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FAR1ReviewNotes

1.SEChasthelegalauthoritytoestablishUSGAAP,however,SECallowaccounting

professiontoestablishGAAPandself-regulate.

a)SecurityandExchangeCommission(SEC)

TheSECwasestablishedbytheSecurityExchangeActof1934.b)CommitteeonAccountingProcedure(CAP)

CAPwasapart-timecommitteeofAICPA,whichissuedARB,determinedGAAPfrom

19391959.

c)AccountingPrinciplesBoard(APB)APBwasanotherpart-timecommitteeofAICPA,whichissuedAPBOand

interpretations,determinedGAAPfrom19591973.

d)FinancialAccountingStandardsBoard(FASB)

FASBisanindependentfull-timeorganization,starteddeterminingGAAPsince

1973.FASBhas7full-timemembers,theyserveona5-yearterms.

2.Allthoseregulationbodiesmadeaccountingguidancecomplicated,thus,fromJuly1,2009,theFASBAccountingStandardsCodificationbecamethesinglesource

ofauthoritativenongovernmentalUSGAAP.

3.InternationalAccountingStandardsBoard(IASB)

IASBhas15full-timemembersand2part-timemembers,withamixofpractice

experience.

4.InternationalFinancialReportingInterpretationsCommittee(IFRIC)

IFRICwasappointedbythetrusteesoftheIFRSFoundationtoassisttheIASBin

establishingandimprovingstandardsofinternationalfinancialaccountingand

reporting.

5.On-goingstandard-settingprocess

DiscussionPaper->ExposureDraft->publiccomments->atleast9membersapproveExposureDraft.

6.ConceptualFrameworkforFinancialReportingisajointprojectforIASBand

FASB.ThepurposeofthisprojectistoconvergeandimprovetheFASBandIASB

financialreportingframework.ButtheConceptualFrameworkisNOTanIFRS.

7.Thegoalforinternationalconvergenceofaccountingstandardsistosetupa

singlesetofhighquality,internationalaccountingstandardsthatcompaniescanuseforbothdomesticandcross-borderfinancialreporting.

8.FASBcreatedaconceptualframework(StatementofFinancialAccounting

Concepts,orSFAC)thatservesasabasisforallFASBpronouncements,however,

SFACisNOTaGAAP.

9.SFANo.8Chapter1:TheObjectiveofGeneralPurposeFinancialReporting

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Toprovidefinancialinformationaboutthereportingentitythatisusefulforthe

primaryusersofgeneral-purposefinancialreportsinmakingdecisionsabout

providingresourcestothereportingentity.(discloseentitysperformance)

a)PrimaryUsers(external)

i.e.investors,lenders,othercreditors

b)UsefulInformationi.e.resourcesofthecompany,theclaimsagainsttheentity,howefficientlyand

effectivelytheentitysmanagementandgoverningboarddischargedtheir

responsibilitytothecompanysresources,futurenetcashinflows.

10.SFACNo.8Chapter3:QualitativeCharacteristicsofUsefulFinancial

Information

a)FundamentalRelevance&FaithfulRepresentation

Relevance:1)PredictiveValue;2)ConfirmingValue;3)Materiality

FaithfulRepresentation:1)Completeness;2)Neutrality;3)FreedomfromErrorb)Enhancing:1)Comparability;2)Verifiability;3)Timeliness;4)Understandability

c)Benefit>Cost

11.FullsetofFinancialStatementsinclude:

Statementoffinancialposition(BalanceSheet)

Statementofearnings(IncomeStatement)

Statementofcomprehensiveincome

Statementofcashflows

Statementofchangesinownersequity

12.Fundamentalassumptions(USGAAP)

EntityAssumption

GoingConcernMonetaryUnit

Periodicity

HistoricalCostPrincipleRevenueRecognitionPrinciple(Earned&Realized/realizable)

