Small and Medium Enterprise

A Small and Medium Enterprise (SME) is defined as an entity that:

Does not have public accountability; and
Publishes general-purpose financial statements for external users.

Public accountability is further defined as an entity that:

Has debt or equity instruments traded in a public market (or it is in the process
of issuing such instruments); or
Holds assets in a fiduciary capacity for a broad group of outsiders as one of its
primary businesses.

Small and Medium Enterprises under Philippine Jurisdiction

The Philippine Securities and Exchange Commission defines SME as an entity:

a) With total assets between P3,000,000 and P350,000,000 or with total
liabilities between P3,000,000 and P250,000,000.
b) That is not required to file financial statements under SEC Rule 68.1. The SRC
Rule 68.1 pertains to listed entities or entities whose securities are traded in an
exchange market, and entities with assets of at least P50,000,000 and have 200 or
more holders each holding at least 100 shares of a class of equity securities.
c) That is not in the process of filing financial statements for the purpose of issuing
any class of instruments in a public market.
d) That is not a holder of secondary license issued by a regulatory agency such as
bank (all types of bank), an investment house, a finance company, an insurance
company, securities broker or dealer, a mutual fund and pre-need company.
e) That is not a public utility.

Micro-Business Entities

Mirco-business entities are entities whose total assets or total liabilities are below the
P3,000,000 floor threshold.

Micro-business entities have the option to use any of the following bases of accounting
in the preparation of financial statements:
a) Full PFRS
b) PFRS for SMEs
c) Another acceptable basis of accounting
Exemptions from PFRS for SMEs

The Philippine SEC in its meeting on October 7, 2010 resolved to exempt from the
mandatory adoption of the PFRS for SMEs small and medium-sized entity that meets
any of the following criteria:

1) It is a subsidiary of a parent reporting under full PFRS.

2) It is a subsidiary of a foreign parent that will be moving toward fill IFRS
pursuant to the foreign countrys published convergence plan.
3) It is a subsidiary of a foreign parent that has been applying the standards for a
nonpublicly accountable entity for local reporting purposes, and is considering
moving to full PFRS instead of the PFRS for SMEs in order to align its policies with
the expected move to full IFRS by its foreign parent pursuant to the foreign
countrys published convergence plan.
4) It has short-term projections that show it will breach the quantitative thresholds
set in the criteria for an SME, and the breach is expected to be significant and
continuing due to its long-term effect on the entitys asset or liability size.
5) It is a part of a group, either as significant joint venture or an associate, that is
reporting under full PFRS.
6) It is a branch office of a foreign entity reporting under full PFRS.
7) It has concrete plans to conduct an initial public operating within the next two
years.
8) It has a subsidiary that is mandated to report under full PFRS.
9) It has been preparing financial statements using full PFRS and has decided to
liquidate its assets.

Summary of Differences between Full PFRS and PFRS for SMEs

Section 2 Concepts and Pervasive Principles

FULL PFRS PFRS for SMEs
Fundamental qualitative Principal qualitative
characteristics characteristics
Relevance Understandability
QUALITATIVE Predictive Value Relevance
CHARACTERISTICS Confirmatory Value Materiality
Materiality Reliability
Faithful Representation Substance over form
Completeness Prudence
Neutrality Completeness
Free from error Comparability
 Enhancing qualitative Timeliness
characteristics Balance between
Understandability benefit and cost
Comparability
Verifiability
Timeliness

MEASUREMENT a. Historical Cost a. Historical Cost

b. Current Cost b. Fair Value
c. Realizable Value
d. Present Value
UNDERLYING Financial statements are
ASSUMPTIONS prepared on an accrual basis
and on the assumption that the
entity is a going concern and
will continue in operation in the
foreseeable future (which is at Same as Full PFRS
least, but not limited to, 12
months from the balance sheet
date).

Assets and liabilities and

income and expenses, when not
material shall not be offset
against each other. Offsetting
may be done when it is
required or permitted by
another PFRS
 Section 3 FINANCIAL STATEMENT PRESENTATION
FULL PFRS PFRS for SMEs
COMPONENTS OF a. Statement of Financial
FINANCIAL Position
STATEMENTS b. Either a single statement of
comprehensive income OR
separate income statement Same as Full PFRS
and a separate statement of
comprehensive income
c. Statement of changes in
equity
d. Statement o cash flows
e. Notes, comprising a
summary of significant
accounting policies and
other explanatory
information
PAS 1 requires fair presentation in
the financial statements of an
entity. Specific reference is made to
FAIR the definitions and recognition
PRESENTATION criteria of the Framework in
achieving this goal.
Same as Full PFRS
Compliance with the standards
would result in fair presentation.
Furthermore, achieving fair
presentation may involve the
selection of accounting policies
using the hierarchy in PAS 8
Accounting Policies, Changes in
Accounting Estimates and Errors,
providing information in a manner
consistent with the qualitative
characteristics and additional
disclosures where necessary.
COMPLIANCE Entities that apply PFRS standards Entities that apply this
must state compliance with PFRS. standard must claim
compliance with PFRS for
In extremely rare circumstances SMEs.
 when management concludes that
compliance with a requirement in In extremely rare
PFRS would be so misleading that it circumstances when
would conflict with the objective of management concludes that
financial statements set out in the compliance with the standard
Framework, the entity must depart would be so misleading that it
from the standard. Special would conflict with the
disclosures are required. objective of financial
statements of SMEs, they must
depart from the standard.
Special disclosures are
required.
GOING CONCERN Financial statements are prepared
on an accruals basis and on the
assumption that the entity is a Same as Full PFRS
going concern and will continue in
operation for the foreseeable future
(which is at least 12 months from
the end of the reporting period).
FREQUENCY OF Financial statements should be Same as Full PFRS
REPORTING prepared at least annually.
Certain disclosures are required if
the reporting period is longer or
shorter than a year.
CONSISTENCY OF The presentation and classification
PRESENTATION of items in the financial statements Same as Full PFRS
must be consistent from period to
period. Changes may only be made
if there is a significant change to
the entitys operations or the
standard requires a change.

When presentation and

classification is changed,
comparatives should be similarly
adjusted, unless impracticable.
Specific disclosures are required for
such changes.
COMPARATIVE Comparative information is
INFORMATION required (unless specifically stated Same as Full PFRS
 otherwise) for all amounts
disclosed. This is also required for
narrative and descriptive
information when it is relevant to an
understanding of the financial
statements.
MATERIALITY AND Each material class of similar items
AGGREGATION must be separately disclosed. Same as Full PFRS
The same is applicable to dissimilar
items unless immaterial.
 Section 4 STATEMENT OF FINANCIAL POSITION
FULL PFRS PFRS for SMEs
CLASSIFICATIONS Current and noncurrent assets and
OF ASSETS AND current and noncurrent liabilities
LIABILITIES IN THE are presented as separate Full PFRS and PFRS for SMEs
SFP classification in the statement of have the same provisions on
financial position, except when a the current and noncurrent
presentation based on liquidity presentation.
provides information that is reliable
and relevant
Assets:
The following items are required to Cash and cash equivalents
LINE ITEMS be presented under Full PFRS but Trade and other receivables.
not under PFRS for SMEs Financial assets.
Inventories.
a. Total assets classified as held PPE.
for sale Investment property.
b. Total of liabilities included in Intangible assets.
disposal group classified as Biological assets.
held for sale Investments in associates
and in joint-ventures.
Full PFRS requires presentation of Current tax assets.
investments in associates but not Deferred tax assets.
investment in joint ventures Liabilities and equity:
Trade and other payables.
Financial liabilities.
Current tax liabilities.
Deferred tax liabilities.
Provisions.
Equity attributable to the
owners of the parent.
Non-controlling interests
(presented within
equity)

PFRS for SMEs requires

presentation of both
investments in associates and
investments in joint ventures
as separate line item
 Section 5 STATEMENT OF COMPREHENSIVE INCOME AND INCOME STATEMENT
FULL PFRS
An entity is required to present a
statement of comprehensive
income either in a single statement,
PRESENTATION or in two statements comprising of
a separate income statement and a
separate statement of
comprehensive income.
There is no prescribed format.
Management selects a method of
presenting its expenses by either
function or nature. Additional
disclosure of expenses by nature is
required if presentation by function
is chosen.
COMPONENTS OF 1. Gain or loss from translation of
OTHER the financial statements of a
COMPREHENSIVE foreign operation
INCOME 2. Remeasurements, including
actuarial gain or loss on
projected benefit obligation
3. Unrealized gain or loss from
derivative contracts designated
as cash flow hedge
4. Unrealized gain or loss on
equity investment measured
at fair value through other
comprehensive income
5. Unrealized gain or loss on
debt investment measured at
fair value through other
comprehensive income
6. Revaluation surplus during the
year
7. The change in fair value
attributable to credit risk of a
PFRS for SMEs
Same as Full PFRS
1. Gain or loss from
translating the financial
statements of a foreign
operation
2. Actuarial gain or loss on
defined benefit plan (the
SME has a policy choice
whether to present this
item as component of
other comprehensive
income or component of
profit or loss)
3. Change in fair value of
hedging instrument that
was effective in offsetting
the change in the fair
value or expected cash
flows of the hedged item.
4. Revaluation surplus from
the revaluation of
property, plant and
 financial liability designated at
fair value through profit or loss
PRESENTATION OF Line items for OCI shall be grouped
OTHER as follows:
COMPREHENSIVE a. OCI that will be reclassified
INCOME subsequently to profit or loss
1. Gain or loss from translating
financial statements of a
foreign operation
2. Unrealized gain or loss on
derivative contracts
designated as cash flow
hedge
3. Unrealized gain or loss of
debt investment measured
at fair value through OCI
b. OCI that will not be reclassified
subsequently to profit or loss
1. Remeasurements of defined
benefit plan, including
actuarial gain or loss on
projected benefit obligation
(may be transferred within
equity or retained earnings
2. Unrealized gain or loss on
equity investment
measured at fair value
through OCI (reclassified to
retained earnings upon
disposal of the investment)
3. Change in revaluation
surplus (realization of the
revaluation surplus is
through retained earnings
4. Change in the fair value
attributable to credit risk of
financial liability designated
equipment as allowed now
under the amended
paragraph 17.15 of PFRS
for SMEs
Each item of other
comprehensive income shall
be grouped as follows:
a. OCI that will not be
reclassified to profit or loss:
1. Gain or loss from
translating the financial
statements of a foreign
operation
2. Actuarial gain or loss in
defined benefit plan if
the entity elected to
present such item in
OCI
3. Revaluation surplus
during the year related
to revaluation of
property, plant and
equipment
b. OCI that will be reclassified
to profit or loss:
1. Change in fair value of
hedging instruments
 at fair value through profit or
loss (may be recycled within
equity or retained earnings)
ANALYSIS OF An entity may present an analysis of
EXPENSES expenses based on the function or Same as Full PFRS
nature of the expenses. The
decision is based on which
methodology provides greater
reliability and relevance. Material
expenses, whether by nature or
amount, must be separately
disclosed.
EXTRAORDINARY not permitted not permitted
ITEMS
Section 6 STATEMENT OF CHANGES IN EQUITY AND STATEMENT OF INCOME AND
RETAINED EARNINGS
FULL PFRS PFRS for SMEs

