Search found 271 matches

by pub_acco
23 Sep 2021, 11:41
Forum: IFRS-related topics
Topic: IFRS 15 and IAS 28, Revenue to the associate
Replies: 10
Views: 85

Re: IFRS 15 and IAS 28, Revenue to the associate

I'm not fully understanding the arrangement, but to me it sounds like a sort of repurchase agreements where A promises to buy back some products when selling them to B. Usually, revenue is not recognized under IFRS 15 in such a situation because the risks and control over the products are effectivel...
by pub_acco
23 Sep 2021, 10:48
Forum: IFRS-related topics
Topic: Storage costs
Replies: 6
Views: 59

Re: Storage costs

I'd be likely to choose Selling expenses if the storage cost relates to finished products waiting for sale.
by pub_acco
23 Sep 2021, 10:45
Forum: IFRS-related topics
Topic: Prepayments
Replies: 7
Views: 81

Re: Prepayments

This AD is directly relevant to this topic, maybe? https://www.ifrs.org/content/dam/ifrs/s ... tracts.pdf

IMO this arrangement is not a loan or under IFRS 9 if the buyer is not able to collect the prepayment in cash.
by pub_acco
23 Sep 2021, 10:21
Forum: IFRS-related topics
Topic: Storage costs
Replies: 6
Views: 59

Re: Storage costs

IAS 2.38 implies that cost of sales usually means the amount expensed this year that was previously recognized as part of inventories. So, although IFRS doesn't preclude to include the storage costs in cost of sales, if you elect to do so, you will need to disclose separately the amount of inventori...
by pub_acco
23 Sep 2021, 10:03
Forum: IFRS-related topics
Topic: IFRS 15 and IAS 28, Revenue to the associate
Replies: 10
Views: 85

Re: IFRS 15 and IAS 28, Revenue to the associate

Do you mean A is acquiring some of the completed apartments from B? In other words, is A trying to recognize revenue when it sells the building to B and recognize revenue again when A sells the repurchased apartments to final consumers?
by pub_acco
31 Aug 2021, 13:48
Forum: IFRS-related topics
Topic: FX embedded derivatives in executory contracts
Replies: 4
Views: 12193

Re: FX embedded derivatives in executory contracts

To me it sounds like the seller is selling the protection as well as the equipment to the buyer, so it sounds natural to break down the consideration into the revenue portion and the option premium portion....
by pub_acco
28 Aug 2021, 02:43
Forum: IFRS-related topics
Topic: FX embedded derivatives in executory contracts
Replies: 4
Views: 12193

Re: FX embedded derivatives in executory contracts

If you separate the embedded derivative, I would expect the seller to record a liability when the equipment is delivered at the initial fair value of the written option. The amount of revenue is adjusted accordingly, but it won't be equal to the forward FX-based price. The subsequent change in fair ...
by pub_acco
12 Aug 2021, 03:36
Forum: General accounting and financial reporting discussion
Topic: €(123) million or (€123) million?
Replies: 8
Views: 11330

Re: €(123) million or (€123) million?

I went through more annual reports and 10-Ks and found out that the overwhelming majority preferred €(123) and (1.23)% over (€123) and (1.23%), and a few companies mixed two styles, which might be caused by mistake. So I conclude it's safer to put only numbers in parentheses in a professional accoun...
by pub_acco
10 Aug 2021, 03:34
Forum: General accounting and financial reporting discussion
Topic: €(123) million or (€123) million?
Replies: 8
Views: 11330

€(123) million or (€123) million?

It might be a silly English question, but when denoting a negative amount with a currency symbol, which notation do you use: €(123) million or (€123) million? In annual reports, companies generally seem to prefer €(123) million, but some companies use (€123) million. It doesn't seem to depend on the...
by pub_acco
05 Aug 2021, 00:21
Forum: IFRS-related topics
Topic: Investment in Subsidiary recoverable amount
Replies: 11
Views: 8175

Re: Investment in Subsidiary recoverable amount

Technically yes, but it was rather like putting a boilerplate statement of compliance with IFRS. Liquidation is the very last moment of a company and at that stage, there are only a few stakeholders left and none of them cares about FS any longer. Even a company that filed bankruptcy has to prepare ...
by pub_acco
04 Aug 2021, 16:10
Forum: IFRS-related topics
Topic: Investment in Subsidiary recoverable amount
Replies: 11
Views: 8175

Re: Investment in Subsidiary recoverable amount

IFRS doesn't provide a specific guidance for a non-going concern FS, so you have to develop and justify your own basis, as Marek pointed out. Btw, is it common or practicable to prepare a serious FS on a non-going concern basis? What I've seen in practice is just to prepare a statutory FS on a going...
by pub_acco
04 Aug 2021, 15:49
Forum: IFRS-related topics
Topic: Asset encumbrance - netting
Replies: 6
Views: 4125

Re: Asset encumbrance - netting

It's not clear for me what you are trying to offset.... Bond lending is an off balance sheet transaction so you have no liability recognized that can be set off against the bond. You cannot derecognize the bond itself either because the derecognition requirements under IFRS 9 aren't satisfied....
by pub_acco
03 Aug 2021, 14:01
Forum: IFRS-related topics
Topic: Investment in Subsidiary recoverable amount
Replies: 11
Views: 8175

Re: Investment in Subsidiary recoverable amount

If the investor prepares a financial statement on a going concern basis, it can just state the investment at cost in accordance with IAS 27 because the recoverable amount exceeds the cost. Otherwise, I have no idea how to prepare a financial statement under IFRS on a basis other than the going conce...
by pub_acco
30 Jul 2021, 20:24
Forum: IFRS-related topics
Topic: Asset encumbrance - netting
Replies: 6
Views: 4125