MatchingPrincipleAccrualAccounting

FullDisclosurePrinciple

ConservatismPrinciple

Fundamentalassumptions(IFRS)

GoingconcernAccrualaccounting

13.ElementsofFinancialStatements

Comprehensiveincome=NetIncome+OtherComprehensiveIncome(OCI)

Normaloperating,recurring:Revenue&Expense

Non-operating,unusualorinfrequent:Gain&Loss

BalanceSheetitem:Assets,Liabilities,Equity

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Investmentof/Distributiontoowners(excludedfromcomprehensiveincome)

14.SFACNo.7UsingCashFlowInformationandPresentValueinAccounting

Measurements(providesaframeworkwhenusingfuturecashflowsasa

measurementbasisforassetsandliabilities)

Fiveelementsofpresentvaluemeasurement:1)Estimateoffuturecashflow

2)Expectationsabouttimingvariationsoffuturecashflows

3)Timevalueofmoney(risk-freeinterest)

4)Thepriceforbearinguncertainty5)Otherfactors(i.e.liquidityissues)

15.Presentvaluecomputation

1)Traditionalapproach

2)Expectedcashflowapproach

16.MeasurementAttributesforAssetsandLiabilities1)Historicalcost(PPE)

2)Currentcost(inventory)

3)Netrealizablevalue(A/R)

4)Currentmarketvalue(marketablesecurities)

5)Presentvalueoffuturecashflows(long-termdebt,bond)

17.Equipmentdepreciationwasassignedtoaproductiondepartmentandthento

productunitcostsexampleofallocatingoverhead

Depreciatedequipmentwassoldinexchangeforanotereceivableexample

realization

Productunitcostswereassignedtocostofgoodssoldwhentheunitsweresoldexampleofmatching

18.Replacementcostisdefinedastheamountofcashoritsequivalentthatwouldbepaidtoacquireorreplaceanassetcurrently.Replacementcostisanacquisition

cost.

19.UnderIASBframework,goingconcernandaccrualaccountingaretheonlytwo

underlyingassumptionsoffinancialstatementpreparationandpresentation.

20.PresentationOrderofmajorcomponentsofIncomestatement

IIncome(orloss)fromContinuingOperations(individuallineitemsshowgrossoftax,thentotalreportednetoftax)

DIncome(orloss)fromDiscontinuedOperations(netoftax)EExtraordinaryItems(netoftax,separatedisclosure)

ACumulativeEffectofChangeinAccountingPrinciple(netoftax)

21.Multiplestepincomestatement(enhanceduserinformation)[Iperabove]

1)Normaloperating

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Netsales

Costofsales

Grossmargin

Sellingexpense

G&Aexpenses

DepreciationexpenseIncome(loss)fromoperations

2)Non-operating

Otherrevenuesandgains(interestrevenue,gainonsaleoffixedasset,etc.)

Otherexpensesandlosses(interestexpense,lossonsaleoffixedasset,etc.)Incomebeforeunusualitemsandincometax

Unusualorinfrequentitems(i.e.lossonsaleofavailable-for-salesecurities)

3)Incomebeforeincometax

4)Provisionforincometax(current,deferred)

5)Netincomefromcontinuousoperations

22.Singlestepincomestatement1)Totalrevenuesandotheritems

2)Totalexpensesandotheritems(incometaxexpenseincluded)

3)Netincome(netoftax)

23.DiscontinuedOperations(Dperabove)forthatperiod!

1)Impairmentloss

2)Gain/lossfromactualoperations

3)Gain/lossondisposal

*Forthatperiodmeans,forexample,classifiedasheldforsaleinAprilYear1,sold

inJuneYear2,countsthewholeyearofoperationallossinthediscontinued

operations,notjustfromAprilDecemberforYear1.

