As you may have noticed, IFRS accounting is often not
straightforward. Preparers frequently lose time digging through
IFRS literature to decide how to account for a transaction. A few
particularly grey areas would be:
- consolidate an entity or not (IFRS
10)
- equity versus liability (IAS 32)
- investment property or owner-occupied
one (IAS 40)
- lease classification (IFRS 16)
- business combination or asset deal
(IFRS 3)
After spending hours reading the standards and their
interpretations, preparers must conclude something and make an
accounting entry. It would seem that the work is now done, and the
complicated issue resolved, but that's not always true. Because
IFRS is principle-based, when a transaction needs careful analysis
then usually the preparer has made some key judgements. And that
means disclosures, disclosures, and disclosures.
