ifrs for smes vs nl gaap showing you the key differences · ifrs for smes vs nl gaap showing you...

November 2009

IFRS for SMEs vs NL GAAPShowing you the key differences

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IFRS Centre of Excellence, The NetherlandsRalph ter Hoeven [email protected]

Dingeman [email protected]

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3 IFRS for SMEs vs NL GAAP Showingyouthekeydifferences

Foreword

Welcometothefirsteditionof“IFRSforSMEsvsNLGAAP,Apocketcomparison”.TheobjectiveofthispublicationistoprovideasummaryofkeydifferencesbetweentherequirementsofIFRSforSMEscomparedtoNLGAAP.ThispublicationdoesnotattempttocaptureallofthedifferencesbetweenIFRSforSMEsandNLGAAPthatmayexistorthatmaybematerialtoaparticularcompany’sfinancialreport. On9July2009theInternationalAccountingStandardsBoard(IASB)issuedIFRSforSMEs.AnimportantquestionisifDutchlegalentitiescanapplyIFRSforSMEs?Theanswertothatquestionisnotyetcompletelyclear.InthecurrentDutchaccountinglawtheapplicationofIFRSforSMEsisnotincludedas an option. It should be noted that there are some provisionsinIFRSforSMEswhichconflictwithspecificprovisionsofDutchlaw.However,apartoftheseconflictscanbeaddressedbychoosinganoptionwithinIFRSforSMEswhichisinlinewithDutchlaw.InouropinionmanyotherconflictscanbesolvedbypresentinganddisclosingadditionalinformationrequiredbyDutchlaw.

Lookingatthefuture,webelievethatthelegislatorshouldexplicitlyallowIFRSforSMEstobeappliedinDutchlegalentities.Notasamandatoryrequirement,ofcourse,butasavoluntaryoptioninthesamewaythatvoluntaryapplicationoffullIFRSsisallowedonconditionthatmandatoryadditionalnotesareincluded in the financial statements as required underNetherlandsjurisdiction.FinancialstatementspreparedunderfullIFRSsorIFRSforSMEsarebasedoninternationallyacceptedfinancialreportingstandardsand provide the required fair view. Whether or not IFRSforSMEswillultimatelybeacceptedornotdependslargelyonwhetheritwillbecomeaworldwidestandard.Theadministrativeburdenofinternationallyoperatingcompanieswouldcertainlydiminishiflocalfinancial statements could be prepared under the same standards,andinparticulartheconsolidatedfinancialstatements. We also believe that companies should be regardedascapableofjudgingwhethertheapplicationofIFRSforSMEsisdesirableorpreferable.Onlyiftheyareallowedtodoso,theycanweightheprosandconsofapplicationofIFRSforSMEs.Itmayalsohaveapositive effect on the competitive edge of companies. Oneuniversallyacceptedsetofsimpleaccountingruleswillsimplifytheadministrativeprocesses.WebelievethattheEuropeanUnionhasanimportantroletoplayinthisdevelopment.Ifthe27EUMemberStatesallowtheapplicationofIFRSforSMEs,itwillbeanimportant gesture that will not go unnoticed in other economicspheresofinfluence.ItwillalsogivetheinternalEuropeanmarketmoreappealandrenderitmore competitive.

WethankLindaTonkes-BoersforhersignificantcontributioninanalysingthedifferencesbetweenIFRSforSMEsandNLGAAP.

RalphterHoeven,DingemanManschotIFRSCentreofExcellence,TheNetherlands

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Abbreviations used in this publication

DAS(s) Dutch Accounting Standard(s)

DASB Dutch Accounting Standards Board

IASB International Accounting Standards Board

IFRSforSMEs InternationalFinancialReportingStandardsforSmalland Medium-sizedEntities

IAS(s) International Accounting Standard(s)

IFRS(s),fullIFRSs InternationalFinancialReportingStandard(s)

NLGAAP GenerallyAcceptedAccountingStandardsintheNetherlands,comprisingtheNetherlandsCivilCodeandtheDutchAccountingStandardspublishedbytheDASB

Thetablebelowexplainssomeofthetermsusedinthisdocument.

Separate financial statements Thosepresentedbyaparent,aninvestorinanassociateoraventurerinajointlycontrolledentity,inwhichtheinvestmentsareaccountedforonthebasisofthedirectequityinterestratherthanon the basis of the reported results and net assets of the investees. Separatefinancialstatementscanonlybepreparedinadditiontoconsolidated or individual financial statements.

Consolidatedfinancialstatements Thefinancialstatementsofaparentanditssubsidiariespresentedasthoseofasingleeconomicentity.

Individual financial statements Thefinancialstatementsofanentitythathasnosubsidiaries,butwhichhasaninvestmentinanassociateand/orajointlycontrolledentity.


IntroductionOn9July2009,theInternationalAccountingStandardsBoard(IASB)issuedtheIFRSforSmallandMedium-sizedEntities(IFRSforSMEs).ThisStandardprovidesanalternativeframeworkthatcanbeappliedbyeligibleentitiesinplaceofthefullsetofInternationalFinancialReportingStandards(IFRSs)inissue.

TheIFRSforSMEsisaself-containedStandard,incorporating accounting principles that are based onfullIFRSsbutthathavebeensimplifiedtosuittheentitieswithinitsscope(knownasSMEs).ByremovingsomeaccountingtreatmentspermittedunderfullIFRSs,eliminating topics and disclosure requirements that arenotgenerallyrelevanttoSMEs,andsimplifyingrequirementsforrecognitionandmeasurement,theIFRSforSMEsreducesthevolumeofaccountingrequirementsapplicabletoSMEsbymorethan90percentwhencomparedwiththefullsetofIFRSs.

