Differentiate Section 9, 10 to 11 of PFRS for Small Entities from a related standards of the

full PFRS
 In terms of Significant influence
 PFRS for Small Entities
 Significant influence is the power to participate in the financial and operating policy
decisions of the associate but is not control or joint control over those policies. It is
presumed to exist when the investor holds at least 20% of the investee’s voting power;
it is presumed not to exist when less than 20% is held. These presumptions may be
rebutted if there is

 FULL PFRS
Similar to IFRS for SMEs; in addition, IFRS gives the following indicators of significant
influence to be considered where the investor holds less than 20% of the voting power of
the investee:
• Representation on the board of directors or equivalent body.
• Participation in policy-making processes.
• Material transactions between the investor and the investee.
• Interchange of managerial personnel.
• Provision of essential technical information.
The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether an entity has significant influence

 Accounting policy election

 PFRS for Small Entities
 an investor may account for its investments using one of the following:
• The cost model (cost less any accumulated impairment losses).
• The equity method.

 FULL PFRS
 Investments in associates are accounted for using the equity method. The cost and fair
value model are not permitted except in separate financial statements. To account for a
jointly controlled entity, either the proportionate consolidation method or the equity
method are allowed. The cost and fair value model are not permitted

 In terms of Equity Method

 PFRS for Small Entities
 An associate is initially recognized at the transaction price (including transaction costs).
The investor, on acquisition of the investment, accounts for the difference between the
cost of the acquisition and its share of fair value of the net identifiable assets as goodwill,
which is included in the carrying amount of the investment.

 FULL PFRS
  Initial recognition is at cost. Cost is not defined in IAS 28, ‘Investments in associates’. In
other standards it is defined as including transaction costs, except in IFRS 3 (revised),
which requires transaction costs in a business combination to be expensed. Entities may
therefore choose whether their accounting policy is to expense transaction costs or to
include them in the cost of the investment. [IAS 28.11, 28.23, 28.29-28.30]

 Classification and Presentation

 PFRS for Small Entities
 An investor classifies investments in associates as non-current assets. Associates are
presented as a line item on the balance sheet.

 FULL PFRS
 Similar to IFRS for SMEs; however, only those associates accounted for using the equity
method are presented as a line item.

 Accounting policy election for Joint ventures

 PFRS for Small Entities
 A venture may account for its investments using one of the following:
• The cost model
• The equity method.

 FULL PFRS
 Either the proportionate consolidation method or the equity method is allowed to account
for a jointly controlled entities. Some exemptions are applicable. [IAS 31.2, 31.30]

 Initial measurement For Investment Property

 PFRS for Small Entities
 Investment are measured at cost at initial recognition. The cost of a purchased investment
property is its purchase price plus any directly attributable costs such as professional fees
for legal services, property transfer taxes and other transaction costs

 FULL PFRS
 Similar to IFRS for SMEs except for borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are required to be capitalized
as part of the cost of that asset.

 Subsequent measurement For Investment Property

 PFRS for Small Entities
 Investment are measured at cost at initial recognition. The cost of a purchased investment
property is its purchase price plus any directly attributable costs such as professional fees
for legal services, property transfer taxes and other transaction costs

 FULL PFRS
 Management may choose as its accounting policy to carry all its investments properties at
fair value or at cost. However, when an investment property is held by a lessee under an
operating lease, the entity follows the fair value model for all its investment properties.

 Transfer
 PFRS for Small Entities
 Transfer to or from investment properties applies when the property meets or ceases to
meet the definition of an investment property.

 FULL PFRS
 IFRS includes further guidance on the situations when a property can be transferred to or
from the investment property category.