Ifrs-Navigating-The-Changes-2021.Pdf
Total Page:16
File Type:pdf, Size:1020Kb
Load more
Recommended publications
-
Changes in Accounting Estimates—Disclosures
Agenda ref 25B April 2016 STAFF PAPER REG IASB Meeting Review of IAS 8 Accounting Policies, Changes in Project Accounting Estimates and Errors Paper topic Changes in accounting estimates: disclosure CONTACT(S) Nadia Chebotareva [email protected] +44 (0) 20 7246 6457 Leonardo Piombino [email protected] +39 06 6976 6834 This paper has been prepared for discussion at a public meeting by the staff of the International Accounting Standards Board® (‘the Board’) and the OIC staff. It does not represent the views of the Board or the OIC or any individual member of the Board or the OIC. Comments on the application of IFRS® Standards do not purport to set out acceptable or unacceptable application of IFRS Standards. Technical decisions are made in public and reported in IASB Update. Background and purpose of the paper 1. As described in Agenda Paper 25A, in September 2014 the Board tentatively decided that the issue of distinguishing between a change in an accounting policy and a change in an accounting estimate, and any applicable thresholds for making changes and disclosures, should be considered as part of the Disclosure Initiative.1 The Board started its discussion of whether to add to IAS 8 any disclosure requirements for changes in accounting estimates in May 2015. 2. The purpose of this paper is to: (a) recommend not adding any new disclosure requirements to IAS 8 for changes in accounting estimates; and (b) recommend not doing any further work on the disclosure requirements for changes in accounting estimates in IFRS Standards. 3. The rest of this paper discusses: (a) Existing disclosure requirements for changes in accounting policies and accounting estimates—paragraphs 5-8 (b) Recommendation in May 2015—paragraphs 9-13 (c) Current recommendation—paragraphs 14-17 (d) Review of disclosure requirements in IFRS Standards—paragraphs 18-22. -
Need to Know IASB Issues IFRS 16 – Leases
GAAP clear vision Need to know IASB issues IFRS 16 – Leases In a nutshell and liabilities recognised in respect Observation of all leases (subject to limited • The new Standard provides exceptions for short‑term leases and The project’s original aim was the a comprehensive model for the leases of low value assets). production of a converged IFRS and identification of lease arrangements U.S. GAAP standard. However, the and their treatment in the financial • In contrast, the Standard does not IASB and FASB reached different statements of both lessees and include significant changes to the conclusions on a number of lessors. It supersedes IAS 17 Leases requirements for accounting by issues including the recognition and its associated interpretative lessors. and presentation of expenses by guidance. • Entities will need to consider the lessees. As a result, the FASB’s • IFRS 16 applies a control model to the impact of the changes introduced leasing standard (issued in February identification of leases, distinguishing by the Standard on, for example, IT 2016) differs from IFRS 16 in several between leases and service contracts systems and internal controls. respects. on the basis of whether there is an • Subject to EU endorsement, the identified asset controlled by the Standard is effective for annual customer. periods beginning on or after 1 • Significant changes to lessee January 2019 with earlier application For more information please see accounting are introduced, with the permitted for entities that have the following websites: distinction between operating and also adopted IFRS 15 Revenue from www.iasplus.com finance leases removed and assets Contracts with Customers. -
Property, Plant and Equipment
HKAS 16 Revised June 2020August 2020 Hong Kong Accounting Standard 16 Property, Plant and Equipment HKAS 16 (June 2020) COPYRIGHT © Copyright 2020 Hong Kong Institute of Certified Public Accountants This Hong Kong Financial Reporting Standard contains IFRS Foundation copyright material. Reproduction within Hong Kong in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source. Requests and inquiries concerning reproduction and rights for commercial purposes within Hong Kong should be addressed to the Director, Finance and Operation, Hong Kong Institute of Certified Public Accountants, 37/F., Wu Chung House, 213 Queen's Road East, Wanchai, Hong Kong. All rights in this material outside of Hong Kong are reserved by IFRS Foundation. Reproduction of Hong Kong Financial Reporting Standards outside of Hong Kong in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside Hong Kong should be addressed to the IFRS Foundation at www.ifrs.org. Further details of the copyright notice form IFRS foundation is available at http://app1.hkicpa.org.hk/ebook/copyright-notice.pdf © Copyright 2 HKAS 16 (March 2010February 2014) CONTENTS HONG KONG ACCOUNTING STANDARD 16 PROPERTY, PLANT AND EQUIPEMENT from paragraph INTRODUCTION IN1 OBJECTIVE 1 SCOPE 2 DEFINITIONS 6 RECOGNITION 7 Initial costs 11 Subsequent costs 12 MEASUREMENT AT RECOGNITION -
