Final answer:
SMEs in International Financial Reporting Standards (IFRS) have simplified requirements compared to larger entities. Simplifications include reduced disclosures, simplified measurement, and simplified recognition and measurement of goodwill.
Step-by-step explanation:
In International Financial Reporting Standards (IFRS), small and medium-sized entities (SMEs) have simplified requirements compared to larger entities. This is because SMEs generally have fewer resources and complexities in their financial reporting. Some of the simplifications for SMEs in IFRS include:
- Reduced disclosures: SMEs are allowed to provide less detailed disclosures in their financial statements compared to larger entities. This helps to reduce the burden of reporting requirements for SMEs.
- Simplified measurement: SMEs can use simpler measurement methods for certain assets, liabilities, and revenue recognition. This reduces the complexity of financial reporting and makes it easier for SMEs to comply with IFRS.
- Simplified recognition and measurement of goodwill: SMEs have specific simplifications for accounting for goodwill, which is an intangible asset. This reduces the complexity of measuring and recognizing goodwill for SMEs.
These simplifications aim to make it easier for SMEs to comply with IFRS and reduce the financial reporting burden on smaller entit