VAS vs IFRS COMPARISON

IAS 17 7 The effects of changes in Foreign Exchange rates – VAS 10 vs... IAS 01 15 Consolidated Financial Statements & Accounting for Investments in subsidiaries – VAS 25 vs.. t phase p

VAS vs IFRS

COMPARISON

IFRS – VAS: Significant

differences

IFRS: There are 38

Standards VAS: There are 26 Standards

List of IFRS – VAS Comparison

1 Inventories – VAS 02 vs IAS 02

2 Tangible fixed assets – VAS 03 vs IAS 16

3 Intangible fixed assets – VAS 04 vs IAS 38

4 Revenue and Other Income – VAS 14 vs IAS 18

5 Framework – VAS 01 vs IFRS Framework

6 Leases – VAS 06 vs IAS 17

7 The effects of changes in Foreign Exchange rates – VAS 10 vs IAS 21

8 Construction contract – VAS 15 vs IAS 11

9 Borrowing costs – VAS 16 vs IAS 23

10 Cash flow statements – VAS 24 vs IAS 07

List of IFRS – VAS Comparison

(cont’)

11 Investment Property – VAS 05 vs IAS 40

12 Accounting for Investments in associates – VAS 07 vs IAS 28

13 Financial Reporting for Interests in joint ventures –VAS 08 vs IAS 31

14 Presentation of Financial Statements – VAS 21 vs IAS 01

15 Consolidated Financial Statements & Accounting for Investments in

subsidiaries – VAS 25 vs IAS 27

16 Related parties disclosures – VAS 26 vs IAS 24

17 Income Tax – VAS 17 vs IAS 12

18 Disclosures in the Financial Statements of Banks and similar Financial

Institutions – VAS 22 vs IAS 30

19 Events after the Balance Sheet date – VAS 23 vs IAS 10

List of IFRS – VAS Comparison

(cont’)

20 Interim Financial Reporting – VAS 27 vs IAS 34

21 Segment Reporting – VAS 28 vs IAS 14

22 Changes in Accounting policies, accounting estimates and errors – VAS

29 vs IAS 8

23 Business combinations – VAS 11 vs IFRS 3

24 Provisions, Contingent Liabilities and Contingent Assets – VAS 18 vs

IAS 37

25 Insurance contracts – VAS 19 vs IFRS 4

26 Earning per share – VAS 30 vs IAS 33

Inventories – VAS 02 vs IAS 02

costs Silent. (par.17) In limited circumstances, borrowing

costs are included in the cost of inventories These circumstances are identified

in the allowed alternative

treatment in IAS 23-

Inventories – VAS 02 vs IAS 02

inventories costing with equal ranking

•Specific identification

•Weighted average

•First-in, first-out

(par 23-25) In IAS 2, only 3 methods are mentioned

Prohibition of LIFO as

a cost formula

a tangible fixed assets:

•It meets the value criteria under the prevailing regulations (i.e greater than MVND 10)

(par.7) IAS only mentioned two criteria for recognition

of tangible fixed asset:

• it is probable that future economic benefits

associated with the item will flow to the entity; and

• the cost of the item can be measured reliably

Tangible fixed assets – VAS 03 vs IAS

allowed to be re-valued in accordance with state regulations subsequently

Paragraph 29:

• Revalued amount

is accepted as an allowed alternative treatment for

measurement subsequent to initial recognition Decision is made

by the company’s

: • Not specified • When the recoverable amount has declined below the carrying

amount, the carrying amount should be reduced to the recoverable amount

• The writing- down should be recognized as an expense so far

as it exceeds the amount that can

be charged to the revaluation surplus (i.e the amount held in the revaluation surplus relating the same assets)

Tangible fixed assets – VAS 03 vs IAS

16 (4/4)

Area of

difference VAS IAS

Impairmen

t (cont.): Not specified. • Write circumstances that led to the back when the

write-down cease to exist and the new circumstances are expected to persist

• The estimated useful life is greater than one year

• It meets the current regulation in term of value

(par.19) IAS only requires two criteria:

•It is probable that the future economic

benefits that are attribute to the asset will flow to the enterprise

•The cost of the asset can be measured

reliably

Intangible fixed assets – VAS 04 vs

IAS 38 (2/5)

