What does one do when an entity has a transaction not addressed in IFRS for SMEs?
If IFRS for SMEs does not specifically address a transaction, other event or condition, an entity's management shall use its judgment in developing and applying an accounting policy that results in information that is:
(a) relevant to the economic decision-making needs of users, and
(b) reliable, in that the financial statements:
(i) represent faithfully the financial position, financial performance and cash flows of the entity;
(ii) reflect the economic substance of transactions, other events and conditions, and not merely the legal form;
(iii) are neutral (in other words, free from bias);
(iv) are prudent; and
(v) are complete in all material respects.
In making the judgment described above, management should refer to, and consider the applicability of, the following sources in descending order:
(a) the requirements and guidance in IFRS for SMEs dealing with similar and related issues, and
(b) the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses and the pervasive principles in Section 2, Concepts and Pervasive Principles, of IFRS for SMEs.
In making the judgment described above, management may also consider the requirements and guidance in full IFRS dealing with similar and related issues.