Where financial statements are prepared using the Standard,thebasisofpresentationnote(and,whereapplicable,theauditor’sreport)wouldrefertocompliance withtheIFRSforSMEs.ManySMEsmayfindthatthisinternationallyrecognised‘cachet’fortheirfinancialstatements will improve their access to capital.

TheIASBhasnotsetaneffectivedatefortheStandardbecausethedecisionastowhethertoadopttheIFRSforSMEs(andalso,therefore,thetimingforadoption)isamatterforeachjurisdiction.ThecompleteIFRSforSMEs(togetherwithbasisforconclusions,illustrativefinancialstatements,andpresentationanddisclosurechecklist)canbedownloadedfreefromhttp://go.iasb.org/IFRSforSMEs.

Key features of the IFRS for SMEsTheStandardhasbeenorganisedbytopictomakeitmorelikeareferencemanual–intendedbytheIASBtobemoreuser-friendlyforSMEpreparersandusersofSMEfinancialstatements.TheIFRSforSMEsandfullIFRSsareseparateanddistinctframeworks.EntitiesthatareeligibletoapplytheIFRSforSMEs,andthatchoosetodoso,mustapplythatStandardinfull(i.e.theyarenotpermittedto‘mixandmatch’therequirementsoftheIFRSforSMEsandfullIFRSs).TheIFRSforSMEsincludesrequirementsforthedevelopment and application of accounting policies

in the absence of specific guidance on a particular subject.Inparticular,anentitymay,butisnotrequiredto,considertherequirementsandguidanceinfullIFRSsdealing with similar and related issues.Thefollowingarethekeysimplificationsmade:• sometopicsinIFRSsareomittedbecausetheyare

notrelevanttotypicalSMEs;• someaccountingpolicytreatmentsinfullIFRSsare

not allowed because a simplified method is available toSMEs;

• simplificationofmanyoftherecognitionandmeasurementprinciplesthatareinfullIFRSs;

• substantiallyfewerdisclosures;and• simplifiedlanguageandexplanationsthroughout.

TopicsthathavebeenomittedfromtheIFRSforSMEsTheIFRSforSMEsdoesnotaddressthefollowingtopicsthataredealtwithinfullIFRSs,becausethesetopicsarenotgenerallyrelevanttoSMEs:• earningspershare;• interimfinancialreporting;• segmentreporting;• assetsheldforsale;and• insurance(becauseentitiesthatissueinsurance

contractswillnotbeeligibletousetheIFRSforSMEs).

Accounting treatments disallowed under the IFRS for SMEsTheIFRSforSMEsdoesnotallowthefollowingaccounting treatments that are available under full IFRSs(generallybecauseasimplifiedmethodisavailabletoSMEs):• therevaluationmodelforproperty,plantand

equipmentandintangibleassets;• proportionateconsolidationforinvestmentsin

jointlycontrolledentities;• forinvestmentproperty,measurementisdrivenby

circumstances rather than allowing an accounting policychoicebetweenthecostandfairvaluemodels.UndertheIFRSforSMEs,ifanentitycanmeasure the fair value of an item of investment propertyreliablywithoutunduecostoreffort,itmustusefairvalue.Otherwisecostisapplied;

• variousoptionsforgovernmentgrantspermittedbyIAS20AccountingforGovernmentGrantsandDisclosureofGovernmentAssistance;

• capitalisationofborrowingcosts;• capitalisationofdevelopmentcosts;and

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• deferralofactuarialgainsandlossesofdefinedbenefit pension plans.

Regardingfinancialinstruments,theStandarddropsthe‘available-for-sale’and‘held-to-maturity’categoriesofIAS39,hasnofairvalueoption,andhassimplifiedhedge accounting and derecognition requirements.However,thereisafallbackthatallowsentitiestochoosetoapplyIAS39initsentiretyinsteadofthefinancialinstrumentrequirementsintheIFRSforSMEs.ThisistheonlyfallbackoptiontofullIFRSsintheIFRSforSMEs.ItisexpectedthatmostSMEswillnotchoosetoapplyIAS39duetotheadditionalcomplexity.

Recognition and measurement simplificationsTheIFRSforSMEsmakesnumeroussimplificationstothe recognition and measurement requirements in full IFRSs.Forexample:• goodwillandotherindefinite-lifeintangiblesare

amortised(overtheirusefullives,butifusefullifecannotbereliablyestimated,thenuse10years);

• asimplifiedcalculationisallowedifmeasurementofdefined benefit pension plan obligations using the projectedunitcreditmethodinvolvesunduecostoreffort;

• thecostmodelispermittedforinvestmentsinassociatesandjointventures;and

• therearenospecialaccountingrequirementsforassets held for sale.

Reductions in disclosure requirements ThedisclosurerequirementsintheIFRSforSMEsaresubstantiallyreducedwhencomparedwiththoseinfullIFRSs.DisclosuresrequiredbyfullIFRSshavebeenomittedfromtheIFRSforSMEsfortwoprincipalreasons,i.e.either:• theyrelatetotopicsoraccountingpolicyoptionsin

fullIFRSsthatareomittedfromtheIFRSforSMEs,or• theyrelatetorecognitionandmeasurement

principlesinfullIFRSsthathavebeenreplacedbysimplificationsintheIFRSforSMEs;or

• theyarenotconsideredappropriatebasedonusers’needsand/orcost-benefitconsiderations.Forexample,somedisclosuresinfullIFRSsaremorerelevant to investment decisions in public capital marketsthantothetransactionsandothereventsandconditionsencounteredbytypicalSMEs.