Area of

difference VAS IAS

Recognition

of expenses: The following expenditures are to be either recorded as expenses

or amortised over 3 years maximum:

• Establishment costs

• Expenditure on training activities, expenditure on advertising and promotional activities incurred in the pre- operating expenses

t phase (par.40) In addition to 6

criteria which is similar to IAS, VAS 04 has one more requirement:

compliance with current regulation of value and useful life for intangible fixed asset

(par.57) 6 criteria for recognition of an

development phase

Intangible fixed assets – VAS 04 vs

(par.74,75) After initial recognition, an intangible asset shall be carried at its cost less any accumulated

amortisation and any

accumulated impairment losses

is finite, not exceed twenty years

(par.88) The useful life may be finite or indefinite

An intangible asset shall

be regarded as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity

Revenue and Other Income – VAS 14

receivable, the difference is recognized as interest revenue

• Disposals and sales of fixed assets;

• Penalty charged against a customer for contract breach

• Insurance compensation received;

Silent

Revenue and Other Income – VAS 14

• Accounts payable whose payee no longer exist;

• Tax reimbursement and reduction;

• Others

Silent

Revenue and Other Income – VAS 14

vs IAS 18 (4/4)

Area of

Disclosure: (par.34) The

financial statements should disclose:

(d) Other incomes, which requires

specific disclosures of the categories

(par.35) Not mention point (d) like VAS

Framework – VAS 01 vs IFRS

shareholders capital, retained earnings and reserves

at historical costs….Cost

is not changed unless other wise required under specific standards

(par.100) A number of different

measurement bases are employed to different degrees and in varying combinations in financial statements They include the following:

• Historical cost…

• Current cost…

• Realisable value…

Leases – VAS 06 vs IAS 17 (1/2)

(par.4) the earlier

of the date the right to use the

transferred or the date the lease

accordance with

(par.4) the earlier of the date of

the lease agreement or of a commitment by the parties

to the principal provisions of the lease

at the inception of the lease, causes the aggregate present value of the minimum lease payments and the un-guaranteed

residual value to be equal to the fair value of the leased asset

(par.4) is the discount rate

that, at the inception of the lease, causes the aggregate present value of (a) the minimum lease payments and (b) the un-guaranteed residual value to be equal to the sum of (i) the fair value of the leased asset and (ii) any initial direct costs of the lessor

The Effects of Changes in Foreign Exchange Rates – VAS 10 vs IAS

… (c) becomes a party to an

unperformed foreign exchange contract

…

(par.20)

Silent

Silent

(par.21) A foreign currency

transaction shall be recorded, on initial recognition in the

of the transaction

The Effects of Changes in Foreign

Exchange Rates – VAS 10 vs IAS

Difference arising on the settlement or

on the retranslation of monetary items at rates different to those at which they were originally recorded should be dealt with as follows:

• During the construction stage, to record cumulatively and represented

as a separate component

on the balance sheet and can be amortized when construction work is completed (over a maximum period of 5 years)

• Only course of business is implied The accounting treatment is similar

to point 2 of VAS 10

The Effects of Changes in Foreign

Exchange Rates – VAS 10 vs IAS

• Not mentioned since being treated in IAS

39

The Effects of Changes in Foreign

Exchange Rates – VAS 10 vs IAS

economy, in which case revenue, income and

(par.42) The results and financial position of an entity whose functional currency is the currency

of a hyperinflationary economy shall be translated into a different presentation currency using the following procedures:

(a) all amounts (ie assets, liabilities,

expenses, including comparatives) shall be translated at the closing

The Effects of Changes in Foreign

Exchange Rates – VAS 10 vs IAS

(par.42) -continued

(b) when amounts are translated into the currency of a non-hyperinflationary economy, comparative amounts shall be those that were presented as current year amounts in the relevant prior year financial statements (ie not adjusted for subsequent changes in the price level or subsequent changes in exchange rates).

