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Regular version of the site

International Financial Reporting Standards

2019/2020
Academic Year
ENG
Instruction in English
5
ECTS credits
Delivered at:
School of Finance
Course type:
Elective course
When:
2 year, 1, 2 module

Instructors

Course Syllabus

Abstract

Course is designed for bachelor students who have experience with International Financial Reporting Standards. This course covers the IFRS Concepts Framework and major formats of financial statements according to IFRS. Then the course is focused on the recognition, measurement and disclosure for such elements of financial accounting as Revenue, Inventory and biological assets, Long-term assets as Property, Plant and Equipment, Intangible assets and Provisions. In separate topic is impairment of long- term assets. The course contains concepts of accounting and reporting for lease operations (financial and operating lease). One class is devoted to the Cash Flow Statement preparation techniques. The course also covers the topic of Financial Instruments. The last part of the course deals with the consolidated financial statements. It covers the main concepts of control, subsidiary, single and consolidated statements. Special part is accounting at the date of acquisition: goodwill, measuring the consideration transferred, measuring the net assets acquired. The course does not require extensive knowledge of mathematics and statistics.
Learning Objectives

Learning Objectives

  • Be able to eliminate intra-companies transaction and unrealized gains
  • Be able to prepare the basic consolidated financial statements
Expected Learning Outcomes

Expected Learning Outcomes

  • Be able to eliminate intra-companies transaction, unrealized gains
  • Be able to prepare the basic consolidated financial statements
Course Contents

Course Contents

  • The repetition of the basics learned in the course Financial Accounting.
  • Topic 1. The IFRS Conceptual Framework and the Financial Statements
    The notion of financial accounting and reporting, difference from managerial and tax accounting and reporting, statistical reporting. Accounting systems in the world. History of IFRS, IASC and IASB, structure, functions, process of creation of the new standard. The relationship between local financial reporting standards and IFRS. Convergence project with US GAAP. The body of IFRS: standards – IAS ad IFRS, Interpretations, Basis for conclusion, Implementation Guidance. Principles of the presentation of financial information. IFRS Conceptual Framework: general purpose, elements of financial statements – recognition and measurement; qualitative characteristics. Overview of the financial reports.
  • Topic 2. Long-term assets. Impairment of assets.
    Life cycle of PPE. Acquisitions, initial measurement - capitalization of costs. Reserves for future costs. Purchase, exchange, government grants, financing by loan and borrowing costs, exchange of assets. Depreciation of PPE – types. Subsequent measurement – historical cost model and fair value model. Revaluation under fair value model. What are intangible assets? IAS 38: objective and scope. The definition of intangible assets, initial recognition and measurement, internally generated assets, measurement of intangible assets after recognition, disposals, disclosure, goodwill. Impairment of assets – indicators, estimating the amounts, using the Cash Generating Units.
  • Topic 3. Inventories and biological assets.
    Describe and apply the principles of inventory valuation. Apply the requirement of relevant accounting standards for biological assets.
  • Topic 4. Leasing.
    Obtaining non-current assets, types of leases (classification of lease, identifying financial lease), accounting for finance leases (present value of the minimum lease payments, definitions and working examples, lease terms, setting up accounts in the statement of financial position, depreciating the asset, making the payments, finance charge). Disclosure in the financial statements. Other issues. Operating leases.
  • Topic 5. Financial instruments
    Defining financial instruments in terms of financial assets and financial liabilities. Distinguishing between debt and equity capital. Measuring financial instruments by amortised cost and fair value ( including option to elect to present gains and losses on equity instruments in other comprehensive income). Applying the requirements of relevant accounting standards to the issue and finance costs of: equity, redeemable preference shares and debt instruments with no conversion rights (principle of amortised cost), convertible debt.
  • Preparation for mid-term test
  • Topic 6. Provisions, events after the reporting date.
    Provisions and contingencies; provision: definition and recognition; measurement treatment; specific applications; disclosures relating to provisions; contingent liabilities; contingent assets; IAS 10 “Events after balance sheet period”.
  • Topic 7. Reporting financial performance
    Identifying and reporting the results of discontinued operations. Defining and accounting for non-current assets held for sale and discontinued operations. Accounting for changes in accounting estimates, changes in accounting policy and correction of prior period errors. Calculating the EPS in accordance with relevant accounting standards (dealing with bonus issues, full market value issues and rights issues). Explaining the relevance of the diluted EPS and calculating the diluted EPS involving convertible debt and share options (warrants)
  • Topic 8. Revenue Recognition.
    Apply the principle of substance over form to the recognition of revenue. Identifying the five steps in the revenue recognition process. Identifying the contract with customers. Determining the transaction price. Allocating the transaction price to the separate performance obligations. Identifying other revenue recognition issues. Describing presentation and disclosure regarding revenue. Accounting for government grants.
  • Topic 9. Group accounts: associates. Business combinations, consolidated financial statements
    Investments in an associate, equity method: consolidated statement of financial position & consolidated income statement; associate’s losses; transactions between a group and its associate. Source of requirements; IFRS3 (revised) “Business combinations”; identifying the acquirer; determining the acquisition date; measuring the consideration transferred; recognition and measuring the net assets acquired; goodwill; practical issues; disclosures.
  • Topic 10. Group accounts: basic principles. Consolidated accounts: consolidated statement of financial position, consolidated statement of financial performance.
    What is a group, what is a subsidiary, accounting principles; the single entity concept; control and ownership (definition of control, ownership, reflecting control and ownership in group accounts). Explain and demonstrate the concept and principals surrounding the consolidation of financial statements including: the single entity concept; substance over form; the distinction between control and ownership. Calculation goodwill, intra-group balances; unrealized intra-group profit, standardized workings; fair value adjustments; mid-year acquisitions; dividends; other adjustments.
  • Topic 11. Presentation of published financial statements
    Preparing a single entity's statement of financial position and statement of profit or loss and other comprehensive income in accordance with the structure prescribed within IFRS. Preparing and explaining the contents and purpose of the statement of changes in equity. Classification of enterprise cash flows: financing, investing and operating. Calculating direct cash flows from selling goods, paying for purchases, selling equipment, paying taxes. Direct and indirect method for Cash Flows from operating activities. Disclosure of reconciliation of Net income to Cash Flow from operations. Cash flows reported as separate lines. Non-cash investing/financing.
Assessment Elements

Assessment Elements

  • non-blocking Homework
  • non-blocking Class participation
  • non-blocking Mid-term test
  • non-blocking Final exam
Interim Assessment

Interim Assessment

  • Interim assessment (2 module)
    0.08 * Class participation + 0.6 * Final exam + 0.08 * Homework + 0.24 * Mid-term test
Bibliography

Bibliography

Recommended Core Bibliography

  • Beyersdorff, M., & Ernst & Young. (2017). International GAAP 2017 : Generally Accepted Accounting Practice Under International Financial Reporting Standards. Chichester, West Sussex, United Kingdom: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1450533
  • Epstein, B. J., & Jermakowicz, E. K. (2007). Wiley IFRS 2007 : Interpretation and Application of International Financial Reporting Standards. Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=492804

Recommended Additional Bibliography

  • Tobór-Osadnik, P. D. K., Wyganowska, P. D. M., & Kabalski, P. D. P. (2013). International Financial Reporting Standards vs. homo sovieticus personality the case of Poland. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.BC1B9426