Additional guidance materialToaccompanytheStandard,theIASBhasproducedimplementation guidance consisting of illustrative financial statements and a presentation and disclosure checklist.

Effective date and transitionTheeffectivedateoftheIFRSforSMEswillbedeterminedineachjurisdictionthatadoptsit.TheStandard contains a section on transition which containsalloftheexemptionsinIFRS1First-timeAdoptionofInternationalFinancialReportingStandards–withadditionalsimplificationsinrelationtocomparativeinformation.IFRS1requiresanentity’sfirstIFRSfinancialstatementstoincludeatleastoneyearofcomparativeinformationunderIFRSs.TheIFRSforSMEsprovidessomerelieffromthisbyincludingan‘impracticability’exemption.Similarly,itprovidesanimpracticabilityexemptionwithrespecttorestatingtheopening statement of financial position.

Who is eligible to use the IFRS for SMEs?TheIFRSforSMEsisintendedbytheIASBforusebyentitiesthathavenopublicaccountabilityandthatarerequired,orchoose,topublishgeneralpurposefinancialstatementsforexternalusers.Essentially,anentityisconsideredtohavepublicaccountabilityifitsdebtorequityinstrumentsarepubliclytraded,orifitisafinancialinstitutionorotherentitythat,aspartofitsprimarybusiness,holdsandmanagesfinancialresourcesentrustedtoitbyclients.Ultimately,thedecisionregardingwhichentitiesshouldusetheIFRSforSMEsrestswithnationalregulatoryauthoritiesandstandard-setters–andthosebodieswilloftenspecifymoredetailedeligibilitycriteria,includingquantifiedcriteriabasedonrevenue,assetsetc.AsubsidiarythatispartofaconsolidatedgroupthatusesfullIFRSsisnotprohibitedfromusingtheIFRSforSMEsinitsindividualfinancialstatements,providedthatthesubsidiaryitselfdoesnothavepublicaccountability.IfthesubsidiaryoptstousetheIFRSforSMEs,itmustfollowthatStandardinitsentirety–itcannotpickandchoosebetweentherequirementsoftheIFRSforSMEsandthoseoffullIFRSs.


Application of IFRS for SMEs by Dutch legal entitiesLegalentitiesincorporatedintheNetherlandsareregulatedprincipallyunderBook2oftheNetherlandsCivilCode.TheprovisionsrelatingtoannualreportingarebasedlargelyonEuropeanCompanyLaw(EC)DirectivesandareincorporatedinPart9,Book2oftheNetherlandsCivilCode(hereinafter:Part9).Part 9 applies to Dutch legal entities such as public limitedliabilitycompanies(NVs)andprivatelimitedliabilitycompanies(BVs).Part9alsoappliestolimitedorgeneralpartnerships(a.o.CVs)whereallpartnerswhoarefullyliabletowardscreditorsforthedebtsarecapital companies under foreign law. Part 9 covers theannualaccounts,thedirectors'reportandotherinformation. According to Part 9 Dutch legal entities mustapplyNLGAAPorcan(option)voluntarilyapplythestandardsoftheIASBendorsedbytheEuropeanCommission(hereinafter:IFRS).Obviously,asaresultoftheECIASRegulation,applicationofIFRSismandatoryin the consolidated financial statements of Dutch listed companies.

NLGAAPisthetermusedtoindicatethewholebodyofauthorativeaccountinglaw,standardsandliterature,includingtheNetherlandsCivilCode,theFrameworkandtheDutchAccountingStandards(DASs)publishedbytheDutchAccountingStandardsBoard (DASB). Part 9 stipulates that the principles generallyusedforvaluationofassetsandliabilitiesand the determination of results are in accordance withstandardsgenerallyconsideredacceptable.DASsareconsideredasstandardsgenerallyconsideredacceptable.TheDASBdefinesthesestandardsintheNetherlandsandpublishesaccountingstandards.Theauthoritativestatementsineitherthedraft(ED)orthedefinitivestandardsarenotbindinginthewaythelegalrequirementsare.However,theauthoritativestatementspublishedbytheDASBarenotexpectedtobe departed from without good reason.

CanIFRSforSMEsbeapplied byDutchlegalentities?Theanswertothatquestionisnotyetcompletelyclear.In the current Dutch accounting law the application of IFRSforSMEsisnotincludedasanoption.However,Part9stipulatesthattheprinciplesgenerallyusedforvaluation of assets and liabilities and the determination of results should be in accordance with standards generallyconsideredacceptable.TheDASBstatesthatauthoritativestatementsmadebytheDASBarenotexpectedtobedepartedfromwithoutgoodreason.BasedonouranalysisweconcludethatsomedifferencesexistbetweenIFRSforSMEsandtheauthorativestatementsofDASB.Materialdifferencesare limited because these authoritative statements ofDASBaretoaverylargeextentbasedon,i.e.inlinewith,IFRSs.Moreover,IFRSsareconsideredasstandardsgenerallyacceptableintheNetherlands.Therefore,inouropiniontheprovisionsofIFRSforSMEsshouldbeconsideredasstandardsgenerallyconsideredacceptableintheNetherlands,too.OurrationaleisthattheprovisionsofIFRSforSMEsarebasedonthesameconceptsandprinciplesasfullIFRSsandNLGAAP.Wealsobelievethatforexampletheexistenceof(potential)internationalstakeholderscouldbeconsideredagoodreasontoapplyIFRSforSMEs.TheultimatedecisionontheacceptabilityofIFRSforSMEsrestupontheEnterpriseChamberoftheCourtofJusticeandultimatelytheSupremeCourt.However,wewillonlyknowthe‘position’oftheEnterpriseChamberin this specific area if a case will be brought before courtbyaplaintiff.

