International Accounting Standards

1. International Accounting Standards • IAS 1 • IAS 2 • IAS 4 • IAS 18

2. IAS In order to have uniformity in the way in which accounting statements are presented, accounting organizations in the developed worlds in 1973 formed international accounting standards committee (IASC). An older set of standards stating how particular types of transactions and other events should be reflected in financial statements The objectives of the IAS Board (IASB) are to : Formulate and publish accounting standards to be used in the presentation of financial statements. Promote their worldwide acceptance and observance. Work to improve and harmonise regulations, accounting standards and procedures which relate to financial statements.

3. Ias 1 The objective is to recommend the starting point for presentation of general purpose statements, to ensure comparability both with the entity’s previous financial statements and other entities’ financial statements. IAS 1 lays down the overall framework and responsibilities for the presentation of financial statements , structure and minimum requirements for the content of the financial statements. The objective of general purpose financial statements is to provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions. To meet that objective, financial statements provide information about an entity's: • Assets. • Liabilities. • Equity. • Income and expenses, including gains and losses. • Other changes in equity. • Cash flows. Presentation of Financial Statements

4. Ias2 The objective of IAS 2 is to prescribe the accounting treatment for inventories. It provides guidance for determining the cost of inventories and for subsequently recognising an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories The basic principles of IAS 2 is that inventories should be valued at a lower cost and net realizable value. The cost of inventories should include: • All cost of purchases • Cost of conversion • Other costs incurred in bringing the inventories to their present location and condition. Accounting For Inventories

5. Ias 4 Depreciation is the part of the cost of a fixed asset that is consumed during the period it is used by the business Assets may be depreciated for a number of reasons such as : • Wear and tear – where the asset is worn out • Obsolescence – where assets have been replaced by updated technology • Passage of time – assets acquire for a limited period of time • Exhaustion – mines and oil wells depreciate as their minerals are extracted from them There are two depreciation methods • Straight line • Reducing balance Depreciation Accounting

6. Ias 4 Withdrawn in 1999 and replaced by IAS 16,22 and 38 The objective of IAS 16 is to prescribe the accounting treatment for property, plant, and equipment. The principal issues are the timing of recognition of assets, the determination of their carrying amounts, and the depreciation charges to be recognised in relation to them. The objective of IAS 22 (Revised 1993) is to prescribe the accounting treatment for business combinations. The Standard covers both an acquisition of one enterprise by another (an acquisition) and also the rare situation where an acquirer cannot be identified (a uniting of interests) The objective of IAS 38 is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another IAS. The Standard requires an enterprise to recognise an intangible asset if, and only if, certain criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires certain disclosures regarding intangible assets. Depreciation Accounting

7. Ias 18 Revenue is income that arises in the course of ordinary activities of an entity. The objective of this standard is to prescribe the accounting treatment of revenue arising from certain types of transactions and events. The primary issue in accounting for revenue is determining when to recognise revenue. Revenue is recognised when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably. This Standard identifies the circumstances in which these criteria will be met and, therefore, revenue will be recognised. It also provides practical guidance on the application of these criteria This Standard shall be applied in accounting for revenue arising from the following transactions and events: • the sale of goods; • the rendering of services • the use by others of entity assets yielding interest, royalties and dividends. REVENUE IS THE GROSS INFLOW OF ECONOMIC BENEFITS DURING THE PERIOD ARISING IN THE COURSE OF THE ORDINARY ACTIVITES OF AN ENTITYWHEN THOSE INFLOWS RESULT IN INCREASES IN EQUITY, OTHER THAN INCREASES RELATING TO CONTRIBUTIONS FROM EQUITY PARTICIPANTS. Revenue

8. remember IAS 1 lays down the overall framework and responsibilities for the presentation of financial statements , structure and minimum requirements for the content of the financial statements IAS 2 -The cost of inventories should include: • All cost of purchases • Cost of conversion • Other costs incurred in bringing the inventories to their present location and condition. There are two depreciation methods • Straight line • Reducing balance REVENUE IS THE GROSS INFLOW OF ECONOMIC BENEFITS DURING THE PERIOD ARISING IN THE COURSE OF THE ORDINARY ACTIVITES OF AN ENTITYWHEN THOSE INFLOWS RESULT IN INCREASES IN EQUITY, OTHER THAN INCREASES RELATING TO CONTRIBUTIONS FROM EQUITY PARTICIPANTS.

9. Thank you • Ivanna, Lillian and Michellene would like to thank you for looking at our presentation • We hope you enjoyed it and are more educated about international accounting standards 1, 2, 4 and 18. • More information is available in the accounting text books chapter 18 • Thanks you and enjoy your day  • Remember study hard!