value on initial recognition of a financial asset in
accordance with IFRS 9 or, when appropriate, the cost on initial recognition of an
investment in an associate or joint venture
(3) recognize the gain or loss associated with the loss of control attributable to the
former controlling interest.

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PFRS 11 (Joint Arrangements)
I. Objective
a) To prescribe a single consolidation model for all entities based on control, irrespective
of the nature of the investee (i.e., whether an entity is controlled through voting rights
of investors or through other contractual arrangements as is common in special purpose
entities).
II. Scope
a) Applies to all entities that are a party to a joint arrangement
III. Key Principles
a) Joint arrangement
i) Characteristics
(1) The parties are bound by a contractual arrangement; and
(2) The contractual arrangement gives two or more of the parties joint control of
the arrangement.
b) Contractual Agreement
i) Often in writing, sets out the terms upon which the parties participate in the activity
that is the subject of the arrangement.
(1) the purpose, activity and duration of the joint arrangement.
(2) how the members of the board of directors, or equivalent governing body, of the
joint arrangement, are appointed.
(3) the decision-making process: the matters requiring decisions from the parties,
the voting rights of the parties and the required level of support for those
matters. The decision-making process reflected in the contractual arrangement
establishes joint control of the arrangement
(4) the capital or other contributions required of the parties.
(5) how the parties share assets, liabilities, revenues, expenses or profit or loss
relating to the joint arrangement.
c) Joint control – the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require the unanimous consent
of the parties sharing control
IV. Two types
a) Joint operations – the parties have:
i) joint control of the arrangement (joint operators)
ii) rights to particular assets, and obligations for particular liabilities, relating to the
arrangement
*A joint operator applies the PFRS standards in recognizing and measuring its share of
the assets and liabilities.
b) Joint venture – the parties have:
i) joint control of the arrangement (joint venturers)
ii) rights to the net assets of the arrangement
*A joint venture uses the equity method to account for its interest in the joint venture.

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PFRS 12 (Disclosure of Interests in Other Entities)
I. Objective
a) To require information to be disclosed in an entity’s financial statements that will enable
users of those statements to evaluate the nature of, and risks associated with, the
entity’s interests in other entities as well as the effects of those interests on the entity’s
financial position, financial performance and cash flows.
II. Scope
a) Applies to:
i) subsidiaries
ii) joint arrangements
iii) associates
iv) unconsolidated structured entities
b) Does not apply to:
i) post-employment benefit plans or other long-term employee benefit plans (PAS 19)
ii) an entity’s separate financial statements (PAS 27)
iii) an interest held by an entity that participates in, but does not have joint control of, a
joint arrangement unless that interest results in significant influence over the
arrangement or is an interest in a structured entity.
iv) an interest in another entity that is accounted for in accordance with PFRS 9 Financial
Instruments. However, an entity shall apply this PFRS:
(1) when that interest is an interest in an associate or a joint venture that, in
accordance with PAS 28 Investments in Associates and Joint Ventures, is measured
at fair value through profit or loss
(2) when that interest is an interest in an unconsolidated structured entity
III. Required Disclosures:
a) Significant judgments and assumptions
i) significant judgments and assumptions it has made in determining:
(1) that it has control of another entity
(2) that it has joint control of an arrangement or significant influence over another
entity
(3) the type of joint arrangement when the arrangement has been structured through
a separate vehicle.
b) Interests in subsidiaries
i) composition of the group
ii) interest that non-controlling interests have in the group’s activities and cash flows
iii) nature and extent of significant restrictions on its ability to access or use assets, and
settle liabilities, of the group
iv) nature of, and changes in, the risks associated with its interests in consolidated
structured entities
v) consequences of changes in its ownership interest in a subsidiary that do not result in
a loss of control
vi) consequences of losing control of a subsidiary during the reporting period