ItshouldbenotedthatsomeprovisionsofIFRSforSMEsconflictwithspecificprovisionsofPart9.However,apartoftheseconflictscanbeaddressedbychoosinganoptionwithinIFRSforSMEswhichisinlinewithDutchlaw.WebelievethatmostotherconflictscanbesolvedbypresentinganddisclosingadditionalinformationrequiredbyDutchlaw.ThetableonthenextpagesetsouttheprovisionswithinIFRSforSMEswhichconflictwithspecificprovisions of Part 9.

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4 Presentation of provisions Provisionsshallbepresentedaslong-termliabilitiesand/orasshort-termliabilities

Provisionsshallbepresentedbetweenthelong-termliabilitiesandequityasaseparatecategory.

5 Statement of comprehensive income and income statement

Asingleamountcomprisingthetotalofpost-taxprofit or loss of a discontinued operation shall be presentedseparately.

Prescriptive formats of the profit and loss account do notallowseparatepresentationofpost-taxprofitorloss of a discontinued operation.

9 Goodwill relating to associates Theinitialmeasurementofaninvestmentinanassociateisbasedonthecostofacquisition.Anydifference between the cost of acquisition and the investor’s share of the net identifiable assets of the associate is accounted for in accordance with Section19.Goodwillisincludedinthecarryingamountoftheinvestment.

Therecognitionisbasedontheinvestor’sshareof the fair value of the net identifiable assets of theassociate.Anygoodwillshouldbeseparatelyrecognised and disclosed as an intangible asset.

9 Measurementofsubsidiaries,associatesandjointlycontrolledentitiesintheseparatefinancialstatements

In the parent’s separate financial statements investmentsinsubsidiaries,associatesandjointlycontrolled entities are accounted for either at cost less impairment or at fair value with changes in fair value recognised in profit or loss.

In the parent’s separate financial statements investmentsinsubsidiaries,associatesandjointlycontrolled entities are accounted for in accordance with the net asset value method (almost similar to theequitymethod).Onlyforvalidreasons,tobedisclosedinthenotes,adeviationfromapplyingnetassetvalueisallowed.Theinternationalstructureofthe group or application of the provisions of Section 2:408oftheNetherlandsCivilCode(consolidationexemptionforintermediateholdingcompanies)areconsidered to be valid reasons.

14 Measurementofassociatesinfinancialstatementsother than the separate financial statements (consolidated or individual financial statements)

An investor shall account for all of its investments in associates using one of the following: -thecostmodel;-theequitymethod;or-thefairvaluemodel(fairvaluewithchangesinfair

value recognised in profit or loss).

Anassociateinwhichsignificantinfluenceisexercisedshouldbemeasuredaccordingtothenetassetvaluemethod.Thenetassetvaluemethoddiffersfromtheequitymethodbecausetheinitialmeasurement is based on the investor’s share of the fair of the net identifiable assets and liabilities oftheassociate.Anygoodwillshouldbeseparatelyrecognisedanddisclosedasanintangibleasset.Theinitialmeasurementundertheequitymethodiscost(thus including goodwill).

15 Jointlycontrolledentitiesinfinancialstatementsother than the separate financial statements (consolidated or individual financial statements)

Proportionate consolidation is not allowed. An investorshallaccountforallofitsinterestsinjointlycontrolled entities using one of the following:-thecostmodel;-theequitymethod;or-thefairvaluemodel(fairvaluewithchangesinfair


Proportionate consolidation is permitted in the consolidatedfinancialstatements,ifthissatisfiestherequiredtrueandfairview.Otherwisetheequitymethod shall be used. Intheindividualfinancialstatementstheequitymethod shall be used.

Section of IFRS for SMEs

Topic IFRS for SMEs Dutch law (Part 9)


Comparison of IFRS for SMEs and NL GAAPThetableonthefollowingpagessetsoutsomeofthekeydifferencesbetweenIFRSforSMEsandNLGAAPforannualperiodsbeginningonorafter1January2010.Thesummarydoesnotattempttocaptureallofthedifferencesthatexistorthatmaybematerialtoaparticularentity’sfinancialstatements.Ourfocusisondifferencesthatarecommonlyfoundinpractice.Thesignificanceofthesedifferences–andothersnotincludedinthislist–willvarywithrespecttoindividualentities,dependingonsuchfactorsasthenatureoftheentity’soperations,theindustryinwhichitoperates,andtheaccountingpolicychoicesithasmade.Referencetotheunderlyingaccountingstandardsandanyrelevantnationalregulationsisessentialinunderstanding the specific differences.

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3 Departure from a standard when compliance would be misleading

Permittedin“extremelyrare”circumstancestoachieve a fair presentation. Specific disclosures are required.

DeparturefromNetherlandsCivilCodeisrequiredtotheextentnecessarytoprovideatrueandfairview.Thereasonsfordepartureshallbedisclosed.DeparturefromDASsmayonlyoccurwithgoodreasons.Thereisnorequirementtodiscloseadeparture from DASs.

4 Presentation of liabilities Thesituationatthebalancesheetdateiscrucialfor the presentation of liabilities as current or non-current.

Allowedtopresentaliabilityasnon-currentifthelender has granted a waiver for a period greater than oneyearafterthebalancesheetdatebutbeforethe issuance of the financial statements or when the violationiscorrectedafterthebalancesheetdate,but before the issuance of the financial statements.Allowedtopresentaliabilityasnon-currentifrefinancingforaperiodgreaterthanoneyeariscompletedafterthebalancesheetdate,butbeforedate of issuance of the financial statements.

4,5,6 Financialstatementspresentation Specific line items required. Prescriptive formats of the balance sheet and profit and loss account are applicable.

