1 Biological Assets.

The International Accounting Standard 41 (IAS 41) states that a

biological asset is any living plant or animals owned by the business,
and are typically measured at fair value minus selling costs.
Initial Recognition
✓ The business controls the biological assets because of a past event
✓ It is probable that the business will get future economic benefits from them
✓ Fair value or cost of the biological asset can be measured reliably

Measurement
The standard generally requires biological assets to be
measured at fair value less costs to sell.
Gain – included in profit or loss
All costs @FV – recognized as expenses
 Full IFRS IFRS for SMEs

Recognition Exemption from Measure biological assets at FV less

and measurement at FV cost to sell where such FV is readily
measurement is only allowed if the determinable without undue cost or
FV cannot be effort.
measured reliably. Where FV is not used, the entity may
use cost less any accumulated
depreciation and any accumulated
impairment loss.
2 Government Grant
 Assistance by government in the form of a transfer of
resources to an entity in return for past or future compliance with
specified conditions relating to the operating activities of the
entity.
Recognition and measurements
• A grant that does not impose specified future performance conditions on
the recipient is recognized in income when the grant proceeds are
receivable
• grant that impose specified future performance conditions on the recipient
is recognized only when performance conditions are met.
• A grant received before the revenue recognition criteria are met is
recognized as liability
Disclosures
• Nature and Amounts will be recognized in financial statement
• Unfulfilled conditions and other contingencies
• Other forms of government assistance which the entity directly
benefited
Comparison with full PFRS

FULL PFRS PFRS FOR SME

Recognized when there is a reasonable Recognized when conditions are
assurance actually satisfied

Recognized as income over the periods Does not allow an entity to match the
are necessary to match the grant with grant with the expense for which it is
related cost intended to compensate

Grant related to asset may be treated It is a deferred income until the

as deferred income or reduction in the conditions are fully satisfied.
CA of the asset
Borrowing Cost
- Interest and other cost that an entity incurs in connection with
borrowing of funds.
• Effective Interest Method
• Finance Charges in respect of finance leased recognized
• Exchange differences arising from forex
Comparison with full PFRS