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c) Interests in unconsolidated subsidiaries (investment entities)
i) the subsidiary’s name
ii) principal place of business of the subsidiary
iii) proportion of ownership interest held by the investment entity and, if different, the
proportion of voting rights held.
d) Interests in joint arrangements and associates
i) nature, extent and financial effects of its interests in joint arrangements and
associates, including the nature and effects of its contractual relationship with the
other investors with joint control of, or significant influence over, joint arrangements
and associates
ii) the nature of, and changes in, the risks associated with its interest in joint ventures
and associates
e) Interests in unconsolidated structured entities
i) nature and extent of its interests in unconsolidated structured entities
ii) nature of, and changes in, the risks associated with its interests in unconsolidated
structured entities
f) Nature of interests
i) how it has determined which structured entities it has sponsored;
ii) income from those structured entities during the reporting period, including a
description of the types of income presented; and
iii) carrying amount (at the time of transfer) of all assets transferred to those structured
entities during the reporting period.
g) Nature of risks
i) carrying amounts of the assets and liabilities recognized in its financial statements
relating to its interests in unconsolidated structured entities.
ii) line items in the statement of financial position in which those assets and liabilities
are recognized
iii) amount that best represents the entity’s maximum exposure to loss from its interests
in unconsolidated structured entities

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PFRS 13 (Fair Value Measurement)
I. Objective
a) To establish a definition of fair value, provide guidance on how to determine fair value
and prescribe the required disclosures about fair value measurements. However, IFRS
13 does not stipulate which items should be measured or disclosed at fair value.
II. Scope
a) Applies when another PFRS requires or permits fair value measurements or disclosures
about fair value measurements (and measurements, such as fair value less costs to sell,
based on fair value or disclosures about those measurements), except as specified in
paragraphs 6 and 7.
i) The measurement and disclosure requirements of this IFRS do not apply to the
following:
(1) share-based payment transactions within the scope of PFRS 2
(2) leasing transactions within the scope of PAS 17; and
(3) measurements that have some similarities to fair value but are not fair value,
such as net realisable value in PAS 2 or value in use in PAS
ii) The disclosures required by this PFRS are not required for the following:
(1) plan assets measured at fair value in accordance with PAS 1;
(2) retirement benefit plan investments measured at fair value in accordance with
PAS 26; and
(3) assets for which recoverable amount is fair value less costs of disposal in
accordance with IAS 36.
III. Required Disclosures
a) significant judgements and assumptions such as how control, joint control and
significant influence has been determined;
b) interests in subsidiaries including details of the structure of the group, risks associated
with consolidated structured entities, restrictions on use of assets and settlement of
liabilities; changes in ownership levels, non-controlling interests in the group, etc.;
c) interests in joint arrangements and associates – the nature, extent and financial effects
of interests in joint arrangements and associates(including names, details and
summarized financial information) and the risks associated with such entities;
d) interests in unconsolidated structured entities – the nature and extent of interests in
unconsolidated structured entities and the nature of, and changes in, the risks
associated with its interests in unconsolidated structured entities;
e) where an entity is an investment entity, PFRS 12
f) Additional disclosures, including:
i) the fact that the entity is an investment entity;
ii) information about significant judgements and
iii) assumptions it has made in determining that it is an
iv) investment entity, and information where an entity
v) becomes, or ceases to be, an investment entity

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PFRS 14 (Regulatory Deferral Accounts)
I. Objective
a) To specify the financial reporting requirements for 'regulatory deferral account balances'
that arise when an entity provides good or services to customers at a price or rate that is
subject to rate regulation
II. Scope
a) entity conducts rate-regulated activities
b) entity that recognised amounts in its previous GAAP financial statements that meet the
definition of regulatory deferral account balances
III. Recognition and Measurement:
a) Changes in accounting policies
i) Entities are permitted to change their accounting policies for regulatory deferral
account balances in accordance with PAS 8, but only if:
(1) the change makes the financial statements more relevant and no less reliable, or
(2) more reliable and not less relevant, to the economic decision-making needs of
users of the entity's financial statements.
*An entity is not permitted to change accounting policies to start to recognize
regulatory deferral account balances
b) Interaction with other Standards
i) The requirements of PAS 10 are applied when determining which events after the end
of the reporting period should be taken into account in the recognition and
measurement of regulatory deferral account balances
ii) Deferred tax assets and liabilities arising from regulatory deferral account balances
are presented separately from total deferred tax amounts and movements in those
deferred tax balances are presented separately from tax expense (income)
iii) Entities are required to present an additional basic and diluted earnings per share that
excludes the impacts of the net movement in regulatory deferral account balances
iv) Regulatory deferral account balances are included in the carrying amount of any
relevant cash-generating unit (CGU) and are treated in the same way as other assets
and liabilities where an impairment loss arises
v) The entity's accounting policies for regulatory deferral account balances are used in
applying the acquisition method
vi) The measurement requirements of PFRS 5 do not apply to regulatory deferral account
balances, and modifications are made to the presentation of information about
discontinued operations and disposal groups in relation to such balances
vii) The entity's accounting policies in respect of regulatory deferral account balances are
required to be applied in an entity's consolidated financial statements or in the
determination of equity accounted information of associates or joint ventures,
notwithstanding that the entity's investees may not have recognized regulatory
deferral account balances in their financial statements

