VAS vs IFRS COMPARISON

1
VAS vs IFRS
COMPARISON
2
IFRS – VAS: Significant
differences
IFRS: There are 38 Standards
VAS: There are 26 Standards
3
List of IFRS – VAS Comparison
1 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
4
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
5
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
6
Inventories – VAS 02 vs. IAS 02
(1/3)
Area of
differenc
e
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.
7
Inventories – VAS 02 vs. IAS 02
(2/3)
Area of
differenc
e
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.
8
Inventories – VAS 02 vs. IAS 02
(3/3)
Area of
difference
VAS IAS
Cost
measuremen
t 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
9
Tangible fixed assets – VAS 03 vs.
IAS 16 (1/4)
Area of
difference
VAS IAS
Recognitio
n 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
10
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.
11
Tangible fixed assets – VAS 03 vs.
IAS 16 (3/4)
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).
12
Tangible fixed assets – VAS 03 vs. IAS
16 (4/4)
Area of
difference
VAS IAS
Impairmen
t (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.
13
Intangible fixed assets – VAS 04 vs.
IAS 38 (1/5)
Area of
difference
VAS IAS
Recognition
and

measuremen
t
(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
14
Intangible fixed assets – VAS 04 vs.
IAS 38 (2/5)
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.
15
Intangible fixed assets – VAS 04 vs.
IAS 38 (3/5)
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
16
Intangible fixed assets – VAS 04 vs.
IAS 38 (4/5)
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.
17
Intangible fixed assets – VAS 04 vs.
IAS 38 (5/5)
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.
18
Revenue and Other Income – VAS 14 vs.
IAS 18 (1/4)
Area of
difference
VAS IAS
Measuremen
t 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.
19
Revenue and Other Income – VAS 14 vs.
IAS 18 (2/4)

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.
20
Revenue and Other Income – VAS 14 vs.
IAS 18 (3/4)
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.
21
Revenue and Other Income – VAS 14 vs.
IAS 18 (4/4)
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
22
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
23
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…
24
Leases – VAS 06 vs. IAS 17 (1/2)
Area of
difference
VAS 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.
25
Leases – VAS 06 vs. IAS 17 (2/2)
Area of
difference
VAS 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.