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IFRS for SMEs in Europe 1 introduction…………………………………………………………………………………..1 2background……………………………………………………………………………………2 3 literature review……………………………………………………………………………...3 3.1 Why IASB need to develop criteria for SMEs……………………………………..…3 3.2 Status of the standards for SMEs…………………………………………….…..…3 3.3 To establish the criteria for SMEs, what are the main issues which need to be solved...3 3.4 Benefits of the research……………………………………………………………….4 4 decision framework………………………………………………………………………….4 5 research methodology………………………………………………………………………..5 6 timeline………………………………………………………………………………………6 7references…………………………………………………………………………………….7 Introduction According to the 2002 "EU Act 1606/2002," since January 11, 2005, the companies came into the market under the supervision of the European Union will work out and combine the financial reports in accordance with International Financial Reporting Standards (IFRS). about 9,000 listed companies and more subsidiaries will be affected for this ,IFRS require all companies to provide a cash-flow statement rights form, balance sheet and income statement. In addition , The IFRS provide special regulations for these specific formats and specific projects . For certain countries, that will be a major change. The IFRS which is likely to make significant impact on the profit and loss are: 1 The fully authorization of the assets of deferred income tax and liabilities Will be a major change. 2 If the GAAP of a country allows to keeps on using the equity method to account the enterprises merger when using IFRS (The using of the combination method of rights and interests is forbidden.) may result in higher depreciation expense yearly after merger. 3 No-amortisation goodwill and other intangible assets with uncertain usage life may the have a positive impact on earnings. Compare with the no-amortisation goodwill Amortisation of goodwill and does not require contrast, IFRS requested to conduct impairment test for goodwill annually. Up to now , some companies did not carry out the impairment testing for of goodwill regularly. 4 Affirm the impairment losses of all assets and liabilities on the basis of the single or cash generating unit. 5 Adopt fair value of pension obligations, benefits obligations of other employees and schemed assets. 6 IASB adopt two ways for Provision preparation (namely the uncertain time or amount of the liabilities and related costs). Under some circumstances, although the company did not Provision in the past year, but are needed now: in other circumstances, it is prohibited to conduct Provision such the traditional preparation as the preparation for the future reorganization and the general preparation. 7 financial instruments may be a major area that affects profit and loss. almost all financial instruments should be recognized in the balance sheet, and most of them should adopt fair value measurement. IFRS financial may impose restrictions on the terminal recognition of the financial assets. It may be brought the less profits for the forward confirmation for companies. At present, all European countries don’t make strictly limitation for the accounting principles .So the stringent requirements of IAS39 may mean the earlier confirmation for profits and losses. Also, the strict regulation on the financial assets impairment may also have an impact on profits. 8 All subsidiaries must be merged. For the subsidiaries waiting for disposal and these which, compare with parent comp