4 Presentation of provisions Provisionsshallbepresentedaslong-termliabilitiesorasshort-termliabilities.

Provisionsshallbepresentedbetweenthelong-termliabilitiesandequityasaseparatecategory.

5 Statement of comprehensive income and income statement

Asingleamountcomprisingthetotalofpost-taxprofit or loss of a discontinued operation shall be presentedseparately.

Prescriptive formats of the profit and loss account do notallowseparatepresentationofpost-taxprofitorloss of a discontinued operation.

9 Subsidiaryacquiredwiththeintentiontodisposeofin the near future

Consolidationisrequired. Consolidationisnotrequired.

9 Consolidationexemptionforsmall-sizedgroups Noexemption. Consolidationisnotrequiredforsmall-sizedgroups.

9 Consolidationexemptionforintermediateholdings An intermediate holding need not present consolidatedfinancialstatementsif,amongotherrequirements,theultimateoranyintermediateparent of the intermediate holding produces consolidated financial statements for public use that complywithIFRSsorwithIFRSforSMEs.

An intermediate holding need not present consolidatedfinancialstatementsif,amongotherrequirements,thefinancialinformationwhichtheintermediate holding should consolidate has been included in the consolidated financial statements oftheultimateoranyintermediateparentandthese consolidated financial statements have been prepared for public use in accordance with the provisionsoftheSeventhDirectiveoftheEUonCompanyLaworinanequivalentmanner(IFRSsandotherhighqualityGAAPsincluded).

9 Measurementofsubsidiaries,associatesandjointlycontrolledentitiesintheseparatefinancialstatements

In the parent’s separate financial statements investmentsinsubsidiaries,associatesandjointlycontrolled entities are accounted for either at cost less impairment or at fair value with changes in fair value recognised in profit or loss.

In the parent’s separate financial statements investmentsinsubsidiaries,associatesandjointlycontrolled entities are accounted for in accordance with the net asset value method (almost similar to theequitymethod).Onlyforvalidreasons,tobedisclosedinthenotes,adeviationfromapplyingnetassetvalueisallowed.Theinternationalstructureofthe group or application of the provisions of Section 2:408oftheNetherlandsCivilCode(consolidationexemptionforintermediateholdingcompanies)areconsidered to be valid reasons.

10 Correctingerrors Materialpriorperioderrorsshallberecognisedretrospectivelyinthefirstsetoffinancialstatementsauthorizedforissueaftertheirdiscovery.

Distinction between fundamental and other material errors.Fundamentalerrorsshallberecognisedretrospectivelyinthefirstsetoffinancialstatementsauthorizedforissueaftertheirdiscovery.Othermaterial errors are recognised in profit or loss.


Topic IFRS for SMEs NL GAAP


11 Measurementofnon-associates Non-associates(nosignificantinfluence)shouldbeaccounted for as financial instruments in accordance withSection11.

Associatesinwhichnosignificantinfluenceisexercisedshouldbemeasuredbyusingthecostmethodorbyusingcurrent(fair)value(withvaluedifferences recorded in a revaluation reserve). Non-associatesshouldbeaccountedforasfinancialinstrumentsinaccordancewithDAS290.

11 Effectiveinterestmethod Application of effective interest method is required. Linearamortisationisallowedifthatdoesnotleadtomajordifferenceswithapplicationofeffectiveinterest method.

11,12 Financialinstruments FallbackthatallowsentitiestochoosetoapplyIAS39initsentiretyinsteadofthefinancialinstrumentrequirementsintheIFRSforSMEs.

Notapplicable.

11,12 Categoriesoffinancialassets Financialassetsmustbeclassifiedintooneoftwocategories: at (amortised) cost or at fair value through profit or loss.

Financialassetsmustbeclassifiedintooneoffivecategories:tradingportfolio,derivatives,acquiredloansandbonds,loansandotherreceivablesandinvestmentinequityinstruments.

11,12 Categoriesoffinancialliabilities Financialliabilitiesmustbeclassifiedintooneoftwo categories: at (amortised) cost or at fair value through profit or loss.

Financialliabilitiesmustbeclassifiedintooneofthreecategories:tradingportfolio,derivativesandother financial liabilities.

11,12 Measurementoffinancialassets After initial recognition financial assets (including derivatives) at (amortised cost) if certain criteria are met and otherwise fair value through profit or loss.

Financialassetsthatclassifyaspartofthetradingportfolio shall be measured at fair value.

Purchased loans and bonds held until the end of the term are measured at amortised cost.

Otherpurchasedloansandbondswithastockexchangequotationaremeasuredatfairvalue.

Otherpurchasedloansandbondswithoutastockexchangequotationaremeasuredatamortisedcostor at fair value.

Loansgrantedandotherreceivablesaremeasuredatamortised cost.

Investmentsinlistedequityinstrumentsaremeasured at fair value.

Investmentsinequityinstrumentswithoutstockexchangequotationaremeasuredatcostoratfairvalue.

12 Hedge accounting Hedgeaccountingisonlypermittedforthefollowingrisks:-interestrateriskofadebtinstrumentmeasuredatamortisedcost;

-foreignexchangeorinterestrateriskinafirmcommitmentorahighlyprobableforecasttransaction;

-priceriskofacommoditythatitholdsorinafirmcommitmentorhighlyprobableforecasttransactiontopurchaseorsellacommodity;and

-foreignexchangeriskinanetinvestmentinaforeign operation.

Costpricehedgeaccountingisnotallowed.

