International Financial Reporting Standards® as issued at January 2010 This edition published in two parts PART A International Financial Reporting Standards® as issued at January 2010 This edition published in two parts PART A The consolidated text of International Financial Reporting Standards (IFRSs®) including International Accounting Standards (IASs®) and Interpretations, and the Preface to IFRSs as issued at January 2010 For the accompanying documents published with IFRSs, and other relevant material, see Part B of this edition International Accounting Standards Board® 30 Cannon Street London EC4M 6XH United Kingdom Telephone: +44 (0)20 7246 6410 Fax: +44 (0)20 7246 6411 Email: iasb@iasb.org Publications Telephone: +44 (0)20 7332 2730 Publications Fax: +44 (0)20 7332 2749 Publications Email: publications@iasb.org Web: www.iasb.org IFRSs together with their accompanying documents are issued by the International Accounting Standards Board (IASB), 30 Cannon Street, London EC4M 6XH, United Kingdom Tel: +44 (0)20 7246 6410 Fax: +44 (0)20 7246 6411 Email: iasb@iasb.org Web: www.iasb.org ISBN for this part: 978-1-907026-61-4 ISBN for complete publication (two parts): 978-1-907026-60-7 Copyright © 2010 International Accounting Standards Committee Foundation (IASCF) International Financial Reporting Standards, International Accounting Standards, Interpretations, Exposure Drafts, and other IASB publications are copyright of the IASCF The approved text of International Financial Reporting Standards, including International Accounting Standards and Interpretations, is that issued by the IASB in the English language Copies may be obtained from the IASCF Publications Department Please address publication and copyright matters to: IASC Foundation Publications Department 30 Cannon Street, London EC4M 6XH, United Kingdom Telephone: +44 (0)20 7332 2730 Fax: +44 (0)20 7332 2749 Email: publications@iasb.org Web: www.iasb.org All rights reserved No part of this publication may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without prior permission in writing from the IASCF The IASB, the IASCF, the authors and the publishers not accept responsibility for loss caused to any person who acts or refrains from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise The IASB logo/the IASCF logo/‘Hexagon Device’, the IASC Foundation Education logo, ‘IASC Foundation’, ‘eIFRS’, ‘IAS’, ‘IASB’, ‘IASC’, ‘IASCF’, ‘IASs’, ‘IFRIC’, ‘IFRS’, ‘IFRSs’, ‘International Accounting Standards’, ‘International Financial Reporting Standards’ and ‘SIC’ are Trade Marks of the IASCF Contents Changes in this edition A1 Introduction to this edition A5 Preface to International Financial Reporting Standards A15 International Financial Reporting Standards (IFRSs) IFRS First-time Adoption of International Financial Reporting Standards A21 IFRS Share-based Payment A51 IFRS Business Combinations A93 IFRS Insurance Contracts A141 IFRS Non-current Assets Held for Sale and Discontinued Operations A171 IFRS Exploration for and Evaluation of Mineral Resources A191 IFRS Financial Instruments: Disclosures A203 IFRS Operating Segments A237 IFRS Financial Instruments A255 International Accounting Standards (IASs) IAS Presentation of Financial Statements A283 IAS Inventories A321 IAS Statement of Cash Flows A337 IAS Accounting Policies, Changes in Accounting Estimates and Errors A351 IAS 10 Events after the Reporting Period A371 IAS 11 Construction Contracts A383 IAS 12 Income Taxes A395 IAS 16 Property, Plant and Equipment A431 IAS 17 Leases A455 IAS 18 Revenue A475 IAS 19 Employee Benefits A487 IAS 20 Accounting for Government Grants and Disclosure of Government Assistance A541 IAS 21 The Effects of Changes in Foreign Exchange Rates A551 IAS 23 Borrowing Costs A573 IAS 24 Related Party Disclosures A583 IAS 26 Accounting and Reporting by Retirement Benefit Plans A595 © IASCF v IAS 27 Consolidated and Separate Financial Statements A607 IAS 28 Investments in Associates A625 IAS 29 Financial Reporting in Hyperinflationary Economies A641 IAS 31 Interests in Joint Ventures A651 IAS 32 Financial Instruments: Presentation A669 IAS 33 Earnings per Share A711 IAS 34 Interim Financial Reporting A737 IAS 36 Impairment of Assets A753 IAS 37 Provisions, Contingent Liabilities and Contingent Assets A803 IAS 38 Intangible Assets A827 IAS 39 Financial Instruments: Recognition and Measurement A863 IAS 40 Investment Property A949 IAS 41 Agriculture A973 Interpretations IFRIC Changes in Existing Decommissioning, Restoration and Similar Liabilities A989 IFRIC Members’ Shares in Co-operative Entities and Similar Instruments A997 IFRIC Determining whether an Arrangement contains a Lease A1009 IFRIC Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds A1019 IFRIC Liabilities arising from Participating in