IAS 33 Earnings per Share requires listed companies to disclose not only basic earnings per share (EPS) but also diluted EPS. It seems that there is not widespread: This post explores the objective of the approach, the reason why the IASB’s predecessor (IASC: International Accounting Standards Committee) selected it and implications for any possible changes… Continue reading What does diluted EPS measure?
IASC’s project on discounting
The International Accounting Standards Committee (IASC) added to its work plan a project on discounting (or present value) in 1998. IASC was the predecessor of the International Accounting Standards Board (the IASB). When the IASB came into being in 2001 and took over from IASC, the IASB decided not to continue with the project. In… Continue reading IASC’s project on discounting
Help for unpacking the objective of financial reporting
Paragraphs 1.2-1.4 of the IASB’s Conceptual Framework for Financial Reporting are written so densely that some people do not succeed in unpacking what they say. To make unpacking the meaning of those paragraphs easier, the IASB staff recommended in 2017 that the IASB should add a flowchart to the Conceptual Framework. This post summarises the… Continue reading Help for unpacking the objective of financial reporting
Why it’s hard to measure deferred tax on investments in subsidiaries
IAS 12 Income Taxes prohibits recognition of most of those deferred tax liabilities (and deferred tax assets) resulting from investments in subsidiaries. This post examines why that prohibition exists. In summary, when that prohibition applies, the parent has a deferred tax liability (or deferred tax asset). The parent must disclose the underlying ‘temporary difference’. But… Continue reading Why it’s hard to measure deferred tax on investments in subsidiaries
Saying how likely something is: way forward
IFRS standards use too many different terms to say how likely it is that an event will occur. And different people using IFRS Standards interpret those terms in different ways. Those clear messages appeared in a research report issued in 2016 by the Korea Accounting Standards Board (KASB) and Australian Accounting Standards Board (AASB). I… Continue reading Saying how likely something is: way forward
Those mushrooming effective date paragraphs
The IASB has a problem with effective date paragraphs. There are far too many of them and their number keeps growing. I believe it is time to find a better approach to writing these paragraphs. What does the IASB do now? When the IASB amends a standard, it also adds to that standard a paragraph… Continue reading Those mushrooming effective date paragraphs
Did a dead man write IAS 1?
There is a strange but persistent rumour that IAS 1 Presentation of Financial Statements was written by Sir Henry Benson (later Lord Benson), the first chairman of the IASB’s predecessor, the International Accounting Standards Committee (IASC). If true, this would have been a remarkable feat. Benson’s term as IASC chairman finished in 1976 and he… Continue reading Did a dead man write IAS 1?
Emission trading schemes: a fresh look
The most difficult question in accounting for emission trading schemes is deciding what to do with emission trading certificates received free of charge. Does the recipient have a liability on day 1? If not, should it recognise an immediate gain? Previous answers to this question have been unconvincing because they did not reflect the nature… Continue reading Emission trading schemes: a fresh look
If, and only if…
The International Accounting Standards Board (IASB) sometimes writes requirements in the form ‘if A is the case, an entity shall do B’. But in other places it writes such requirements in the form ‘if, and only if, A is the case, an entity shall do B’. Are those two forms intended to have different meanings?… Continue reading If, and only if…