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ACCA Strategic Professional · Strategic Business Reporting (International) · The applications, strengths and weaknesses of the accounting framework

Zarin Co, a subsidiary of a listed parent that publishes IFRS consolidated statements, has no public accountability itself. Zarin wants to apply IFRS 19 in its own financial statements. Which statement is correct?

Zarin may apply IFRS 19 reduced disclosures while still following the recognition and measurement requirements of other IFRS Accounting Standards. IFRS 19 changes only disclosure. It requires an IFRS-compliant parent producing consolidated statements and does not provide simplified measurement rules, which belong to the IFRS for SMEs standard.

  1. AZarin may apply the IFRS 19 reduced disclosures while still applying the recognition and measurement requirements of other IFRS Accounting StandardsCorrect
  2. BZarin may use IFRS 19 to apply simplified recognition and measurement rules for financial instruments
  3. CZarin may apply IFRS 19 only if its parent prepares financial statements under local GAAP
  4. DZarin may apply IFRS 19 only if it has no other subsidiaries of its own

Explanation

IFRS 19 permits eligible subsidiaries to give reduced disclosures, but recognition, measurement and presentation follow the other IFRS Accounting Standards. The parent must produce consolidated statements that comply with IFRS Accounting Standards, which makes the local GAAP option wrong. Simplified measurement is a feature of the IFRS for SMEs standard, not IFRS 19.

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