Total comprehensive income

for the period
STATEMENT OF Effects of Retrospective Same as Full PFRS
CHANGES IN Application and
EQUITY Retrospective Restatements
Reconciliation between
carrying amount at the
beginning and end of the
period
STATEMENT OF A statement of income and
INCOME AND retained income may be
RETAINED presented in place of the
EARNINGS statement of comprehensive
income and statement of
changes in equity, if the only
changes to equity comprise
not applicable profit or loss, payment of
dividends, corrections of prior
year errors and changes in
accounting policy.

If the statement of income and

retained earnings is presented,
it
must include:
Retained earnings at the
beginning of the period
Dividends declared during
the period
Restatements of retained
earnings for corrections or
errors
and changes in accounting
policy
Retained earnings at the end
of the period.
 Section 7 STATEMENT OF CASH FLOWS
FULL PFRS PFRS for SMEs
Cash equivalents are held for Cash equivalents are short-
meeting short-term cash term, highly liquid investments
commitments rather than for held to meet short-term cash
CASH EQUIVALENTS investment or other purposes. For commitments rather than for
an investment to qualify as a cash investment or other purposes.
equivalent, it must be readily
convertible to a known amount of Bank overdrafts may be
cash and be subject to an included when repayable on
insignificant risk of changes in demand and are an integral
value. part of the entitys cash
management.
Overdrafts that are repayable on
demand and form an integral part
of an entitys cash management are
included as a component of cash
and cash equivalents.
STATEMENT OF Cash flows are presented as
CASH FLOWS operating, investing or financing Same as Full PFRS
cash flows.

Operating direct OR indirect

method
Investing & Financing direct
method only
 Section 8 NOTES TO THE FINANCIAL STATEMENTS
FULL PFRS
The notes are an integral part of the
GENERAL financial statements. Notes provide
additional information to the
amounts disclosed in the primary
statements.
ORDER OF 1. Statement of compliance
PRESENTING THE with PFRS
NOTES 2. Summary of significant
accounting policies applied
3. Supporting information for
items presented in the
financial statements in the
sequence in which each line
item is presented in the
financial statements
4. Other disclosures
OTHER In addition, an entity shall disclose
DISCLOSURES the following:
1. The name of the parent of
the group
2. The amount of dividends
proposed or declared before
the financial statements were
authorized for issue but not
recognized as distribution
during the period and the
related amount per share.
3. The amount of any
cumulative preference
dividends not recognized
PFRS for SMEs
Same as Full PFRS
Same as Full PFRS
An SME shall disclose the
following in the notes:
a. The domicile and legal
form of the entity, its
country of
incorporation and the
address of its registered
office or place of
business, if different
from the registered
office.
b. A description of the
nature of the entitys
operations and its
principal activities
PFRS for SMEs does not
require the presentation of
the following:
a. Segment information
b. Earnings per share
 c. Interim financial reports
RELATED AND Related Parties:
UNRELATED 1. Affiliates PFRS for SMEs and full PFRS
PARTIES 2. Associates share the same principles
3. Joint Ventures with respect to related party
4. Key management personnel disclosures.
of the entity
5. Close family members of the Both full PFRS and PFRS for
key management personnel SMEs require disclosure of
6. Individuals with significant related party relationships
influence over the reporting where control exists
entity and close family irrespective of whether there
members of such individuals have been transactions
7. Postemployment benefit between the parties.
plans
Unrelated Parties:
1. Two entities simply because
they have a director or other
key management personnel
in common
2. Two venturers simply
because they share joint
control over the joint venture
3. Providers of finance, trade
unions, public utilities and
government agencies simply
by virtue of their normal
dealings with the reporting
entity
4. A customer, supplier,
franchisor, distributor or
general agent with whom the
reporting entity transacts a
significant volume of
business merely by virtue of
the resulting economic
dependence.
DISCLOSURE OF If there have been transactions
RELATED PARTY between related parties, an entity
TRANSACTIONS shall disclose: Same as Full PFRS
 a. The nature of the related
party relationship
b. Information about the
transactions and outstanding
balances
As a minimum, the disclosures shall
include:
a. The amount of transaction
b. The amount of outstanding
balance, terms and
conditions, whether secured
or unsecured, and nature of
consideration to be provided
in settlement
c. The allowance for doubtful
accounts related to the
outstanding balance
d. The expense recognized
during the period in respect
of doubtful accounts due
from related parties
KEY MANAGEMENT An entity shall disclose key
PERSONNEL management personnel
COMPENSATION compensation in total and for each Same as Full PFRS
of the following categories:
a. Short-term employee
benefits
b. Postemployment benefits
c. Other long-term employee
benefits
d. Termination benefits
e. Share based payment
EVENTS AFTER THE ADJUSTING EVENTS provides
END OF REPORTING evidence of conditions that existed
PERIOD at the end of reporting period and Same as Full PFRS
lead to adjustments of the financial
statements
NONADJUSTING EVENTS
indicative of the conditions that
arose after the end of reporting
period and do not lead to
adjustments but only to disclosures
in the financial statements
 Section 9 CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
FULL PFRS PFRS for SMEs
Either: Either:
ACCOUNTING FOR a. At cost, or a. At cost less impairment,
INVESTMENT IN b. In accordance with PAS 39 or
SUBSIDIARIES, b. At fair value with
JOINTLY changes in fair value
CONTROLLED recognized in profit or
ENTITIES AND loss
ASSOCIATES

