1. Purpose
1.1. Prescribes account treatment for "inventories".
1.2. Recognizes PRIMARY ISSUE in accounting inventory
1.2.1. Determination of cost to be recognized as asset
1.2.2. Determination of cost to be recognized as expense
1.3. Provides guidance in "Cost Determination" of inventories
2. Exemptions on its applications
2.1. Applied to all except
2.1.1. Assets accounted for other standards
2.1.1.1. Financial Instruments (PAS 32 and PFRS 9)
2.1.1.2. Biological assets and agricultural produce at the point of harvest (PAS 41)
2.1.2. Assets not measured under LCNRV under PAS 2
2.1.2.1. Producers of agricultural, forest and mineral products measured at NRV
2.1.2.2. Commodity broker-traders measured at FV less cost
3. PAS 9: Financial Instruments
3.1. Manner of Recognition
3.1.1. Initial recognition
3.1.1.1. Regular way transactions
3.1.1.1.1. Trade date accounting
3.1.1.1.2. Settlement date accounting
3.2. Recognition Criteria
3.2.1. When the entity becomes a party to the contractual provisions of the instrument
3.3. Derecognition Critetia
3.3.1. Derecognition of financial assets
3.3.1.1. Derecognize a financial asset when:
3.3.1.1.1. Contractual rights to the cash flows from the financial asset expire
3.3.1.1.2. When an entity transfers
3.3.2. Derecognition of financial liabilities
3.3.2.1. Derecognize a financial liability when:
3.3.2.1.1. It is extinguished and when the obligation specified in the contract is:
3.4. Financial Assets
3.4.1. Basis of Classification
3.4.1.1. Business Model
3.4.1.1.1. Objective: Hold assets to collect contractual cash flows (+sell)
3.4.1.2. Contractual Cash Flow Characteristics
3.4.1.2.1. Cash flows on specified dates that are solely: Principal + Interest
3.4.2. Categories
3.4.2.1. Measured at Amortized Cost
3.4.2.1.1. Business model + Contractual CF
3.4.2.2. Measured at Fair Value through Profit/Loss
3.4.2.2.1. All other financial assets
3.4.2.3. Measured at Fair Value through Other Comprehensive Income (OCI)
3.4.2.3.1. Equity Investments not held for trading
3.4.2.3.2. Business model + Contractual Cash Flow Test
3.5. Financial Liabilities
3.5.1. Categories
3.5.1.1. Financial Liabilities at Fair Value through Profit or Loss
3.5.1.1.1. Held for trading
3.5.1.1.2. Designated at FVTPL
3.5.1.2. Financial Liabilities at Amortized cost
3.5.1.2.1. All other liabilities
3.5.2. Other Categories
3.5.2.1. Liabilities related to failed derecognition of assets
3.5.2.2. Financial guarantee contracts
3.5.2.3. Some loan commitments
3.6. Manner of Measurement on Financial Instrument
3.6.1. Initial Measurement
3.6.1.1. Financial Instrument (FA + FL) at Fair Value through Profit/Loss (FVTPL)
3.6.1.1.1. Fair Value
3.6.1.2. Other Financial Instrument (FA + FL)
3.6.1.2.1. Fair Value + Transaction Cost
3.6.2. Subsequent Measurement
3.6.2.1. Fair Value
3.6.2.1.1. Fair Value through P/L
3.6.2.1.2. Fair Value through OCI
3.6.2.2. Amortized Cost
3.6.2.2.1. No subsequent measurement
3.6.2.2.2. If impaired, measured via P/L
3.6.2.2.3. Uses P/L (Effective Interest Rate)
3.7. Impairment
3.7.1. An entity shall recognize a loss allowance for expect credit losses
3.7.1.1. Measured through:
3.7.1.1.1. FA at Amortized Cost
3.7.1.1.2. FA at FV-OCI (Meets both contractual CF Test and Business Model Test)
3.7.1.1.3. Lease receivables (IFRS 19)
3.7.1.1.4. Contract assets (IFRS 15)
3.7.1.1.5. Loan Commitments
3.7.1.1.6. Financial guarantee contracts
3.7.2. Manner of Measurement
3.7.2.1. General approach
3.7.2.1.1. Based on 3 stages
3.7.2.1.2. Applicable to all financial assets subject to impairment except:
3.7.2.2. Simplified approach
3.7.2.2.1. No stage
3.8. Embedded Derivatives
3.8.1. Hybrid Instrument
3.8.1.1. Non-derivative host contract
3.8.1.1.1. Open for Separation
3.8.1.1.2. Financial Asset
3.8.1.2. Embedded derivative
3.8.1.2.1. Foreign currency forward
3.8.1.2.2. Interest rate floor/cap
3.9. Hedge Accounting
3.9.1. Definition
3.9.1.1. Designating one or more hedging instruments so that their change in fair value is an offset to the "change in FV" or "cash flows" of a hedged item
