In effect, the IASB has said that "all of those choices are a complication and impose a burden in valuating the accounting each year, so we're going to take them away and just say here, this is a good policy to use," says H. David Sherman, an accounting professor at Northeastern University who has studied IFRS extensively.

The number of disclosures to be made in the footnotes to financial statements has also been substantially reduced.

In addition, there are many simplifications to the way asset values are measured and recognized. For example, goodwill and other intangible assets do not have to be measured anew each year to account for impairments; rather, an asset's value is measured just once and then amortized over its "estimated useful life." If that lifespan cannot be estimated reliably, it is simply amortized over 10 years.

Simplifications also were made to the measurement or recognition of financial instruments, investments in joint ventures, defined-benefit plans, and biological assets, among others.

What's in a Name?
Asked why the new standard is called "IFRS for SMEs" even though there's no test for company size in determining what entities are eligible to use it, Pacter notes that the IASB changed its working name several times during its five-year development process. SME was in the name at first, then it was changed to NPAE — "non-publicly-accountable entities." "But that didn't roll off the tongue easily, nobody had ever heard of it, and it wasn't easily translatable," says Pacter. "Besides, even a hot-dog stand has some public accountability — it's got to follow the health laws."

Then for a while the standard was called "IFRS for Private Entities." But that too was judged unsuitable because in many countries — including China, France, Sweden, and several in Latin America — it is common for the government to be a part owner of companies and to consider such companies to be public. The IASB finally decided that no name was better than IFRS for SMEs.

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