NON- NCI can be measured using either:
CONTROLLING 1. Fair value of NCI (full
INTERESTS (NCI) IN goodwill); or
THE ACQUIREE 2. Proportionate interest in the
fair value of net identifiable
assets of the entity acquired
(partial goodwill)
EXEMPTION FROM A parent need not present
PREPARING consolidated financial statements if
CONSOLIDATED and only if:
FINANCIAL a) The parent is itself a wholly-
STATEMENTS owned subsidiary, or is a partially
owned subsidiary of another entity
and its other owners, including
those not otherwise entitled to
vote, have been informed about,
and do not object to, the parent not
presenting consolidated financial
statements
b) The parents debt or equity
instruments are not traded in a
public market (a domestic or
foreign stock exchange or an
over-the-counter market, including
local and regional markets)
c) The parent did not file, nor is it in
the process of filing, its financial
statements with a securities
commission or other
NCI are stated at the non-
controlling interest portion of
the fair value of the net assets
of the entity acquired (partial
goodwill)
Specific differences include:
PFRS for SMEs does not
require partly-owned parents
to seek permission of other
shareholders for the
exemption
The exemption from
preparing consolidated
financial statements, if the
parent already prepares PFRS
financial
statements, has been
expanded to also include the
case where the parent
prepares PFRS for SMEs
financial statements
PFRS for SMEs does not
require the consolidated
financial statements of the
ultimate parent (or any
intermediate
parent) to be made available
 regulatory organization for the
purpose of issuing any class of
instruments in a public market
d) The ultimate or any intermediate
parent of the parent produces
consolidated financial statements
available for public use that comply
with PFRS.
SEPARATE If separate financial statements are
FINANCIAL prepared, a parent, an investor in an
STATEMENTS associate or a venturer with an
interest in a jointly controlled entity
must account for its investments in
subsidiaries, associates and jointly
controlled entities either:
a) At cost or
b) In accordance with PAS 39.
The entity must apply the same
accounting policy for each category
of investments.
There are additional requirement in
relation to investments accounted
for at cost that are classified as held
for sale.
for public use in order for the
exemption to apply
PFRS for SMEs permits an
additional exemption for a
subsidiary acquired with the
intention of selling it within
one year, provided it is the
only subsidiary.
If separate financial statements
are prepared, a parent, an
investor in an associate or a
venturer with an interest in a
jointly controlled entity must
account for its investments in
subsidiaries, associates and
jointly controlled entities
either:
a) At cost less impairment or
b) At fair value with changes in
fair value recognized in profit
or loss.
The entity must apply the
same accounting policy for all
investments in a single class
(subsidiaries, associates or
jointly controlled entities), but
it can elect different policies
for different classes.
 Section 10 ACCOUNTING POLICIES, ESTIMATES AND ERRORS
FULL PFRS PFRS for SMEs
If there is no relevant guidance, If it specifically addresses a
SELECTION OF management shall consider the transaction, other event or
ACCOUNTING following sources in hierarchy: condition, the SME shall apply
POLICIES a. The requirements and guidance the PFRS for SMEs. Otherwise,
in PFRS on similar and related management shall use its
issues. judgment in developing and
b. The definition, recognition applying an accounting policy
criteria and measurement of that results in information that
assets, liabilities, income and is relevant and reliable.
expenses
c. Most recent pronouncement of If there is no relevant
other standard setting bodies guidance, management shall
d. Other accounting literature consider the following sources
e. Accepted industry practices in hierarchy:
a. The requirements and
guidance in PFRS on
similar and related
issues
b. The definition,
recognition criteria and
measurement of assets,
liabilities, income and
expenses
CONSISTENCY OF Accounting policies must be Accounting policies must be
ACCOUNTING applied consistently for similar applied consistently for similar
POLICIES transactions, events or conditions, transactions, events or
unless PFRS specifies otherwise. conditions, unless a section
specifies otherwise.
CHANGES IN A change in accounting policy shall A change in accounting policy
ACCOUNTING be made only when: shall be made only when:
POLICIES a. Required by an accounting a. Required by PFRS for
standard SMEs
b. The change will result in b. The change will result in
more relevant and faithfully more relevant and
represented financial faithfully represented
information financial information
A retrospective application is
A retrospective application is applied to the earliest period
 applied to the earliest period presented and each
presented and each comparative comparative period as if the
period as if the policy had always policy had always applied.
applied. Where it is impracticable to Where it is impracticable to
determine the period specific effect, determine the period specific
the entity must apply the change in effect, the entity must apply
policy to the earliest period that it is the change in policy to the
practicable. When it is impracticable earliest period that it is
to determine the cumulative effect, practicable.
the entity will apply the change in
accounting policy prospectively
from the date that it is practicable.
CHANGES IN Changes in accounting estimates
ACCOUNTING are applied prospectively by Same as Full PFRS
ESTIMATES including in profit or loss, the effect
of the change in:
The period of the change, if it is
the only period affected or
The period of the change and
subsequent periods, if the change
affects both.
PRIOR PERIOD Treated retrospectively by adjusting
ERRORS the opening balances of retained Same as Full PFRS
earnings and affected assets and
liabilities
 SECTION 11 BASIC FINANCIAL INSTRUMENTS
SECTION 12 OTHER FINANCIAL INSTRUMENT ISSUES
FULL PFRS
DEFINITIONS Not Applicable
When a financial instrument is
INITIAL recognized initially, an entity
MEASUREMENT measures it at its fair value plus, in price including transactions
the case of a financial asset or
financial liability not at fair value
through profit or loss, transaction
costs that are directly attributable
to the acquisition or issue of the
financial asset or financial liability. of future payments discounted
PFRS for SMEs
Following instruments are
accounted for as basic
financial instruments:
Cash.
Debt instruments that
provide fixed unconditional
returns to the holder and do
not contain provisions that
could result in the holder
losing principal, interest, pre-
payment or put provisions
contingent on future events.
A commitment to receive a
loan that cannot be settled in
cash, and when executed,
meet the criteria of a basic
instrument.
Investments in non-
convertible preference shares
and non-puttable ordinary
shares or preference shares
Basic financial instruments are
measured at their transaction
costs.
If the contract constitutes a
financing arrangement it is
measured at the present value
at a market rate of interest for
a similar instrument (this is not
applicable to assets and
liabilities classified as current,
unless they incorporate a
finance arrangement).

SUBSEQUENT Financial instruments classified as
MEASUREMENT held for trading and designated as
at fair value through profit or loss
are measured at fair value through
profit or loss.
Held-to-maturity investments and
loans and receivables are measured
at amortized cost.
Financial liabilities other than
those at fair value through profit or
loss are measured at amortized
cost.
Available-for-sale investments are
measured at fair value with changes
in fair value recorded in equity.
Investments in equity securities
whose fair value cannot be
measured reliably are measured at
cost less impairment.
AMORTIZED COST Amortized cost is the net of:
The amount at which the financial
instrument is measured at initial
recognition, minus repayments of
the principal;
Plus/minus the cumulative
amortization using the effective
interest method of any difference
between the amount at initial
recognition and the maturity
amount;
If interest is not at a market
rate, the fair value would be
future payments discounted at
a market rate of interest.
Other financial instruments are
initially measured at fair value,
which is usually their
transaction price. This will
exclude transaction costs.
At the end of each reporting
period, basic debt instruments
are measured at amortized
cost using the effective
interest method.
Commitments to receive a
loan are measured at cost less
impairment.
Investments in non-convertible
and non-puttable ordinary
shares or preference shares are
measured at fair value through
profit or loss if fair value can
be measured reliably,
otherwise at cost less
impairment.
Same as Full PFRS
 Minus reduction for impairment or
uncollectibility (for financial assets).

EFFECTIVE INTEREST Method of calculating the

METHOD amortized cost of a financial Same as Full PFRS
instrument and of allocating the
interest income/expense over the
relevant period.
FAIR VALUE PAS 39 contains application
guidance on the determination of Same as Full PFRS
fair value. Likewise, this standard
also makes use of a fair value
hierarchy. This makes use of quoted
prices in an active market, prices in
recent transactions for the identical
assets (adjusted) and the use of
valuation techniques.

Fair value, where there is no active

market, is only considered reliable if
the variability in the range of fair
values is not significant and the
probabilities of various estimates
can be reasonably assessed.

PAS 39 also contains provisions that

the fair value of a liability cannot be
less than the instruments demand
feature, discounted to the reporting
date.
IMPAIRMENT An entity assesses at the end of
each reporting period whether Same as Full PFRS
there is any objective evidence that
a financial asset or group of
financial assets is impaired. If any
such evidence exists, the entity
applies the specific provisions for
financial assets carried at amortized
cost, for financial assets carried at
 cost or for available-for-sale
financial assets to determine the
amount of any impairment loss.

For instruments carried at

amortized cost, the amount of the
loss is measured as the difference
between the assets carrying
amount and the present value of
estimated future cash flows
discounted at the financial assets
original effective interest rate.
Reversals of impairments are
permitted if specific criteria are met.

Reversal of impairments of
available-for-sale equity
instruments is not permitted.
An entity derecognizes a financial
DERECOGNITION asset when: Same as Full PFRS
The contractual rights to the cash
flows expire
It transfers the financial asset in a
manner that allows for
derecognition.

When an asset is transferred:

It is derecognized if the entity
transfers substantially all the risks
and rewards of ownership
It continues to be recognized if
the entity retains substantially all
the risks and rewards of ownership
If the entity neither transfers nor
retains substantially all the risks and
rewards of ownership, the entity
derecognizes the financial asset
(and separately recognizes any
rights and obligations). Alternatively
the asset is not derecognized if the
 entity continues to retained control.
An entity derecognizes a financial
liability when it is extinguished
HEDGE To qualify for hedge accounting, an
ACCOUNTING entity must meet the following
conditions:
At inception of the hedge there is
formal designation and
documentation of the hedging
relationship, the entitys risk
management objective and strategy
for the hedge
The hedge is expected to be
highly effective
For cash flow hedges, a forecast
transaction is highly probable
The effectiveness can be reliably
measured
The hedge is assessed on an
ongoing basis and determined to
have been actually effective.
HEDGED RISKS PAS 39 permits the following hedge
relationships:
Fair value hedge: a hedge of the
exposure to changes in fair value of
a recognized asset or liability or an
unrecognized firm commitment,
which is attributable to a particular
risk and could affect profit or loss
Cash flow hedge: a hedge of the
exposure to variability in cash flows
that:
Is attributable to a particular risk
To qualify for hedge
accounting, an entity must
meet the following conditions:
The entity designates and
documents the hedging
relationship, clearly identifying
the risk being hedged, the
hedged item and hedging
instrument
The hedged risk is one of the
specified risks in the standard
(see below)
The hedging instrument is as
specified in the standard (see
below)
The entity expects the hedge
to be highly effective.
PFRS for SMEs only permits
hedge accounting when the
hedged risk is one of the
following risks:
Interest rate risk of a debt
instrument measured at
amortized cost
Foreign exchange or interest
rate risk in a firm commitment
or a highly probable forecast
transaction
Price risk of a commodity
 associated with a recognized asset
or liability or a highly probable
forecast transaction and
Could affect profit or loss
Hedge of a net investment in a
foreign operation as defined in PAS
21.
HEDGING PAS 30 does not restrict the
INSTRUMENT circumstances in which a derivative
may be a hedging instrument,
except for some written options. A
non-derivative financial instrument
can only be designated as a hedge
of a foreign currency risk.
Only instruments that involve a
party external to the reporting
entity can be designated as
hedging instruments.
HEDGE OF A FIXED Most hedges of fixed interest rate
INTEREST RATE risk would be fair value hedges.
RISK Fair value hedges are accounted for
as follows:
that it holds or in a firm
commitment or highly
probable forecast transaction
to purchase or sell a
commodity
Foreign exchange risk in a
net investment in a foreign
operation.
The Hedge accounting is only
permitted if the hedging
instrument meets all of the
following:
It is an interest rate swap, a
foreign currency swap, a
foreign currency forward
exchange contract or a
commodity forward exchange
contract that is expected to be
highly effective
It involves a party external to
the reporting entity
Its notional amount equals
the designated amount of the
hedged item
It has a specified maturity date
not later than:
The maturity of the hedged
item
The expected settlement of
the commodity commitment
The occurrence of the highly
probable forecast transaction
It has no prepayment of early
termination or extension
features.
Same as Full PFRS
 The gain or loss on remeasuring
the hedging instrument at fair value
is recognized in profit or loss
The gain or loss on the hedged
item is adjusted against its carrying
amount and recognized in profit or
loss.
HEDGE OF A Most hedges of a variable interest Hedges of a variable interest
VARIABLE INTEREST rate risk would be cash flow hedges rate risk are treated in a similar
RATE RISK under full PFRS. way to cash flow hedges under
Cash flow hedges are accounted for full PFRS
as
follows:

The effective portion of the gain

or loss on the hedging instrument is
recognized in other comprehensive
income
The ineffective portion is
recognized in profit or loss.
DISCONTINUING Hedge accounting is discontinued
HEDGE when: Same as Full PFRS
ACCOUNTING The hedging instrument expires or
is sold
The hedge no longer meets the
conditions for hedge accounting
In the hedge of a forecast
transaction, when the transaction is
no longer highly probable
The entity revokes the
designation.
 Section 13 INVENTORIES
FULL PFRS PFRS for SMEs
Inventories are assets:
DEFINITION Held for sale in the ordinary
course of business; Same as Full PFRS
In the process of production for
such sale; or
In the form of materials or
supplies to be consumed in the
production process or in rendering
of services
MEASUREMENT
Lower of cost and net realizable
value. Net realizable value is the Same as Full PFRS
estimated selling price less costs of
completion and costs necessary to
make the sale.
COST OF All costs of purchase, costs of
INVENTORY conversion and other costs incurred Same as Full PFRS
in bringing the inventories to their
present location and condition.
COST FORMULAS For non-interchangeable items:
- Specific identification
For interchangeable items, either: Same as Full PFRS
- FIFO
- Weighted average cost
Use of LIFO is prohibited
MEASUREMENT Standard Cost Standard Cost
TECHNIQUES Retail Method Retail Method
Most recent purchase price
RECOGNITION OF Loss on inventory write down is
INVENTORIES AS treated as an impairment loss
EXPENSES AND When inventories are sold, the Same as Full PFRS
IMPAIRMENT OF carrying amount of the inventories
INVENTORIES shall be recognized as expense as
component of cost of goods sold in
the period in which the related
revenue is recognized
 Section 14 INVESTMENT IN ASSOCIATES
FULL PFRS PFRS for SMEs
- Is the power to participate in the
SIGNIFICANT financial and operating policy
INFLUENCE decisions of the associate but is Same as Full PFRS
not in control or joint control over
those policies
- Holds at least 20% or more of the
investees voting power; does not
exist at less than 20% unless there
is evidence to the contrary

The following indicates the

existence of significant influence as
follows:
1. Participation in policy
making process
2. Representation in the board
of directors
3. Interchange of managerial
personnel
4. Material transactions
between investor and investee
5. Provisions of essential
information
METHODS OF ALL investments in associates
ACCOUNTING FOR Equity method only are accounted for using any
INVESTMENT IN one of the following:
ASSOCIATES 1. Cost model
2. Equity method
3. Fair value method
DISCONTINUING An investor must discontinue use of An investor must cease using
THE EQUITY the equity method from the date it the equity method from the
METHOD ceases to have significant influence. date that significant influence
ceases.
On loss of significant influence, the
investor must measure at fair value If the associate becomes a
any investment the investor retains subsidiary or joint venture, the
in the former associate. The investor investor remeasures its
must recognize in profit or loss any previously held equity interest
difference between:
The fair value of any retained
investment and any proceeds from
disposing of the part interest in the
associate
The carrying amount of the
investment at the date when
significant influence is lost.
If the associate becomes a
subsidiary or joint venture, the
investment is accounted for in
accordance with PAS 27 or PAS 31,
respectively. Otherwise the
investment is accounted for in
accordance with PAS 39 and the fair
value of the investment at the date
when it ceases to be an associate is
regarded as its fair value on initial
recognition as a financial asset.
to fair value and recognizes
any resulting gain or loss in
profit or loss.
If an investor loses significant
influence over an associate as
a result of a full or partial
disposal, it must derecognize
that
associate and recognize in
profit or loss the difference
between:
The sum of the proceeds
received plus the fair value of
any retained interest
The carrying amount of the
investment in the associate at
the date significant influence is
lost.
Thereafter, the investor
accounts for any retained
interest as a financial asset
using Section 11 and Section
12, as appropriate.
If an investor loses significant
influence for reasons other
than a partial disposal of its
investment, the investor
regards the
carrying amount of the
investment at that date as a
new cost basis and accounts
for the investment using
Sections 11 and 12, as
appropriate.
 Section 15 INVESTMENT IN JOINT VENTURES
FULL PFRS PFRS for SMEs
A joint venture is a contractual
DEFINITION arrangement whereby two or more
parties undertake an economic Same as Full PFRS
activity that is subject to joint
control.

The standard identifies three broad

types of joint venture:
jointly controlled operations
jointly controlled assets
jointly controlled entities.

Joint control is the contractually

agreed sharing of control over an
economic activity, and exists only
when the strategic, financial and
operating decisions relating to the
activity require the unanimous
consent of the parties sharing
control (the venturers).
Either one of three different
MEASUREMENT Equity method in an investors models
primary financial statements or equity method
Proportionate consolidation (an cost model
accounting policy choice) fair value model

The chosen model is applied

to ALL its investments in
jointly controlled entities
AMORTIZATION OF Does not allow the amortization of Under the equity method,
GOODWILL goodwill PFRS for SMEs requires that
implicit goodwill be
systematically amortized
throughout its expected useful
life
 Section 16 INVESTMENT PROPERTY
FULL PFRS
Investment property is property
DEFINITION (land or building, or a part of a
building, or both) held by the owner
or by the lessee under a finance
lease to earn rentals or for capital
appreciation or both
INITIAL An investment property must be
MEASUREMENT measured initially at its cost.
Transaction costs are included in
the initial measurement.
The cost of a purchased investment
property comprises its:
purchase price and
any directly attributable
expenditure.
Directly attributable expenditure
includes:
professional fees for legal services
property transfer taxes and
other transaction costs.
SUBSEQUENT Investment property may be carried
MEASUREMENT at either:
Cost less accumulated
amortization and impairment losses
or
Revalued amount less
accumulated amortization and
impairment losses.
TRANSFERS Transfers to, or from, investment
property must be made when, and
only when, there is a change in use.
PFRS for SMEs
Same as Full PFRS
There are no differences
between PFRS and PFRS for
SMEs, except for borrowing
costs, which are capitalized
under PFRS if they are directly
attributable to the acquisition,
construction or production of
a qualifying asset.
PFRS for SMEs differs from
PFRS in that it requires the use
of the fair value model, where
fair value can be measured
reliably without undue cost or
effort.
An entity must transfer a
property to, or from,
investment
property only when the
property first meets, or ceases
to meet, the definition of
investment property.
 Section 17 PROPERTY, PLANT AND EQUIPMENT
FULL PFRS PFRS for SMEs
Property, plant and equipment are
DEFINITION tangible assets that are:
a) Held for use in the production or Same as Full PFRS
supply of goods or services,
for rental to others, or for
administrative purposes
b) Expected to be used during more
than one period.

RECOGNITION An entity recognizes the cost of an

item of property, plant and
equipment as an asset if, and only
if:
a) It is probable that future
economic benefits associated with
the item will flow to the entity
b) The cost of the item can be
measured reliably.
SUBSEQUENT Investment property may be carried
MEASUREMENT at either:
Cost less accumulated
amortization and impairment losses
or
Revalued amount less
accumulated amortization and
impairment losses.
INITIAL An item of property, plant and
MEASUREMENT equipment that qualifies for
recognition as an asset is measured
at its cost. The cost comprises:
a) Its purchase price
b) 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
Same as Full PFRS
PFRS for SMEs differs from
PFRS in that it requires the use
of the fair value model, where
fair value can be measured
reliably without undue cost or
effort.
There are no differences
between PFRS and PFRS for
SMEs, except for borrowing
costs, which are capitalized
under full PFRS if they are
directly attributable to the
acquisition, construction or
production of a qualifying
asset.
 c) The initial estimate of the costs of
dismantling and removing the item
and restoring the site on which it is
located.
SUBSEQUENT a) The cost model (cost less
MEASUREMENT accumulated amortization and Cost model only
impairment losses)
or
b) The revaluation model (revalued
amount less accumulated
amortization and impairment
losses).

