vas vs ifrs comparison - thu vien phap luat

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VAS vs IFRS COMPARISON

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IFRS – VAS: Significant differences

IFRS: There are 38 Standards

VAS: There are 26 Standards

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List of IFRS – VAS Comparison1 Inventories – VAS 02 vs. IAS 02

2 Tangible fixed assets – VAS 03 vs. IAS 16

3 Intangible fixed assets – VAS 04 vs. IAS 38

4 Revenue and Other Income – VAS 14 vs. IAS 18

5 Framework – VAS 01 vs. IFRS Framework

6 Leases – VAS 06 vs. IAS 17

7 The effects of changes in Foreign Exchange rates – VAS 10 vs. IAS 21

8 Construction contract – VAS 15 vs. IAS 11

9 Borrowing costs – VAS 16 vs. IAS 23

10 Cash flow statements – VAS 24 vs. IAS 07

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List of IFRS – VAS Comparison (cont’)

11 Investment Property – VAS 05 vs. IAS 40

12 Accounting for Investments in associates – VAS 07 vs. IAS 28

13 Financial Reporting for Interests in joint ventures –VAS 08 vs. IAS 31

14 Presentation of Financial Statements – VAS 21 vs. IAS 01

15 Consolidated Financial Statements & Accounting for Investments in subsidiaries – VAS 25 vs. IAS 27

16 Related parties disclosures – VAS 26 vs. IAS 24

17 Income Tax – VAS 17 vs. IAS 12

18 Disclosures in the Financial Statements of Banks and similar Financial Institutions – VAS 22 vs. IAS 30

19 Events after the Balance Sheet date – VAS 23 vs. IAS 10

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List of IFRS – VAS Comparison (cont’)

20 Interim Financial Reporting – VAS 27 vs. IAS 34

21 Segment Reporting – VAS 28 vs. IAS 14

22 Changes in Accounting policies, accounting estimates and errors – VAS 29 vs. IAS 8

23 Business combinations – VAS 11 vs. IFRS 3

24 Provisions, Contingent Liabilities and Contingent Assets – VAS 18 vs. IAS 37

25 Insurance contracts – VAS 19 vs. IFRS 4

26 Earning per share – VAS 30 vs. IAS 33

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Inventories – VAS 02 vs. IAS 02 (1/3)

Area of differenc

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VAS IAS

Other costs

Silent. (par.17) In limited circumstances, borrowing costs are included in the cost of inventories. These circumstances are identified in the allowed alternative treatment in IAS 23- Borrowing Costs.

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Area of differenc

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VAS IAS

Other costs

Silent. (par.18) When inventories are purchased with deferred settlement terms, the difference between the purchase price for normal credit terms and the amount paid is recognised as interest expense over the period of financing.

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Area of difference

VAS IAS

Cost measurement techniques:

(par. 13) VAS 2 introduces four methods of inventories costing with equal ranking•Specific identification•Weighted average•First-in, first-out

•Last-in, first out

(par. 23-25) In IAS 2, only 3 methods are mentioned

Prohibition of LIFO as a cost formula

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Tangible fixed assets – VAS 03 vs. IAS 16 (1/4)Area of

differenceVAS IAS

Recognition of fixed assets:

(par. 6) Additional criteria for recognition of a tangible fixed assets:•It meets the value criteria under the prevailing regulations (i.e greater than MVND 10).

(par.7) IAS only mentioned two criteria for recognition of tangible fixed asset:

• it is probable that future economic benefits associated with the item will flow to the entity; and

• the cost of the item can be measured reliably

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Tangible fixed assets – VAS 03 vs. IAS 16 (2/4)

Area of difference

VAS IAS

Subsequent re-measurement:

Paragraph 28:

• The tangible fixed assets are only allowed to be re-valued in accordance with state regulations subsequently to its initial recognition.

Paragraph 29:

• Revalued amount is accepted as an allowed alternative treatment for measurement subsequent to initial recognition. Decision is made by the company’s management.

