Ifrs international financial reporting standards

One of the fundamental objectives of IFRS is to achieve comparability of the financial information of companies, IFRS 1 seeks to prescribe the accounting treatment for companies to meet this objective, when they first apply international accounting standards. In accordance with the general orientation of the conceptual structure (framework) (currently under review), the comparability of accounting information (comparability: paragraphs 39, 40, 41 and 42), is made over several years of the same company and between several entities in the same period of time.

Objective:

The objective of this IFRS is to ensure that an entity's first IFRS financial statements, as well as its interim financial reports, relating to a part of the period covered by such financial statements, contain high-quality information that: is transparent to users and comparable for all exercises presented; provide an appropriate starting point for accounting under IFRS. can be obtained at a cost that does not exceed the benefits provided to users.

Scope:

An entity shall apply this IFRS in: its first financial statements under IFRS; and in each interim financial report that, where appropriate, it presents in accordance with IAS 34 “Interim Financial Information”, relating to a part of the year covered by its first financial statements in accordance with IFRS. The first financial statements in accordance with IFRS are the first annual financial statements in which the entity adopts IFRS, by means of an explicit and unreserved statement, contained in such financial statements, of compliance with IFRS. The IFRS financial statements are the first IFRS financial statements of the entity if, for example, the entity: has presented its most recent previous financial statements:according to national requirements that are not consistent in all respects with IFRS; in accordance with IFRS in all respects, except that such financial statements do not contain an explicit and unreserved statement of compliance with IFRS; with an explicit statement of compliance with some IFRS, but not all; according to national requirements that are not consistent with IFRS, but applying some individual IFRS to account for items for which there are no national regulations, or according to national requirements, providing a reconciliation of some of the figures with the same magnitudes determined according to IFRS; has prepared financial statements in accordance with IFRS for internal use only, without making them available to the entity's owners or other external users;has prepared an information package in accordance with IFRS, for use in consolidation, that does not constitute a complete set of financial statements, as defined in IAS 1 Presentation of Financial Statements, or did not present financial statements in prior periods.

This IFRS will apply when the entity first adopts IAS-IFRS. It will not apply when, for example, the entity:

abandons the presentation of financial statements according to national requirements, if it has previously presented them together with another set of financial statements that contained an explicit and unreserved statement of compliance with IAS-IFRS; present in the previous year financial statements according to national requirements, and such financial statements contained an explicit and unreserved statement of compliance with the IAS-IFRS, presented in the previous year financial statements that contained an explicit and unreserved statement of compliance with the IAS-IFRS, including whether the auditors expressed their qualified opinion in the auditor's report on such financial statements. This IFRS will not affect changes in accounting policies made by an entity that has already adopted IFRS.Such changes are subject to: specific requirements related to changes in accounting policies, contained in IAS 8 “Net Profit or Loss for the Exercise, Fundamental Errors and Changes in Accounting Policies”, and specific transitory provisions contained in other IFRS.

Recognition and valuation.

Opening balance in accordance with IFRS.

The entity will prepare an opening balance sheet in accordance with IAS-IFRS on the date of transition to IAS-IFRS. This is the starting point for accounting under IAS-IFRS. The entity does not need to present this opening balance sheet in its first financial statements under IFRS.

Accounting policies.

An entity will use the same accounting policies in its opening balance sheet under IFRSs and throughout all years presented in its first financial statements under IFRSs. These accounting policies must comply with each IFRS in effect on the date of presentation of its first financial statements in accordance with IFRS, except as specified in paragraphs 13 to 34. The entity will not apply different versions of IFRS that were in effect on previous dates. The entity may adopt a new IFRS that is not yet mandatory, provided that it allows early application.

Example: Uniform application of the latest version of IFRS

Background:

The reporting date of entity A's first financial statements under IFRS is December 31, 2005. The entity elects to present comparative information on such financial statements for a single year (see paragraph 36).

Therefore, its date of transition to IFRS is the beginning of its activity on January 1, 2004 (or, alternatively, the closing of its activity on December 31, 2003). Entity A presented annual financial statements, in accordance with its previous GAAP, on December 31 of each year, including December 31, 2004.

Application of the requirements:

Entity A will be required to apply IFRSs that are in effect for years ending December 31, 2005 by:

a) prepare your opening balance sheet in accordance with IFRS as of January 1, 2004, and

b) prepare and present its balance sheet as of December 31, 2005 (including comparative amounts for 2004), its income statement, its statement of changes in equity and its statement of cash flows for the year ending 31 December December 2005 (including comparative amounts for 2004), as well as the rest of the information to be disclosed (including comparative information for 2004).

