Yakub02
Banned
Recognition and measurement An entity should use the same accounting policies in the interim accounts that it uses in the annual financial statements.
Measurement for interim purposes should be made on a year-to-date basis. For example, suppose that a company uses quarterly reporting and in the first quarter of the year, it writes down some inventory to zero.
If it is then able to sell the inventory in the next quarter, the results for the six-month period require no write down of inventory, and the write-down of inventory should be reversed for the purpose of preparing the interim accounts for the first six months of the year.
IAS 34 gives some guidance on applying the general recognition and measurement rules from the IASB Conceptual Framework to the interim accounts. Some examples are given below. Intangible assets The guidance in IAS 34 states that an entity should follow the normal recognition criteria when accounting for intangible assets.
Development costs that have been incurred by the interim date but do not meet the recognition criteria should be expensed. It is not appropriate to capitalize them as an intangible asset in the belief that the criteria will be met by the end of the annual reporting period.
Tax Interim period tax should be accrued using the tax rate that would be applicable to expected total earnings.
Use of estimates in interim financial statements The interim financial statements should be reliable and relevant.
However, IAS 34 recognizes that the preparation of interim accounts will generally rely more heavily on estimates than the annual financial statements.
Measurement for interim purposes should be made on a year-to-date basis. For example, suppose that a company uses quarterly reporting and in the first quarter of the year, it writes down some inventory to zero.
If it is then able to sell the inventory in the next quarter, the results for the six-month period require no write down of inventory, and the write-down of inventory should be reversed for the purpose of preparing the interim accounts for the first six months of the year.
IAS 34 gives some guidance on applying the general recognition and measurement rules from the IASB Conceptual Framework to the interim accounts. Some examples are given below. Intangible assets The guidance in IAS 34 states that an entity should follow the normal recognition criteria when accounting for intangible assets.
Development costs that have been incurred by the interim date but do not meet the recognition criteria should be expensed. It is not appropriate to capitalize them as an intangible asset in the belief that the criteria will be met by the end of the annual reporting period.
Tax Interim period tax should be accrued using the tax rate that would be applicable to expected total earnings.
Use of estimates in interim financial statements The interim financial statements should be reliable and relevant.
However, IAS 34 recognizes that the preparation of interim accounts will generally rely more heavily on estimates than the annual financial statements.