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Area of difference

VAS IAS

Impairment:

• Not specified

• When the recoverable amount has declined below the carrying amount, the carrying amount should be reduced to the recoverable amount.

• The writing- down should be recognized as an expense so far as it exceeds the amount that can be charged to the revaluation surplus (i.e. the amount held in the revaluation surplus relating the same assets).

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Area of difference

VAS IAS

Impairment (cont.):

Not specified. • Write back when the circumstances that led to the write-down cease to exist and the new circumstances are expected to persist.

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Intangible fixed assets – VAS 04 vs. IAS 38 (1/5)

Area of difference

VAS IAS

Recognition and measurement

(par.16) VAS requires two additional recognition criteria for an intangible fixed asset:• The estimated useful life is greater than one year• It meets the current regulation in term of value

(par.19) IAS only requires two criteria: •It is probable that the future economic benefits that are attribute to the asset will flow to the enterprise•The cost of the asset can be measured reliably

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Area of difference

VAS IAS

Recognition of expenses:

The following expenditures are to be either recorded as expenses or amortised over 3 years maximum:• Establishment costs• Expenditure on training activities, expenditure on advertising and promotional

activities incurred in the pre-operating expenses

• Research costs

• Expenditure on relocating of an enterprise

IAS requires these expenditures to be recognized as expenses when it is incurred.

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Area of difference

VAS IAS

Development phase

(par.40) In addition to 6 criteria which is similar to IAS, VAS 04 has one more requirement: compliance with current regulation of value and useful life for intangible fixed asset

(par.57) 6 criteria for recognition of an intangible asset arising from development phase

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Area of difference VAS IAS

Measurement subsequent to initial recognition (VAS) - Measurement after Recognition – Cost Model (IFRS)

(par.53) Did not mention the accumulated impairment losses

(par.74,75) After initial recognition, an intangible asset shall be carried at its cost less any accumulated amortisation and any accumulated impairment losses.

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Area of difference

VAS IAS

Amortized period (VAS) - Useful life (IFRS)

(par.54) Based on assumption that the useful life of an intangible asset is finite, not exceed twenty years.

(par.88) The useful life may be finite or indefinite. An intangible asset shall be regarded as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.

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Revenue and Other Income – VAS 14 vs. IAS 18 (1/4)

Area of difference

VAS IAS

Measurement of revenue:

Silent. When the fair value of consideration in cash or cash equivalent received/receivable is less than the nominal amount of the cash received or receivable, the difference is recognized as interest

revenue.

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Area of difference

VAS IAS

Other Income:

Other incomes dealt with in this Standard include receipts from non-recurrent and irregular activities, other than the activity generating revenue, including:• Disposals and sales of fixed assets;

• Penalty charged against a customer for contract breach

• Insurance compensation received;

Silent.

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Area of difference

VAS IAS

Other Income (cont.):

• Previously written-off accounts which has been collected;

• Accounts payable whose payee no longer exist;

• Tax reimbursement and reduction;

• Others

Silent.

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Area of difference

VAS IAS

Disclosure: (par.34) The financial statements should disclose:

(d) Other incomes, which requires specific disclosures of the categories.

(par.35) Not mention point (d) like VAS

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Framework – VAS 01 vs. IFRS Framework (1/2)

Area of difference

VAS IAS

Elements of Financial Statement:

Not mentioned. Substance over form is a qualitative characteristic of financial statements

Equity: List many items. Suggest including shareholders capital, retained earnings and reserves

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Framework – VAS 01 vs. IFRS Framework (2/2)

Area of difference

VAS IAS

Historical cost

(par.5) Assets are recognised at historical costs….Cost is not changed unless other wise required under specific standards.

(par.100) A number of different measurement bases are employed to different degrees and in varying combinations in financial statements. They include the following:

• Historical cost…

• Current cost…

• Realisable value…

• Present value…

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Leases – VAS 06 vs. IAS 17 (1/2)Area of

differenceVAS IAS

The inception of the lease

(par.4) the earlier of the date the right to use the asset is transferred or the date the lease begins to be charged in accordance with the lease agreement.