If there is any IFRS that is not yet mandatory, but admits its early application, Entity A will be allowed, without being obliged to do so, to apply such IFRS in its first financial statements under IFRS.

The transitional provisions contained in other IFRSs will apply to changes in accounting policies made by an entity that is already using IFRS, but will not apply in the transition to IFRS of an entity that adopts them for the first time, except for as specified in paragraphs 27 to 30.

Except as described in paragraphs 13 to 34, an entity on its opening balance sheet under IFRS: will recognize all assets and liabilities for which recognition is required by IFRS; will not recognize items as assets or liabilities if IFRS do not allow such recognition; it will reclassify the assets, liabilities and components of equity recognized under previous GAAP, according to the asset, liability or component of equity categories that correspond to it under IFRS, and apply IFRS when valuing all assets and recognized liabilities.The accounting policies that the entity uses in its opening balance in accordance with IFRS, may differ from those applied on the same date in accordance with its previous GAAP.The resulting adjustments arise from events and transactions prior to the date of transition to IFRS. Therefore, the entity will recognize such adjustments, on the date of transition to IFRS, directly in retained earnings reserves (or, if appropriate, in another category of equity).This IFRS establishes two categories of exclusions to the general principle that the opening balance sheet under the entity's IFRS must comply with each and every IFRS: exemptions for certain requirements contained in other IFRSs are provided in paragraphs 13 to 25, and in paragraphs 26 to 34 retrospective application of some aspects of other IFRSs is prohibited.if appropriate, in another category of equity) This IFRS establishes two categories of exclusions to the general principle that the opening balance sheet under the entity's IFRS must comply with each and every IFRS: paragraphs 13 to 25 provide exemptions for certain requirements contained in other IFRSs, and paragraphs 26 to 34 prohibit the retroactive application of some aspects of other IFRSs.if appropriate, in another category of equity) This IFRS establishes two categories of exclusions to the general principle that the opening balance sheet under the entity's IFRS must comply with each and every IFRS: paragraphs 13 to 25 provide exemptions for certain requirements contained in other IFRSs, and paragraphs 26 to 34 prohibit the retroactive application of some aspects of other IFRSs.and paragraphs 26 to 34 prohibit retroactive application of some aspects of other IFRSs.and paragraphs 26 to 34 prohibit retroactive application of some aspects of other IFRSs.

Exemptions in the application of other IFRS

The entity may choose to use one or more of the following exemptions:

business combinations (paragraph 15); fair value or revaluation as deemed cost (paragraphs 16 to 19); employee benefits (paragraph 20); accumulated translation differences (paragraphs 21 and 22); compound financial instruments (paragraph 23); assets and liabilities of subsidiaries, associates and joint ventures (paragraphs 24 and 25).

The entity will not apply these exemptions by analogy to other items.

Some of the above exemptions refer to fair value. IAS 22 “Business Combinations” (today replaced by IFRS 3, approved in 2004) explains how to determine the fair values of identifiable assets and liabilities acquired in a business combination. The entity will apply these explanations when determining fair values under this IFRS, unless another IFRS contains more specific guidelines for determining fair values of the asset or liability in question. These fair values will reflect the conditions existing on the date for which they were determined.

Business combinations.

An entity shall apply the requirements of Appendix B to business combinations that it has recognized prior to the date of transition to IFRS.

Fair value or revaluation as deemed cost.

The entity may choose, on the date of transition to IFRS, to measure an item of property, plant and equipment at its fair value, and use this fair value as the deemed cost on that date. The entity that adopts IFRS for the first time may use the amount of property, plant and equipment revalued according to previous GAAP, either on the transition date or before, as an attributed cost on the revaluation date, provided that it was, at the time of realization, broadly comparable: at fair value, or at cost, or at depreciated cost under IFRS, adjusted to reflect, for example, changes in a general or specific price index The options in paragraphs 16 and 17 may also be applied to: investment property,if the entity chooses the application of the cost model of IAS 40 "Investment Property", and intangible assets that meet: the recognition criteria of IAS 38 "Intangible Assets" (including the reliable valuation of the original cost), and the criteria established by IAS 38 for the realization of revaluations (including the existence of an active market).

The entity will not use these options for the valuation of other assets or liabilities other than those mentioned.

The entity that first adopts IFRS may have established an attributed cost, under previous GAAP, for some or all of its assets and liabilities, valuing them at their fair value on a particular date, for cause.

of some event, such as a privatization or a takeover bid. In that case, you may use such fair value measurements, caused by the event in question, such as the cost attributed by IFRS on the date such valuation occurred.

Employee benefits.

