Can you explain the IAS paper sample?

IAS and IFRS - What are IAS and IFRS?

IAS and IFRS are international accounting standards that companies use as guidelines for their annual financial statements.

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The IAS (International Accounting Standards) and IFRS (International Financial Reporting Standards) are standards according to which companies can and must, depending on the country and legal form, prepare their annual financial statements. Internationally, they are roughly what the Commercial Code is for Germany.

IAS and IFRS - what is the difference?

The distinction between IAS and IFRS is a bit confusing. Ultimately, both sets of regulations are valid. The difference only comes from the time it was created.

IAS - What are the IAS?

The International Accounting Standards (IAS) are accounting standards that were issued until 2000 by the Board of the International Accounting Standards Committee (IASC). This sets out basic accounting rules and explains accounting problems.

Example: IAS 26 clarifies the accounting and reporting of retirement benefit plans.

IFRS - What are the IFRS?

The International Financial Reporting Standards (IFRS) have replaced the IAS since 2001 and are published by the International Accounting Standards Board (IASB). This IASB is made up of legal experts from different countries. The IFRS thus form the new international standard for accounting.

The topics dealt with in the IAS have also been integrated into the IFRS. Areas covered by IFRS include leasing, income tax, financial statements, sales reporting, and fixed assets, among others.

Example: IFSR 3 contains accounting regulations on business combinations.

Structure - How are the IAS and IRFS structured?

The international accounting standards are divided into individual standards, each dealing with a specific accounting problem. They are based on the Anglo-Saxon accounting system and are therefore very specific and often explained using examples.

Example: ISFR 3 first defines what is meant by corporate mergers. Then the accounting of the various possible cases is explained in detail.

Validity - Do I have to adhere to the IAS or IRFS?

In Germany and the other member states of the European Union, capital market-oriented companies are obliged to prepare their financial statements in accordance with the rules of IAS / IFRS (EU Regulation 1606/2002).

Every listed company, i.e. every company whose shares or bonds are (or should be) traded on a stock exchange, must prepare financial statements in accordance with international standards.

The IFRS currently apply in more than 120 countries and require that the financial results and the financial position of companies are disclosed in a uniform manner. This makes it easier to compare or contrast companies from different countries.