(par.4) the earlier of the date of the lease agreement or of a commitment by the parties to the principal provisions of the lease.

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Leases – VAS 06 vs. IAS 17 (2/2)Area of

differenceVAS IAS

The interest rate implicit

in the lease

(par.4) is the discount rate that, at the inception of the lease, causes the aggregate present value of the minimum lease payments and the un-guaranteed residual value to be equal to the fair value of the leased asset.

(par.4) is the discount rate that, at the inception of the lease, causes the aggregate present value of (a) the minimum lease payments and (b) the un-guaranteed residual value to be equal to the sum of (i) the fair value of the leased asset and (ii) any initial direct costs of the lessor.

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The Effects of Changes in Foreign Exchange Rates – VAS 10 vs. IAS 21

(1/6)Area of difference

VAS IAS

Initial recognition

(par.07) A foreign currency transactions include transactions arising when an entity:

…

(c) becomes a party to an unperformed foreign exchange contract

…

(e) otherwise uses one currency to buy

(par.20)

Silent

Silent

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The Effects of Changes in Foreign Exchange Rates – VAS 10 vs. IAS 21

(2/6)Area of difference

VAS IAS

Initial recognition

(par.08) A foreign currency transaction should be recorded, on initial recognition in the reporting currency, by applying the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(par.21) A foreign currency transaction shall be recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

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The Effects of Changes in Foreign Exchange Rates – VAS 10 vs. IAS

21 (3/6)Area of

differenceVAS IAS

Recognition of exchange difference:

Difference arising on the settlement or on the retranslation of monetary items at rates different to those at which they were originally recorded should be dealt with as follows:

• During the construction stage, to record cumulatively and represented as a separate component on the balance sheet and can be amortized when construction work is completed (over a maximum period of 5 years)• Treated as income/expense during the

normal course of business, unless:

• Only course of business is implied. The accounting treatment is similar to point 2 of VAS 10

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21 (4/6)Area of

differenceVAS IAS

Recognition of exchange difference:

• For enterprise that use financial instruments for hedging against foreign exchange risk, no retranslation of value for hedged items are allowed.

• Not mentioned since being treated in IAS 39

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21 (5/6)Area of differenc

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VAS IAS

Foreign Entities – reporting in the currency of a hyperinflationary economy

(par.24) (b) when the foreign entity reports in the currency of a hyperinflationary economy, in which case revenue, income and expense items should be

(par.42) The results and financial position of an entity whose functional currency is the currency of a hyperinflationary economy shall be translated into a different presentation currency using the following procedures:

(a) all amounts (ie assets, liabilities, equity items, income and expenses, including comparatives) shall be translated at the closing rate at the date of the most recent balance sheet, except that

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21 (5/6)Area of differenc

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VAS IAS

Foreign Entities – reporting in the currency of a hyperinflationary economy

(par.24) – cont.

translated at the closing rate.

(par.42) -continued(b) when amounts are translated into the

currency of a non-hyperinflationary economy, comparative amounts shall be those that were presented as current year amounts in the relevant prior year financial statements (ie not adjusted for subsequent changes in the price level or subsequent changes in exchange rates).

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21 (6/6)Area of difference

VAS IAS

Disclosure

(par.35) When the reporting currency is different from the currency of the country in which the enterprise is domiciled, the reason for using a different currency should be disclosed, even when there is change in the reporting currency

(par.53) When the presentation currency is different from the functional currency, that fact shall be stated, together with disclosure of the functional currency and the reason for using a different presentation currency

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Construction Contract – VAS 15 vs. IAS 11 (1/1)Area of

differenceVAS IAS

Recognition of Expected Losses

Silent (par.36) When it is probable that total contract costs will exceed total contract revenue, the expected loss shall be recognised as an expense immediately.