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 viii) Separate disclosure of regulatory deferral account balances and net movements in
those balances recognised in profit or loss or other comprehensive income are
required for various PFRS 12 disclosures
IV. Presentation
a) The impact of regulatory deferral account balances are separately presented in an entity's
financial statements.
b) Separate line items are presented in the statement of financial position for the total of all
regulatory deferral account debit balances, and all regulatory deferral account credit
balances
c) Regulatory deferral account balances are not classified between current and non-current,
but are separately disclosed using subtotals
d) The net movement in regulatory deferral account balances are separately presented in
the statement of profit or loss and other comprehensive income using subtotals
V. Required Disclosures
a) the nature of, and risks associated with, the rate regulation that establishes the price(s)
the entity can charge customers for the goods or services it provides.
i) including information about the entity's rate-regulated activities and the rate-setting
process
b) the identity of the rate regulator(s), and the impacts of risks and uncertainties on the
recovery or reversal of regulatory deferral balance accounts the effects of rate regulation
on the entity's financial statements
c) including the basis on which regulatory deferral account balances are recognised, how
they are assessed for recovery, a reconciliation of the carrying amount at the beginning
and end of the reporting period, discount rates applicable, income tax impacts and details
of balances that are no longer considered recoverable or reversible.

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PFRS 15 (Revenue from Contracts with Customers)
I. Objective
a) To prescribe the accounting treatment for revenue arising from sales of goods and
rendering of services to a customer.
b) Revenue that does not arise from a contract with a customer is not in the scope of this
standard. For example revenue arising from dividends, and donations received would be
recognised in accordance with other standards.
II. Scope:
a) Does not apply to:
i) lease contracts within the scope of PFRS 16
ii) insurance contracts within the scope of PFRS
iii) financial instruments and other contractual rights or obligations within the scope of
PFRS 9, PFRS 10, PFRS 11, PAS 27 and PAS 28.
iv) non-monetary exchanges between entities in the same line of business to facilitate
sales to customers or potential customers
III. Recognition and Measurement:
a) Contracts
i) the parties to the contract have approved the contract (in writing, orally or in
accordance with other customary business practices) and are committed to perform
their respective obligations
ii) the entity can identify each party’s rights regarding the goods or services to be
transferred
iii) the entity can identify the payment terms for the goods or services to be transferred
iv) the contract has commercial substance
v) it is probable that the entity will collect the consideration to which it will be entitled
in exchange for the goods or services that will be transferred to the customer.
b) Performance obligations
i) a good or service (or a bundle of goods or services) that is distinct
ii) a series of distinct goods or services that are substantially the same and that have
the same pattern of transfer to the customer
c) Recognize revenue when the entity satisfies a performance obligation
i) Transferring a promised good or service to a customer - obtains control of that asset.

d) Costs to fulfill a contract

i) Not within the scope of another Standard - recognize an asset from the costs incurred
to fulfill a contract only if the cost:
(1) directly relates to a contract or to an anticipated contract that the entity can
specifically identify
(2) generate or enhance resources of the entity that will be used in satisfying (or in
continuing to satisfy) performance obligations in the future
(3) are expected to be recovered.
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IV. Presentation:
a) Statement of financial position
i) As a contract asset or a contract liability, depending on the relationship between the
entity’s performance and the customer’s payment.
ii) Present any unconditional rights to consideration separately as a receivable.