An entity must apply that policy to

an entire class of property, plant
and equipment.
RESIDUAL VALUE The residual value and the useful
life of an asset must be reviewed at
least at each financial year-end.
PFRS for SMEs states that the
residual value should be
reviewed only if there are
indicators that it has changed
since the most recent annual
reporting date.
 Section 18 INTANGIBLE ASSETS OTHER THAN GOODWILL
FULL PFRS
An intangible asset is an identifiable
DEFINITION non-monetary asset without
physical substance. Identifiablility
arises when the asset is separable
or arises from contractual or other
legal rights.
RECOGNITION An intangible asset is recognized if,
and only if,
it is probable that there are
expected future benefits
cost can be reliably measured.
INITIAL Initial measurement is dependent
MEASUREMENT on the manner in which the
intangible asset is acquired:
Separate acquisition at cost
Business combination at fair
value at the acquisition date
Government grant at the fair
value of the grant or at the nominal
amount
Exchange of assets at the fair
value of the asset or cost when the
transaction lacks commercial
substance or fair values cannot be
reliably measured.
RESEARCH & Research costs are expensed but
DEVELOPMENT development costs may be
COST capitalized when specific criteria
are met.
SUBSEQUENT Cost model, or
MEASUREMENT Revaluation model
AMORTIZATION Useful life is finite or indefinite.
There is no assumption of 10 years
Intangible Asset with finite useful
life is amortized
PFRS for SMEs
Same as Full PFRS
A significant difference exists
between PFRS and PFRS for
SMEs in that the latter does
not allow for any internally
generated intangible assets to
be capitalized to the balance
sheet.
PFRS for SMEs differs from
PFRS in respect of the initial
measurement of intangible
assets acquired by way of a
government grant as under
PFRS for SMEs, such assets
must be measured at fair
value.
ALL research and
development costs are
expensed
Cost model only
Useful life is finite. It is
assumed to be not exceeding
10 years.
All intangible assets
 Intangible Asset with indefinite
useful life is not amortized
IMPAIRMENT Intangible Asset with finite useful
life is tested for impairment when
there is an indication
Intangible Asset with indefinite
useful life is tested for impairment
annually and when there is an
indication
including goodwill are
amortized
ALL intangible assets are
tested for impairment when
there is an indication that the
asset is impaired
 Section 19 BUSINESS COMBINATIONS AND GOODWILL
FULL PFRS
Business Combination is a
DEFINITION transaction or other event in which
an acquirer obtains control of one
or more businesses
Initially recognized part of the
CONTIGENT consideration transferred
CONSIDERATION Non-occurrence of a future event
(e.g. not meeting earnings target) is reliably measurable criteria
not considered to be a
measurement period adjustment-
therefore not adjusted against
goodwill
COST INCURRED IN Direct Cost Expensed
A BUSINESS Indirect Cost Expensed
COMBINATION Costs to issue and register stocks
Debited to APIC/Share Premium
Costs to issue debts Debited to
BIC
RECOGNIZING AND Recognized separately from
MEASURING goodwill if it either contractual or
ASSETS ACQUIRED separable
AND LIABILITIES
ASSUMED ON
INITIAL
RECOGNITION
PFRS for SMEs
Business Combination is
bringing together separate
entities or businesses into one
reporting entity
Initially recognized in the
cost of the combination only if
it meets probability and
If future event does not
occur, then any adjustments to
the cost of the business
combination are made against
goodwill.
Direct Cost Capitalized
Indirect Cost Expensed
Costs to issue and register
stocks Debited to APIC/Share
Premium
Costs to issue debts
Debited to BIC
Requires recognition if their
fair value can be measured
reliably

IDENTIFIABLE
INTANGIBLE ASSETS
EXCEPTIONS TO Recognize only where there is a Requires recognition of
RECOGNITION OR present obligation that arises from possible obligations if their fair
MEASUREMENT past events and its fair value can be value can be measured
PRINCIPLES, OR measured reliably reliably
BOTH, ON INITIAL
RECOGNITION

CONTIGENT LIABILITIES
 TERMS USED Acquisition Method Purchased Method

MEASURING Options: Proportionate share of

GOODWILL/ 1. Full Fair Value identifiable net assets (Partial
BAGAIN PURCHASE 2. Proportionate share of Goodwill)
GAIN identifiable net assets (partial
Goodwill)
VALUATION OF Cost less impairment losses Cost less impairment losses
GOODWILL and amortization (life should
be presumed to be 10 years)
 Section 20 LEASES
FULL PFRS PFRS for SMEs
A lease is is an agreement that Same as Full PFRS
DEFINITION transfers the right to use assets in
return for payment. A finance lease
transfers substantially all the risks
and rewards incidental to
ownership of an asset. An operating
lease is a lease other than a finance
lease.
: Same as Full PFRS
INITIAL Finance leases are initially measured
MEASUREMENT at amounts equal to the fair value
Lessees finance of the leased property or, if lower,
leases the present value of minimum lease
payments.
PFRS for SMEs includes
Lessees operating Operating lease payments are additional guidance on the
leases expensed on a straight line basis treatment of an operating
over the lease term unless another lease by a lessee, where
systematic basis is more payments payable to the
representative of the use of the lessor are structured to
asset. increase with inflation.
Lessors recognize assets under a Same as Full PFRS
Lessors finance finance lease in statement of
leases financial position as a receivable
equal to net investment in lease.
Lessors present assets subject to PFRS for SMEs allows
Lessors operating operating leases in the statement of recognition of structured
leases financial position according to the payments relating
nature of the asset. to inflation.

Lease income from operating leases

is recognized on a straight-line
basis over the lease term, unless
another systematic basis is more
representative.

Depreciation policy is consistent

with lessors normal depreciation
 policy for similar assets.

Initial direct costs incurred by

lessors in arranging leases are
added to carrying amount of leased
asset and expensed over lease term
on same basis as lease income.

Manufacturer or dealer lessor does

not recognize any selling profit on
entering into an operating lease
because it is not the equivalent of a
sale.
Sale and leaseback If a sale and leaseback transaction Same as Full PFRS
finance leases results in finance lease, the excess
of sale proceeds over carrying
amount is deferred and amortized
over the lease term by the
seller/lessee.
Sale and leaseback If a sale and leaseback results in an Same as Full PFRS
operating leases operating lease and the transaction
was at fair value, profit or loss is
recognized immediately.

If the sales price is below fair value,

profit or loss is recognized
immediately unless compensated
for by future below market price
payments, which are deferred and
amortized.

If the sale price was in excess of the

fair value, the excess is deferred
and amortized.
SUBSEQUENT Minimum lease payments are Same as Full PFRS
MEASUREMENT apportioned between finance
Lessees finance charges and reduction of liability
leases allocated to produce a constant
periodic rate of interest.
 An asset is depreciated over the
shorter of the lease term and
the useful life of the asset.
Lessors finance Finance income is allocated over Same as Full PFRS
leases lease term reflecting constant
periodic rate of return on lessors
net investment.
DERECOGNITION Lease classification is made at Same as Full PFRS
inception of the lease. If at any time
the lessee and lessor agree to
change the provisions of lease,
other than changes in
circumstances or estimates, the
revised agreement is regarded as
new agreement over its term.
 Section 21 PROVISIONS AND CONTINGENCIES
FULL PFRS PFRS for SMEs
A provision is a liability of uncertain Same as Full PFRS
DEFINITION timing or amount.

A liability is a present obligation of

the entity arising from past events,
the settlement of which is expected
to result in an outflow from the
entity of resources embodying
economic benefits.
Recognize a provision only when:
RECOGNITION a. The entity has an obligation at Same as Full PFRS
the reporting date as a result of
past event
b. It is probable that the entity will
be required to transfer economic
benefits in settlement
c. The amount of the obligation
can be estimated reliably

INITIAL The amount recognized as a Same as Full PFRS

MEASUREMENT provision is the best estimate of
the expenditure required to settle
the present obligation at the end of
the reporting period, which is the
amount that it would rationally pay
to settle the obligation at the end
of the reporting period or to
transfer it to a third party at that
time.

Where the effect of the time value

of money is material, the amount of
provision is the present value of
expenditures expected to be
required to settle the obligation at a
pre-tax discount rate that reflects
current market assessments of time
value of money and risks specific to
 liability.
SUBSEQUENT Provisions shall be reviewed at the Same as Full PFRS
MEASUREMENT end of each reporting date and
adjusted to reflect the current best
estimate of the provision. Where
discounting is used, the increase in
each period to reflect the passage
of time is recognized as borrowing
cost.

A provision is only used for

expenditures for which it was
originally recognized.
CONTINGENT A contingent liability is either: Same as Full PFRS
LIABILITIES a. A possible but uncertain
obligation
b. A present obligation that is
not recognized as a liability
because it is not probable
that an outflow will occur OR
the amount cannot be
measured reliably.
Contingent liabilities are disclosed
unless the possibility of outflow of
resources is remote.
CONTIGENT ASSET An entity does not recognize a Same as Full PFRS
contingent asset. However, when
the inflow of resources is virtually
certain, an asset is recognized.
DERECOGNITION A provision is derecognized when A provision is derecognized
no more resources are required when all obligations are
settling any obligations. settled.
 Section 22 LIABILITIES AND EQUITY
FULL PFRS
A financial liability is any liability The appendix to PFRS for SMEs
DEFINITION that is:
a) A contractual obligation:
To deliver cash or another
financial asset
or
To exchange financial assets or
financial liabilities under
unfavorable conditions
or
b) A contract that will or may be
settled in the entitys own equity
instruments and is:
A non-derivative for which the
entity is or may be obliged to
deliver a variable number of the
entitys own equity instruments or
A derivative that will or may be
settled other than by the exchange
of a fixed amount of cash or
another financial asset for a fixed
number of the entitys own equity
instruments. For this purpose the
entitys own equity instruments do
not include puttable financial
instruments and instruments that
impose on the entity an obligation
to deliver a pro rata share of the net equity instruments.
assets on liquidation, or instruments
that are contracts for the future
receipt or delivery of the entitys
own equity instruments.
RECOGNITION PAS 32 provides the principle that
the issuer of a financial instrument
PFRS for SMEs
contains the definition of a
financial liability as any liability
that is:
a) A contractual obligation:
To deliver cash or another
financial asset or
To exchange financial assets
or financial liabilities under
unfavorable conditions
or
b) A contract that will or may
be settled in the entitys own
equity instruments and:
The entity is or may be
obliged to deliver a variable
number of its own equity
instruments or
Will or may be settled other
than by the exchange of a
fixed amount of cash or
another financial asset for a
fixed number of the entitys
own equity instruments. For
this purpose, the entitys own
equity instruments do not
include instruments that are
contracts for the future receipt
or delivery of the entitys own
Same as Full PFRS
 classifies the instrument, or its
component parts, on initial
recognition as a financial liability, a
financial asset or an equity
instrument in accordance with the
substance of the contractual
arrangement and the definitions.

Some financial instruments that

meet the definition of a liability are
classified as equity because they
represent the residual
interest in the net assets of the
entity:

a) A puttable instrument that gives

holder right to sell back to
issuer or is automatically
repurchased by issuer on
occurrence
of uncertain future event, death or
retirement
b) Instruments subordinated to all
other classes classified as equity if
obligation to deliver share of net
assets only on liquidation.
c) Members shares in co-operative
entities (and similar) are equity if
the entity has an unconditional
right to refuse redemption, or
redemption is unconditionally
prohibited by local law, regulation
or the entitys governing charter.
EQUITY If an entity reacquires its own equity Same as Full PFRS
TRANSACTIONS instruments, these instruments
(treasury shares) are deducted from
equity.