Hedge accounting is allowed for the following hedgingrelationships:fairvaluehedge,cashflowhedge and hedge of a net investment in a foreign operation.NLGAAPalsoidentifiescostpricehedge accounting. In the event of cost price hedge accounting recognition occurs as follows:

-aslongasthehedgeditemisnotyetrecognisedinthebalancesheet,thehedgeinstrumentisnotrevalued;

-ifthehedgeditemregardsaforeigncurrencymonetaryitemthederivative,ifapplicable,isalsomeasuredattherateasatbalancesheetdate;

-whentheresultsofthehedgedpositionarerecognisedintheprofitorloss,therelatedresultonthehedgeinstrumentisalsorecogniseddirectlyinprofit or loss.



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13 Measurementofinventory Inventories shall be measured at the lower of cost and estimated selling price less costs to complete and sell.

Inventories shall be measured at the lower of cost and net realisable value or at current cost (“replacementvalue”).

13 Methodfordeterminingcost LIFOisprohibited. LIFOispermitted,butnotrecommended.

14 Definition of associate Anentityinwhichtheinvestorhassignificantinfluenceandwhichisneitherasubsidiarynorajointventure.

Anenterpriseholdsanassociateiftheenterprise,oroneofitssubsidiaries,hasprovidedcapitalforitsown account for furthering its own business activities byestablishingalong-termrelationship.A distinction is made between associates (“deelnemingen”)inwhichsignificantinfluenceisexercisedandotherassociates.Thisdistinctionismade for measurement purposes.

14 Measurementofassociatesinfinancialstatementsother than the separate financial statements

An investor shall account for all of its investments in associates using one of the following: -thecostmodel;-theequitymethod;or-thefairvaluemodel(fairvaluewithchangesinfair


Anassociateinwhichsignificantinfluenceisexercisedshouldbemeasuredaccordingtothenetasset value method in the consolidated financial statements and individual financial statements.

14 Equitymethodversusnetassetvalue Theinitialmeasurementofaninvestmentinanassociateaccountedforusingtheequitymethodisbasedonthecostofacquisition.Anydifferencebetween the cost of acquisition and the investor’s share of the net identifiable assets of the associate (goodwill or negative goodwill) is accounted for in accordancewithSection19.Goodwillisincludedinthecarryingamountoftheinvestment.

Thenetassetvaluemethoddiffersfromtheequitymethod because the initial measurement is based on the investor’s share of the fair value of the net identifiable assets and liabilities of the associate. Anygoodwillshouldbeseparatelypresentedasanintangible asset.Aninvestormaydeviatefromtheequitymethodwheninsufficientdataisavailable.Theassociateshouldthenbevaluedattheso-calledvisibleequityvalue of the associate.

14 Lossofsignificantinfluenceasaresultofpartialdisposal

Theinvestmentisremeasuredtoitsfairvalueatthatdate,withthegainorlossrecognisedinprofitor loss.

Thelastknowncarryingamountundertheequitymethod should be the basis for subsequent measurement at cost or fair value.

15 Jointlycontrolledentitiesinthefinancialstatementsother than the separate financial statements

Proportionate consolidation is not allowed. An investorshallaccountforallofitsinterestsinjointlycontrolled entities using one of the following:-thecostmodel;-theequitymethod;or-thefairvaluemodel(fairvaluewithchangesinfair


Proportionate consolidation is permitted in the consolidatedfinancialstatements,ifthissatisfiestherequiredtrueandfairview.Otherwisetheequitymethod shall be used.

16 Investmentproperty Measurementisdrivenbycircumstancesratherthananaccountingpolicychoicebetweenthecostandfairvaluemodels.Ifanentitycanmeasurethefairvalueofanitemofinvestmentpropertyreliablywithoutunduecostoreffort,itmustusethefairvaluemodel.Otherwise,itmustusethecostmodel.

Accountingpolicybetweenthecostandfairvaluewith changes in fair value recognised in profit or loss.

16 Fairvaluechangesofinvestmentpropertymeasuredat fair value

Shall be recognised in profit or loss. A revaluation reserve is not required.

Shallberecognisedinprofitorloss.However,arevaluation reserve shall be recognised for the difference between cost and the fair value until the fair value is realised.

17 Revaluationofproperty,plantandequipment Revaluationisnotallowed. Revaluationisallowed.




17 Costsofdecommissioning,restorationandsimilarliabilities

Thecostofanitemofproperty,plantandequipmentincludes the initial estimate of the costs of dismantling and removing the item and restoring the siteonwhichitislocated,theobligationforwhichanentityincurseitherwhentheitemisacquiredoras a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Allowed to recognise a provision for costs of decommissioning,restorationandsimilarliabilitiesovertheusefullifeofanitemofproperty,plantandequipment.

17 Majorinspectionandmaintenance Accounted for as part of the cost of an asset. Allowedtorecogniseaprovisionforcostsofmajorinspection and maintenance.

18 Development costs Capitalisationofdevelopmentcostsisnotanoption. Capitalisationofdevelopmentcostsisrequiredifcertain criteria are satisfied.

18 Revaluationofintangibles Revaluationofintangiblesisnotallowed. Revaluationofintangibleassetsisallowedifthereisanactivemarketforthoseassets.

19 Accounting method for business combinations All business combinations should be accounted for usingthepurchasemethod.Thepoolingofinterestsmethod is prohibited.

Thepurchasemethodisrequiredforcombinationsclassified as acquisitions and the pooling of interests method is required for combinations classified as uniting of interests.

19 Recognisingaliabilityforaplannedpost-acquisitionrestructuring

An acquirer shall recognise liabilities for terminating orreducingtheactivitiesonlywhentheacquirehasattheacquisitiondateanexistingliabilityforrestructuring.