(par.37) The amount of such a loss is determined irrespective of:

(a)whether work has commenced on the contract;

(b)the stage of completion of contract activity; or

(c) the amount of profits expected to arise on other contracts which are not treated as a single construction contract in accordance with paragraph 9.

http://gaait-aa.ey.net/Knowledge/View/Document.aspx?bookID=514&tbGoToKeyword=IAS%2011%2C%20para.9&productId=110

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Borrowing Costs – VAS 16 vs. IAS 23 (1/3)

Area of difference

VAS IAS

Definition: Same as IAS except for: no mention about exchange differences on foreign currency borrowings as an adjustment to interest costs.

Borrowing costs include:• interest on bank overdrafts and

borrowings;• amortization of discounts or

premiums on borrowings;

• amortization of ancillary costs incurred in the arrangement of borrowings;

• finance charges on finance leases; and

• exchange differences on foreign currency borrowings where they are regarded as an adjustment to interest costs.

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Area of difference

VAS IAS

Treatment of borrowing costs:

Both methods are acceptable. However capitalization is considered as exception.

Benchmark treatment - expense all borrowing costs in the period in which they are incurred.

Alternative allowed treatment - borrowing costs in relation to the acquisition, construction and production of qualifying assets should be capitalized.

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Area of difference

VAS IAS

Excess of the carrying amount of the qualifying asset over recoverable amount

Silent (par.19) When carrying amount or expected ultimate cost of qualifying asset exceeds its recoverable amount or NRV, the carrying value is written down (off) in accordance with the requirements of other ISA.

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Cash flow Statements – VAS 24 vs. IAS 07 (1/4)

Area of differenc

e

VAS IAS

Definition

(par.4) Cash comprises cash on hand, cash in transit and demand deposits

Cash equivalents are short-term investments (for a period not exceeding 3 months) that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(par.6) Cash comprises cash on hand and demand deposits

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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Area of difference

VAS IAS

Treatment for bank overdrafts:

Not specified. (par.8) Bank overdrafts are repayable on demand and form an integral part of an enterprises’ cash management.

Bank overdrafts are included in cash equivalent for cash flow preparation purposes.

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Area of difference

VAS IAS

Classification of cash transactions:

Specified headings for cash flow statements:

• Operating activities,• investing activities,• Financing activities.

Interest and dividends received are classified as investing activities.

Interest paid are classified as operating activities.

Cash transactions are analysed to operating, investing and financing activities.

Interest and dividends received and paid may be classified as operating, investing or financing, provided that they are classified consistently from period to period.

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Area of difference

VAS IAS

Classification of cash transactions (cont.):

Dividends paid are classified as financing activities.

Cash flows arising from taxes on income are normally classified as operating.

Cash flow arising from taxes on income are normally classified as operating, unless they can be specified with financing or investing activities.

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Investment Property – VAS 05 vs. IAS 40 (1/2)

VAS IAS

Initial recognition

Not mention. Allows certain property interests under operating leases be classified as IP and accounted at fair value model.

Subsequent measurement

One option: All at cost. Two options: at cost or adjusted for fair value provided that selected option must be applied for all.

Note: Fair value must be applied for the operating lease classified as IP.

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Investment Property – VAS 05 vs. IAS 40 (2/2)

VAS IAS

Impairment Not mention. Impairments of investment property are recognized in accordance with IAS 36.

Transfers to and from IP

No difference arises due to all IPs are recorded at cost.

Differences might arise.

E.g. PPE recorded at cost, transferred to IP and accounted for at fair value. Difference is the book value of PPE and its fair value at transfer.

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Accounting for Investments in Associates –

VAS 07 vs. IAS 28 (1/2)VAS IAS

Associates operate under LT severe conditions

Cost method. Equity method.

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Accounting for Investments in Associates –

VAS 07 vs. IAS 28 (2/2)VAS IAS

Separate FSs

Cost method. Two options: Cost method or IAS 39 Financial Instruments: Recognition and Measurement provided that the same option has to be applied for the whole category of investments.