No gain or loss is recognized in

profit or loss on the purchase, sale,
 issue or cancellation of an entitys
own equity instruments.
CONVERTIBLE DEBT The issuer of a non-derivative Same as Full PFRS
financial instrument must evaluate
the terms of the financial
instrument to determine whether it
contains both a liability and an
equity component. Such
components are classified
separately as financial liabilities,
financial assets or equity
instruments.

Classification of the liability and

equity components of a convertible
instrument is not revised.

Equity instruments are instruments

that evidence a residual interest in
the net assets of an entity.
Therefore, the equity component is
assigned the residual amount after
deducting from the fair value of the
instrument as a whole the amount
separately determined for the
liability component.
DISTRIBUTION TO Interest, dividends, losses and gains
OWNERS relating to a financial instrument or
a component that is a financial
liability are recognized as income or
expense in profit or loss.
Distributions to holders of an equity
instrument are recognized directly
in equity, net of any related income
tax benefit.
Full PFRS required an
interpretation (IFRIC 17) for
distributions of non-cash
assets. This guidance has been
incorporated into the PFRS for
SMEs. The major difference
between IFRIC 17 and the PFRS
for SMEs requirements is that
IFRIC 17 scopes out entities
under control. As these
transactions often occur when
a group of commonly
controlled entities are
reorganized, PFRS for SMEs
may be more prescriptive
than full PFRS in this regard.
 Section 23 REVENUE
FULL PFRS PFRS for SMEs
Revenue is the gross inflow of Same as Full PFRS
DEFINITION & economic benefits during the
MEASUREMENT period arising in the course of the
ordinary activities of an entity when
those inflows result in increases in
equity, other than increases relating
to contributions from equity
participants.

Revenue shall be measured at fair

value of the consideration
received or receivable
When ALL the following conditions Same as Full PFRS
RECOGNITION: are satisfied:
SALE OF GOODS The entity has transferred to the
buyer the significant risks and
rewards of ownership of goods
The entity retains neither
continuing managerial involvement
nor the effective control over the
goods sold.
The amount of revenue can be
measured reliably
It is probable that the economic
benefits associated with the
transaction will flow to the entity.
The costs incurred or to be
incurred in respect of the
transaction can be measured
reliably

RECOGNITION: Shall recognize revenue when ALL When the outcome of a

RENDERING OF of the following conditions are transaction involving rendering
SERVICES satisfied: of services can be estimated
The amount of revenue can be reliably, the revenue
measured reliably associated with the transaction
 It is probable that the economic
benefits associated with the
transaction will flow to the entity
The stage of completion of the
transaction at the end of the
reporting period can be measured
reliably and
The costs incurred for the
transaction and the costs to
complete the transaction can be
measured reliably
RECOGNITION: Shall recognize revenue arising
INTEREST, from interest, royalties and
ROYALTIES AND dividends when:
DIVIDENDS It is probable that the economic
benefits associated with the
transactions will flow to the entity
and
The amount of revenue can be
measured reliably
Revenue shall be recognized on the
following bases:
Interest Using effective interest
method
Royalties on an accrual basis in
shall be recognized by
reference to the stage of
completion of the transaction
at the end of the reporting
period.
The outcome of the
transaction can be estimated
reliably when ALL of the
following conditions are
satisfied:
The amount of revenue can
be measured reliably
It is probable that the
economic benefits associated
with the transaction will flow
to the entity
The stage of completion of
the transaction at the end of
the reporting period can be
measured reliably and
The costs incurred for the
transaction and the costs to
complete the transaction can
be measured reliably
Same as Full PFRS
 accordance with the substance of
the relevant agreement
Dividends When the
shareholders right to receive
payment is established
RECOGNITION: A company recognizes revenue over
CONSTRUCTION time if at least one of the Same as Full PFRS
CONTRACTS following two criteria is met:
1. Companys performance
creates or enhances an
asset that the customer
controls as the asset is
created or enhanced; or
2. Companys performance
does not create an asset
with an alternative use
If criterion 1 or 2 is met, then a
company recognizes revenue
over time if it can reasonably
estimate its progress toward
satisfaction of the performance
obligations.
Company recognizes revenues
and gross profits each period based
upon the progress of the
construction referred to as the
percentage-of-completion
method (such as cost-to-cost
method).
If criteria are not met, the
company recognizes revenues and
gross profit when the contract is
completed, referred to as the cost-
recovery (zero-profit) method.
This method recognizes revenue
only to the extent of costs incurred
that are expected to be recoverable.
Only after all costs are incurred is
gross profit recognized
 RECOGNITION: Depending on the economic
FRANCHISE RIGHTS substance of the rights, the
REVENUE OVER franchisor may be providing access
TIME t the right rather than transferring
control of the franchise rights. In
this case, the franchise revenue is
recognized over time, rather than
at a point in time.
DISCLOSURES a. The accounting policies
adopted for the recognition
of revenue, including the
method for determining
stage of completion
b. The amount of each category
of revenue showing
separately revenue arising
from sale of goods,
rendering of services,
interest, royalties, dividends,
commission, government
grants and any other
significant type of service
Same as Full PFRS
a. The accounting policies
adopted for the
recognition of revenue,
including the method
for determining stage
of completion of
transactions involving
the rendering of
services;
b. The amount of each
significant category of
revenue recognized
during the period,
including revenue
arising from: the sale of
goods, the rendering of
services, interest,
royalties, dividends and
c. The amount of revenue
arising from exchanges
of goods or services
included in each
significant category of
revenue.
 Section 24 GOVERNMENT GRANTS
FULL PFRS PFRS for SMEs
An assistance by the government
DEFINITION in the form of transfer of resources Same as Full PFRS
to an entity in return for past or
future compliance with specified
conditions relating to the
operating activities of the entity

RECOGNITION AND There are two broad options under a. Grant does not impose
MEASUREMENT PAS 20: the capital approach and specified future
the income approach. Accounting performance condition
and presentation could therefore be Recognized as income
different. when grant proceeds
are receivable
Revenue is not recognized until
there is a reasonable assurance that: b. Grant imposes specified
The entity complies with the future performance
conditions attached to the grants; condition Recognized
and as income when
The grants are receivable. performance are met

c. Grant received before

revenue recognition
criteria are met
Recognized as liability

Government grant shall be

measured at the fair value of
the asset received or
receivable
SIGNIFICANT 1. Government grant is 1. When conditions are
DIFFERENCES recognized when compliance actually satisfied
with specified conditions is
reasonably assured 2. Does not allow
2. Matching of grant income matching of grant with
with related cost related expense
3. Grant related to asset may 3. Grant as deferred
be treated as either deferred income until conditions
income or a reduction to are actually satisfied
carrying amount of the
asset
 Section 25 BORROWING COST
FULL PFRS PFRS for SMEs
Borrowing costs are interest and
DEFINITION other costs that an entity incurs Same as Full PFRS
in connection with the borrowing of
funds and may include:
Interest expense calculated using
the effective interest method
Finance charges in respect of
finance leases
Exchange differences arising from
foreign currency borrowings to the
extent that they are regarded as an
adjustment to interest costs.

RECOGNITION Borrowing costs that are directly Recognize ALL borrowing

attributable to the acquisition, costs as expense of the period
construction or production of a when incurred.
qualifying asset shall be capitalized
as part of the cost of the asset.

Borrowing costs that are not

directly attributable to a qualifying
asset shall be expensed when
incurred.
 Section 26 SHARE-BASED PAYMENT
FULL PFRS PFRS for SMEs
Share-based payment transactions
SCOPE include equity-settled and cash- Same as Full PFRS
settled share-based payments.
Programs established by law by
which equity instruments are
awarded for apparently nil or
inadequate consideration are
equity-settled share-based
payments.

RECOGNITION The goods or services received or Same as Full PFRS

acquired in a share-based payment
transaction are recognized when
the entity obtains the goods or
receives the services.

The entity also recognizes a

corresponding increase in equity if
the goods or services were received
in an equity-settled share-based
payment transaction or a liability if
the goods or services were acquired
in a cash-settled share-based
payment transaction.

When the goods or services

received do not qualify for
recognition as assets they are
recognized as an expense.

MEASUREMENT Transactions are measured at fair Transactions in respect of

EQUITY SETTLED value of the goods or services
SHARE-BASED received.
TRANSACTIONS
If the entity cannot estimate reliably
these fair values, which is deemed
always to be the case for
transactions with employees, the
goods or services received
from non-employees are
measured at fair value of the
goods or services received. If
the entity cannot estimate
reliably these fair values, the
transactions are measured at
 transactions are measured at the the fair value of the equity
fair value of the equity instruments instruments granted, ignoring
granted, ignoring any service or any service or non-market
non-market vesting vesting conditions.