a Specific Market— Waste Electrical and Electronic Equipment A1027 IFRIC Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies A1033 IFRIC Reassessment of Embedded Derivatives A1039 IFRIC 10 Interim Financial Reporting and Impairment A1045 IFRIC 12 Service Concession Arrangements A1051 IFRIC 13 Customer Loyalty Programmes A1063 IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction A1071 IFRIC 15 Agreements for the Construction of Real Estate A1081 IFRIC 16 Hedges of a Net Investment in a Foreign Operation A1089 IFRIC 17 Distributions of Non-cash Assets to Owners A1103 IFRIC 18 Transfers of Assets from Customers A1111 IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments A1119 vi © IASCF SIC-7 Introduction of the Euro A1127 SIC-10 Government Assistance—No Specific Relation to Operating Activities A1131 SIC-12 Consolidation—Special Purpose Entities A1135 SIC-13 Jointly Controlled Entities—Non-Monetary Contributions by Venturers A1141 SIC-15 Operating Leases—Incentives A1145 SIC-21 Income Taxes—Recovery of Revalued Non-Depreciable Assets A1149 SIC-25 Income Taxes—Changes in the Tax Status of an Entity or its Shareholders A1153 SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease A1157 SIC-29 Service Concession Arrangements: Disclosures A1163 SIC-31 Revenue—Barter Transactions Involving Advertising Services A1169 SIC-32 Intangible Assets—Web Site Costs A1173 © IASCF vii Changes in this edition Changes in this edition This section is a brief guide to the changes since the 2009 edition that are incorporated in this edition of the Bound Volume of International Financial Reporting Standards Introduction The main changes in this collection are the inclusion of: • one new standard—IFRS • one revised standard—IAS 24 • amendments to IFRSs that were issued as separate documents • amendments to IFRSs issued in the second annual improvements project • amendments to other IFRSs resulting from those revised or amended standards • two new Interpretations—IFRICs 18 and 19 The version of IAS 24 that has been superseded by the new version has been omitted New pronouncements Details of the new, revised and amended standards, new Interpretations and amendments to IFRSs included in this edition are as follows IFRS IFRS Financial Instruments was issued in November 2009 It is the first phase of the project to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety by the end of 2010 IFRS is required to be applied from January 2013 Earlier application is permitted IAS 24 A revised version of IAS 24 Related Party Disclosures was issued in November 2009 It superseded IAS 24 Related Party Disclosures (as issued in 2003) The revised IAS 24 is required to be applied from January 2011 Earlier application, in whole or in part, is permitted IFRICs 18 and 19 The two new Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) and included in this edition are: • IFRIC 18 Transfers of Assets from Customers • IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 18 is required to be applied for annual periods beginning on or after July 2009 IFRIC 19 is required to be applied for annual periods beginning on or after July 2010 In each case, earlier application is permitted © IASCF A1 Changes in this edition Amendments to IFRSs issued as separate documents Amendments to IFRS Improving Disclosures about Financial Instruments (Amendments to IFRS 7) was issued in March 2009 The amendments are required to be applied for annual periods beginning on or after January 2009 Earlier application is permitted Amendments to IFRIC and IAS 39 Embedded Derivatives (Amendments to IFRIC and IAS 39) was issued in March 2009 The amendments are required to be applied for periods ending on or after 30 June 2009 Annual improvements The annual improvements project provides a vehicle for making non-urgent but necessary amendments to IFRSs The second product from this project was issued in April 2009 as Improvements to IFRSs Most of the miscellaneous amendments are required to be applied from January 2010, but some have other effective dates In most cases earlier application is permitted Amendments to IFRS Group Cash-settled Share-based Payment Transactions (Amendments to IFRS 2) was issued in June 2009 The amendments are required to be applied for annual periods beginning on or after January 2010 Earlier application is permitted The amendments also incorporate the guidance contained in IFRIC and IFRIC 11, which are therefore withdrawn Those Interpretations have accordingly been omitted from this edition Amendments to IFRS Additional Exemptions for First-time Adopters (Amendments to IFRS 1) was issued in July 2009 The amendments are required to be applied for annual periods beginning on or after January 2010 Earlier application is permitted Amendments to IAS 32 Classification of