The Effects of Changes in Foreign

Exchange Rates – VAS 10 vs IAS

enterprise is

domiciled, the reason

for using a different

currency should be

disclosed, even when

(par.53) When the

presentation currency is different

from the functional

currency, that fact

shall be stated, together with

disclosure of the functional currency and the reason for

Silent (par.36) When it is probable that total contract

costs will exceed total contract revenue, the expected loss shall be recognised as an expense immediately

(par.37) The amount of such a loss is determined irrespective of:

(a)whether work has commenced on the contract; (b)the stage of completion of contract activity; or (c) the amount of profits expected to arise on other contracts which are not treated as a single construction contract in accordance with

paragraph 9

Borrowing Costs – VAS 16 vs

IAS 23 (1/3)

Area of

Definition: Same as IAS except for:

no mention about exchange differences on foreign currency borrowings as an adjustment to interest costs.

Borrowing costs include:

• interest on bank overdrafts and borrowings;

• amortization of discounts or premiums on borrowings;

• amortization of ancillary costs incurred in the arrangement of borrowings;

• finance charges on finance leases; and

• exchange differences on foreign currency borrowings where they are regarded as an adjustment to

Benchmark treatment - expense all borrowing costs

in the period in which they are incurred.

Alternative allowed treatment - borrowing costs

in relation to the acquisition, construction and production

of qualifying assets should

be capitalized

Borrowing Costs – VAS 16 vs IAS

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to

an insignificant risk of changes in value

Cash flow Statements – VAS 24 vs

Not specified (par.8) Bank overdrafts are repayable on demand and

form an integral part of an enterprises’ cash management.

Bank overdrafts are included in cash equivalent for cash flow preparation purposes.

Interest paid are classified

Cash flow Statements – VAS 24 vs

Cash flows arising from taxes

on income are normally classified as operating

Cash flow arising from taxes on income are normally classified as operating, unless they can

be specified with financing

or investing activities.

Note: Fair value must be applied for the operating lease classified as IP.

Investment Property – VAS 05 vs IAS

40 (2/2)

Impairment Not mention. Impairments of investment

property are recognized in accordance with IAS 36

Transfers

to and

from IP

No difference arises due to all IPs are recorded at cost

Differences might arise

E.g PPE recorded at cost, transferred to IP and accounted for at fair value Difference is the book value of PPE and its fair value at transfer

Accounting for Investments in

Associates – VAS 07 vs IAS 28 (1/2)

Accounting for Investments in

Associates – VAS 07 vs IAS 28 (2/2)

Financial Reporting for Interests in

to be applied for the whole category of investments.

Presentation of Financial Statements –

Complete set of FSs includes:

Presentation of Financial Statements –

Not mention Require to disclose on the

face of the balance sheet:

Minority interest is presented within equity

Pre-tax gain or loss on disposal of assets or settlements of liabilities

discontinuing operations

Require certain items to

be disclosed on the face:

Deductions, Net revenue,

expenses, Management and admin expenses, Other income, Other expenses

Not require

Presentation of Financial Statements –

- Write-down of inventories, PPE and reversals

- Restructuring of an entity and reversals of any provisions for the costs of restructuring

- Disposals of items of PPE and equipment

capital information on the Balance sheet or in the Notes.

judgment and key sources

of estimated uncertainty made by management

Consolidated Financial Statements

and Accounting for Investment in

Subsidiaries – VAS 25 vs IAS 27 (1/3)

Recognition and Measurement

Full consolidation

Consolidated Financial Statements

and Accounting for Investment in

Subsidiaries – VAS 25 vs IAS 27 (2/3)

Separate

FSs Cost method. Two options: Cost method or IAS 39 Financial

Instruments: Recognition and Measurement,

provided that:

- applied for the whole category of investments, and

- investments accounted for as IAS 39 in the

separate FSs must be accounted as so in the consolidated FSs

Consolidated Financial Statements

and Accounting for Investment in

Subsidiaries – VAS 25 vs IAS 27 (3/3)

policies on the grounds that it is impracticable to make them the same

value of each class of its financial assets and liabilities as required by

Instruments: Disclosure and Presentation

Business combinations – VAS 11 vs

IFRS 03

Area of

Goodwill Goodwill (with large

amount) shall be amortized over useful life but not over 10 years

Goodwill shall not be amortized, instead the acquirer shall test it for impairment annually or more frequently if needed.