FULL PFRS PFRS FOR SME

For Directly attributable to the Recognize borrowing cost as
acquisition, construction, or expense, Does not permit
production of the qualifying capitalization of interest
asset shall be capitalized as part
of the cost of the asset
For Not Direct attributable
expensed when incurred
3 Cash and Cash Equivalents
- Refer to the line item on the balance sheet that reports the value
of a company's assets that are cash or can be converted into cash
immediately. These include bank accounts, marketable securities,
commercial paper, Treasury bills and short-term government bonds
with a maturity date of three months or less. Marketable securities
and money market holdings are considered cash equivalents
because they are liquid and not subject to material fluctuations in
value.
 Cash is money in the Cash equivalents are investments
form of currency. securities that are for short-term
investing, and they have high credit
COMPONENTS OF CASH
quality and are highly liquid.
1. currency
2. coins
3. Bank overdrafts
4. cash in savings account
5. cash in checking accounts
6. money order
7. petty cash
 IFRS for SMEs
Section 7 Statement of
Cash Flows
Cash equivalents are short-
term, highly liquid
investments held to meet
short-term cash
commitments rather than
for investment or other
purposes.
Bank overdrafts may be
included when repayable
on demand and are an
integral part of the entity’s
cash management.
IFRS
IAS 7 Statement of Cash Flows
Cash equivalents are held for meeting
short-term cash commitments rather than
for investment or other purposes. For an
investment to qualify as a cash
equivalent, it must be readily convertible
to a known amount of cash and be
subject to an insignificant risk of changes
in value.
Overdrafts that are repayable on demand
and form an integral part of an entity’s
cash management are included as a
component of cash and cash equivalents
Impact Assessment
Generally the concepts of cash
equivalents are similar, however
full IFRS includes a requirement
that there is insignificant risk of
changes in value. Therefore,
under IFRS for SMEs, there is
the possibility that certain
marketable securities may meet
the definition of a cash
equivalent, but would fail under
full IFRS. However, in practice
differences are expected to be
rare.
4 Receivables
abcdefg
5 Inventories
 PAS 2 /IFRS 2
The following terms are used in this Standard with the
meanings specified:
Inventories are assets:
a) held for sale in the ordinary course of business;
b) in the process of production for such sale; or
c) in the form of materials or supplies to be consumed in the
production process or in the rendering of services.
 IFRS for SMALL
IFRS for SMEs Full IFRS
ENTITIES
Definition and
scope
Definition Inventories and assets: Same as IFRS Same as IFRS for
• Held for sale in the ordinary course of business. for SMEs SMEs
• In the process of production for such sale [IAS 2.6]
• In the form of materials or supplies to be consumed in [IAS 2.6]
the production process or in the rendering of services
[IFRS for SMEs 13.1]
Scope of the Out of scope are work in process under construction Same as IFRS Same as IFRS for
standard contracts, financial instruments, biological assets and for SMEs SMEs
agricultural produce, as well as inventories held by: [IAS 2.2-2.3]
• Producers of agricultural, forest and mineral products,
to the extend that they are measured at fair value less
costs to sell through profit or loss.
• Commodity brokers and dealers who measure their
inventories at fair value less costs to sell though profit or
loss
[IFRS for SMEs 13.2-13.3]
 IFRS for SMEs Full IFRS IFRS for SMALL ENTITIES
Measurement Inventories are initially recognized at Same as IFRS for SMEs; An entity shall measure
and cost. The cost of inventories includes however, IAS 2 refers to inventories at the lower
impairment all costs of purchase, costs of net realizable value. of cost or market value.
conversion and other costs incurred [IAS 2.9-2.10, 2.28-2.33] Section 21 - Impairment
in bringing the inventories to their of Assets covers
present location and conditions. impairment requirements
Inventories are subsequently valued for inventories.
at the lower of cost and selling price
less costs to complete and sell.
Inventories are assessed for
impairment at each
reporting date. Management then
reassesses the selling price, less costs
to complete and sell in each
subsequent period, to determine if
the impairment losses previously
recognized should be
reversed.
[IFRS for SMEs 13.4-13.5, 27.2-27.4]
 IFRS for SMALL
IFRS for SMEs Full IFRS
ENTITIES
Cost of
Inventories
Costs of Cost of purchase of Same as IFRS for Same as IFRS for
purchase inventories includes the SMEs SMEs
purchase price, import [IAS 2.11]
duties, non-refundable
taxes, transport and
handling costs and any
other directly attributable
costs less trade discounts,
rebates and similar items.
[IFRS for SMEs 13.6]
 IFRS for SMEs Full IFRS IFRS for SMALL ENTITIES
Costs of Costs of conversion of inventories Same as IFRS for SMEs Same as IFRS for SMEs
Conversion include costs directly related to the [IAS 2.12]
units of production, such as direct
labor. They also include a
systematic allocation of fixed and
variable production overheads that
are incurred in converting materials
into finished goods.
[IFRS for SMEs 13.8]

Other costs Borrowing costs are recognized as Borrowing costs are An entity shall include
an expense included in the cost of other costs in the cost
inventories under of inventories only to
limited circumstances the extent that they are
as identified by IAS 23. incurred in bringing the
[IAS 2.17] inventories to their
present location and
condition.
 IFRS for SMEs
Cost The cost of inventories used is
Formulas assigned by using either the
first-in, first-out (FIFO) or
weighted average cost
formula. Last-in, last-out (LIFO) is
not permitted. The same cost
formula is used for all inventories
that have a similar nature and
use to the entity. Where
inventories have a different
nature or use, a different cost
formula may be justified.
[IFRS for SMEs 13.17-13.18]
Full IFRS IFRS for SMALL ENTITIES
Same as IFRS An entity shall measure the
for SMEs cost of inventories, other than
[IAS 2.25] those dealt with in paragraph
167, by using the first-in, first-
out (FIFO) or weighted
average cost formula. An
entity shall use the same cost
formula for all inventories
having a similar nature and
use to the entity. For
inventories with a different
nature or use, different cost
formulas may be justified. The
last-in, first-out method (LIFO)
is not permitted.
 IFRS for SMEs Full IFRS IFRS for SMALL ENTITIES
Techniques An entity may use Similar to IFRS for An entity may use techniques such
for techniques for measuring SMEs, the most as the standard cost method, the
measuring the cost of inventories if recent purchase retail method or most recent
cost the results approximate price is not purchase price for measuring the
cost. Accepted mentioned as cost of inventories if the result
techniques are: an example. approximates cost. Standard costs
• Standard cost method. [IAS 2.21] take into account normal levels of
• Retail method materials and supplies, labor,
• Most recent purchase efficiency and capacity utilization.
price. They are regularly reviewed and, if
• [IFRS for SMEs 13.16] necessary, revised in the light of
current conditions. The retail
method measures cost by
reducing the sales value of the
inventory by the appropriate
percentage gross margin.