According to IAS 19 “Remuneration –Benefits- to Employees”, the entity may choose to apply the “fluctuation band” approach, according to which some actuarial gains and losses are left unrecognized. Retrospectively applying this approach would require the entity to separate the recognized portion and the unrecognized portion of accumulated actuarial gains and losses from the start of the plan to the date of transition to IFRS. However, the first-time adopter of IFRS may choose to recognize all accumulated actuarial gains and losses on the date of transition to IFRS, even if it decides to use the 'corridor' approach to treat gains and losses. subsequent actuarial. If the entity adopting IFRS for the first time decides to make use of this possibility,will apply it to all plans.

Cumulative translation differences.

IAS 21 “Effects of Changes in Foreign Exchange Rates” requires that the entity:

classify some translation differences as a separate component of equity, and transfer, when disposing or exiting a foreign business, the translation difference related to it (including, if applicable, the gains and losses from the related hedges) to the account of results as part of the loss or gain derived from the disposal or abandonment.

However, the entity that first adopts IFRS does not need to comply with this requirement, with respect to the accumulated translation differences that exist on the date of transition to IFRS. If the first-time adopter makes use of this exemption:

the accumulated translation differences of all foreign businesses will be considered null on the date of transition to IFRS, and the loss or gain from the subsequent disposal or abandonment of a foreign business will exclude the translation differences that have arisen before from the date of transition to IFRS, and will include the translation differences that have arisen after that date.

Compound financial instruments.

IAS 32 "Financial Instruments: Presentation and Disclosure" requires the entity to decompose compound financial instruments, from the outset, into their separate liability and equity components. If the liability component has ceased to exist, retrospective application of IAS 32 involves the separation of two portions of equity. A portion will be in retained earnings reserves and will represent the sum of the total accrued interest on the liability component. The other portion will represent the original equity component. However, under this IFRS, the first-time adopter need not separate those two portions if the liability component has ceased to exist on the date of transition to IFRS.

Assets and liabilities of subsidiaries, associates and joint ventures

If a subsidiary adopts IFRS after its parent, it will value the assets and liabilities, in its individual financial statements, choosing between the following treatments:

the book amounts that would have been included in the parent's consolidated financial statements, established on the parent's transition date to IFRS, regardless of the adjustments derived from the consolidation procedure and the effects of the business combination resulting from the that the parent acquired from the subsidiary, the carrying amounts required by the rest of this IFRS, established on the date of transition to the IFRS of the subsidiary. These amounts may differ from those described in letter a) above: when the exemptions provided for in this IFRS give rise to valuations that depend on the date of transition to IFRS, when the accounting policies applied in the subsidiary's financial statements differ from those used in the consolidated financial statements. For example,the subsidiary can use the preferential treatment of IAS 16 Property, plant and equipment, while the group can use the alternative treatment allowed.

The associate or joint venture that adopts IFRS for the first time will have a similar option, although at a later time than the entity that has significant influence or control over it jointly with others.

However, if an entity adopts IFRS for the first time after its subsidiary (or associate or joint venture), it will value, in its consolidated financial statements, the assets and liabilities of the subsidiary (or associate or joint venture) for the same book amounts that appear in the individual financial statements of the subsidiary (or associate or joint venture), after making the corresponding adjustments when consolidating or applying the equity method, as well as those that refer to the effects of the business combination in which such entity acquired the subsidiary. Similarly, if a parent adopts IFRS for the first time in its individual financial statements, before or after that in its consolidated financial statements,will value its assets and liabilities for the same amounts in both financial statements, except for the consolidation adjustments.

Exceptions to the retrospective application of other IFRSs.

This IFRS prohibits the retroactive application of some aspects of other IFRSs relating to:

derecognition of financial assets and financial liabilities (paragraph 27), hedge accounting (paragraphs 28 to 30), and estimates (paragraphs 31 to 34).

Cancellation of financial assets and financial liabilities.

The first-time adopter will apply the requirements for the derecognition of IAS 39 “Financial Instruments: Recognition and Valuation”, prospectively from the effective date of IAS 39. That is, if the first-time adopter had given of write off financial assets or financial liabilities, following previous GAAP, in a fiscal year that began before January 1, 2001, you should not recognize these assets and liabilities under IFRS (unless they meet the conditions for their recognition as a result of another transaction or subsequent event). However, the first-time adopter of IFRS:

recognize all derivatives and other types of interests, such as rights or obligations relating to financial management of the debt, that it has retained after the transaction that led to the derecognition of the accounts, if they still exist on the date of transition to IFRS, and consolidate all Special Purpose Entities (SPE) that it controls on the date of transition to IFRS, even if such SPEEs existed prior to that date, or had financial assets or financial liabilities that were derecognized under GAAP previous.

