IFRScommunity Forum

a sale is a sale, even if you intend to continue trading with those entities under new ownership

:lol: believe it or not, I also try to keep things simple, but it seems that I'm not trying hard enough :) but under the Commonwealth approach ;), the last year depreciation charge can be much higher than the charge from previous years! see the example from kb (no residual value): depreciation3.JPG

I'm here to spice up the discussion! ;) We're in the realm of IFRS 10 here: https://ifrscommunity.com/knowledge-base/ifrs-10-consolidated-financial-statements/#link-loss-of-control "any interest retained in former subsidiary is recorded at fair value", not fair value + cost of disposing the controll...

Interesting! But if you set the residual value to a trivial amount, and want to have a constant depreciation rate (unless you don't?), the depreciation charge for first year is disproportionately high. Modification of the first example from the kb, residual value set to 0.6 (i.e. 5% of the cost): de...

ad. 1 what JRSB wrote + additional disclosure is encouraged in IAS 16.79b) ad 2. hmm, I'm a bit surprised by JRSB's answer, because the approach that I know is different... I've described it in the knowledge base and there are two examples there, the second one is for an asset without residual value...

ok then general offsetting criteria apply (see the link in my previous post)

You're right pub_acco! I must admit that I wasn't aware that IAS 2 even mentions cost of sales

true

but it should be possible (in most cases at least) not recognise anything between trade date and settlement date due to immaterial impact of the valuation of such a 'derivative'

yvreddy wrote: ↑22 Oct 2020, 06:59 as per IAS 2.

IFRS are pretty much silent on the distinction between direct costs (or COGS) and indirect costs

it's true that IAS 16 does not specifically cover prepayments, but in my opinion it doesn't have to. Prepayment should not be treated as PP&E as you did not receive any physical asset yet. In other words, a prepayment does not meet the definition of PP&E: Property, plant and equipment are tangible i...

ok I focused on the entries that you provided in your examples, but it's true that you said that Deloitte's example is different this indeed is confusing... when I read para. B3.1.5 it seems to clearly state that Trade date accounting refers to (a) the recognition of an asset to be received and the ...

We don't need to know what kind of asset they purchased in IFRS 9 example. We know that they didn't credit cash, but recognised a financial liability. So it's a substantial difference to Deloitte's approach IMO.

I'm afraid that our forum is still in an too early stage to get a wider practical perspective from other users, but let's see. In the meantime, I'm looking at an example in IFRS 9 (Guidance on implementing, par. D.2.1). In their example, you purchase a financial asset, trade date is 29 December, set...

I wouldn't recognise cash on trade date... in your example, if you're buying USD and selling EUR, I would recognise this as DR Receivable (USD to be received) and CR Liability (EUR to be paid). But trade date accounting is not something I have experience with. So you're saying that Deloitte suggest ...

and how did the receivable from lessor arise? is it a prepayment for future periods for the same lease?

Leo wrote: ↑21 Oct 2020, 01:15 The remaining part which is the equity of those entities will stay in equity in consolidation, which will go out when the sell will happen.
do you agree with me?

Equity is not derecognised once a subsidiary is sold, just assets and liabilities

we're in the realm of classification and measurement of financial liabilities under IFRS 9: https://ifrscommunity.com/knowledge-base/ifrs-9-classification-of-financial-assets-and-financial-liabilities/#link-classification-of-financial-liabilities If the liability is measured at amortised cost, we ca...

IFRS 16 doesn't have any specific requirements with regards to offsetting, so general requirements apply:
https://ifrscommunity.com/knowledge-bas ... struments/

yep, looks good,

plus there will be FV changes after day 1...

to keep accountants busy

So you had day 1 gain, right? there's a short summary here: https://ifrscommunity.com/knowledge-base/ifrs-9-scope-and-initial-recognition-of-financial-instruments/#link-day-1-gains-losses I guess it's OK to recognise the deferred amount in P/L as the proceeds exceed the amount originally lent I'm no...

The answer to your question depends on mechanics of your consolidation. In the end, you should derecognise assets and liabilities of those 3 entities from the perspective of the consolidated financial statements of the parent. It won't necessarily equal the equity in standalone accounts of those ent...

I won't address all your questions here, but let's get started

I would expect consistent approach to recognition of movements in cash under trade date accounting. So in your first example (USD/EUR), why do you debit cash account, but credit payables (and not cash)?

you can and should reverse write-offs, obviously the carrying amount cannot exceed original cost see IAS 2.33: A new assessment is made of net realisable value in each subsequent period. When the circumstances that previously caused inventories to be written down below cost no longer exist or when t...

A bit more information would be useful. what are the key repayment terms of this liability when it comes to timing and amount? On each period end, all profits or losses on the PnL are allocated and recorded in this liability instead of retained earnings. I'm not sure I understand. So what happens, f...

Interesting, in Poland there's no such exemption from audit, a fully owned subsidiary must be audited even if its parent is domiciled in Poland

In the examples that you've seen for electricity contracts, how was the right to direct the use of the power plant effected by lessees?

Hm, I'm not sure I follow, would you mind telling us more about this exemption from audit?

perhaps not that surprising...
https://ion.icaew.com/financialreportin ... ter-brexit

another version of IFRS to keep track of in the future

Leo, first of all, subsidiaries are not accounted for using the equity method. Re. OCI, if your associate recognises something in OCI (e.g. actuarial gains), your share goes to your OCI as well re. retained interest - applies when you don't sell all your interest (e.g. when you retain 10% interest) ...