Re: Asset encumbrance - netting

So you are entering repo and reverse repo transactions, not outright lending of gilts. At the first repo, the 200M gilt remains on the balance sheet and instead a 100M borrowing is recognized: Dr. Cash 100M Cr. Borrowing from repo market 100M Then, the 100M cash is invested in the second reverse rep...
by pub_acco
30 Jul 2021, 06:42
Forum: IFRS-related topics
Topic: Asset encumbrance - netting
Replies: 6
Views: 4125

Re: Asset encumbrance - netting

To me, IAS 32.48 doesn't sound like a catch-all provision.... Anyway, what are you trying to offset? Are you going to lend and borrow bonds at the same time?
by pub_acco
30 Jul 2021, 05:24
Forum: IFRS-related topics
Topic: Net investment hedging ineffectiveness
Replies: 3
Views: 3574

Re: Net investment hedging ineffectiveness

I think it depends. If the designated hedge amount is 1,000 and the reduced net investment is 990, then we can argue it's a continuing over-hedge relationship. But if the reduced net investment is say 10, it should be no longer possible to insist an economic relationship.
by pub_acco
29 Jul 2021, 15:59
Forum: IFRS-related topics
Topic: Net investment hedging ineffectiveness
Replies: 3
Views: 3574

Re: Net investment hedging ineffectiveness

Though I have no experience facing such a situation, it's counterintuitive to me to check the fair value change since the beginning of the hedge, rather than that since a portion of the hedge became ineffective. I think the fair value changes that had been effective should stay in Accumulated OCI un...
by pub_acco
05 Jul 2021, 05:50
Forum: IFRS-related topics
Topic: Effects on financial positions
Replies: 2
Views: 1454

Re: Effects on financial positions

Do you mean the revaluation model of PP&E? If so, if an entity revalues land purchased centuries ago, then the entity is likely to record huge revaluation surplus and as a result improve stability ratios dramatically. I've seen some jurisdictions that allowed one-time revaluation of assets aiming th...
by pub_acco
25 Jun 2021, 05:14
Forum: IFRS-related topics
Topic: IAS8 - correction
Replies: 2
Views: 1540

Re: IAS8 - correction

Is it an error? It sounds to me like a legitimate change in accounting policy. Anyway, you will not need to restate the comparative period as long as you can convince stakeholders of the impracticablity, though personally I feel it shouldn't be very difficult to make a fair if not 100% accurate esti...
by pub_acco
17 Jun 2021, 16:45
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7242

Re: Parental guarantee on outstanding debt

I think this kind of situation typically occurs when all parties are under common control. Otherwise, the sub cannot raise so much debt without a legal financial guarantee. A typical case I've seen is like: Sub A makes a huge loss and Parent has Sub B lend money to Sub A just as the group's ordinary...
by pub_acco
16 Jun 2021, 18:03
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7242

Re: Parental guarantee on outstanding debt

There should be a more rigid legal arrangement if non-controlling interests were involved and in this case the aspect of financial instrument would be more prominent. But I agree in your case IAS 37 sounds more appropriate. It is actually common under our local gaap (not IFRS) for a parent to recogn...
by pub_acco
16 Jun 2021, 02:09
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7242

Re: Parental guarantee on outstanding debt

I agree that the arrangement sounds like a commitment to make a capital contribution if it is not a "loan" commitment. I also agree that the investment in the sub should first be reduced to zero. But I'm not really sure what you should do if the value of the sub is well below zero. In such a case, t...
by pub_acco
08 Jun 2021, 02:34
Forum: IFRS-related topics
Topic: Prepayments-cash flow (IFRS 16)
Replies: 5
Views: 939

Re: Prepayments-cash flow (IFRS 16)

In practice I classify prepayments and initial direct costs as investing by organizing my cash flow worksheet like the following: Additions of PP&E Additions of ROU Less: recognition of lease liabilities Less: recognition of dismantling obligations Changes in capex payable ----- Total capital expend...
by pub_acco
08 Jun 2021, 02:19
Forum: IFRS-related topics
Topic: Embedded derivative
Replies: 11
Views: 2539

Re: Embedded derivative

I think so.
by pub_acco
05 Jun 2021, 06:39
Forum: IFRS-related topics
Topic: Embedded derivative
Replies: 11
Views: 2539

Re: Embedded derivative

It sounds like the parties adjust the allocation of steel price risk in a reasonable way related to the host steel sale/purchase agreement. If so, the option is closely related to the host.

Is it regarded as a "prepayment" option by the way?
by pub_acco
03 Jun 2021, 02:06
Forum: IFRS-related topics
Topic: Embedded derivative
Replies: 11
Views: 2539

Re: Embedded derivative

Is it possible to account for prepayment options separately? I'm not able to come up with a specific case. Unlike debt instruments, non-financial purchase agreements don't usually give rise to an asset or liability until the buyer receives goods or services.
by pub_acco
03 Jun 2021, 01:58
Forum: IFRS-related topics
Topic: IFRS 9 and Loan Holidays
Replies: 12
Views: 2024

Re: IFRS 9 and Loan Holidays

Btw, I'm actually skeptical if the lender is obligated to provide a loan after two years. I know the borrower has to commit to draw a loan to compensate for the lost profit, but from the lender's point of view, it really depends on the credit standing of the borrower two years later. If the borrower...