Hedge accounting

On the date of transition to IFRS, as required by IAS 39, “Financial Instruments: Recognition and Measurement”, an entity:

you must measure all derivatives at fair value; y You must eliminate all deferred gains and losses from derivatives that you would have recorded under previous GAAP as assets or liabilities.

In its opening balance sheet in accordance with IFRS, the entity should refrain from reflecting a hedging relationship that does not qualify for it under IAS 39 (as is the case, for example, in many hedging relationships where the hedging instrument is a cash instrument or issued option; or where the hedged item is a net position or where the interest risk on an investment held to maturity is hedged). However, if the entity designated a net position as a hedged item under previous GAAP, it may designate an individual item within that net position as a hedged item under IFRS, provided that it does not do so after the date of transition to IFRS..

The entity shall apply the transitional provisions of IAS 39 to all other hedging relationships that exist on the date of transition to IFRS.

Estimates

Estimates made under IFRS, on the transition date, will be consistent with estimates made for the same date under previous GAAP (after making the necessary adjustments to reflect any difference in accounting policies), unless there is objective evidence of that these estimates were in error After the date of transition to IFRS, the entity may receive information regarding estimates made under previous GAAP. According to paragraph 31, the entity will treat the receipt of such information in the same way as events after the balance sheet date that do not involve adjustments, according to IAS 10 "Events After the Balance Sheet Date". For example, it may be assumed that the entity's date of transition to IFRS is January 1, 2004, and that the new information,received on July 15, 2004, requires the revision of an estimate made under GAAP that applied on December 31, 2003. The entity will not reflect this new information in its opening balance sheet under IFRS (unless such estimates required adjustments to reflect differences in accounting policies, or there was objective evidence that they contained errors). Instead, the entity will reflect this new information in the income statement (or, if appropriate, as other changes in equity) for the year ended December 31, 2004.The entity will not reflect this new information in its opening balance sheet in accordance with IFRS (unless such estimates required adjustments to reflect differences in accounting policies, or there was objective evidence that they contained errors). Instead, the entity will reflect this new information in the income statement (or, if appropriate, as other changes in equity) for the year ended December 31, 2004.The entity will not reflect this new information in its opening balance sheet in accordance with IFRS (unless such estimates required adjustments to reflect differences in accounting policies, or there was objective evidence that they contained errors). Instead, the entity will reflect this new information in the income statement (or, if appropriate, as other changes in equity) for the year ended December 31, 2004.

The entity may have to make estimates under IFRS at the transition date that were not required on that date under previous GAAP. To achieve consistency with IAS 10, such estimates made under IFRS will reflect the conditions existing at the transition date. In particular, the estimates made on the date of transition to IFRS, relative to market prices, interest rates or exchange rates, will reflect market conditions on that date.

Paragraphs 31 to 33 apply to the opening balance sheet in accordance with IFRS. They will also apply to comparative periods presented in the first IFRS financial statements, in which case references to the date of transition to IFRS will be replaced by references to the end of the corresponding comparative period.

Presentation and disclosure

This IFRS does not contain presentation and disclosure exemptions for other IFRSs.

Comparative information

To comply with IAS 1 “Presentation of Financial Statements”, the entity's first financial statements under IFRS will include at least one year of comparative information in accordance with IFRS. Some entities present historical summaries of selected data, for years prior to the one in which they present complete comparative information according to IFRS. This IFRS does not require that these summaries meet the recognition and measurement requirements of IFRS. In addition, some entities present comparative information under previous GAAP, as well as the comparative information required by IAS 1. In the event that the financial statements contain a summary of historical data or comparative information under previous GAAP, the entity:It will prominently identify that information as not prepared in accordance with IFRS, and it will reveal the nature of the main adjustments that would have to be made to comply with IFRS. The entity will not need to quantify such adjustments.

Explanation of the transition to IFRS

The entity will explain how the transition from previous GAAP to IFRS has affected what was previously reported, such as financial position, results and cash flows.

