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Hello Community, Hope everyone is doing great. I wanted a bit of a sparring on lease cum derivative accounting and what better place to ask for it other than this wonderful community so here I go with my different scenarios: - Lease an asset to a third party for 5 years and an option to sell (put op...

Thanks Marek.

I am also linking an article on the topic from GT here where it is mentioned that where the reimbursements relate to leasehold improvements made by the lessee but which are controlled by the lessor and are accounted for in its statement of financial position then the lessor’s payment would not repre...

Dear Members, On the topic of reimbursement of leasehold improvements, when I refer the knowledge base then it is mentioned there that if the reimbursement is not classified as a lease incentive, it is treated as a reduction of their cost. My question is that should we even be recognizing the asset ...

Hi, I am a bit confused about which standard to apply for recognizing termination benefits which is part of a restructuring program. While both standard would lead to a booking of an expense in the PNL but I am confused how to label it: Employee expense or Restructuring provision? I am referring to ...

Hi everyone, Can someone please make this below guidance a bit simple for me to follow: The attribution of tax deductions has pivotal implications because temporary differences only arise on initial recognition if tax deductions are assigned to the lease liability. When deductions are associated wit...

For instance a leasing contract turned onerous along the course of the lease term...

Hi, 1. Could you clarify if asset X generates independent cash inflows? No, it doesn't generate independent cash flows and is therefore made part of CGU A for impairment testing purposes. For CGU A there is no impairment indicator. 2.Also, I'm curious as to why you brought up CGUs B and C and goodwi...

Hi,

Any response on this query please? As mentioned in the previous posts I am unclear if the decision tree in the KB should also factor in IAS 36.9 specific guidance.

I was thinking that if it could be possible that while an entity can choose to pay taxes as per pillar-2 tax reforms but for the effective tax rate computation old rates are used. Looking at your question though, it seems that an entity would ignore pillar-2 reforms completely for financial book clo...

Hi again,

Allow me a follow up question please: Could it be that an entity increases the CIT by early adopting the reforms but the adjustment to CIT is not absorbed in the effective rate computation and later on in calculation of DTA/DTL.

I guess my query arise from my understanding that I see IAS 36.9 as an exception to 36.22/67 which is the basis of the decision tree in KB. For the ease of reference: IAS 36.9: "An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impai...

Hey!! If the buyer would not be required to assume the lease liability, then the company excludes the lease liability from the carrying amount of the CGU and, to achieve a like-for-like comparison, excludes the lease payments from the discounted cash flows used to measure the CGU’s VIU. Wouldn't the...

Hi, I referred to the decision tree mentioned in the KB: https://ifrscommunity.com/knowledge-base/cash-generating-units-cgu/ wherein it is stated in one of the dialogue box that "Does IAS 36 mandate CGU level impairment testing" which I assume is pointing towards IAS 36.96 i.e. CGU to whic...

Let's take a simple example of an existing DTL at an effective tax rate of 10%. With the introduction of pillar 2 tax reforms the rate would rise to 15% thus a definite increase in the DTL. Do I factor in the increase now by creating a provision even though I continue to keep the existing DTL calcul...

Hello All,

While IASB has introduced a temporary, mandatory exception in IAS 12.4A but would you recommend recording a provision if I expect a DTL to materialize in future as a result of adoption of pillar-2 reforms?

Hello Community,

Allow me to update my question slightly: Income tax expense on OCI items would be towards creating deferred tax asset/liability unless reclassified and becomes a part of accounting profit. Would you agree?

Hello Community, Can someone help me understand this better that OCI items can be presented either net of tax effects or before tax, with the overall tax impact disclosed separately. In either case, entities must specify the tax amount related to each item in OCI, including any reclassification adju...

Depends on the type of auditor. I have been an auditor myself (with one of the big 4's) and I very much wanted to look at the nature of eliminations performed to arrive at the consolidated results. Just because something did not surface to the face of the financial statement doesn't reduces it's cla...

Yeah in some way that becomes a short cut ;) . I would prefer to not get an observation from the auditor as against opting for a simplistic approach. I have seen a lot of companies follow a similar approach for inter-company loans too meaning even when the underlying nature of those loans is an inve...

Hi, Please allow me to reconsider Marek's position in this post. In a case where a company issue prefs and the prefs are redeemable at the issuer's discretion but provide for a mandatory payment of the dividend each year. In that case, I would say that the principal is classified as equity and the ...

Carrying amount would be 5 million but for deferred tax purposes the difference between Tax base and Carrying Amount of 2.5 million would be ignored as per Initial recognition exemption unless criteria under IAS 12.15/24 are not fulfilled. Refer the following url: https://ifrscommunity.com/knowledge...

Thanks Ketan. The attached image and guidance helped. Maybe I circle back here with specific doubts, if any.

Thanks Marek. Just academic interest in IFRS 9.

I am not facing a scenario but trying to understand the concept, especially the correlation between Asset and Liabilities (measurement - both intial and subsequent).

Hi All,

I am really struggling to follow the guidance in the KB on the topic of continuing involvement in transferred assets. Can someone simplify this with some examples?

https://ifrscommunity.com/knowledge-bas ... red-assets

Dear Marek,

Thank you. Appreciate you setting up such a great platform.

Dear Ketan,

Thanks a lot. I have learnt so much off late by simply reading your responses to the different questions raised by fellow community members. Keep it going please..

Cheers
Kevin

Respected Members, Can someone help me understand this preferably with the help of an example? Also, why are we doing the gross up? when non-controlling interest is not measured at fair value, entities need to make sure that, for the purpose of impairment testing, goodwill is grossed-up to include a...