International accounting standards.

History of standard IAS-30

April 1987 --Exposure Draft E29 Disclosures in Financial Statements of Banks July 1989 --Exposure Draft E29 was modified and reexposed as Exposure Draft E34 Disclosures in Financial Statements of Banks and Similar Financial Institutions August 1990 --IAS 30 Disclosures in Financial Statements of Banks and Similar Financial Institutions 1 January 1991 --Effective date of IAS 30 (1990)

 1994 

–-IAS 30 was reformatted

 December

1998 --IAS 30 was amended by IAS 39 Financial Instruments: Recognition and Measurement, effective 1 January 2001 August 2005 --IAS 30 is superseded by IFRS 7 Financial Instruments: Disclosures effective 1 January 2007

  18

Summary of IAS-30

prescribe appropriate presentation and disclosure standards for banks and similar financial institutions . provide users with appropriate information to assist them in evaluating the financial position and performance of banks enable them to obtain a better understanding of the special characteristics of the operations of banks.

 

 

Presentation and Disclosure : A bank's income statement should group income and expenses by nature. [IAS 30.9] A bank's income statement or notes should report the following specific amounts: [IAS 30.10]
› interest income › interest expense › dividend income › fee and commission income › fee and commission expense › net gains/losses from securities dealing › net gains/losses from investment securities › net gains/losses from foreign currency dealing › other operating income › loan losses › general administrative expenses › other operating expenses.


bank's balance sheet should group assets and liabilities by nature and list them in liquidity sequence. [IAS 30.18] 30.19 sets out the specific line items requiring disclosure. 30.13 and IAS 30.23 include guidelines for the limited circumstances in which income and expense items or asset and liability items are offset.

  IAS   IAS

 Disclosures

are also required about:

› specific contingencies and commitments

› › › › › ›

(including off-balance sheet items) requiring disclosure [IAS 30.26] specified disclosures for the maturity of assets and liabilities [IAS 30.30] concentrations of assets, liabilities and off-balance sheet items [IAS 30.40] losses on loans and advances [IAS 30.43] losses on loans and advances [IAS 30.43] losses on loans and advances [IAS 30.43]


OF IAS-31:

prescribe the manner in which venturers and investors account for, and present interest in joint ventures in their financial statements.

  It

does not apply to venturers’ interests in jointly controlled entities held by:

Venture capital organizations.  Mutual funds, unit trust organizations and similar entities including investment linked insurance funds.


A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control.  Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers).  Control is the power to govern the financial and operating policies of an economic activity so as to obtain benefits from it.  A venturer is a party to a joint venture and has joint control over that joint venture.

 Prescribed

accounting treatment:

The accounting for joint ventures depends on the type of joint venture. The standard identifies the three broad joint venture types.

   

Jointly controlled operations: Characteristic:

 Involves

the use of assets and other resources of the venturers rather than the establishment of an entity separate from the venturers.

 

Financial Reporting:

 The

venturer shall recognise in its financial statements:  the assets that it controls and the liabilities that it incurs  the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the joint venture.

 Jointly 

controlled assets:

 Characteristic   Involves

the joint control by the venturers of one or more assets contributed to or acquired for the purpose of the joint venture and dedicated to the purposes of the joint venture. Likewise, this type of joint venture does not involve the establishment of an entity separate from the venturers.

Financial Reporting:

The venturer shall recognise in its financial statements:  Its share of the jointly controlled assets, classified according to the nature of the assets.  Any liabilities it has incurred and its share of jointly incurred liabilities.  Any income from the sale or use of its share of the output of the joint venture, plus its share of expenses incurred by the joint venture.  Any expenses that it has incurred inrespect of its interest in the joint venture.

 Jointly 

controlled entities:

 Characteristic   Involves

the establishment of a separate entity, in which each venturer has an interest.

Financial Reporting:

The venturer shall recognise its interest in a jointly controlled entity using the proportionate consolidation or equity method for the period of time it has joint control in a jointly controlled entity.  In the venturer’s separate financial report, the interest is accounted for in accordance with IAS 27 Consolidated and separate financial statements.  If the jointly controlled entity becomes a subsidiary or associate of a venturer, the venturer must apply IAS 27 or IAS 28 Investments in associates respectively.

The standard also prescribes:

Proportionate consolidation:  to combine its share of each of the assets, liabilities, income and expenses of the jointly controlled entity with the similar items, line by line, in its financial statements — e.g. share of jointly controlled entity’s inventory with its inventory.

to include separate line items for its share of the assets, liabilities, income and expenses of the jointly controlled entity in its financial statements — e.g. share of property, plant and equipment of the jointly controlled entity as part of its property, plant and equipment.

In addition:  accounting for transactions (e.g. contribution or sale of assets) between a venturer and a joint venture; the recognition of any portion of gains and losses associated with such transactions, including the reduction in net realisable value of inventories or an impairment loss, shall be based on the transfer of significant risks and rewards of ownership.

investors in joint ventures that do not have joint control shall be accounted for in accordance with IAS 39 Financial instruments: recognition and measurement, or in accordance with IAS 28 Investments in associates, where significant influence exists operators or managers of joint ventures shall account for any fees in accordance with IAS 18 Revenue.

  

PRESCRIBED DISCLOSURES: Required disclosures by a venturer for interests in joint ventures include Information about any contingent liabilities that the venturer has incurred in relation to its interests in joint ventures The venturer’s share of the contingent liabilities of the joint ventures themselves for which it is contingently liable Contingent liabilities arising because the venturer is contingently liable for the liabilities of the other venturers of a joint venture Aggregate amount of commitments related to its interests in joint ventures separately from other commitments, such as capital commitments and share of capital commitments.

A listing and description of interests in significant joint ventures and the proportion of ownership interest held in jointly controlled entities.  Where the line-by-line reporting format is used to recognise interests in jointly controlled entities, a venturer shall disclose the aggregate amounts of each of current assets, long-term assets, current liabilities, long-term liabilities, income and expenses related to its interests in joint ventures.  A venturer shall disclose the method it uses to recognise its interests in jointly controlled entities.

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