24.Heldforsale:Onceyouplan/decidetosellthecomponent,allrelatedrevenue

andexpensesarereportedunderdiscontinuedoperationsuntilsold(note:thesaleisexpectedtobecompletewithinoneyear)

25.Inordertoreportasdiscontinuedoperations:

a)Eliminatedfromongoingoperations

b)Nosignificantcontinuousinvolvementafterdisposal

26.Impairmentloss

a)Anyinitialorsubsequentwrite-downtofairvaluelesscoststosellshouldberecognizedasimpairmentloss

b)Againisallowedforsubsequentincreaseinfairvalueafterinitialimpairment

lossisrecognized,butnotexceedingtheamountthatpreviouslywrite-off

27.Assetswithinthecomponentthatarereportedindiscontinuedoperationsare

nolongerdepreciatedoramortized.

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28.Subsequentadjustmentrelatedtodiscontinuedoperations

a)hasacause-and-effectrelationship

b)occurnolaterthanayearafterthedisposaltransaction

e.g.contingenciesrelatedtodisposal,settlementofemployeebenefitplan

29.Discontinuedoperationscomponentcouldbedisclosedinfaceornotes

30.Exitordisposalcosts:(discloseinnotes,notthefaceofF/S)

a)Involuntaryemployeeterminationbenefits

b)Coststoterminateacontractthatisnotacapitalleasec)Othercostsassociatedwithexitordisposalactivities,includingcoststo

consolidatefacilitiesorrelocateemployees

31.Examplesofextraordinaryitems:

Damageasaresultofinfrequentearthquakeorflood; Anexpropriationofaplantbythegovernment; Aprohibitionofaproductlinebyanewlyenactedlaworregulation; Certaingainsorlossesfromextinguishmentofalong-termdebt(non-

recurring,unusualandinfrequentinnature);

Note:IFRSdoesnotallowpresentingofextraordinaryitem

32.Examplesofnon-extraordinaryitems:

Gainorlossfromsaleorabandonmentofproperty,plantorequipmentusedinbusiness;

Largewrite-downorwrite-offofreceivables,inventories,intangibles(includinggoodwill),long-termsecurities(permanentdecline);

Gainorlossfromforeigncurrencytransactionsortranslation; Lossesfrommajorstrikebyemployees; Long-termdebtextinguishmentsthatapartofacommonmanagement

strategy(notunusualandinfrequent)

33.Accountingchange

1)Changesinaccountingestimate(prospective) Changesinlivesoffixedassets Adjustmentsofyear-endaccrualofofficerssalaryorbonus Write-donofobsoleteinventory Materialnon-recurringIRSadjustment Settlementoflitigation Changesinaccountingprinciplethatareinseparablefromachangein

estimate(i.e.achangefrominstallmentmethodtoimmediaterecognition

method)

2)Changesinaccountingprinciple(retrospective)

Cumulativeeffectdifferencebetweentheamountofbeginningretainedearnings

intheperiodofchangeandwhatretainedearningswouldhavebeenifthe

accountingchangehadbeenretroactivelyapplied.

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Thegeneralruleisthatchangesinaccountingprincipleshouldberecognizedby

adjustingbeginningretainedearningsintheearliestperiodpresentedforthe

cumulativeeffectofthechange,and,ifpriorperiodarepresented,theyshouldbe

restated.

Note:

Non-GAAP->GAAP=ErrorCorrection(i.e.Cashbasis->Accrualbasis) ChangeininventorymethodtoLIFO=changeinestimate Changeindepreciationmethods=changeinestimate

3)Changesinaccountingentity(retrospective=restate)Requirefulldisclosureofthecauseandnatureofthechange

Note:IFRSdoesnotincludesuchconcept

34.Comprehensiveincome=NI+OCI

Changeinequityfromnon-ownertransactionsNI=Incomefromcontinuousoperations+Discontinuedoperations+Extraordinary

item(IDEperabove)OtherComprehensiveIncome(OCI)includes:PPensionadjustments(Pensionchangesinfundedstatus:duetogains/losses,

priorservicecosts,andnettransitionassetsorobligations)UUnrealizedgainsandlosses(available-for-salesecurities,anddebtsecurities

transferredfromheld-to-maturitytoavailable-for-sale)