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Financial Reporting for Interests in Joint ventures

- VAS 08 vs. IAS 31 (1/3)VAS IAS

Jointly controlled entity

Equity method. Two options: Proportionate consolidation or equity method.

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JVs operate under LT severe conditions

Cost method. Two options: Proportionate consolidation or equity method.

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Separate FSs

Cost method. Two options: Cost method or IAS 39 Financial Instruments: Recognition and Measurement provided that the same option has to be applied for the whole category of investments.

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Presentation of Financial Statements – VAS 21 vs. IAS 01 (1/6)

VAS IAS

Components of FSs

Not include a statement of changes in equity.

Instead, changes in equity is presented in Notes to the FSs.

Complete set of FSs includes:

- Balance sheet

- Income statement

- Statement of equity

- Cash flow statement

- Notes to the FSs

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VAS IAS

Presentation of currency

Not mention. FSs can be made more understandable by presenting information in thousands or millions of units of the presentation currency provided the level of rounding is disclosed and material information is not omitted.

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VAS IAS

Minimum presentation of the Balance sheet

Not mention. Require to disclose on the face of the balance sheet:

- Investment property- Biological assets - Financial assets- Financial liabilities

Minority interest is presented separately from liabilities and equity.

Minority interest is presented within equity.

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VAS IAS

Minimum presentation of the Income statement

Not mention. Require to disclose Pre-tax gain or loss on disposal of assets or settlements of liabilities attributable to discontinuing operations.

Require certain items to be disclosed on the face:Deductions, Net revenue, COGSs, Financial income, Selling expenses, Management and admin expenses, Other income, Other expenses.

Not require.

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VAS IAS

Material items on the income statement or in the notes

Not mention.

- Write-down of inventories, PPE and reversals

- Restructuring of an entity and reversals of any provisions for the costs of restructuring.

- Disposals of items of PPE and equipment.

- Disposals of investments.- Discontinuing operations.- Litigation settlements.- Other reversals of provisions

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VAS IAS

Cash flow statement

Please refer to comparison of VAS 24 vs. IAS 7

Notes to FSs Only require share capital information or dividends presented in the Notes.

Allow showing share capital information on the Balance sheet or in the Notes.

Not mention. Require disclosure on judgment and key sources of estimated uncertainty made by management.

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Consolidated Financial Statements and Accounting for Investment in

Subsidiaries – VAS 25 vs. IAS 27 (1/3)VAS IAS

Subsidiaries operate under LT severe conditions

VAS Financial Instruments: Recognition and Measurement.

Full consolidation.

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Subsidiaries – VAS 25 vs. IAS 27 (2/3)VAS IAS

Separate FSs

Cost method. Two options: Cost method or IAS 39 Financial Instruments: Recognition and Measurement, provided that: - applied for the whole category of investments, and - investments accounted for as IAS 39 in the separate FSs must be accounted as so in the consolidated FSs.

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Subsidiaries – VAS 25 vs. IAS 27 (3/3)

VAS IAS

Non-uniform accounting policies

Allow so if impracticable.

Does not allow the use of non-uniform accounting policies on the grounds that it is impracticable to make them the same.

Presentation of minority interest in the Balance sheet

Separately presented from liabilities and parent owners’ equity.

Separately presented by within owners’ equity.

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Disclosures in the Financial Statements of Banks and similar Financial Institutions –

VAS 22 vs. IAS 30 (1/1)

VAS IAS

Financial instruments

Not mention. Require to disclose the fair value of each class of its financial assets and liabilities as required by IAS 32 Financial Instruments: Disclosure and Presentation.

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Business combinations – VAS 11 vs. IFRS 03

Area of difference

VAS IFRS

Goodwill Goodwill (with large amount) shall be amortized over useful life but not over 10 years

Goodwill shall not be amortized, instead the acquirer shall test it for impairment annually or more frequently if needed.

vas vs ifrs comparison - thu vien phap luat

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