Transactions with employees

are measured at the fair value
of the instruments granted,
ignoring any service or non-
market vesting conditions. A
three-tier hierarchy is
applied when measuring the
fair value of the equity
instruments:
1. Use of observable market
prices.
2. Use of specific observable
market data, such as a recent
transaction in the entitys
shares or a recent independent
fair valuation of the entity.
3. Use of a generally accepted
valuation technique that uses
market data to the greatest
extent practicable (directors
use their judgment to apply
the most appropriate valuation
method to determine the fair
value of the entitys shares).
A corresponding increase in
equity is recognized.
MEASUREMENT Cash-settled share-based payment
CASH-SETTLED transactions are measured at the Same as Full PFRS
SHARE-BASED fair value of the liability. Until the
TRANSACTION liability is settled, the fair value of
the liability is re-measured at each
reporting date and at the date of
final settlement, with any changes
in fair value recognized in profit or
loss.
MEASUREMENT OF Fair value on the date of grant, if Share Options must be
SHARE OPTIONS not measured reliably, intrinsic measured at fair value on the
value is used date of grant

Intrinsic value is the excess of the The intrinsic value is the

market price of the share over the excess of the market price of
option price the share over the option price
 Section 27 IMPAIRMENT OF ASSETS
FULL PFRS PFRS for SMEs
An asset is impaired when its
GENERAL carrying amount exceeds its Same as Full PFRS
PRINCIPLES recoverable amount. The
recoverable amount of an asset or a
cash generating unit is the higher of
its fair value less costs to sell and its
value in use.
An impairment loss must be An entity must recognize an
recognized immediately in profit or impairment loss immediately
loss, unless the asset is carried at in profit or loss. PFRS for SMEs
revalued amount in accordance differs from PFRS in that it
with another standard. Any does not permit the
impairment loss of a revalued asset application of revaluation
must be treated as a revaluation models
decrease in accordance with that
other standard.
INDICATORS OF An entity must assess at the end of PFRS for SMEs differs from
IMPAIRMENT each reporting period whether PFRS in that it does not
there is any indication that an asset require an annual
may be impaired. If any such impairment test for intangible
indication exists, the entity must assets and goodwill.
estimate the recoverable amount of
the asset. Irrespective of whether Instead these assets are tested
there is any indication of for impairment only if there
impairment, an entity must also: are indicators that
impairment may exist.
a) Test an intangible asset with an
indefinite useful life or an intangible
asset not yet available for use for
impairment annually by comparing
its carrying amount with its
recoverable amount
b) Test goodwill acquired in a
business combination for
impairment annually.

In assessing whether there is any

indication that an asset may be
 impaired, an entity must consider,
as a minimum, external and internal
sources of information.

RECOVERABLE Recoverable amount is the higher

AMOUNT of an assets (or CGUs) fair value Same as Full PFRS
less costs to sell and its value in use.
If either exceeds the carrying
amount, it is not necessary to
estimate the other amount.
VALUE IN USE The value in use is defined as the
present value of the future cash Same as Full PFRS
flows expected to be derived from
an asset or CGU. Future cash flows
are estimated for the asset in its
current condition. Cash inflows or
outflows from financing activities
and income tax receipts or
payments are not included.
FAIR VALUE LESS When performing the impairment
COST TO SELL test of an asset (or CGU), the entity
estimates the fair value less costs to Same as Full PFRS
sell based on a hierarchy of
reliability of evidence:

A price in a binding sale

agreement in an arms length or
market price in an active market,
less costs of disposal.

Best available information to

reflect the amount that an entity
could obtain at the reporting date
from disposal of the asset in an
arms length transaction between
knowledgeable, willing parties, less
costs of disposal. Outcome of
recent transactions for similar assets
 within the same industry need to be
considered.

REVERSAL OF AN An impairment loss recognized for

IMPAIRMENT LOSS goodwill must not be reversed in a Same as Full PFRS
subsequent period.

Reversal shall not exceed the

carrying amount that would have
been determined, had no
impairment loss been recognized
for the asset in prior years
Assets with finite useful lives are ALL assets including goodwill
NOTABLE tested for impairment when there is are tested for impairment
DIFFERENCE an indication. when there is an indication
that the asset is impaired
Assets with indefinite useful lives are
tested annually and when there is
an indication
 Section 28 EMPLOYEE BENEFITS
FULL PFRS PFRS for SMEs
Employee benefits are all forms of
EMPLOYEE consideration given by an entity in Same as Full PFRS
BENEFITS exchange for services rendered by
its employees. These benefits
include:
Short-term employee benefits
(such as wages, salaries, profit-
sharing and bonuses).
Termination benefits (such as
severance and redundancy pay).
Post-employment benefits (such
as retirement benefit plans).
Other long-term employee
benefits (such as long-term service
leave and jubilee benefits).
PAST SERVICE Expensed immediately Same as Full PFRS
COSTS
ACTUARIAL GAINS Actuarial gain and loss are Actuarial gains and losses on
AND LOSSES recognized through other liabilities are recognized in
comprehensive income. However, full in profit in loss or in
amounts recognized through other other comprehensive income
comprehensive income are (without recycling) in the
permanently excluded from period in which they occur.
profit or loss
It has an accounting policy
choice.
DEFINED BENEFIT Net total of the following:
LIABILITY a. Present value of benefit Same as Full PFRS
obligation at year-end
b. Minus the fair value of plan
assets at year-end
EXPECTED RETURN Not applicable Not applicable
MEASUREMENT OF The projected unit credit method The projected unit credit
DEFINED BENEFIT must be used method is used in measuring
LIABILITY the defined benefit liability if
the information that is needed
to make such a calculation is
already available or can be
 obtained without undue cost
or effort.

If this is not the case, an

alternative method is
permitted in which future
salary, future service and
possible mortality between
reporting date and the date
employees are expected to
begin receiving
postemployment benefits are
not considered
RECOGNITION An entity recognizes the cost of all
employee benefits to which its Same as Full PFRS
employees have become entitled
during the reporting period:
As a liability, after deducting
amounts that have been paid either
directly to the employees or as a
contribution to an employee benefit
fund. An entity recognizes any asset
to the extent that the pre-payment
will lead to a reduction in future
payments or a cash refund
As an expense, unless other
section requires the cost to be
recognized as part of an asset.
FAIR VALUE OF Changes in fair value of plant assets ALL changes in fair value of
PLAN ASSETS can be recognized in profit or loss plan assets are recognized in
or other comprehensive income profit or loss.
OTHER LONG-TERM Other long-term benefits include
EMPLOYEE long-service and sabbatical leave, Same as Full PFRS
BENEFITS jubilee and other long-service
benefits,
long-term disability benefits and
compensation, and bonus
payments paid after 12 months or
more after the
end of the period in which they are
earned. The amount recognized as
a liability for other long-term
benefits is the net total of:
The present value of the benefit
obligation at the reporting date;
Less the fair value at the reporting
date of plan assets (if any) out of
which the obligations are to be
settled directly.
 Section 29 INCOME TAX
FULL PFRS
The tax base of an asset or is the
TAX BASE amount that will be deductible for
tax purposes against any taxable
economic benefits that will flow to
an entity when it recovers the
carrying amount of the asset.
The tax base of a liability is its
carrying amount, less any amount
that will be deductible for tax
purposes in respect of that liability
in future periods.
An entitys expectation as to the
manner in which it will recover the
carrying amount of an asset or
settle the carrying amount of a
liability can affect the tax base. For
example, if an entity were to pay a
different amount of tax depending
on whether an asset is consumed in
the business or sold, the entity
measures deferred tax according to
the expected method of realization.
This effectively makes deferred tax
under PAS 12 a function of
managements intent.
A deferred tax asset must be
RECOGNITION OF recognized for all deductible
DEFERRED TAX temporary differences to the extent
ASSETS that it is probable that taxable profit
will be available against which the
deductible temporary difference
can be utilized.
PAS 12 also requires an entity to
reassess the recognition of deferred
tax assets and recognize previously
PFRS for SMEs
PFRS for SMEs eliminates
management intent from the
determination of the tax base
since it is determined
assuming an entity sells or
settles all its assets and
liabilities at each reporting
date.
This may cause practical
difficulties for preparers as
more work may be required to
calculate the tax base as
hypothetical tax calculations
will need to be done to
determine the tax base.
Deferred tax assets that were
previously not recorded under
PAS 12 will now have to be
recorded under PFRS for SMEs
with offsetting valuation
allowances. For SMEs, this will
require additional tracking and
documentation for each
deferred tax asset and its
related valuation allowances
 unrecognized deferred tax assets at when compared with PAS 12.
each balance sheet date to the
extent it has become probable that
the asset will be recovered.

A deferred tax asset is not reported

gross, less a valuation allowance,
but as an amount representing the
amount of income taxes
recoverable in future periods in
respect of deductible temporary
differences, the carry forward of
unused tax losses and the carry
forward of unused tax credits.

Movements in deferred tax assets

are recognized in profit or loss,
unless the tax relates to items
outside profit or loss.
BACKWARD PAS 12 requires current tax and An entity must recognize tax
TRACING deferred tax to be charged or expense in the same
credited in other comprehensive component of total
income (OCI) or directly in equity if comprehensive income or
the tax relates to items that were equity as the transaction or
credited or charged, whether in the other event that resulted in the
current or previous period, in OCI or tax expense.
directly in equity. Subsequent
changes to those amounts are also
allocated to OCI or equity as
applicable.
INITIAL PAS 12 currently requires a deferred PFRS for SMEs does not
RECOGNITION tax asset or liability to be describe how to account for
EXEMPTION recognized for all deductible or temporary differences on the
taxable temporary differences, initial recognition of items that
except for: are not goodwill. Therefore,
entities will need to develop
A deferred tax liability arising from an accounting policy to deal
the initial recognition of goodwill or with these differences.
A deferred tax asset or liability
arising from the initial recognition
 of an asset or liability in a
transaction which is not a business
combination and at the time of the
transaction affects neither
accounting profit nor taxable profit
or loss.
TEMPORARY Temporary differences are
DIFFERENCES differences between the tax basis of Same as Full PFRS
an asset or liability and its carrying
amount in the financial statements
that will result in a taxable or
deductible amount when the
carrying amount of the asset or
liability is recovered or settled.
UNCERTAIN TAX There is no specific guidance under An entity recognizes the effect
POSITION PAS 12. In practice, management of the possible outcomes of a
records the liability measured as review by the tax authorities. It
either is measured using the
a single best estimate or a weighted probability-weighted average
average probability of the possible amount of all the possible
outcomes, if the likelihood is outcomes, assuming that the
greater than 50%. tax authorities will review the
amounts reported and have
full knowledge of all relevant
information.
APPLICABLE TAX An entity must measure tax assets
RATE and liabilities using the tax rate Same as Full PFRS
applicable to undistributed profits.

