All of the above - and more - is the result of an effort that did not start recently and is being methodically promoted. The collapse of these economic boundaries resulted in the restructuring of the parameters of national economies in order to approach the various standards set by international organizations. There were accounting committees that established certain standards acceptable to all countries involved.
It is written to make an easier transition to the real subject, namely International Accounting Standards (IAS).
Generally
Multinational companies will save time and costs by not having to prepare financial statements in every country they have, with different regulations and standards. Developing countries will save time and costs by not having to prepare and publish their own standards. The main objective of financial statements in some countries is to provide information to the government for tax purposes, while in other countries the main objective is to provide information to various categories of users for making economic decisions.
The establishment of international accounting standards constitutes an important advance for accounting science, because I.A.S.
International Accounting Standards
Generally
The profit or loss from the value difference of traded fixed assets is transferred to the operating results. We also mentioned that value in use is the present value of future economic cash flows expected from the use of the fixed asset in the company. We have calculated the revenue that the company will receive for the next five years from the sale of that product.
2 Useful life is the period that a fixed asset is expected to be used by the company.
International Accounting Standards in force
- Balance sheet
- Separation of assets in current and non - current
- Minimal information in the main part of balance sheet10
- Income statement
- Income statement model. Analysis of expenses at
- Generally
- Model of changes in equity statement
- Cash flow statement
- Generally
- Cash and equivalent cash
- Business, investment and financial activities
- Model of cash flow statement
- Notes of financial statements
- Financial statements according to Greek Accounting
- I.A.S. 8. Net profit or loss for the period, fundamental
- I.A.S. 10. Events after the balance sheet date
Disclosures of any special accounting treatment necessary for a proper understanding of the financial statements. The balance sheet, profit and loss statement and retained earnings statement must be published from the above financial statements. This standard is occupied with transactions that were realized after the balance sheet date and before the approval of the financial statements by the board of directors of the company.
In order to better inform the shareholders, the annual accounts must contain information on transactions after the balance sheet date. Events that do not have to be booked, but there must be an additional report in the accounts (non-regulatory events). Fraud or error detection affecting financial statements after the balance sheet date and before their approval by the board of directors.
- Tangible fixed assets
- Intangible assets
- Goodwill
- Investments in subsidiaries
- Other financial data
These fixed assets are displayed with their purchase value (purchase price) and are presented with that value for the entire period of their use in the company2. Various extensions, additions and improvements increase their useful life time and their purchase value. Depreciation of fixed assets is realized according to the depreciation rates which are determined by the relevant laws which 1 That account can be used by the company according to its needs.
International Accounting Standards, before the presentation and analysis of various accounting data of balance sheet, state when this data is posted or not in that statement. On the contrary, the recognition of expenses from which no expected economic benefits are realized is transferred to the operating results. In this group, the fixed assets (fields, plots, buildings, machinery, transport equipment, furniture and other equipment, capital investments in progress) are posted. either it is privately owned or it is owned by the company as a result of financial leasing.
The accounting treatment of devaluation of fixed assets due to impairment of their value is defined from I.A.S. This group places the intangible assets of a company such as electronic software, patents, goodwill, etc. Goodwill is the difference between the value given and the actual value of assets (less liabilities) when purchasing a subsidiary.
These investments are composed of the purchase value of subsidiaries, analyzed against participation value (fair value of the assets) and goodwill. Fixed assets are recorded in this group, such as investments owned until their maturity date, financial assets that are for sale.
- Posting of tangible fixed assets
- Initial measurement of tangible fixed assets
- Posting of transacted fixed assets
- Example
- Subsequent expenses for tangible fixed assets
- Measurement after the initial posting of tangible fixed assets
- Alternative method
- Depreciations of tangible fixed assets
- Generally
- Straight line method
- Decreasing charges method
- Re – examination of useful life and depreciation method of
- Retirements and sales of tangible fixed assets
- Tangible fixed assets and taxation
- Disclosures
2 Capital costs are the amount paid in cash or equivalent cash or the real value of another asset, which is given for the acquisition of the new capital asset. 1 Book value is the amount that a fixed asset is booked on the balance sheet after deducting accumulated depreciation. 2 Real value is the amount for which the fixed asset can be exchanged for parts.
Under the alternative measurement method, a tangible fixed asset must be presented at revalued value. In that case we will increase the cost and accumulated depreciation of a fixed asset so that it is presented at its real value. The depreciable amount1 of a tangible fixed asset should be allocated systematically over the duration of its useful life.