Reconciliations

To comply with paragraph 38, the first financial statements under IFRS will include: reconciliations of your equity, under previous GAAP, with the resulting IFRS for each of the following dates: the date of transition to IFRS, and the end of the last period contained in the most recent financial statements that the entity has presented applying the previous GAAP. a reconciliation of the loss or gain presented under the previous GAAP, for the last period contained in the most recent financial statements of the entity, with its loss or gain under IFRS for the same period, and the entity proceeded to recognize or reverse impairment losses on the assets for the first time when preparing its opening balance sheet under IFRS,the information to disclose that would have been required, according to IAS 36 "Impairment of Assets", if the entity had recognized such losses due to impairment of the assets, or the corresponding reversals, in the year that began with the date of transition to IFRS The reconciliations required by letters a) and b) of paragraph 39, will be made with sufficient detail to allow users to understand the significant adjustments made to the balance sheet and the income statement. If the entity presented a statement of cash flows according to its previous GAAP, it will also explain the significant adjustments to it.If the entity is aware of errors contained in the information prepared in accordance with previous GAAP,The reconciliations required by letters a) and b) of paragraph 39 will distinguish between the corrections of such errors and changes in accounting policies. IAS 8 "Net Profit or Loss for the Year, Fundamental Errors and Changes in Accounting Policies", no It deals with changes in accounting policies derived from the first adoption of IFRS. Therefore, the disclosure requirements regarding changes in accounting policies, contained in IAS 8, are not applicable in the first financial statements under IFRS of the entity If an entity did not present financial statements in previous periods, will disclose this fact in its first financial statements under IFRS.IAS 8 “Net Profit or Loss for the Year, Fundamental Errors and Changes in Accounting Policies”, does not address changes in accounting policies derived from the first adoption of IFRS. Therefore, the disclosure requirements regarding changes in accounting policies, contained in IAS 8, are not applicable in the entity's first financial statements under IFRSs. If an entity did not present financial statements in prior years, will disclose this fact in its first financial statements under IFRS.IAS 8 “Net Profit or Loss for the Year, Fundamental Errors and Changes in Accounting Policies”, does not address changes in accounting policies derived from the first adoption of IFRS. Therefore, the disclosure requirements regarding changes in accounting policies, contained in IAS 8, are not applicable in the first financial statements under IFRS of the entity If an entity did not present financial statements in previous periods, will disclose this fact in its first financial statements under IFRS.they are not applicable in the first financial statements under IFRS of the entity. If an entity did not present financial statements in previous periods, it will disclose this fact in its first financial statements under IFRS.they are not applicable in the first financial statements under IFRS of the entity. If an entity did not present financial statements in previous periods, it will disclose this fact in its first financial statements under IFRS.

Use of fair value as deemed cost.

If, in its opening balance sheet under IFRS, the entity uses fair value as deemed cost for an item of property, plant and equipment, investment property or an intangible asset (see paragraphs 16 and 18), the first statements financial statements under IFRS shall disclose, for each item that appears as a separate line in the opening balance sheet under IFRS: the cumulative total of such fair values; and the cumulative adjustment to the carrying amount presented under previous GAAP. Interim financial information In order to comply with paragraph 38, if the entity submits an interim financial report, under IAS 34 "Interim Financial Information", for part of the year covered by its first financial statements presented under IFRS,will comply with the following additional requirements to those contained in IAS 34: If the entity submitted interim financial reports for the comparable interim period of the immediately preceding year, each interim financial information will include reconciliations regarding: its equity at the end of the interim comparable period, under previous GAAP, with equity under IFRS on that date, and its profit or loss obtained in that comparable period (both current year and cumulative year to date data), using previous GAAP, with the loss or gain under IFRS for that period In addition to the reconciliations required by (a), in the first interim financial report you submit under IAS 34,for a part of the period covered by its first financial statements under IFRS, the entity shall include the reconciliations described in paragraphs (a) and (b) of paragraph 39 (supplemented by the details required by paragraphs 40 and 41), or a reference to another published document that includes such reconciliations. IAS 34 requires that certain minimum information be disclosed, which is based on the assumption that users of interim reports also have access to the most recent annual financial statements. However, IAS 34 also requires an entity to disclose information 'about events or transactions that are significant to an understanding of the current interim period'. Therefore, if the first-time adopter did not disclose, in its most recent annual financial statements,prepared in accordance with previous GAAP, significant information for the understanding of the interim period, will do so within the interim financial information, or will include a reference to another published document that contains it. Effective Date The entity will apply this IFRS if its first financial statements under IFRS are for a year beginning on or after January 1, 2004. Early application is advised. If the entity's first financial statements under IFRS refer to a period beginning before January 1, 2004, and the entity applies this IFRS instead of SIC-8 “First-Time Application of IAS as Accounting Basis ”, will reveal this fact.Significant information for the understanding of the interim period will be included in the interim financial information, or it will include a reference to another published document that contains it. Effective Date The entity will apply this IFRS if its first financial statements under IFRS are for a year beginning on or after January 1, 2004. Early application is advised. If the entity's first financial statements under IFRS refer to a fiscal year beginning before January 1, 2004, and the entity applies this IFRS instead of SIC-8 “First Time Application of IAS as Accounting Basis ”, will reveal this fact.Significant information for the understanding of the interim period will be included in the interim financial information, or it will include a reference to another published document that contains it. Effective Date The entity will apply this IFRS if its first financial statements under IFRS are for a year beginning on or after January 1, 2004. Early application is advised. If the entity's first financial statements under IFRS refer to a period beginning before January 1, 2004, and the entity applies this IFRS instead of SIC-8 “First-Time Application of IAS as Accounting Basis ”, will reveal this fact.or it will include in it a reference to another published document that contains it. Effective Date The entity will apply this IFRS if its first financial statements under IFRS are for a year beginning on or after January 1, 2004. Early application is advised. If the entity's first financial statements under IFRS refer to a period beginning before January 1, 2004, and the entity applies this IFRS instead of SIC-8 “First-Time Application of IAS as Accounting Basis ”, will reveal this fact.or it will include in it a reference to another published document that contains it. Effective Date The entity will apply this IFRS if its first financial statements under IFRS are for a year beginning on or after January 1, 2004. Early application is advised. If the entity's first financial statements under IFRS refer to a period beginning before January 1, 2004, and the entity applies this IFRS instead of SIC-8 “First-Time Application of IAS as Accounting Basis ”, will reveal this fact.If the entity's first financial statements under IFRS refer to a fiscal year beginning before January 1, 2004, and the entity applies this IFRS instead of SIC-8 “First Time Application of IAS as Accounting Basis ”, will reveal this fact.If the entity's first financial statements under IFRS refer to a fiscal year beginning before January 1, 2004, and the entity applies this IFRS instead of SIC-8 “First Time Application of IAS as Accounting Basis ”, will reveal this fact.

