1. Scope
Consolidated accounts of publicly traded companies for fiscal years beginning on or after 1 January 2005 and optionally for the consolidated accounts of unlisted groups.
Warning: Some standards have been implemented in France and are applicable from 1 January 2002 or 2005 (see Chapter 3).
2. Great principles
Ø An entity presents its financial statements under IFRS must include an explicit and unreserved compliance with IFRS.
Ø Principle of Fair Value: evaluation of certain assets to their market value.
Ø Prevalence of substance over appearance (integration of leases in the balance sheet for example). Ø
Method of progress required under IFRS for contracts to provide services and construction contracts (accounting for revenue and margin in proportion to the closing date income / expense even for ongoing operations not completed by the closing date of exercise).
IAS / IFRS: An economic approach oriented Investors -> impact on income statements and balance sheet -> change profitability and debt ratios:
Ø Impact on goodwill -> more passive goodwill - goodwill asset is determined in an approximation and is tested for impairment annually.
Ø Integration of assets and debt in the lease -> change in debt and asset
Ø Accounting for hedging volatility risk
Ø Recognition of pension liabilities -> higher provisions and lower equity.
Ø There is no longer heading through quasi-equity - should be placed near the FP debt FP or a party debts and another FP.
3. Standards implemented pursuant to the statutory accounts in France:
3.1 - IAS 37 Provisions Contingent Assets and Liabilities - Fr Standards applicable since 2002 similar to IAS 37
Criteria accounting provisions:
- present obligation (legal or constructive ).
- Results from past events.
- Probable outflow of cash.
- Reliable estimate.
Remember:
Ø No significant difference between the accounting under French GAAP and IAS. Except
Ø: no provision for major maintenance and major overhauls in IAS.
3.2 - IAS 16/38 tangible / intangible assets - Applicable Standards Fr 01.01.2005
Definition: An asset is something
- Identifiable Heritage
- Having a positive value for the entity (although will generate cash flow)
Criterion accounting
- It is probable that the entity will receive future economic benefits and
- The cost or value can be measured with sufficient reliability
Otherwise it is a burden .
3.3 - IAS 36 Impairment asset - Applicable Standards from Fr 01/01/2005
Remember:
Ø Accounting by calling tangible assets (eg a building broken roof - Elevator - walls ...). Where depreciation by component. Ø Difference
with IAS: standards in Fr can be provisioned liabilities of major maintenance expenses instead of making a component depreciation on major maintenance, major overhaul .. Ø
Impairment: Evaluation via impairment tests (comparing current VNC-value ...). Tests carried out in case index of impairment.
3.4 - IAS 19 Employee Benefits
Remember:
Applicable Standards En accordance with CNC recommendation but the presentation in the balance sheet is required under IFRS as it does that a preferential nature under French GAAP
Example: Retirement benefits, life insurance after employment
4. Other standards.
4.1 IAS 10 Events after the closing date
Remember:
Ø Events Subsequent to year end, contributing to evidence of conditions existing at the date of closing -> Adjustment of Financial Statements.
Example: bankruptcy of a client where there is a debt. Ø
Events after the closing date of the exercise, not affecting the status of assets and liabilities for the period before the closing -> No adjustment but attached information.
Example: Destruction of a portion of the plant after the closing date
4.2 - IAS 17 Leases
Remember :
Ø Integration of assets and debt in the lease. Assets depreciated over the useful life of the asset. Interest expense based on the interest rate implicit in the contract.
Ø In summary, we have done here reprocessing usual financial analysis.
4.3 - IAS 18 Revenue recognition
Remember:
Ø Revenues: Sales of goods - services and interest, dividends and royalties (where they come from current operations) are carried on the line "Revenue ordinary ".
4.4 - IAS 21 Receivables and payables in foreign currency
Remember:
Ø Change Exchange -> impact on liabilities (fair value) and the Profit and Loss (gain or loss on exchange). For
memory standards Fr, exchange rate fluctuations is tracked in a balancing account assets and is subject to a reserve, the unrealized foreign exchange gains are not recognized as revenue.
4.5 - 32 and IAS 39 Financial Instruments
Remember:
Ø These standards also include receivables, advance payments / receipts and payables. Ø
Dailly Assignment / Discount with recourse -> counted as assets on the balance until the debtor has not acquired its debt with the bank. Ø
Dailly Assignment / Discount without recourse -> standards as Fr, receivables off-balance
Ø Factoring -> debt on the balance sheet if the risk of nonpayment is not transferred to the factor. Ø
Hedging Instruments -> impact PC / Income Statement by type of coverage.
4.6 - IAS 40 Investment Property
Remember:
Ø Valuation at fair value or historical value minus depreciation. There must be permanently in the method used. Ø If
measuring fair value, changes in the value of the property -> impact on the income statement (although the change in other assets impacts the capital)
4.7 - IFRS 3 Business Combinations
Remember:
Ø Goodwill is recorded as an asset. It is no longer amortized but tested for impairment. If goodwill is impaired, the impairment can be resumed.
Ø There are no more negative goodwill. Recognition of its surplus in income immediately upon acquisition.
4.8 - IFRS 5 Non-current assets held for sale and discontinued operations
Remember:
Ø Taking into account the consolidated activities "held for sale" or HFS (held for sale ). Creating a line to the Assets and Liabilities (no compensation) and the balance sheet presentation of the results of these activities in the income statement on a separate line.
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