International Financial Information Standards

International Financial Information Standards

Introduction

As future public account professionals, the changes produced by the International Financial Information Standard (IFRS) in Colombia must be clear, the adoption of the norm was in 2009 where the Government established dates for compliance with the norm and powerGenerate the opening balance.

The local standard that was governed under Decree 2649 of 1993 compared to the International Financial Information Standard caused differences in accounting and financial procedures. Colombian companies had to create policies shaped like the activity and particularities that the company has.

In the list of international standards, IAS 16 Property and Equipment is included, which details the concepts that professionals must take into account when recognizing it, introduced non -common terms for example recognition, fair value, deterioration, among others. The practice was carried out with different name and when comparing the difference was not much. Another important change was the useful life, in Decree 2649 it established the useful life of each good;In the International Financial Information Standard (IFRS) the company must establish the useful life taking into account Factora that alter the same.

Developing

On July 13 of 2009 Colombia issued Law 1314 which regulated the principles and norms of accounting and financial information and information assurance, also relates the entities responsible for monitoring compliance with the law.

This law is the window to the convergence of international financial information standards.

Companies were classified as large, small, medium and microenterprise for which groups were formed for the application of international standards, Decree 2784 of the year 2012 is addressed to group 1 that is basically for financial entities or that issue securities alreadybe shares, bonds among others;Decree 3022 of the year 2013 is for group 2 SMEs, requirements such as employees, total value of assets, among others and finally decree 2706 of the year 2012 Group 3 are addressed to microenterprises and must meet some requirements and must meet some requirementsAs personnel plant not exceeding 10 workers, total assets infer 500 monthly minimum monthly salaries. Each group had transition, application and report dates, in order to generate an accounting opening balance and with this information apply international standards.

The International Financial Information Standards allow the accounting information to be interpreted in the same way in any country, facilitating the competitiveness of Colombian companies abroad because the information is expressed in the same terms, it is spoken in onelanguage.

One of the issues it deals with is plant and equipment, this item allows each company to define parameters according to the need you have;Each decision must be stipulated in accounting policy and notes to the financial statements. Facilitates

IAS 16 is the standard that establishes the guidelines that must be taken into account when accounting for a plant and equipment property element. The professional in charge of analyzing the item must be clear about the concepts contained. Within the guidelines given by the standard is the measurement, depreciation, useful life, fair value, amount in books, residual value among others.

Each concept is key to the proper treatment of plant and equipment property, if at the time of registering in accounting a game of said standard and the guidelines that the item can have to have significant monetary repercussions are not contemplated. The main problems that arise in the treatment of the account is the accounting of assets, charges for depreciation and deterioration due to the misinterpretation of the norm, for ignoring and lack of practice.

PLANT AND TEAM PROPERTY – IAS 16

Plant and equipment are the goods that it has in normal use of a company’s operations, they are not intended for sale, they can be tangible and use must be greater than one year;It is a item that forms the asset of a company, an asset is a controlled resource of past events that expect future economic benefits.

At the time that recognition is acquired, the recognition must include all the costs in which they were incurred until they are ready for use, an example can be import tariffs and taxes, discounts, payment of an expert, dismantling, among others;The payment of administrative payroll should be excluded, for example the head of purchases, advertising costs for example notices in the newspaper promoting the new product;Income from non -common activities, for example competition decides to buy products due to the shortage of a material.

An entity decides to improve a die cutter, increase its productivity, the cost incurred by the company in the improvement of the machine will take into account in the cost of improvement because the company can obtain future benefits and can be measured faithfully.

The tools that a company acquires for the maintenance of the equipment are not classified as plant and equipment property, but as inventories (IAS 13);Because the tools are not only use for plant and equipment property.

Companies can disaggregate the components of a machine because each component can handle a different classification or different depreciation periods. An example of this can be when in a residential set has elevator the building has a useful life of 50 years, while the elevator is 5 years old. It has two elements with different qualities it is important that they disaggregate them, since we with comparable for their respective depreciation and if it decides to handle depreciation with the years of life of the elevator will have an acceleration of the same.

Depreciation is another element to take into account, which will be done systematically according to the established period of useful life. The methods used are straight line, units produced and decreasing depreciation. In order to have the despicable amount, the following factors must be taken into account:

(+

Cost

(-)

Revaluation

(-)

Deterioration

(-)

Accumulated depreciation

(-)

Residual value

(=)

Depreciable amount

Once the despicable amount is divided into the useful life established in the company’s accounting policy and that way the depreciation of the good is determined. It must be recognized at the end of the period in case of cases of component assets must be depreciated separately.

To determine the useful life of an asset, the company must take into account factors such as physical wear, maintenance, technical obsolescences, changes in product demand, use restrictions, among others.

Each element contained in IAS 16 is important to show the real value of plant and equipment owned by a company, if there is a change this must be revealed in the notes to the financial statements;so that those interested in accounting information take it into account for decision making.

Conclusions

• Colombia adopted financial information standards (IFRS) in 2009 in order for the information to be one, not have the need to restore information for future international business.
• The local standard versus the International Financial Information Standard (IFRS) generated differences which are reflected in the ORI.
• Initial property and equipment property recognition is at cost.
• All costs that were incurred directly in the location of the asset are included until they were in operation.
• The components must be depreciated separately.
• The subsequent measurement will be at cost or revaluation depending on the case.

References

• Buitrago, h. (s.F.). Tell SME. Obtained from Conta Sme
• CCMAGANGUE. (s.F.). Obtained from CcMagangue
• Deloitte. (2019). Obtained from Deloitte
• Table, r. B. (s.F.). Technical Council of Public Accounting.