FForeigncurrencyitems(includingtranslationadjustments)EEffectiveportioncashflowhedges

RRevaluationsurplus(IFRSonly)

35.AccumulatedOtherComprehensiveIncome(AOCI)

AOCIisacomponentofequitythatincludesthetotalofOCIfortheperiodandpreviousperiods.OCIforcurrentperiodisclosedouttothisaccount,justlikeNIis

closedouttoRetainedEarnings.Thisaccountisusedforcertaingains/lossesthat

arenotreadytohitNI.

36.Theunrealizedlossonthetradingsecurityandrevaluationlossofintangibleassetswillbereportedinnetincome,notothercomprehensiveincome.

37.BothUSGAAPandIFRSrequireadescription(disclosure)ofallsignificantpoliciesbeincludedasanintegralpartofthefinancialstatements.Accounting

policiescommonlydescribedinthefootnote: Basisofconsolidation Depreciationmethods Amortizationofintangibles Inventorypricing Accountingforrecognitionofprofitonlong-termconstructioncontracts Recognitionofrevenuefromfranchisingorleasingoperations

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38.UnderUSGAAP,Officerssalaries,officersexpensesandintercompanysalesare

alltransactionsintheordinarycourseofbusinessandgenerallywouldnotrequire

disclosure.Onlytheloanstoofficerswouldrequiredisclosurebecausetheyare

outsideoftheordinarycourseofbusiness.However,compensationarrangements

forkeymanagementwouldrequiredisclosureunderIFRS.

Short-termemployeebenefits Post-employmentbenefits Otherlong-termbenefits Terminationbenefits Share-basedpayments

Thus,officerssalariesneedtobedisclosedunderIFRS,butofficersexpensesare

notconsideredrelatedpartytransactions.

39.Fordisclosureofaccountingpolicies,disclosureshouldNOTbelimitedto

principlesandmethodspeculiartotheindustryinwhichthecompanyoperates.Allmaterialaccountingpoliciesshouldbedisclosed.

40.Disclosureofrisksanduncertainties(USGAAP)

1)Natureofoperations(majorproducts,principalmarkets,etc.)

2)Useofestimatesinthepreparationoffinancialstatements

3)Certainsignificantestimates(reasonablypossible&material)

4)Currentvulnerabilityduetocertainconcentrations

41.Forinterimonly,timelinessisemphasizedoverreliability.Interimfinancial

reportingshouldbeviewedasreportingforanintegralpartofanannualperiod.

42.Incometaxesruleforquarters:Thegeneralruleistomultipletheyear-to-date

incomebytheestimatedeffectivetaxrateandsubtracttheresultfromtheprovisionincludedinpreviousquarter.

43.Interiminventoryvaluation:1)Disclosethemethodusedattheinterimdateandreconcileanymaterial

differencewithannualphysicalinventory2)LiquidationofaLIFObaselayer(USGAAPonly,becauseIFRSdoesnotallow

LIFO)

3)Permanentandtemporarydeclineinmarketvaluepermanentinventorylossesshouldbereflectedintheinterimperiodinwhichtheyoccur;temporarymarket

valuedeclinethatareexpectedtoreversebeforetheendoftheannualperiod

shouldnotberecognizedininterimperiod.e.g.Duetothedeclineinmarketpriceinthesecondquarter,thecompanyincurred

aninventoryloss.Themarketpriceisexpectedtoreturntopreviouslevelbythe

endoftheyear,however,thedeclinehadnotreversedatyear-end.Thelossshould

bereportedinfourthquarteronly,notinsecondquarter.Onlywhenthelossis

probableandestimable,theexpectedlossmustberecordedinfull,andtheloss

becomessuchattheendofthefourthquarter,notsecondquarter.