Rights Issues (Amendment to IAS 32) was issued in October 2009 The amendment is required to be applied for annual periods beginning on or after February 2010 Earlier application is permitted Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendments to IFRIC 14) was issued in November 2009 The amendments are required to be applied for annual periods beginning on or after January 2011 Earlier application is permitted A2 © IASCF SIC-29 SIC Interpretation 29 Service Concession Arrangements: Disclosures (SIC-29) is set out in paragraphs and SIC-29 is accompanied by a Basis for Conclusions The scope and authority of Interpretations are set out in paragraphs and 7–17 of the Preface to International Financial Reporting Standards FOR THE BASIS FOR CONCLUSIONS ON SIC-29 SEE PART B OF THIS EDITION A1164 © IASCF SIC-29 SIC Interpretation 29 Service Concession Arrangements: Disclosures References • IAS Presentation of Financial Statements (as revised in 2007) • IAS 16 Property, Plant and Equipment (as revised in 2003) • IAS 17 Leases (as revised in 2003) • IAS 37 Provisions, Contingent Liabilities and Contingent Assets • IAS 38 Intangible Assets (as revised in 2004) • IFRIC 12 Service Concession Arrangements Issue An entity (the operator) may enter into an arrangement with another entity (the grantor) to provide services that give the public access to major economic and social facilities The grantor may be a public or private sector entity, including a governmental body Examples of service concession arrangements involve water treatment and supply facilities, motorways, car parks, tunnels, bridges, airports and telecommunication networks Examples of arrangements that are not service concession arrangements include an entity outsourcing the operation of its internal services (eg employee cafeteria, building maintenance, and accounting or information technology functions) A service concession arrangement generally involves the grantor conveying for the period of the concession to the operator: (a) the right to provide services that give the public access to major economic and social facilities, and (b) in some cases, the right to use specified tangible assets, intangible assets, or financial assets, in exchange for the operator: (c) committing to provide the services according to certain terms and conditions during the concession period, and (d) when applicable, committing to return at the end of the concession period the rights received at the beginning of the concession period and/or acquired during the concession period The common characteristic of all service concession arrangements is that the operator both receives a right and incurs an obligation to provide public services The issue is what information should be disclosed in the notes in the financial statements of an operator and a grantor © IASCF A1165 SIC-29 Certain aspects and disclosures relating to some service concession arrangements are already addressed by existing International Financial Reporting Standards (eg IAS 16 applies to acquisitions of items of property, plant and equipment, IAS 17 applies to leases of assets, and IAS 38 applies to acquisitions of intangible assets) However, a service concession arrangement may involve executory contracts that are not addressed in International Financial Reporting Standards, unless the contracts are onerous, in which case IAS 37 applies Therefore, this Interpretation addresses additional disclosures of service concession arrangements Consensus All aspects of a service concession arrangement shall be considered in determining the appropriate disclosures in the notes An operator and a grantor shall disclose the following in each period: (a) a description of the arrangement; (b) significant terms of the arrangement that may affect the amount, timing and certainty of future cash flows (eg the period of the concession, re-pricing dates and the basis upon which re-pricing or re-negotiation is determined); (c) the nature and extent (eg quantity, time period or amount as appropriate) of: (i) rights to use specified assets; (ii) obligations to provide or rights to expect provision of services; (iii) obligations to acquire or build items of property, plant and equipment; (iv) obligations to deliver or rights to receive specified assets at the end of the concession period; (v) renewal and termination options; and (vi) other rights and obligations (eg major overhauls); (d) changes in the arrangement occurring during the period; and (e) how the service arrangement has been classified 6A An operator shall disclose the amount of revenue and profits or losses recognised in the period on exchanging construction services for a financial asset or an intangible asset The disclosures required in accordance with paragraph of this Interpretation shall be