Anacquirerisrequiredtorecognise,aspartofallocatingthecostofabusinesscombination,aprovision for terminating or reducing the activities of theacquireethatwasnotaliabilityoftheacquireeattheacquisitiondate,providedtheacquirersatisfiesspecified criteria at the acquisition date.

19 Recognisingcontingentliabilitiesofacquiree Anacquirershallrecogniseseparatelytheacquiree’scontingent liabilities at the acquisition date as part ofallocatingthecostofabusinesscombination,providedtheirfairvaluescanbemeasuredreliably.

Anacquirershallnotrecogniseseparatelytheacquiree’s contingent liabilities. Such contingent liabilities are subsumed within the amount recognised as goodwill or negative goodwill.

19 Intangibles Anintangibleassetisrecognisedseparatelyfromgoodwill when it meets the definition of an intangible asset and its fair value can be measured reliably.

Anintangibleassetisrecognisedseparatelyfromgoodwill when it meets the definition of an intangibleasset,itsfairvaluecanbemeasuredreliablyanditisprobablethatanyassociatedfutureeconomicbenefitswillflowtotheacquirer.

19 Goodwill Goodwill should be capitalised and should subsequentlybeamortised.Iftheusefullifecannotbeestimatedreliably,thelifeshallbepresumedtobetenyears.

Thebenchmarktreatmentisthatgoodwillshouldbecapitalisedandsubsequentlysystematicallyamortisedoveritsusefullife.Thereisarebuttablepresumption that the useful life of goodwill will not exceedtwentyyearsfrominitialrecognition.

Anenterpriseshould,atleastateachfinancial-yearend,estimatetherecoverableamountofgoodwillthatisamortisedoveraperiodexceedingtwentyyearsfrominitialrecognition,evenifnoindicationexiststhatitisimpaired.

Based on Dutch law DASs also permits the method bywhichgoodwillischargedimmediatelytotheshareholders’equityorprofitandlossaccount.



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19 Excessoffairvalueofnetassetsacquiredovertheacquisition cost (negative goodwill)

Recogniseimmediatelyasagain. Totheextentthatnegativegoodwillrelatestoexpectationsoffuturelossesandexpensesthatareidentified in the acquirer’s plan for the acquisition andcanbemeasuredreliably,butwhichdonotrepresent identifiable liabilities at the date of acquisition,thatportionofnegativegoodwillshouldbe recognised as income in the income statement whenthefuturelossesandexpensesarerecognised.

Totheextentthatnegativegoodwilldoesnotrelatetoidentifiableexpectedfuturelossesandexpensesthatcanbemeasuredreliablyatthedateofacquisition,negativegoodwillshouldberecognisedas income in the income statement as follows:

-theamountofnegativegoodwillnotexceedingthefairvaluesofacquiredidentifiablenon-monetaryassets should be recognised as income on a systematicbasisovertheremainingweightedaverageusefullifeoftheidentifiable,acquired,depreciable/amortisableassets;and

-theamountofnegativegoodwillinexcessofthefairvaluesofacquired,identifiablenon-monetaryassetsshouldberecognisedasincomeimmediately.

21 Provision for restructuring Shouldonlyberecognisediftherestructuringwasstarted or announced prior to the balance sheet date.

Allowed to recognise if the restructuring was started or announced after the balance sheet date but beforethedateofissue,ifcertainconditionshavebeen met.

21 Measurementofprovisions Wheretheeffectofthetimevalueofmoneyismaterial,theamountofaprovisionshouldbethepresentvalue.Iftheeffectisnotmaterial,theuseofthe nominal value is allowed.

Maybemeasuredatpresentvalueornominalvalue.

21 Accrued interest Wherediscountingisused,thecarryingamountofaprovision increases in each period with the accrued interest,toreflectthepassageoftime.Thisincreaseis recognised as borrowing cost in profit or loss.

Additions to the provision due to accrued interest should be presented either as borrowing costs or as partoftherelatedexpenseinprofitorloss.

22 Classificationasequityorliability Intheconsolidatedfinancialstatements,individualand separate financial statements an instrument is classifiedasaliabilityiftheissuercouldbeobligedtosettle in cash or another financial instrument.

In the consolidated financial statements the classificationoffinancialinstrumentsbyissuersisbased on the economic substance of a financial instrument,withsomeexceptions.In the individual and separate financial statements theclassificationoffinancialinstrumentsbytheissuer is based on the legal form of an instrument instead of the economic substance of a financial instrument.

22 Preference shares Preference shares that bear contingent dividends shallbeclassifiedasaliability,becausethepaymentofdividendcannotbeavoidedindefinitely.

Anentityhasanaccountingpolicychoicetoclassifypreference shares that bear contingent dividends as equityorasaliability.

22 Financialinstrumentthatcontainsbothaliabilityandanequityelement

Theissuershallclassifytheinstrument’scomponentpartsseparatelyinaccordancewiththesubstanceofthe contractual arrangement on initial recognition andthedefinitionsofafinancialliabilityandanequityinstrument.

Theissuermay,butisnotrequiredto,classifytheinstrument’scomponentsseparatelyinaccordancewith the substance of the contractual arrangement on initial recognition and the definitions of a financialliabilityandanequityinstrument.

22 Puttable instruments at fair value Classifiedasequityiftheyaresubordinatedtoallother classes of instruments and if certain other criteria are met.

Presentationasequityisallowed,butnotrequired.




23 Definition of a construction contract Acontractthatmustbespecificallynegotiatedforthe construction of an asset.

A construction contract is defined in a more broad sense which might lead to a broader application of the percentage of completion method.

23 Presentation of construction contracts An enterprise should present:the gross amount due from customers for contract workasanasset;the gross amount due to customers for contract workasaliability.