IFRS 9, Financial Instruments Understanding the Basics Introduction
www.pwc.com/ifrs9 IFRS 9, Financial Instruments Understanding the basics Introduction Revenue isn’t the only new IFRS to worry about for 2018—there is IFRS 9, Financial Instruments, to consider as well. Contrary to widespread belief, IFRS 9 affects more than just financial institutions. Any entity could have significant changes to its financial reporting as the result of this standard. That is certain to be the case for those with long-term loans, equity investments, or any non- vanilla financial assets. It might even be the case for those only holding short- term receivables. It all depends. Possible consequences of IFRS 9 include: • More income statement volatility. IFRS 9 raises the risk that more assets will have to be measured at fair value with changes in fair value recognized in profit and loss as they arise. • Earlier recognition of impairment losses on receivables and loans, including trade receivables. Entities will have to start providing for possible future credit losses in the very first reporting period a loan goes on the books – even if it is highly likely that the asset will be fully collectible. • Significant new disclosure requirements—the more significantly impacted may need new systems and processes to collect the necessary data. IFRS 9 also includes significant new hedging requirements, which we address in a separate publication – Practical guide – General hedge accounting. With careful planning, the changes that IFRS 9 introduces might provide a great opportunity for balance sheet optimization, or enhanced efficiency of the reporting process and cost savings. Left too long, they could lead to some nasty surprises. -
Leases a Guide to IFRS 16
Leases A guide to IFRS 16 June 2016 This guide contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this guide, rendering professional advice or services. Before making any decision or taking any action that might affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this guide. © 2016. For information, contact Deloitte Touche Tohmatsu Limited. Extracts from International Financial Reporting Standards and other International Accounting Standards Board material are reproduced with the permission of the IFRS Foundation. Leases | A guide to IFRS 16 Foreword This guide is intended to assist preparers and users of financial statements to understand the impact of IFRS 16 Leases, issued in January 2016 and effective for accounting periods beginning on or after 1 January 2019. We begin with a high-level executive summary of the new requirements, followed by a specific focus on the important issues and choices available for entities on transition to the new Standard. Our detailed guide covers the requirements of the new Standard, supplemented by interpretations and examples to give clarity to those requirements, and pointers regarding practical issues that are likely to arise. In the appendices, we provide: • a summary of the important illustrative examples accompanying IFRS 16 dealing with the identification of leases; • convenient checklists for IFRS 16’s presentation and disclosure requirements (separately for lessees and lessors); and • a brief comparison with US Generally Accepted Accounting Principles (US GAAP). -
IAS 39 Appendix a Application Guidance
IAS 39 Financial Instruments: Recognition and Measurement Appendix A Application guidance This appendix is an integral part of the Standard. Scope (paragraphs 2–7) AG1 Some contracts require a payment based on climatic, geological or other physical variables. (Those based on climatic variables are sometimes referred to as ‘weather derivatives’.) If those contracts are not within the scope of IFRS 4, they are within the scope of this Standard. AG2 This Standard does not change the requirements relating to employee benefit plans that comply with IAS 26 Accounting and Reporting by Retirement Benefit Plans and royalty agreements based on the volume of sales or service revenues that are accounted for under IAS 18. AG3 Sometimes, an entity makes what it views as a ‘strategic investment’ in equity instruments issued by another entity, with the intention of establishing or maintaining a long-term operating relationship with the entity in which the investment is made. The investor or joint venturer entity uses IAS 28 to determine whether the equity method of accounting is appropriate for such an investment. If the equity method is not appropriate, the entity applies this Standard to that strategic investment. AG3A This Standard applies to the financial assets and financial liabilities of insurers, other than rights and obligations that paragraph 2(e) excludes because they arise under contracts within the scope of IFRS 4. AG4 Financial guarantee contracts may have various legal forms, such as a guarantee, some types of letter of credit, a credit default contract or an insurance contract. Their accounting treatment does not depend on their legal form. -