Appendix a

Definition of terms

This appendix is an integral part of IFRS.

Date of transition to IFRS: The beginning of the earliest period for which the entity presents complete comparative information in accordance with IFRS, within its first financial statements presented in accordance with IFRS.

Attributed cost: An amount used as a proxy for cost or depreciated cost on a given date. Subsequent depreciation or amortization assumes that the entity had initially recognized the asset or liability on the given date, and that this cost was equivalent to the deemed cost.

Fair value: The amount for which an asset could be exchanged or a liability canceled, between interested and duly informed parties, in a transaction carried out under conditions of mutual independence.

First financial statements in accordance with IFRS: The first annual financial statements in which the entity adopts the International Financial Reporting Standards (IFRS), through an explicit and unreserved statement of compliance with IFRS.

IFRS first-time adopter (or first-time adopter): The entity that presents its first IFRS financial statements.

International Financial Reporting Standards (IFRS): Standards and Interpretations adopted by the International Accounting Standards Board (IASB). They comprise:

International financial reporting standards; International Accounting Standards; eInterpretations issued by the International Financial Reporting Standards Interpretations Committee (IFRIC), or issued by the previous Interpretations Committee (SIC) and adopted by the IASB.

Opening balance sheet under IFRS: The entity's balance sheet (published or not) on the date of transition to IFRS.

Previous GAAP: The accounting bases that the entity that adopts IFRS for the first time, used immediately before applying IFRS.

Presentation date: The end of the last fiscal year covered by the financial statements or by an interim financial report.

Appendix b

Business combinations

Appendix c

Amendments affecting other IFRSs

The amendments contained in this appendix are effective for the annual financial statements that cover periods beginning on or after January 1, 2004. If an entity applies this IFRS for a prior period, these amendments will also be effective for that period.

This IFRS repeals SIC-8 Application, for the First Time, of IAS as Accounting Basis. This IFRS modifies letter h) of paragraph 172 of IAS 39 “Financial Instruments: Recognition and Measurement”, which now reads as follows: yes If securitisations, assignments or other transactions have been carried out that imply the cancellation of a financial instrument, prior to the beginning of the year in which this Standard is applied for the first time, the way of accounting for said operation should not be changed retroactively, in order to comply with the requirements. established in this standard; However, this does not exempt the transferor from complying with the following requirements: recognize all derivatives and other interests, such as the rights or obligations derived from the administration of said instruments,that you have retained after the transaction is made and meet the conditions for recognition under this Standard or another IFRS; and consolidate all the entities with a special purpose controlled by the transferor (see SIC-12 “Consolidation - Entities with a Special Purpose”).

Public Accountant with studies in Philosophy at the University of Quindío and specialization in Social Management with the University of Antioquia. Professor of Accounting Theory and Member of the Permanent Research Seminar on Accounting Theory and International Standards of the accounting profession at the University of Quindío. Email: [email protected] - [email protected]

The term is definitive "Adoption", in IFRS 1, it replaces SIC 8 that expressed "application". Partial adoption is not possible for international regulatory bodies.

