IAS1 : PRESENTATION OF FINANCIAL STATEMENTS
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Disclosure of accounting policies
An entity shall disclose in the summary of significant [one] accounting policies:
(a) the measurement basis (or bases) [two] used in preparing the financial statements, and
(b) the other [three] accounting policies used that are relevant [four] to an understanding of the financial statements.
It is important for an entity [five] to inform users of the measurement basis or bases used [six] in the financial statements (for example, historical cost, [seven] current cost, net realisable value, fair [eight] value or recoverable amount) because the basis on which [nine] an entity prepares the financial statements significantly affects [ten] users’ analysis. When an entity uses more [one] than one measurement basis in the financial statements, [two] for example when particular classes of assets are [three] revalued, it is sufficient to provide an indication [four] of the categories of assets and liabilities to which each measurement [five] basis is applied.
In deciding whether a particular [six] accounting policy should be disclosed, management [seven] considers whether disclosure would assist users [eight] in understanding how transactions, other events and conditions [nine] are reflected in reported financial performance and financial [ten] position. Disclosure of particular accounting policies is [one] especially useful to users when those policies [two] are selected from alternatives allowed in IFRSs. An example [three] is disclosure of whether a venturer recognises its [four] interest in a jointly controlled entity using proportionate [five] consolidation or the equity method (see IAS 31 [six] Interests in Joint Ventures). Some IFRSs specifically [seven] require disclosure of particular accounting policies, including [eight] choices made by management between different policies [nine] they allow. For example, IAS 16 requires [ten] disclosure of the measurement bases used for classes of property, [one] plant and equipment.
Each entity considers the nature of its [two] operations and the policies that the users of its financial [three] statements would expect to be disclosed for that [four] type of entity. For example, users would expect [five] an entity subject to income taxes to disclose its [six] accounting policies for income taxes, including those [seven] applicable to deferred tax liabilities and assets. When [eight] an entity has significant foreign operations or transactions [nine] in foreign currencies, users would expect disclosure [ten] of accounting policies for the recognition of foreign exchange gains [one] and losses.
An accounting policy may be significant [two] because of the nature of the entity’s operations even if amounts [three] for current and prior periods are not material. [four] It is also appropriate to disclose each [five] significant accounting policy that is not [six] specifically required by IFRSs but the entity selects and applies [seven] in accordance with IAS 8.
An entity shall [eight] disclose, in the summary of significant accounting policies or other [nine] notes, the judgements, apart from those involving estimations [ten] (see paragraph 125), that management has [one] made in the process of applying the entity’s accounting policies [two] and that have the most significant effect on the amounts [three] recognised in the financial statements.
In the process of applying the entity’s [four] accounting policies, management makes various judgements, [five] apart from those involving estimations, that can [six] significantly affect the amounts it recognises in the financial [seven] statements. For example, management makes judgements in determining:
(a) [eight] whether financial assets are held-to-maturity investments;
(b) [nine] when substantially all the significant risks and rewards [ten] of ownership of financial assets and lease assets are [one] transferred to other entities;
(c) whether, in substance, particular [two] sales of goods are financing arrangements and therefore [three] do not give rise to revenue; and
(d) [four] whether the substance of the relationship between the entity and a special [five] purpose entity indicates that the entity controls [six] the special purpose entity.
Some of the disclosures made in accordance [seven] with paragraph 122 are required by other [eight] IFRSs. For example, IAS 27 requires an entity [nine] to disclose the reasons why the entity’s ownership interest [ten] does not constitute control, in respect of an investee [one] that is not a subsidiary even though [two] more than half of its voting or potential [three] voting power is owned directly or indirectly [four] through subsidiaries. IAS 40 Investment Property [five] requires disclosure of the criteria developed by the entity to distinguish [six] investment property from owner-occupied property and from property held [seven] for sale in the ordinary course of business, when classification [eight] of the property is difficult.
Thus it appears, in what various ways Nature has taught man her first great lesson of love and union.
Nor did she give the same talents either in kind or in degree to all, evidently meaning that the inequality of her gifts should be ultimately equalized by a reciprocal interchange of good offices and mutual assistance.
Thus, in different countries, she has caused different commodities to be produced, that expediency itself might introduce commercial intercourse.
The Complaint of Peace