Reducing Complexity in IAS 39
technical update extra FINANCIAL INSTRUMENTS Reducing complexity in IAS 39 MARTIN O’DONOVAN ANALYSES THE PROPOSALS ON REDUCING COMPLEXITY IN FINANCIAL INSTRUMENTS. ll will agree that IAS 39, the accounting standard for financial instruments, is complex, but finding an alternative Executive summary is no easy matter. After years of acknowledging that I The International Accounting Standards Board has started the something must be done the International Accounting formal process of considering the possibilities for reducing AStandards Board (IASB) has issued a discussion paper considering complexity in IAS 39. Its discussion paper sets out thoughts on ways to reduce complexity in the reporting of financial instruments. the way financial instruments are measured and some ideas for The paper deliberately restricts itself to the problems arising from the simplifying hedge accounting. However, behind the openness to many ways by which financial instruments are measured as well as change, the board remains firmly wedded to the long-term aim hedge accounting. Derecognition and presentation and disclosures of extending the application of fair values. are not within its scope. Given that the IASB is very much in favour of full fair-value accounting, it starts from the assumption that fair value would be a good measurement attribute that in the long term should apply to all If the accounts are to be meaningful, surely it is important for the financial assets and liabilities. Certainly, when you consider the range user to understand whether the intention of management is to be a of valuation and measurement methods that currently exists, some trader seeking short-term profits or a longer-term holder, generating form of rationalisation is desirable. -
Ifrs 9 & Key Changes with Ias 39
THE KOSOVO BANKER | JULY 2017 EXPERTS CORNER 12 IFRS 9 & KEY CHANGES WITH IAS 39 Ms. ARTA LIMANI Mr. ARIAN META SENIOR MANAGER MANAGER DELOITTE KOSOVA DELOITTE KOSOVA SH.P.K. SH.P.K. The introduction of new requirements strong governance and internal controls to in IFRS 9 Financial Instruments will be a give all stakeholders confidence in resulting significant change to the financial reporting financial information. For many banks, the of banks. It will impact many stakeholders adoption of expected credit loss accounting including investors, regulators, analysts and will be the most momentous accounting auditors. Given the importance of banks in change they have experienced, even more the global capital markets and the wider significant than their transition to IFRSs. economy, the effective implementation of the new standard has the potential to The key changes between IFRS 9 and IAS benefit many. Conversely, a low-quality 39 are summarized below. implementation based on approaches that are not fit for purpose has the risk of undermining confidence in the financial Changes in Scope results of the banks. t Financial instruments that are in the The International Accounting Standards scope of IAS 39 are also in the scope Board (IASB) published the final version of of IFRS 9. However, in accordance with IFRS 9 Financial Instruments in July 2014. IFRS 9, an entity can designate certain IFRS 9 replaces IAS 39 Financial Instruments: instruments subject to the own-use Recognition and Measurement, and is exception at fair value through profit or effective for annual periods beginning on loss (FVTPL); hence, IFRS 9 will apply to or after January 1, 2018. -
Fair Value Accounting in Times of Financial Crisis
ACRN Journal of Finance and Risk Perspectives Vol. 1, Issue 1, p. 67-90, Oct. 2012 ISSN 2305-7394 FAIR VALUE ACCOUNTING IN TIMES OF FINANCIAL CRISIS Natascha Jarolim1 and Carina Öppinger2 1,2 Department of Accounting and Auditing, Johannes Kepler University, Austria Abstract. Fair value accounting is an essential feature of International Financial Reporting Standards. Even though this accounting method did not spark the financial crisis, it did enhance its impact. As a consequence of the financial crisis the IASB amended IAS 39 to override the fair value recognition. The amendments to IAS 39 & IFRS 7 permitted reclassifications of the categories Held for Trading and Available for Sale, some of which had explicitly been forbidden prior to the amendment. Critics argue that these modifications to IAS 39 made it possible to camouflage losses of hundreds of billions of euros. The main goal of this paper is to evaluate the amendment to IAS 39 & IFRS 7 by conducting a survey of the banking sector. Furthermore fair value accounting in general is critically discussed. Keywords: amendment, banking sector, fair value, financial assets, financial crisis, IAS 39, IFRS 7, IFRS 9, OCI, reclassification. Introduction In the aftermath of the financial crisis in 2008 increased criticism was made of fair value measurement of financial instruments in accordance with IAS 39. Due to the inactivity of the markets it was almost impossible to perform a reliable market valuation. In addition to the valuation issue, the increased depreciation posed an even greater problem. These circumstances made it necessary for the IASB and the EU to take urgent measures. -