provided individually for each service concession arrangement or in aggregate for each class of service concession arrangements A class is a grouping of service concession arrangements involving services of a similar nature (eg toll collections, telecommunications and water treatment services) A1166 © IASCF SIC-29 Date of consensus May 2001 Effective date This Interpretation becomes effective on 31 December 2001 An entity shall apply the amendment in paragraphs 6(e) and 6A for annual periods beginning on or after January 2008 If an entity applies IFRIC 12 for an earlier period, the amendment shall be applied for that earlier period © IASCF A1167 SIC-31 SIC Interpretation 31 Revenue—Barter Transactions Involving Advertising Services This version includes amendments resulting from IFRSs issued up to 31 December 2009 SIC-31 Revenue—Barter Transactions Involving Advertising Services was developed by the Standing Interpretations Committee and issued in December 2001 Since then, SIC-31 has been amended by IAS Accounting Policies, Changes in Accounting Estimates and Errors (issued December 2003) © IASCF A1169 SIC-31 SIC Interpretation 31 Revenue—Barter Transactions Involving Advertising Services (SIC-31) is set out in paragraph SIC-31 is accompanied by a Basis for Conclusions The scope and authority of Interpretations are set out in paragraphs and 7–17 of the Preface to International Financial Reporting Standards FOR THE BASIS FOR CONCLUSIONS ON SIC-31 SEE PART B OF THIS EDITION A1170 © IASCF SIC-31 SIC Interpretation 31 Revenue—Barter Transactions Involving Advertising Services References • IAS Accounting Policies, Changes in Accounting Estimates and Errors • IAS 18 Revenue Issue An entity (Seller) may enter into a barter transaction to provide advertising services in exchange for receiving advertising services from its customer (Customer) Advertisements may be displayed on the Internet or poster sites, broadcast on the television or radio, published in magazines or journals, or presented in another medium In some cases, no cash or other consideration is exchanged between the entities In some other cases, equal or approximately equal amounts of cash or other consideration are also exchanged A Seller that provides advertising services in the course of its ordinary activities recognises revenue under IAS 18 from a barter transaction involving advertising when, amongst other criteria, the services exchanged are dissimilar (IAS 18.12) and the amount of revenue can be measured reliably (IAS 18.20(a)) This Interpretation only applies to an exchange of dissimilar advertising services An exchange of similar advertising services is not a transaction that generates revenue under IAS 18 The issue is under what circumstances can a Seller reliably measure revenue at the fair value of advertising services received or provided in a barter transaction Consensus Revenue from a barter transaction involving advertising cannot be measured reliably at the fair value of advertising services received However, a Seller can reliably measure revenue at the fair value of the advertising services it provides in a barter transaction, by reference only to non-barter transactions that: (a) involve advertising similar to the advertising in the barter transaction; (b) occur frequently; (c) represent a predominant number of transactions and amount when compared to all transactions to provide advertising that is similar to the advertising in the barter transaction; (d) involve cash and/or another form of consideration (eg marketable securities, non-monetary assets, and other services) that has a reliably measurable fair value; and (e) not involve the same counterparty as in the barter transaction © IASCF A1171 SIC-31 Date of consensus May 2001 Effective date This Interpretation becomes effective on 31 December 2001 Changes in accounting policies shall be accounted for in accordance with IAS A1172 © IASCF SIC-32 SIC Interpretation 32 Intangible Assets—Web Site Costs This version includes amendments resulting from IFRSs issued up to 31 December 2009 SIC-32 Intangible Assets—Web Site Costs was developed by the Standing Interpretations Committee and issued in March 2002 Since then, SIC-32 has been amended by the following IFRSs: • IAS 16 Property, Plant and Equipment (as revised in December 2003) • IFRS Business Combinations (issued March 2004) • IAS Presentation of Financial Statements (as revised in September 2007).