Up to May 2004, five IFRSs have been issued: 1: First-time application of IFRS, 2: Payment in shares, 3: Business combination (replaces IAS 22 and modifies IAS 36, 38 and 39), 4: Contracts of insurance (leases) and 5: Non-current assets for sale and discontinued operations (replaces IAS 35).

The comments will be presented as a footnote; the translation of the Standard is that produced by the official journal of the European Union of April 6, 2004, with some changes in the name of the Standards.

The international accounting standard, which establishes the criteria for “Presentation of Financial Statements” is IAS 1, revised in 1997 and improved in December 2003.

The International Accounting Standard (IAS), which prescribes the treatment of “Interim financial information. Intermediate EEFF ”is IAS 35, approved in June 1998.

Comparability is a qualitative characteristic of the Financial Statements, contemplated in paragraphs 39 to 42 of the IASC Framework of Concepts (today the IASB), the other three qualitative characteristics of the Financial Statements are: Understandability, Relevance and Reliability.

The IASC Conceptual Framework (today the IASB), contemplates a section “Limitations on the Relevance and Reliability of the information” between paragraphs 43 to 45; paragraph 44 headlines “Cost-benefit balance:“… The benefits derived from the information must exceed the cost of obtaining it. The assessment of benefits and costs is, however, substantially a trial process. ”

Paragraph 11 of IAS 1 (revised in 1997) states that “A company whose financial statements comply with the IAS- (IFRS) (name after 2001 for Standards issued by the IASB), shall disclose this fact. The financial statements should not be described in the sense that they comply with the IAS- (IFRS) unless it complies with all the requirements of each applicable IAS (IFRS) and each SIC Interpretation (today issued by the IFRIC) of the Standing Committee of interpretations.

In the Colombian case, the preparation of financial statements in accordance with the guidelines established in Decree 2649 and 2650 of 1993.

See comment: Mejía Soto, Eutimio. Introduction to international accounting standards. Armenia: University of Quindío, 2003, pp. 36-72. Comments to the IASC Conceptual Framework (today the IASB), in a comparison with Decree 2649 of 1993.

IAS 1 “Presentation of Financial Statements” contemplates in paragraph 7 that a complete set of financial statements includes the following components:

Balance sheet, Income statements, A statement showing either:
- All changes in capital, Changes in capital other than those arising from capital transactions with owners and distributions to owners.
Statement of cash flows; yAccounting policies and explanatory notes

IAS 8 was revised in 1993.

The IASC Conceptual Framework (now the IASB) contemplates the topic “Recognition of the elements of financial statements” in paragraphs 82 to 84. In paragraph 83 it states: “An item that meets the definition of an element should be recognized if:

Any future economic benefits associated with the particular item are likely to flow to or from the business, and the item has a cost or value that can be reliably measured.

The concept of an element of the financial statements is expressed in paragraph 47 of the IASC Conceptual Framework (now the IASB) and explained in paragraphs between 48 and 80. “The financial statements reflect the financial effects of transactions and other events by grouping them into broad classes, according to their economic characteristics. These broad classes are called elements of financial statements ”(M: 47). The elements related to the financial position are: assets, liabilities and capital; For the measurement of the result, the related elements are: income and expenses.

Generally Accepted Accounting Principles, in Colombia established in Decree 2649 of 1993, such decree in its first article indicates what is expressed in Law 143 of 1990, article 6, which states “Of the generally accepted accounting principles: it is understood by accounting principles or standards generally accepted in Colombia, the set of basic concepts and rules that must be observed when registering and reporting accounting, on matters and activities of natural or legal persons ”.

In 2004 IFRS 3 “Business Combinations” is issued, which repeals IFRS 22 “Business Combinations” revised in 1998. All business combinations are accounted for using the purchase method · The union of interests method is prohibited.

Fair value: is the amount for which an asset can be exchanged, between an experienced buyer and seller, in a free transaction.

IAS 20 “Employee Benefits” revised in 2000; is the international accounting standard that prescribes the treatment of corresponding to employee compensation.

IAS 21 “Effects of variations in foreign currency exchange rates”, revised in 1993, is in charge of prescribing the treatment of accumulated exchange differences.

The standards that establish the treatments of financial instruments are: IAS 32 “Financial Instruments: Presentation and Disclosure” revised in 2000 and IAS 39 Financial Instruments: Recognition and Measurement ”revised in 2000.

“A business combination is the unification of independent companies in a single economic entity, as a result that one of the companies joins with the other or obtains control over the net assets and operations of the same.