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PFRS 16 (Leases)
I. Objective
a) To establish principles for the recognition, measurement, presentation and disclosure of
leases, with the objective of ensuring that lessees and lessors provide relevant
information that faithfully represents those transactions.
II. Scope:
a) Applies to all leases, including subleases, except for:
i) leases to explore for or use minerals, oil, natural gas and similar non-regenerative
resources
ii) leases of biological assets held by a lessee (PAS 41)
iii) service concession arrangements
iv) licences of intellectual property granted by a lessor
v) rights held by a lessee under licensing agreements for items such as films, videos,
plays, manuscripts, patents and copyrights within the scope of PAS 38
III. Recognition and Measurement:
a) Recognition exemptions
i) a lessee may elect to account for lease payments as an expense on a straight-line
basis over the lease term or another systematic basis for the following two types of
leases:
(1) leases with a lease term of 12 months or less and containing no purchase options
– this election is made by class of underlying asset
(2) leases where the underlying asset has a low value when new – this election can
be made on a lease-by-lease basis.
b) Lease
i) conveys the right to control the use of an identified asset for a period of time in
exchange for consideration
*Control is conveyed where the customer has both the right to direct the identified asset’s
use and to obtain substantially all the economic benefits from that use.
ii) An asset is typically identified by being explicitly specified in a contract, but an asset
can also be identified by being implicitly specified at the time it is made available for
use by the customer.
c) Separating components of a contract
i) For a contract that contains a lease component and additional lease and non-lease
components, lessees shall allocate the consideration payable on the basis of the
relative stand-alone prices, which shall be estimated if observable prices are not
readily available.
ii) Lessors shall allocate consideration in accordance with PFRS 15
d) Accounting Treatment (Lessee)
i) Recognizes a right-of-use asset and a lease liability upon lease commencement
ii) The right-of-use asset - initially measured at the amount of the lease liability plus any
initial direct costs incurred by the lessee.

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 iii) After lease commencement, a lessee shall measure the right-of-use asset using a cost
model, unless:
(1) the right-of-use asset is an investment property and the lessee fair values its
investment property under PAS 40
(2) the right-of-use asset relates to a class of PPE to which the lessee applies PAS 16’s
revaluation model, in which case all right-of-use assets relating to that class of PPE
can be revalued
e) Lease liability - present value of the lease payments payable over the lease term,
discounted at the rate implicit in the lease if that can be readily determined.
i) If that rate cannot be readily determined, the lessee shall use their incremental
borrowing rate
(1) Variable lease payments (depends on an index or a rate)
(a) included in the initial measurement of the lease liability
(b) initially measured using the index or rate as at the commencement date.
(2) Variable lease payments that are not included in the measurement of the lease
liability are recognised in profit or loss in the period in which the event or
condition that triggers payment occurs, unless the costs are included in the
carrying amount of another asset under another Standard
ii) The lease liability is subsequently re-measured to reflect changes in:
(1) the lease term (using a revised discount rate)
(2) the assessment of a purchase option (using a revised discount rate)
(3) the amounts expected to be payable under residual value guarantees (using
an unchanged discount rate
(4) future lease payments resulting from a change in an index or a rate used to
determine those payments (using an unchanged discount rate).
*The remeasurements are treated as adjustments to the right-of-use asset.
f) Accounting Treatment (Lessors)
i) Classify each lease as a/an:
(1) operating lease
(2) finance lease
(i) transfers substantially all the risks and rewards incidental to ownership of
an underlying asset
ii) A lessor recognizes:
(1) assets held under a finance lease as a receivable at an amount equal to the
net investment in the lease upon lease commencement
(2) finance income over the lease term of a finance lease, based on a pattern
reflecting a constant periodic rate of return on the net investment.
(3) selling profit or loss in accordance with its policy for outright sales at the
commencement date
(4) operating lease payments as income on a straight-line basis

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