* * effective date January 2009 © IASCF A1173 SIC-32 SIC Interpretation 32 Intangible Assets—Web Site Costs (SIC-32) is set out in paragraphs 7–10 SIC-32 is accompanied by a Basis for Conclusions and an example illustrating the application of the Interpretation The scope and authority of Interpretations are set out in paragraphs and 7–17 of the Preface to International Financial Reporting Standards FOR THE FOLLOWING MATERIAL ACCOMPANYING SIC-32: • BASIS FOR CONCLUSIONS • ILLUSTRATIVE EXAMPLE SEE PART B OF THIS EDITION A1174 © IASCF SIC-32 SIC Interpretation 32 Intangible Assets—Web Site Costs References • IAS Presentation of Financial Statements (as revised in 2007) • IAS Inventories (as revised in 2003) • IAS 11 Construction Contracts • IAS 16 Property, Plant and Equipment (as revised in 2003) • IAS 17 Leases (as revised in 2003) • IAS 36 Impairment of Assets (as revised in 2004) • IAS 38 Intangible Assets (as revised in 2004) • IFRS Business Combinations Issue An entity may incur internal expenditure on the development and operation of its own web site for internal or external access A web site designed for external access may be used for various purposes such as to promote and advertise an entity’s own products and services, provide electronic services, and sell products and services A web site designed for internal access may be used to store company policies and customer details, and search relevant information The stages of a web site’s development can be described as follows: (a) Planning – includes undertaking feasibility studies, defining objectives and specifications, evaluating alternatives and selecting preferences (b) Application and Infrastructure Development – includes obtaining a domain name, purchasing and developing hardware and operating software, installing developed applications and stress testing (c) Graphical Design Development – includes designing the appearance of web pages (d) Content Development – includes creating, purchasing, preparing and uploading information, either textual or graphical in nature, on the web site before the completion of the web site’s development This information may either be stored in separate databases that are integrated into (or accessed from) the web site or coded directly into the web pages Once development of a web site has been completed, the Operating stage begins During this stage, an entity maintains and enhances the applications, infrastructure, graphical design and content of the web site When accounting for internal expenditure on the development and operation of an entity’s own web site for internal or external access, the issues are: © IASCF A1175 SIC-32 (a) whether the web site is an internally generated intangible asset that is subject to the requirements of IAS 38; and (b) the appropriate accounting treatment of such expenditure This Interpretation does not apply to expenditure on purchasing, developing, and operating hardware (eg web servers, staging servers, production servers and Internet connections) of a web site Such expenditure is accounted for under IAS 16 Additionally, when an entity incurs expenditure on an Internet service provider hosting the entity’s web site, the expenditure is recognised as an expense under IAS 1.88 and the Framework when the services are received IAS 38 does not apply to intangible assets held by an entity for sale in the ordinary course of business (see IAS and IAS 11) or leases that fall within the scope of IAS 17 Accordingly, this Interpretation does not apply to expenditure on the development or operation of a web site (or web site software) for sale to another entity When a web site is leased under an operating lease, the lessor applies this Interpretation When a web site is leased under a finance lease, the lessee applies this Interpretation after initial recognition of the leased asset Consensus An entity’s own web site that arises from development and is for internal or external access is an internally generated intangible asset that is subject to the requirements of IAS 38 A web site arising from development shall be recognised as an intangible asset if, and only if, in addition to complying with the general requirements described in IAS 38.21 for recognition and initial measurement, an entity can satisfy the requirements in IAS 38.57 In particular, an entity may be able to satisfy the requirement to demonstrate how its web site will generate probable future economic benefits in accordance with IAS 38.57(d) when, for example, the web site is capable of generating revenues, including direct revenues from enabling orders to be placed An entity is not able to demonstrate how a web site developed solely or primarily for promoting and advertising its own products and services will generate probable future economic benefits, and consequently all expenditure on developing such a web site shall be recognised as an expense when incurred Any internal expenditure on the development and operation of an entity’s own web site shall be accounted for in accordance with IAS 38 The nature of each activity for which expenditure is incurred (eg training employees and maintaining the web site) and