Deferred taxes are measured based

on the tax rates and tax laws that
are enacted or substantively
enacted at the reporting date.
CLASSIFICATION PAS 12 follows the requirements of
PAS 1 Presentation of Financial Same as Full PFRS
Statements which requires all
deferred tax assets and liabilities to
be classified as non-current,
regardless of the classification of
the underlying asset and liability
giving rise to the temporary
difference.
 Section 30 FOREIGN CURRENCY TRANSLATION
FULL PFRS PFRS for SMEs
Functional currency the currency
DEFINITION of the primary economic Same as Full PFRS
environment in which the entity
operates.

Presentation currency the

currency in which the financial
statements are presented.
All components of the financial
FUNCTIONAL statements are measured in the Same as Full PFRS
CURRENCY functional currency. All transactions
entered into in currencies other
than the functional currency are
treated as transactions in a foreign
currency.
FOREIGN A foreign currency transaction must
CURRENCY be recorded, on initial recognition in Same as Full PFRS
TRANSACTION the functional currency, by applying
to the foreign currency amount the
spot exchange rate between the
functional currency and the foreign
currency at the date of the
transition.
For practical reasons, a rate that
approximates the actual rate at the
date of the transaction might be
used if it does not fluctuate
significantly.

At the end of each reporting period:

Foreign currency monetary items

must be translated using the
closing rate
Non-monetary items that are
measured in terms of historical cost
in a foreign currency must be
translated using the exchange rate
 at the date of the transaction
Non-monetary items that are
measured at fair value in a foreign
currency must be translated using
the exchange rates at the date
when the fair value was determined.
RECOGNITION OF Exchange differences on monetary Same as PFRS for SMEs,
EXCHANGE items are recognized in profit or loss except that exchange
DIFFERENCES for the period except for those differences on a monetary item
differences arising on a monetary that forms part of a net
item that forms part of an entitys investment in a foreign
net investment in a foreign entity operation are reclassified from
(subject to strict criteria of what equity to profit or loss on
qualifies as net investment). In the disposal of the foreign
consolidated financial statements, operation.
such exchange differences are
recognized as a separate
component in equity.

Recycling through profit or loss of

any cumulative exchange
differences that were previously
recognized in equity on disposal of
a foreign operation is not
permitted.
CHANGE IN A change in functional currency is
FUNCTIONAL justified only if there are changes in Same as Full PFRS
CURRENCY underlying transactions, events and
conditions that are relevant to the
entity.

The effect of a change in functional

currency must be accounted for
prospectively from the date of the
change.
An entity may choose to present its
PRESENTATION financial statements in any currency. Same as Full PFRS
CURRENCY If the presentation currency differs
from the functional currency, an
entity translates its items of income
 and expense and financial position
into the presentation currency.
KEY DIFFERENCE The Full PFRS allows or requires
cumulative exchange differences
that relate to a foreign operation
that were previously recognized in
other comprehensive income to be
reclassified from equity to profit or
loss (as a reclassification
adjustment) when the gain or loss
on disposal of the foreign operation
is recognized.
The PFRS for SMEs does not
allow or require cumulative
exchange differences that
relate to a foreign operation
that were previously
recognized in other
comprehensive income to be
reclassified from equity to
profit or loss (as a
reclassification adjustment)
when the gain or loss on
disposal of the foreign
operation is recognized.
 Section 31 HYPERINFLATION
FULL PFRS PFRS for SMEs
The standard does not establish an This section does not
INDICATORS OF absolute rate at which establish an absolute rate at
HYPERINFLATION hyperinflation is deemed to arise. which an economy is deemed
Hyperinflation is indicated by hyperinflationary. An entity
characteristics of the economic must make that judgment by
environment of a country. The considering all information
standard gives a number of available, using the given
indicators of hyperinflation, which indicators of hyperinflation
are identical to those included in
PFRS for SMEs.
Where an entitys functional
PRESENTATION currency is the currency of a Same as Full PFRS
hyperinflationary economy, the
financial statements are stated in
terms of the measuring unit
current at the end of the reporting
period. The gain or loss on the net
monetary position is included in
profit or loss and separately
disclosed.
GAIN OR LOSS ON The gain or loss on the net
NET MONETARY monetary position must be Same as Full PFRS
POSITION included in profit or loss and
separately disclosed.
ECONOMIES CEASING When an economy ceases to be
TO BE hyperinflationary, and an entity Same as Full PFRS
HYPERINFLATIONARY discontinues the preparation and
presentation of financial
statements in accordance with this
standard, it treats the amounts
expressed in the measuring unit
current at the end of the previous
reporting period as the basis for
the carrying amounts in its
subsequent financial statements.
KEY DIFFERENCE Full PFRS does set out specific
procedures for the translation of
the result and financial position of
an entity whose functional
currency is the currency of a
hyperinflationary economy into a
different presentation currency.
PFRS does not set out specific
procedures for the translation
of the result and financial
position of an entity whose
functional currency is the
currency of a
hyperinflationary economy
into a different presentation
currency.
 Section 32 EVENTS AFTER THE END OF THE REPORTING PERIOD
FULL PFRS PFRS for SMEs
Events after the end of the
DEFINITIONS reporting period are classified as: Same as Full PFRS

Adjusting events when they

provide evidence of a condition that
existed at the end of the reporting
period
Non-adjusting events when they
are indicative of conditions that
arose after the end of the reporting
period.

Events after the end of the

reporting period would include all
events up to the date the financial
statements are authorized for issue.
An entity must adjust the amounts
RECOGNITION AND recognized in its financial Same as Full PFRS
MEASUREMENT statements, including related
disclosures, to reflect adjusting
events after the end of the
reporting period.

An entity must not adjust the

amounts recognized in its financial
statements to reflect non-adjusting
events after the end of the
reporting period.
DIVIDENDS Dividends proposed or declared
after the end of the reporting Same as Full PFRS
period are not recognized as a
liability in the reporting period.
DATE OF Management discloses the date on
AUTHORIZATION which the financial statements were Same as Full PFRS
FOR ISSUE authorized for issue and who gave
that authorization. If the owners or
other persons have the power to
amend the financial statements
after issue, this fact is also
disclosed.
 Section 33 RELATED PARTY DISCLOSURES
FULL PFRS PFRS for SMEs
A party is related to an entity if:
DEFINITIONS Same as Full PFRS
a) Directly, or indirectly, the party:
Controls, is controlled by, or is
under common control with the
entity
Has significant influence or
Has joint control

b) The party is an associate of the

entity

c) The party is a joint venture in

which the entity is a venture

d) The party is a member of the key

management personnel

e) The party is a close member of

the family in (a) or (d) above

f) The party is an entity that is

controlled, jointly controlled or
significantly influenced by an
individual in (d) or (e)

g) The party is a post-employment

benefit plan for the benefit of
employees of the entity or any
related entity.
Relationships between a parent and
SUBSIDIARY its subsidiaries must be disclosed Same as Full PFRS
RELATIONSHIPS irrespective of whether there are
any related party transactions.

Entities must disclose the name of

the parent and the ultimate
controlling party.
DISCLOSURES Where there have been related-
party transactions, disclosure is Same as Full PFRS
made of the nature of the
relationship, the amount of
transactions, and outstanding
balances and other elements
necessary for a clear understanding
of the financial statements (for
example, volume and amounts of
transactions, amounts outstanding
and pricing policies).
 Section 34 SPECIALISED ACTIVITIES
FULL PFRS
AGRICULTURE Biological asset: a living animal or
plant.
DEFINITIONS
Agricultural produce: the
harvested product of biological
assets.
Similar to PFRS for SMEs; however,
RECOGNITION AND exemption from measurement at
MEASUREMENT fair value is only allowed if the fair
value cannot be measured reliably.
This is the case for biological assets
for which market-determined prices
or values are not available and for
which alternative estimates of fair
value are determined to be clearly
unreliable.
In such cases, biological assets are
measured at cost.
PFRS for SMEs
Same as Full PFRS
An entity involved in
agricultural activity measures
biological assets at fair value
less cost to sell where such fair
value is readily determinable
without undue cost or effort.
Where fair value is not used,
the entity measures such
assets at cost less any
accumulated depreciation and
any accumulated impairment
losses.
The agricultural produce
harvested from biological
assets is measured at fair value
less estimated costs to sell at
the point of harvest.

Gains or losses on initial

recognition and from change
in fair value are recognized in
profit or loss of the period
EXTRACTIVE Tangible Asset Initially at cost; Tangible Asset Initially at
INDUSTRIES Subsequently at cost OR revaluation cost; Subsequently at cost OR
model revaluation model
RECOGNITION AND
MEASUREMENT Intangible Asset Initially at cost; Intangible Asset- Initially at
Subsequently at cost OR revaluation cost; Subsequently at cost
model model only
SERVICE An arrangement whereby a
CONCESSION government or other public sector Same as Full PFRS
ARRANGEMENTS body contracts with a private
operator to develop, operate and
DEFINITION maintain infrastructure assets such
as roads, prisons and hospitals.
FINANCIAL ASSET The amount due from or at the The operator initially measures
MODEL direction of the grantor is the financial asset at its fair
accounted for in accordance with value. Thereafter, it follows
PAS 39 Financial Instruments: Section 11 Basic Financial
Recognition and Measurement as a Instruments and Section 12
loan or receivable, an available-for- Other Financial Instruments
sale financial asset, or if so Issues in accounting for the
designated upon initial recognition, financial asset
a financial asset at fair value
through profit or loss.
INTANGIBLE ASSET The consideration is recognized at
MODEL fair value. Same as Full PFRS
PAS 38 Intangible Assets applies to
the measurement of any intangible
asset recognized and it is measured
at cost less amortization and
impairment losses.
.