"IFRS for SMEs" is 230 pages, compared to 2500 pages for the full version of IFRS.
SME stands for small and medium-sized entities. There is no bright line size test to determine which companies can apply the standards. Instead, the SME standards can only be applied by entities that do offer their equity or debt publicly or which hold assets as a fiduciary for others (like banks, insurance companies, securities broker/dealers, and mutual funds.)
U.S. companies are free to adopt the SME rules since the American Institute of Certified Public Accountants has recognized the IASB as an accounting standard setter.
Private companies may find IFRS for SMEs is easier to apply and accordingly more cost-effective to apply tha n U.S. GAAP.
In the European Union, where accounting standards are fragmented into a multitude of home country accounting standards, the cost savings may be most significant. One major advantage could be that lenders would have one set of standards to use to evaluate financial statements in determining credit worthiness of their customers.
- Eliminating topics not used by private companies--earnings per share, interim financial reporting, segment reporting.
- Simpler accounting methods--financial instruments, property, plant, and equipment, intangible assets, investment property, financial instruments, investments in joint ventures, defined-benefit plans, and others.
- Reduced disclosures
Goodwill and intangibles do not have to be tested for impairment each year. Instead, assets are valued at inception and then amortized over estimated useful life. If life cannot be estimated reliably, assets are amortized over 10 years.
Read thefull IASB release here.