3.9.2. Categories
3.9.2.1. Fair Value Hedge
3.9.2.2. Cash flow hedge
3.9.2.3. Hedge of a net investment in a foreign operation
3.9.2.4. The following contains specified conditions and manner of accounting.
4. Definition
4.1. Inventories are assets:
4.1.1. Held for sale in the ordinary course of business
4.1.2. Process of production for sale
4.1.3. Raw materials and manufacturing supplies
4.1.4. Measurement
4.1.4.1. Cost of Inventories
4.1.4.1.1. Purchase Cost
4.1.4.1.2. Conversion Costs
4.1.4.1.3. Other Costs
4.1.4.1.4. The following are excluded from the cost:
4.1.4.2. Lower of Cost and Net Realizable Value
5. Cost Formulas Provided
5.1. Specific Identification
5.1.1. Applicable to inventories:
5.1.1.1. Not ordinarily interchangeable
5.1.1.2. Segregated for specific projects
5.2. First-In, First Out (FIFO)
5.2.1. Inventories purchased first are sold first
5.3. Weighted Average
5.3.1. Applicable to:
5.3.1.1. Cost of Sales
5.3.1.2. Ending Inventory
5.3.1.3. Inventories purchased during the period
5.3.2. Calculated on a periodic basis
6. PAS 41: Agriculture
6.1. Scope
6.1.1. Biological assets, except for bearer plants (PAS 16)
6.1.2. Agricultural produce at the point of harvest
6.1.3. Government grants covered by paragraphs 34 and 35
6.2. Recognition Criteria
6.2.1. The entity controls the asset as a result of past events
6.2.2. It is probable that the future economic benefits associated with the asset will flow to the entity
6.2.3. The fair value or cost of the asset can be measured reliably
6.3. Scope and key definitions
6.3.1. Biological Asset
6.3.1.1. Living animal or plant
6.3.2. Bearer plant
6.3.2.1. A living plant that is/has:
6.3.2.1.1. Used in the production or supply of agricultural produce
6.3.2.1.2. Expected to bear produce for more than one period
6.3.2.1.3. Has remote likelihood of being sold as agricultural produce, except for incidental scrap sales
6.3.2.2. The following are plants not considered a "bearer plant"
6.3.2.2.1. Plants cultivated to be harvested as agricultural produce
6.3.2.2.2. Plants cultivated to produce agricultural produce when there is more than a remote likelihood that the entity will also harvest and sell the plant as agricultural produce
6.3.2.2.3. Annual crops
6.3.3. Agricultural produce
6.3.3.1. The harvested produce of the entity's biological assets
6.3.4. Agricultural activity
6.3.4.1. The management by an entity of the biological transformation
6.3.4.2. Harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets
6.3.4.3. Exemptions
6.3.4.3.1. Harvesting from unmanaged sources
6.4. Measurement on:
6.4.1. Biological Assets
6.4.1.1. Initial: Fair Value less Costs to sell
6.4.1.2. Subsequent: Fair Value Less Costs to sell
6.4.1.3. When fair value cannot be measured reliably: Cost less Any accumulated depreciation and any accumulated impairment loss
6.4.2. Agricultural produce
6.4.2.1. Initial: Fair value less Costs to sell at the point of harvest
6.4.2.2. Subsequent: NRV
6.4.2.3. Point-of-sale costs: Exclude transport and other costs necessary to get the assets to a market
6.4.3. Gains and losses
6.4.3.1. Gain or loss on changes in fair value less cost to sell
6.4.3.2. Gain or loss on initial recognition of agricultural produce
6.4.3.3. Gain or loss on initial recognition of biological asset
6.5. Exemptions on its application
6.5.1. Does not apply to:
6.5.1.1. Land related to agricultural activity
6.5.1.1.1. PAS 16
6.5.1.1.2. PAS 40
6.5.1.2. Bearer plants related to agricultural activity
6.5.1.2.1. PAS 16
6.5.1.3. Government grants related to bearer plants
6.5.1.3.1. PAS 20
6.5.1.4. Intangible assets related to agricultural activity
6.5.1.4.1. PAS 38
6.6. Government grants
6.6.1. Applicable to biological assets measured at fair value less costs to sell
6.6.2. Unconditional government grant
6.6.2.1. Recognize income when the grant becomes receivable
6.6.3. Conditional government grant
6.6.3.1. Recognize income only when the conditions of the grant are met
6.6.4. Conditional government grant - piecemeal satisfaction
6.6.4.1. Recognize income proportionately or through straight-line method
7. PAS 28: Investment in Associates and Joint Ventures
7.1. Objectives
7.1.1. To prescribe the accounting for associates
7.1.2. To set out the requirements for the application of equity method
7.1.2.1. Applicable to
7.1.2.1.1. Associate
7.1.2.1.2. Joint venture
7.2. Recognition Criteria (either of these two)
7.2.1. An entity with joint control
7.2.2. An entity with recognized "significant influence"
7.2.2.1. Holding directly or indirectly of more than 20% but less than 50% of the voting power over the investee
7.2.2.2. A power to participate in the financial and operating policy decisions of the investee but is not control or joint control of these policies
7.2.2.3. Evidences of Significant Influence
7.2.2.3.1. Representation in Board of Directors
7.2.2.3.2. Interchange of management
7.2.2.3.3. Participation in policy making
7.2.2.3.4. Material transactions
7.3. Manner of Measurement
7.3.1. Equity Method
7.3.1.1. Exemptions of an entity to equity method
7.3.1.1.1. Entity is a subsidiary of another entity
7.3.1.1.2. Entity's instruments are not traded
7.3.1.1.3. Entity is not in process of issuing publicly traded securities
7.3.1.1.4. The ultimate/any intermediary parent produces consolidated FS
7.3.1.2. Initial recognition
7.3.1.2.1. At cost
7.3.1.3. After the acquisition date
7.3.1.3.1. Investor's share on investee's P/L
7.3.1.3.2. Distributions received from investee
7.3.1.4. Standards
7.3.1.4.1. Similar to consolidation procedures (IFRS 10)
7.3.1.4.2. Uniform accounting policies and same reporting date
7.3.1.4.3. Investor's share on gains and losses from mutual transactions is eliminated
7.3.1.4.4. Losses of an investee should not reduce its investment below 0
7.3.1.5. Basis of derecognition to equity method
7.3.1.5.1. When significant influence ceases
7.3.2. Other applicable method
7.3.2.1. When held by venture capital and similar entities (IFRS 9)
7.3.2.2. When classified as held for sale (IFRS 5)