Impact on the Presentation of Financial Statements due to the Accounting Treatment of Deferred Charges under International Accounting Standards in Colombia

Abstract

The adoption of the Law 1314 of 2009seeks the convergence of accounting standards in Colombia with international standards; therefore, it is essential to anticipate the effects that a future implementation of these standards will have on the accounting treatment of different economic events. One of the immediate impacts observed is associated with the treatment of the deferred charges, which leads to the interpretation of a total or partial derogation thereof, since it changes the traditional handling of certain concepts in Colombia, such as: deferred charges and prepaid expenses. The purpose of this article is to explore the potential effect that the partial or total derogation of deferred items could generate on the financial statements of Colombian companies. For this purpose, a simulation, based on a case study, of the impact expected of such convergence on the financial statements (balance sheet and income statement) from a national hydrocarbon sector will be presented, by measuring changes in the financial situation and results.