The method used must reflect the consumption of economic benefits of the fixed asset in question by the company. A fixed asset's depreciable amount is defined after deducting its residual value2. 1 Depreciable amount is the cost price of a fixed asset after deducting its residual value.
2 Residual value is the net amount that the company expects to receive from a fixed asset at the end of its useful life, after deducting its disposal costs. According to this method, the acquisition value (after deduction of residual value) is allocated to equal parts of the useful life of the fixed asset, and the equal amounts that arise are discounted back. It is possible that the book value of a fixed asset is different from its tax base2.
As we can see, the book value of this fixed asset is greater than the tax base.
- Leases – Generally
- Leases in lessee's financial statements
- Leases in lessor's financial statements
- Interpretation 15: Motives for operating leasing
- Greek Uniform Chart of Accounts for the leases
The expenses paid by the lessee and related to this lease increase the cost of fixed assets. The salary paid by the tenant is attributed to financial costs and to the reduction of the tenant's liability. The salary paid from the lessee and the depreciation expenses on the leased fixed asset.
The wages that the landlord receives from the tenant must be shown as financial income. In the previous example, the landlord would display his claim against the tenant (for the payment of wages) in the assets (debtors) of his balance sheet, while any wage collection should be deposited in the financial income accounts. Sometimes in negotiating a new operating lease, the landlord can give the tenant incentives to enter into an agreement.
The cost of these motives is deducted from the total salary that the landlord will receive from the tenant. The tenant posts these motives as a discount on the total wages payable to the landlord. The lessee will pay €350,000 because the amount of €50,000 relates to the cost of transporting the machinery in question, which is paid by the lessor.
Therefore, the lessee will record the value of €50,000 in the operating results (as profit) over the period in which the transport took place. At the end of the lease period, title to the leased asset is transferred to the lessee at a price lower than its actual value.
- Recognition of a fixed asset, which its value can be
- Impairment loss: Recognition and measurement
- Examples
- Impairment of assets
- Calculation of value in use
- Disclosures
According to that revaluation, a fixed asset is devalued when its book value exceeds its recoverable amount. The company must find out at the balance sheet date whether a 1 Recoverable amount is the greater amount between net selling price and value in use of a fixed asset. 2 Impairment loss is the amount that arises when the book value of a fixed asset is higher than its recoverable amount.
A fixed asset or cash-generating unit2 is valued at the lower of its book value and its recoverable amount. In that case, the recoverable amount is defined for the entire cash-flow generating unit to which the fixed asset in question belongs. When the recoverable amount of a fixed asset is lower than its book value, the asset's book value is reduced to its recoverable amount.
However, if that fixed asset is represented at its revalued value, then the impairment loss reduces that value. However, if the fixed asset is presented at its revalued value, then the reversal of the impairment loss increases that value. After recognition of an impairment loss, the new book value (the old book value is reduced to the recoverable value) of the fixed asset is systematically allocated to its useful life1.
According to what we wrote above, fixed asset A is not devalued because the recoverable amount is greater than the book efficiency from the company. As we mentioned before, value in use helps us to calculate the recoverable amount of a fixed asset.
- Generally – Greek Uniform Chart of Accounts & I.A.S
- Definition of intangible assets
- Recognition and measurement of intangible assets
- Expenditures for intangible assets
- Measurement of intangible assets after the initial posting
- Amortization of intangible assets
- Impairment loss of intangible assets
- Retirement and disposal of intangible assets
- Disclosures
When an intangible asset is acquired from a purchase, it is recorded at its actual value on the date of purchase. 22 "Business combinations", goodwill resulting from the combination of two businesses is an intangible asset. Expenses for an intangible asset must be recognized as an expense when incurred, except where these expenses are part of the cost of an intangible asset.
Under this method, an intangible asset is presented after initial accounting at its cost less accumulated amortization. Under this method, an intangible asset must be presented after initial accounting at a revalued value, which represents its actual value on the revaluation date less any subsequent accumulated depreciation. We see that the new book value of that intangible asset is equal to the fair value on 12/31/2003.
Therefore, we will transfer the accumulated amortization account to the main account of that intangible asset. After this accounting entry, the accumulated depreciation account is balanced and the intangible asset account has a debit balance of €40,000. The difference between these amounts (€30,000) is the gain due to the revaluation of that intangible asset and will be posted to the share capital account "Revaluation reserve".
According to this accounting record, the intangible asset account has a debit balance of €70,000, which is equal to its real value on the day, and the positive balance of the "Revaluation reserve" account represents the profit due to the overvaluation of this intangible asset. This market is assumed to exist at the end of year 1 Depreciation is the cost of an intangible asset.