the web site’s stage of development or post-development shall be evaluated to determine the appropriate accounting treatment (additional guidance is provided in the illustrative example accompanying this Interpretation) For example: A1176 (a) the Planning stage is similar in nature to the research phase in IAS 38.54–.56 Expenditure incurred in this stage shall be recognised as an expense when it is incurred (b) the Application and Infrastructure Development stage, the Graphical Design stage and the Content Development stage, to the extent that © IASCF SIC-32 content is developed for purposes other than to advertise and promote an entity’s own products and services, are similar in nature to the development phase in IAS 38.57–.64 Expenditure incurred in these stages shall be included in the cost of a web site recognised as an intangible asset in accordance with paragraph of this Interpretation when the expenditure can be directly attributed and is necessary to creating, producing or preparing the web site for it to be capable of operating in the manner intended by management For example, expenditure on purchasing or creating content (other than content that advertises and promotes an entity’s own products and services) specifically for a web site, or expenditure to enable use of the content (eg a fee for acquiring a licence to reproduce) on the web site, shall be included in the cost of development when this condition is met However, in accordance with IAS 38.71, expenditure on an intangible item that was initially recognised as an expense in previous financial statements shall not be recognised as part of the cost of an intangible asset at a later date (eg if the costs of a copyright have been fully amortised, and the content is subsequently provided on a web site) 10 (c) expenditure incurred in the Content Development stage, to the extent that content is developed to advertise and promote an entity’s own products and services (eg digital photographs of products), shall be recognised as an expense when incurred in accordance with IAS 38.69(c) For example, when accounting for expenditure on professional services for taking digital photographs of an entity’s own products and for enhancing their display, expenditure shall be recognised as an expense as the professional services are received during the process, not when the digital photographs are displayed on the web site (d) the Operating stage begins once development of a web site is complete Expenditure incurred in this stage shall be recognised as an expense when it is incurred unless it meets the recognition criteria in IAS 38.18 A web site that is recognised as an intangible asset under paragraph of this Interpretation shall be measured after initial recognition by applying the requirements of IAS 38.72–.87 The best estimate of a web site’s useful life should be short Date of consensus May 2001 Effective date This Interpretation becomes effective on 25 March 2002 The effects of adopting this Interpretation shall be accounted for using the transition requirements in the version of IAS 38 that was issued in 1998 Therefore, when a web site does not meet the criteria for recognition as an intangible asset, but was previously recognised as an asset, the item shall be derecognised at the date when this Interpretation becomes effective When a web site exists and the expenditure to develop it meets the criteria for recognition as an intangible © IASCF A1177 SIC-32 asset, but was not previously recognised as an asset, the intangible asset shall not be recognised at the date when this Interpretation becomes effective When a web site exists and the expenditure to develop it meets the criteria for recognition as an intangible asset, was previously recognised as an asset and initially measured at cost, the amount initially recognised is deemed to have been properly determined IAS (as revised in 2007) amended the terminology used throughout IFRSs In addition it amended paragraph An entity shall apply those amendments for annual periods beginning on or after January 2009 If an entity applies IAS (revised 2007) for an earlier period, the amendments shall be applied for that earlier period A1178 © IASCF ... A5 Preface to International Financial Reporting Standards A1 5 International Financial Reporting Standards (IFRSs) IFRS First-time Adoption of International Financial Reporting Standards A2 1 IFRS. .. International Financial Reporting Standards as issued at January 2010 This edition published in two parts PART A The consolidated text of International Financial Reporting Standards (IFRSs®)... International Financial Reporting Standards are available in over 40 languages, including all major European and Asian languages The IASC Foundation will consider making approved translations available