The Accounting Act includes the principals of audit and the publication of financial and consolidated statements and, in terms of its principals, is very close to International Financial Reporting Standards (IFRS).
The main differences between Polish Accounting Standards and International Financial Reporting Standards (IFRS) are presented below.
Main differences between Polish and International Financial Reporting Standards
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Description
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Polish Accounting Standards
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International Financial Reporting Standards
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Measurement currency
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Measurement currency concept does not underlie the preparation of the financial statements.
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Measurement currency concept underlies the preparation of the financial statements.
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Long term contracts
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Long term contracts approach need only be applied for contracts with a period exceeding 6 months |
Construction contracts approach should be applied to all contracts of this type regardless of the period.
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Investment property
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Assets are acquired for increase in value or rental or interest, and not used on the operations of the business. Assets are measured using the fair value or cost model.
Fair value model requires regular revaluation of property to fair value, with all changes reflected in equity.
Cost model requires carrying at cost and depreciation over a useful life.
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Assets are held for increase in value or rental or interest, and not used on the operations of the business. Assets are measured using the fair value
or cost model. Fair value model requires regular revaluation of property to fair value, with all changes reflected in the profit and loss.
Cost model requires carrying at cost and depreciation over a useful life. |
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Intangible assets
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Revaluation to fair value is not permitted. |
Revaluation to fair value permitted only if there is an active market in which to reliably determine fair value. |
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Impairment of assets
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Assessed yearly if there is high robability that the assets (including goodwill and intangibles) will not bring expected benefits. Write assets down to selling value or if that is not available to fair value. |
Assessed yearly if there are indications that assets may be impaired (including goodwill and intangibles). If indications exist, write assets down to the higher of net selling price or value in use.
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Hyperinflation
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No adjustments for hyperinflation - regulated restatements of fixed assets undertaken instead as noted below. |
During periods of hyperinflation, assets and liabilities are restated to reflect the changes in the general price index |
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Goodwill - adjustments to fair value on acquisition
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Changes in the initial fair values of acquired assets and liabilities, which are identified during the financial year in which the merger took place should
adjust goodwill
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Changes in the initial fair values of acquired assets and liabilities, which are identified before the end of the first financial year commencing the acquisition, are adjusted against goodwill
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Fixed assets
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Fixed assets may be revalued only on the basis of separate regulations to a value not exceeding the fair value. |
Fixed assets may be revalued to their fair value.
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Discounting of longterm
trade receivables
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Trade receivables, regardless of the credit period, are not discounted.
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Long-term trade receivables are discounted as with any other financial assets.
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Capitalisation of
borrowing costs
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All borrowing costs incurred in the period of construction of tangible and intangible assets are capitalised as part of the assets' cost. FX gains/losses are also included as part of the borrowing costs.
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Requires an entity to choose between capitalizing or not capitalising interest on specific and general borrowings to finance the construction of individual qualifying assets. FX gains/losses are also included as part of the borrowing costs, to the extent they represent an
adjustment to the interest charge.
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Subsidiaries with dissimilar activity
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Investments are accounted for using the equity method of accounting.
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Investments are consolidated
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Embedded
Derivatives
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Amendments in 2004, gave more precise guidance and specifically excluded foreign currency embedded derivatives similar to the revised IAS 39 coming into effect in 2005.
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Include specific guidance, however, have a narrower scope of exclusion of foreign currency embedded derivatives.
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