4(a)The principal aim when developing accounting standards for small to medium-sized enterprises(SMEs) is to provide a framework that generates relevant,reliable,and useful information which should provide a high quality and understandable set of accounting standards suitable for SMEs.There is no universally agreed definition of an SME and it is difficult for a single definition to capture all the dimensions of a small or medium-sized business.The main argument for separate SME accounting standards is the undue cost burden of reporting,which is proportionately heavier for smaller firms.

　　Required:

　　(i)Comment on the different approaches which could have been taken by the International Accounting Standards Board(IASB)in developing the 'IFRS for Small and Medium-sized Entities'(IFRS for SMEs),explaining the approach finally taken by the IASB.(6 marks)

　　(ii)Discuss the main differences and modifications to IFRS which the IASB made to reduce the burden of reporting for SME's, giving specific examples where possible and include in your discussion how the Board has dealt with the problem of defining an SME.(8 marks)

　　Professional marks will be awarded in part(a)for clarity and quality of discussion.(2 marks)

　　(b)Whitebirk has met the definition of a SME in its jurisdiction and wishes to comply with the'IFRS for Small and Medium-sized Entities'.The entity wishes to seek advice on how it will deal with the following accounting issues in its financial statements for the year ended 30 November 2010.The entity already prepares its financial statements under full IFRS.

　　(i)Defined benefit obligation

　　

　　The entity currently uses the 'corridor approach’ to recognise actuarial gains and losses.

　　(ii)Whitebirk purchased 90% of Close,a SME,on 1 December 2009.The purchase consideration was $5·7 million and the value of Close's identifiable assets was $6 million.The value of the non-controlling interest at 1 December 2009 was estimated at $0·7 million.Whitebirk has used the full goodwill method to account for business combinations and the estimated life of goodwill cannot be estimated with any accuracy.Whitebirk wishes to know how to account for goodwill under the IFRS for SMEs.

　　(iii)Whitebirk has incurred $1 million of research expenditure to develop a new product in the year to 30 November 2010.Additionally,it incurred $500,000 of development expenditure to bring another product to a stage where it is ready to be marketed and sold.

　　Required:

　　Discuss how the above transactions should be dealt with in the financial statements of Whitebirk,with reference to the'IFRS for Small and Medium-sized Entities'.(9 marks)

　　(25 marks)