DASs contain an alternative treatment allowing the balance of all construction contracts to be shown as one amount. If this balance is a credit balance it shall bepresentedasaliability.However,ifthealternativetreatmentisappliedanentityshalldisclosethegrossamount due to customers and the gross amount due from customers.

24 Government grants All grants are recognised in income when the performance conditions are met or earlier if there are no performance conditions. All grants are measured at the fair value of the asset received or receivable.

DASs permit a range of other methods that are not allowedbytheIFRSforSMEs.

24 Non-monetarygovernmentgrants Non-monetarygovernmentgrantsarerecognisedatfair value.

DASs contain no specific requirements. On the basis ofgeneralDASs-requirements,measurementatfairvaluebetterreflectseconomicreality.

25 Borrowingcoststhatrelatetoassetsthattakeasubstantialperiodoftimetogetreadyforuseorsale

Capitalisationisnotallowed. Capitalisationisanavailableaccountingpolicychoice.

26 Equity-settledshare-basedpayments Forequity-settledshare-basedpaymenttransactionsthe goods or services received are measured at fair value.

DASs contain an alternative treatment allowing tomeasureequityshare-basedpaymentswithemployeesattheirintrinsicvalueatthegrantdateandthisvalueisrecognisedimmediatelyasanexpense.

26 Measurementofshare-basedpayments Ifobservablemarketpricesarenotavailable,entitiesshouldmeasuretheexpenseusingthedirectors’bestestimateofthefairvalueoftheequity-settledshare-basedpayment.

Ifobservablemarketpricesarenotavailable,anentityshallestimatethefairvalueoftheequityinstruments granted using a valuation technique. If thefairvalueoftheequityinstrumentscannotbeestimatedreliablyanentityshallapplytheintrinsicvalue model.

27 Reversalsofimpairmentlossesforgoodwill Prohibited. Requirediftheimpairmentwasduetoaspecificexternaleventofanexceptionalnaturethatisnotexpectedtorecurandsubsequentexternaleventshave occurred that reverse the effect of that event. Prohibited in all other situations.

28 Post-employmentbenefitplans Post-employmentbenefitplansareclassifiedaseitherdefined contribution plans or defined benefit plans.

Initsprofitandlossaccount,thelegalentitymustrecognise the contribution to be paid to the pension providerasanexpense.

Alegalentitymustassessonthebasisoftheadministrationagreementwhetherand,ifso,whichliabilitiesexistatthebalancesheetdateinadditiontotheannualcontributionspayabletothepensionprovider.

In addition to the liabilities owed to the pension provider,theremayalsobeliabilitiesthatareowedtoemployees.Theselattermayarise,amongotherthings,fromfullyorpartiallyunfundedpensioncommitments.Theamountrecognisedasapensionprovision must be the best estimate of the amounts needed to settle the relevant liabilities as at the balance sheet date.



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28 Application of US GAAP Notallowed. Entitiesthatalso-forinternalorexternalpurposes-prepare a balance sheet and profit and loss account accordingtoUSGAAP(orIFRS),areallowedtoapplytheUSGAAP(orIFRS)standardsrelatingtopensionsandother“postretirementbenefits”intheirfinancialstatements,subjecttotheconditionthatthesestandardsareappliedintegrally.

29 Measurementofdeferredtaxassetsandliabilities Nottobediscounted. Measuredatnominalvalue(undiscounted)oratpresent value (discounted).

29 Uncertaintaxpositions Noprobability-basedrecognitionthresholdisapplied.Rather,theuncertaintyisincludedinthemeasurementofthetaxassetsandliabilities.Thatisdonebymeasuringcurrentanddeferredtaxassetsandliabilitiesusingtheprobability-weightedaverageof all possible outcomes.

DASsaresilentonhowtotreatanyuncertaintyrelatingtoamountssubmittedtothetaxauthorities.

30 Goodwill arising as a result of the acquisition of a foreignentityandanyfairvalueadjustmentstothecarryingamountsofassetsandliabilitiesarisingasaresult of the acquisition

Shall be treated as assets and liabilities of the foreign operation.Thustheyshallbeexpressedinthefunctionalcurrencyoftheforeignoperationandshallbetranslatedtothepresentationcurrencyatthe closing rate.

Anygoodwillarisingasaresultoftheacquisitionofaforeignentityandanyfairvalueadjustmentstothecarryingamountsofassetsandliabilitiesarisingasaresult of the acquisition shall be treated as either:-assetsandliabilitiesoftheforeignoperation;or-asassetsandliabilitiesoftheacquirer.

30 Exchangedifferencesdeferredinaseparatecomponentofequityrelatingtoadisposedforeignoperation

Shall not be recognised in profit or loss when the gain or loss on disposal is recognised.

Recognitioninprofitorlossisrecommended.Undertheallowedalternativeitmaybetransferreddirectlyto other reserves.

32 Declared dividends after the balance sheet date Declareddividendsthroughholdersofequityinstruments after the balance sheet date should not berecognisedasaliabilityatthebalancesheetdate.

Thebalancesheetshouldbedrawnupbeforeorafter the appropriation of profit. If the latter option is used,adifferencewithIFRSscouldarise,becauseanentityisallowedtopresenttheproposeddividendasaliabilityatthebalancesheetdate.

33 Disclosureofrelatedpartytransactions Anentityshalldiscloserelatedpartytransactions. Onlysignificanttransactionsthathavebeenenteredintobytheentitywithrelatedpartiesunderirregularmarket(‘notatarm’slength’)conditionsshallbedisclosed.Thisdisclosurerequirementdoesnotapplytomedium-sizedlegalentities,unlessthelegalentityisapubliclimitedliabilitycompany,andsmalllegalentities.



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