---
title: "IFRS for SMEs"
description: "What IFRS for SMEs is, which companies may use it, how it differs from full IFRS, and what the third edition issued in 2025 changes for private companies."
canonical: https://ledgeriano.com/glossary/ifrs-for-smes
language: en
publisher: "Ledgeriano"
updated: 2026-11-06
---

# IFRS for SMEs

> What IFRS for SMEs is, which companies may use it, how it differs from full IFRS, and what the third edition issued in 2025 changes for private companies.

IFRS for SMEs is a standalone, simplified version of IFRS for small and medium-sized entities that have no public accountability, meaning their debt or equity is not publicly traded and they do not hold assets for a broad group of outsiders, such as banks do. It cuts options, simplifies measurement and requires far fewer disclosures.

The standard fits in one volume organised in sections, so a small company does not have to navigate the full IFRS. Key simplifications include amortising goodwill over its useful life (no more than ten years when it cannot be estimated reliably), expensing all borrowing costs and development costs, and fewer fair value measurements.

The IASB issued the third edition in February 2025, effective for periods beginning on or after 1 January 2027, with earlier application allowed. It aligns the revenue section with the five-step model of IFRS 15 and updates fair value and consolidation guidance.

Whether you can use it depends on local law. Many countries allow it for private companies, some require it. A [small business chart of accounts](https://ledgeriano.com/templates/small-business-chart-of-accounts) or the [IFRS template](https://ledgeriano.com/templates/ifrs-chart-of-accounts) both work as a base.

## Example: goodwill under IFRS for SMEs

A company buys a small competitor and recognises goodwill of 300,000. Management cannot reliably estimate its useful life, so it amortises the goodwill over 10 years: 30,000 a year. Under full IFRS, goodwill is not amortised but tested for impairment every year.

### Can a listed company use IFRS for SMEs?

No. Listed companies and entities holding assets in a fiduciary capacity for a broad group of outsiders have public accountability and must use full IFRS or another framework required by their regulator.

### Is there a size limit for IFRS for SMEs?

The IASB sets no size limit; eligibility depends on public accountability. Local laws may add thresholds based on revenue, assets or employees.