Which of the following is not one of the steps to prepare ifrs statements for the first time?
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Organisation Show
Hong Kong Institute of Certified Public Accountants (HKICPA). Role of the organisation As one of two Special Administrative Regions of China (the other being Macao), Hong Kong has its own legal system, including its own legal framework for developing accounting standards. The HKICPA is the only body authorised by law to promulgate financial reporting, auditing and ethical standards for professional accountants in Hong Kong pursuant to Section 18A of the Professional Accountants Ordinance (Chapter 50). COMMITMENT TO GLOBAL FINANCIAL REPORTING STANDARDSHas the jurisdiction made a public commitment in support of moving towards a single set of high quality global accounting standards? Yes. Has the jurisdiction made a public commitment towards IFRS Accounting Standards as that single set of high quality global accounting standards? Yes. What is the jurisdiction’s status of adoption? Hong Kong Financial Reporting Standards (HKFRS) have been fully converged with International Financial Reporting Standards (IFRS Standards) starting with annual reporting periods commencing from 1 January 2005. Additional comments provided on the adoption status? HKFRS contain wording identical to the equivalent IFRS Standards except that the transitional provisions in a few standards that were converged initially with effect from 1 January 2005 were changed to provide the transition from the requirements in the previous HK GAAP. Since 1 January 2005, all HKFRS issued have the same IFRS Standards effective dates and transitional provisions. If the jurisdiction has NOT made a public statement supporting the move towards a single set of accounting standards and/or towards IFRS Accounting Standards as that set of standards, explain the jurisdiction's general position towards the adoption of IFRS Accounting Standards in the jurisdiction. Not applicable. EXTENT OF IFRS APPLICATIONFor DOMESTIC companies whose debt or equity securities trade in a public market in the jurisdiction:Are all or some domestic companies whose securities trade in a public market either required or permitted to use IFRS Accounting Standards in their consolidated financial statements? Domestic companies whose securities trade in a public market are required to use Hong Kong Financial Reporting Standards (HKFRS), which are virtually identical to IFRS Standards, with the following exception: A company that is domiciled in Hong Kong but that is incorporated outside of Hong Kong is permitted to use either HKFRS or IFRS Standards as issued by the IASB Board. See comment below regarding application of the HKFRS equivalent of IFRS 1 First-time Adoption of International Financial Reporting Standards. If YES, are IFRS Accounting Standards REQUIRED or PERMITTED? Either HKFRS or IFRS Standards are required. Does that apply to ALL domestic companies whose securities trade in a public market, or only SOME? If some, which ones? All. Are IFRS Accounting Standards also required or permitted for more than the consolidated financial statements of companies whose securities trade in a public market? Yes. For instance, are IFRS Accounting Standards required or permitted in separate company financial statements of companies whose securities trade in a public market? HKFRS and IFRS Standards are required as explained above. For instance, are IFRS Accounting Standards required or permitted for companies whose securities do not trade in a public market? Companies whose securities do not trade in a public market are permitted to use HKFRS or, if they are incorporated outside Hong Kong, to use IFRS Standards as issued by the IASB Board. An SME (as defined in the IFRS for SMEs Standard) in Hong Kong also has the option to adopt the HKFRS for Private Entities, which is nearly identical to the IFRS for SMEs Standard. Additionally, a Hong Kong incorporated company that is not a holding company or a subsidiary in itself has the option to use the Hong Kong Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard (SME-FRF & SME-FRS). If the jurisdiction currently does NOT require or permit the use of IFRS Accounting Standards for domestic companies whose securities trade in a public market, are there any plans to permit or require IFRS Accounting Standards for such companies in the future? Not applicable. For FOREIGN companies whose debt or equity securities trade in a public market in the jurisdiction:Are all or some foreign companies whose securities trade in a public market either REQUIRED or PERMITTED to use IFRS Accounting Standards in their consolidated financial statements? Yes, foreign companies whose securities are publicly traded in Hong Kong are permitted to report under IFRS Standards. If YES, are IFRS Accounting Standards REQUIRED or PERMITTED in such cases? Permitted. Does that apply to ALL foreign companies whose securities trade in a public market, or only SOME? If some, which ones? Annual accounts of foreign company that is publicly traded in Hong Kong are required to conform to:
At 30 October 2018, a total of 391 Chinese companies trade in Hong Kong (on the ‘Red Chip’ and ‘H-Share’ main boards). The financial reporting frameworks used by those companies in Hong Kong are as follows:
IFRS ENDORSEMENTWhich IFRS Accounting Standards are required or permitted for domestic companies? IFRS Standards as issued by the IASB Board, ie standards and amendments are adopted/endorsed as and when issued by the IASB Board. The auditor’s report and/or the basis of presentation footnote states that financial statements have been prepared in conformity with: Hong Kong Financial Reporting Standards (if the company uses HKFRS) or IFRS Standards (if the company is incorporated outside Hong Kong and uses IFRS Standards as issued by the IASB Board). Does the auditor's report and/or the basis of preparation footnote allow for ‘dual reporting’ (conformity with both IFRS Accounting Standards and the jurisdiction’s GAAP)? Yes. Are IFRS Accounting Standards incorporated into law or regulations? No. If yes, how does that process work? Financial reporting standards issued by the HKICPA are recognised as authoritative under Hong Kong law. If no, how do IFRS Accounting Standards become a requirement in the jurisdiction? Not applicable. Does the jurisdiction have a formal process for the 'endorsement' or 'adoption' of new or amended IFRS Accounting Standards (including Interpretations) in place? Yes. If yes, what is the process? The HKICPA’s due process procedures are as follows:
If no, how do new or amended IFRS Accounting Standards become a requirement in the jurisdiction? Not applicable. Has the jurisdiction eliminated any accounting policy options permitted by IFRS Accounting Standards and/or made any modifications to any IFRS Accounting Standards? No. If yes, what are the changes? Not applicable. Other comments regarding the use of IFRS Accounting Standards in the jurisdiction? Hong Kong adopted IFRS 1 First-time Adoption of International Financial Reporting Standards as HKFRS 1 effective 1 January 2005. Companies that had been using HKFRS prior to 1 January 2005 did not apply HKFRS 1. Companies that have switched from another GAAP to HKFRS on or after 1 January 2005 have applied HKFRS 1. TRANSLATION OF IFRS ACCOUNTING STANDARDSAre IFRS Accounting Standards translated into the local language? No. If they are translated, what is the translation process? In particular, does this process ensure an ongoing translation of the latest updates to IFRS Accounting Standards? Not applicable. APPLICATION OF THE IFRS FOR SMEs ACCOUNTING STANDARDHas the jurisdiction adopted the IFRS for SMEs Accounting Standard for at least some SMEs? Yes. It is called the HKFRS for Private Entities. If no, is the adoption of the IFRS for SMEs Accounting Standard under consideration? Not applicable. Did the jurisdiction make any modifications to the IFRS for SMEs Accounting Standard? Yes, originally. However, in 2015 the Board amended the IFRS for SMEs Standard so that the 2015 version of the IFRS for SMEs Standard reflects Hong Kong’s modification in full. If the jurisdiction has made any modifications, what are those modifications? Hong Kong modified Section 29 on income taxes to conform to the requirement of IAS 12 Income Taxes with respect to using the ordinary income tax rate or capital gains tax rate to measure deferred taxes relating to property. Which SMEs use the IFRS for SMEs Accounting Standard in the jurisdiction, and are they required or permitted to do so? All are permitted. For those SMEs that are not required to use the IFRS for SMEs Accounting Standard, what other accounting framework do they use? In addition to the HKFRS for Private Entities, SMEs are permitted to use HKFRS or, if they are incorporated outside Hong Kong, to use IFRS Standards as issued by the Board. Additionally, a Hong Kong incorporated company that is not a holding company or a subsidiary in itself has the option to use the Hong Kong Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard (SME-FRF & SME-FRS). Other comments regarding use of the IFRS for SMEs Accounting Standard? None. Which of the following statements is true regarding the requirements of IFRS 1 choose multiple answers?The correct answer to this question is a. It does not permit the recognition of intangible assets in balance sheets.
What is IFRS 1 in accounting?Overview. IFRS 1 First-time Adoption of International Financial Reporting Standards sets out the procedures that an entity must follow when it adopts IFRSs for the first time as the basis for preparing its general purpose financial statements.
What are the objectives of IFRS 1?IFRS 1 aims to ensure that an entity's first financial statements after adopting IFRS, and interim statements for partial periods under IFRS, will: be transparent and comparable; provide a "suitable starting point" for the entity's accounting under IFRS; and. have benefits that exceed the cost of preparation.
What are the principles of IFRS?IFRS requires that financial statements be prepared using four basic principles: clarity, relevance, reliability, and comparability.
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