IFRS 16 – an Overview
IFRS 16 – An overview The new normal for lease accounting March 2021 home.kpmg/ifrs Contents 1 IFRS 16 at a glance 2 7 Lease modifications 68 1.1 Key facts 2 7.1 Definition 68 1.2 Key application issues 3 7.2 Lessee modification accounting 70 7.3 Lessor modification accounting 75 2 Lessee accounting 4 2.1 Lessee accounting model 4 8 Sub-leases 80 2.2 Initial measurement of the lease liability 5 9 Sale-and-leaseback 82 2.3 Initial measurement of the right-of-use asset 11 2.4 Subsequent measurement of the lease liability 12 Appendix I: List of examples 86 2.5 Subsequent measurement of the right-of-use Keeping in touch 88 asset 15 2.6 Recognition exemptions for lessees 17 About this publication 90 2.7 Presentation and disclosure 20 Acknowledgements 90 3 Lessor accounting 23 3.1 Lessor accounting model 23 3.2 Lease classification 24 3.3 Operating lease model 27 3.4 Finance lease model 28 3.5 Presentation and disclosure 29 4 Lease definition 31 4.1 Overview 31 4.2 Identified asset 32 4.3 Economic benefits from using the asset 38 4.4 Right to direct the use 40 5 Separating components 46 5.1 Overview 46 5.2 Identify separate lease components 46 5.3 Identify separate non-lease components 48 5.4 Allocate the consideration 50 5.5 Allocate the variable consideration 53 6 Lease term 56 6.1 Overview 56 6.2 The non-cancellable period 57 6.3 The enforceable period 57 6.4 The reasonably certain threshold 60 6.5 Renewable and cancellable leases 62 6.6 Changes in the lease term 64 The new normal for lease accounting IFRS 16 Leases has now been successfully adopted by companies reporting under IFRS® Standards. -
IAS 16 Property, Plant and Equipment 2017 - 07 1
ACCOUNTING SUMMARY 2017 - 07 IAS 16 Property, plant and equipment Objective The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of the financial statements can discern information about an entity’s investment in its property, plant and equipment and the changes in such investment. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognised in relation to them. Scope This Standard shall be applied in accounting for property, plant and equipment except when another Standard requires or permits a different accounting treatment. This Standard does not apply to: (a) property, plant and equipment classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. (b) biological assets related to agricultural activity other than bearer plants (see IAS 41 Agriculture). This Standard applies to bearer plants but it does not apply to the produce on bearer plants. (c) the recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources). (d) mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative resources. However, this Standard applies to property, plant and equipment used to develop or maintain the assets described in (b)–(d). An entity using the cost model for investment property in accordance with IAS 40 Investment Property shall use the cost model in this Standard for owned investment property. -
Applying IFRS a Closer Look at IFRS 16 Leases
Applying IFRS A closer look at IFRS 16 Leases Updated December 2020 Contents Overview 4 1. Objective and scope of IFRS 16 5 1.1 Objective of IFRS 16 5 1.2 Scope of IFRS 16 5 1.3 Recognition exemptions 6 2. What is a lease? 7 2.1 Determining whether an arrangement contains a lease 7 2.2 Identifying and separating lease and non-lease components of a contract and allocating contract consideration 27 2.3 Contract combinations 36 3. Key concepts 37 3.1 Inception of a contract 37 3.2 Commencement date of the lease 37 3.3 Lessee involvement with the underlying asset before the commencement date 38 3.4 Lease term and purchase options 39 3.5 Lease payments 47 3.6 Discount rates 55 3.7 Initial direct costs 58 3.8 Economic life 60 3.9 Fair value 60 4. Lessee accounting 61 4.1 Initial recognition 61 4.2 Initial measurement 64 4.3 Subsequent measurement 66 4.4 Remeasurement of lease liabilities 71 4.5 Lease modifications 73 4.6 Other lessee matters 80 4.7 Presentation 81 4.8 Disclosure 83 5. Lessor accounting 89 5.1 Lease classification 89 5.2 Key concepts applied by lessor 91 5.3 Finance leases 92 5.4 Operating leases 102 5.5 Lease modifications 104 5.6 Other lessor matters 109 5.7 Presentation 109 5.8 Disclosure 110 6. Subleases 112 1 December 2020 Applying IFRS - A closer look at IFRS 16 Leases 6.1 Definition 112 6.2 Intermediate lessor accounting 112 6.3 Sub-lessee accounting 115 6.4 Presentation 115 6.5 Disclosure 115 7.