Reference to the fair value ago: IAS 16 "Property, plant and equipment" paragraph 6 ^to the IAS 17 "Leases", paragraph 3, IAS 18 "Revenue", paragraph 7, IAS 19 "Employee Benefits" paragraph 7, the IAS 20 "Accounting for Government Grants and Disclosure of Government Aid" paragraph 3, IAS 21 "Effects of Changes in Foreign Exchange Rates" paragraph 7, IAS 32 "Financial Instruments: Presentation and Information to be disclosed ”paragraph 5, IAS 33“ Earnings per share ”paragraph 9, IAS 38“ Intangible assets ”paragraph 7 and IAS 39“ Financial Instruments: Recognition and Measurement ”paragraph 8.

Investment properties: are those made up of land or buildings that are not substantially occupied for the use or operations of the investing company, or of another company in the same group as the investor.

Active market: it is a market in which all the following conditions exist:

The goods or services exchanged in the market are homogeneous. Buyers and sellers for a given good or service can be found at any time, and the prices are available to the public.

IAS 21 “Effects of changes in exchange rates in foreign currency” was revised in 1993 and is valid for financial statements for periods beginning on or after January 1, 1995. It defines terms such as: foreign operation, foreign entity, currency in which it is reported, foreign currency, exchange rate, exchange difference, closing or exchange rate, net investment in a foreign entity, monetary items and fair value.

- A financial instrument is a contract that gives rise, simultaneously, to a financial asset in one company and a financial liability or capital instrument in another company. An equity instrument is any contract that shows interest in the net assets of a company, once all liabilities have been deducted. In addition, IAS 32 and 39 define: financial asset, financial liability, derivative instrument, negotiable financial asset or liability, investments to be held until maturity, loans and receivables originated by the company itself, financial assets available for sale, the effective interest method, effective interest rate, transaction costs, firm commitment, control, derecognition of a financial instrument, hedging transaction, hedged item or item,hedging instrument, hedging efficiency, securitization, repurchase agreement.

IAS 16 "Property, plant and equipment" establishes the following Treatment by "preferred" reference point: After their initial recognition as an asset, all the elements of property, plant and equipment must be accounted for at their cost of acquisition less the accumulated depreciation practiced and the accumulated amount of any impairment losses (related to impairment losses is contemplated in IAS 36, amended in 2004) that they have suffered throughout their useful life. (IAS 16: p. 28)

IAS 16 "Property, plant and equipment" establishes the following alternative treatment allowed ": After the initial recognition as an asset, every element of property, plant and equipment must be accounted for at its revalued value, which is given by its fair value, at the time of revaluation, less the accumulated depreciation subsequently practiced and the accumulated amount of impairment losses suffered by the item. The revaluations must be made with sufficient regularity, so that the book value, at all times, does not differ significantly from that which can be determined using the fair value on the balance sheet date. (IAS 16: p. 29).

IAS 10 “Contingencies and events occurring after the balance sheet date” was revised in 1999.

IAS 1 “Presentation of Financial Statements” was revised in 1997 and improved in December 2003.

IAS 34 “Interim Financial Information: Interim Financial Statements” was approved in February 1998 and is effective for financial statements that cover periods beginning on or after January 1, 1999.

Interim financial information is the entire set of financial information, whether complete or condensed, that refers to a period smaller than the company's annual accounting period.

SIC 8 “Application, for the first time, of the IAS as Accounting Basis”, has the agreement date January 1998 and entered into force on August 1, 1998, it was replaced by IFRS 1 “First-time adoption of IFRS ”of June 2003.

Standards issued by the IASB after 2001.

Standards issued by the IASC before 2001.

Appendix B of IFRS 1 is developed in accordance with IAS 22 “Business Combinations”, as of 2004 with the issuance of “IFRS 3:“ Business Combinations ”, IAS 22 is replaced. All business combinations are accounted for using the purchase method · The interest pooling method is prohibited · Goodwill is not amortized but must be tested for impairment at least annually · The costs of restructuring subsequent to the combination are not recorded as liabilities in the acquisition date". For this reason, Appendix B of IFRS 1 is deleted from this presentation.

Paragraph 172 numeral h) of IAS 39 “Financial Instruments: Recognition and Measurement” approved in 1999 states the following “if a securitization, assignment or other transaction that implies derecognition of a financial instrument had been undertaken, prior to the beginning of the period accounting in which this Standard is applied for the first time, the way of accounting for such operation should not be changed retrospectively to comply with the requirements established in this Standard.

SIC 12 “Consolidation-entities with special purpose”, has as reference IAS 27 “Consolidated financial statements and accounting in subsidiaries”. The agreement is dated June 1998 and is effective for accounting periods beginning on or after July 1, 1999.

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