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44.Toadequatelycapturetheimpactofdiscontinuedoperationsandextraordinary

items,bothshouldbeincludedinnetincomeanddiscloseintheinterimfinancial

statementnotes.

45.General,anenterpriseisrequiredtodisclosesegmentprofit/loss,segment

assets,andcertainrelateditems,butisnotrequiredtoreportsegmentcashflow.Requireddisclosuresforonlypublicenterprises:

Operatingsegments(annualandinterim) Productsandservices Geographicareas Majorcustomers

46.Transactionsbetweenthesegmentsofanenterprisearenoteliminatedasin

consolidationbetweentheparentcompanyandsubsidiaries.

47.Noteveryenterpriseisanoperatingsegment:e.g.corporateheadquartersand

pensionplanareNOToperatingsegments.Inordertoqualifyassegment,ithastoearnrevenueorincurexpenserelatedtobusinessactivity.Ithasoperationalresults

areregularlyreviewedbychiefoperatingofficertomakedecisionsofallocatingthe

businessresources,andwithtraceable(discrete)financialinformationavailable.

48.Quantitativethresholdforreportingsegments:

1)10%ofrevenue,orreportedprofit/loss,orassetsofallcombinedoperating

segments(note:usecombinednumber,notconsolidated!)

2)Keepaddingsegmentuntilallofthereportedsegmentsrevenue>75%ofall

combinedrevenue

49.SegmentProfit/LossformulaRevenues(Forthatsegmentinternalandexternal)

Less:Directlytraceablecosts

Less:Reasonablyallocatedcosts=OperatingProfit(orloss)forsegment

50.Developmentstageenterprisesmustissuethesamefinancialstatementsasany

otherenterprises,withadditionaldisclosurerequirements,suchascumulativenet

loss(deficitaccumulatedduringthedevelopmentstage),cumulativelossfromthecompanysinception,cumulativecashinflowandoutflows,stocksissued

51.FirsttimeadoptionofIFRSAtleast3balancesheet,2statementofcomprehensiveincome,2statementofcash

flow,2statementofchangesinequity,andrelatednotes.

AnentityshoulddisclosehowthetransitionfrompreviousGAAPtoIFRSaffectedits

financialstatements.

52.SECReportingRequirements:(knowtheforms!!)

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1)10-K(60/75/90days)

2)10-Q(unaudited,40/45days)

3)11-K(annualreportforemployeebenefitplan)

4)20-Fand40-F(20-FforCanadiancompanies,40-Fforallotherforeignprivate

issuers)=10-KforUSissuers

5)6-K(half-yearreportbyforeignprivateissuers)6)8-K(majorcorporateevents)

7)Form3,4and5(filedbydirectors,officers,beneficialowners)

53.RegulationS-XInterim:

1)Condensedfinancialstatementsareokay.

2)USQuarterlyfiling;ForeignSemi-annuallyfiling

Annual:

1)Periodpresented:IFRSall2sets;GAAP2B/S,3allothers

54.SECXBRL(ExtensibleBusinessReportingLanguage)KeyXBRLterms:

1)Tag:machine-readablecodeprovidescontextualinformationallowingdatatobe

recognizedandprocessedbysoftware

2)Taxonomy:definesthespecifictagsusedforindividualitemsofbusinessand

financialdata

XBRLexhibitssubmittedtoSECaresubjecttomodifiedliabilityfor24monthsfrom

thetimethefilerfirstisrequiredtosubmitinteractivedatafiles.Themodified

liabilityprovisionwillterminatecompletelyonOctober31,2014.

Eachcompanysinitialinteractivedataexhibits,willberequiredwithin30daysaftertheearlieroftheduedateorfilingdate.Filerswillalsoreceivea30-daygrace

periodforthefirstfilingthatisrequiredtohavefootnotesandschedulestagged.