Search found 251 matches

by pub_acco
05 Jul 2021, 05:50
Forum: IFRS-related topics
Topic: Effects on financial positions
Replies: 2
Views: 58

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: 79

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: 186

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: 186

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: 186

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: 117

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: 197

Re: Embedded derivative

I think so.
by pub_acco
05 Jun 2021, 06:39
Forum: IFRS-related topics
Topic: Embedded derivative
Replies: 11
Views: 197

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: 197

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: 175

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...
by pub_acco
02 Jun 2021, 01:52
Forum: IFRS-related topics
Topic: IFRS 9 and Loan Holidays
Replies: 12
Views: 175

Re: IFRS 9 and Loan Holidays

It reminds me of the discussion with my colleagues about an agreement (not an option) to draw/provide a loan at a future date. Our conclusion at that time was that it was a derivative that reflects the difference between the agreed interest rate and the effective interest rate as of the future date....
by pub_acco
14 May 2021, 16:21
Forum: IFRS-related topics
Topic: Interest rate swap on debt
Replies: 24
Views: 507

Re: Interest rate swap on debt

IFRS 9 doesn't have a direct shortcut provision, but I've seen in practice some entities skip the effectiveness test under perfect hedges, and I've also seen a real disclosure that omits effectiveness-related information, saying that hedges are all perfect. That's often enough for many corporates th...
by pub_acco
14 May 2021, 15:52
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 328

Re: Above-par instruments and current/non-current distinction

So the portion (or entirety) of a long-term term investment that becomes due within 12 months is no longer a non-current asset under IAS 1, therefore IFRS 5.3 no longer applies. If we give precedence to IAS 1, we can also say like "PP&E and intangibles consumed within the next normal operating cycl...
by pub_acco
12 May 2021, 15:05
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 328

Re: Above-par instruments and current/non-current distinction

I think IFRS 5.3 reads that Assets (once) classified as non-current shall not be (subsequently) reclassified as current assets until they meet the criteria to be classified as held for sale. BC10 also says assets are not reclassified as current simply "because they reached their final twelve months ...
by pub_acco
11 May 2021, 15:35
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 328

Re: Above-par instruments and current/non-current distinction

IFRS 5's measurement provisions do not apply to financial assets, but its classification and presentation requirements do cover non-current financial assets as stated in the basis for conclusions. So, I think IAS 1 and IFRS 5 provide conflicting guidance about financial assets that were originally c...
by pub_acco
11 May 2021, 15:20
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 328

Re: Above-par instruments and current/non-current distinction

DJP wrote: 08 May 2021, 11:18 whoever buys this asset has an economic objective
That's a good point! Economic resource does flow into the investor.
by pub_acco
08 May 2021, 04:14
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 328

Re: Above-par instruments and current/non-current distinction

In practice, I state all the amount as non-current, but I am struggling to find out a basis for this in the standards, for assets in particular. It's a good point that the meaning of "realise" may vary depending on the type of asset. It is also a conceptually interesting question. The above-par port...
by pub_acco
07 May 2021, 00:59
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 328

Above-par instruments and current/non-current distinction

Consider a zero-coupon bond issued at $150 and repaid at $100 after five years (or if it sounds too unrealistic, assume that the carrying amount ends up at $150 when the fair value hedge is discontinued). Assume that by applying the effective interest rate method, $10 is recognized in PL within the ...
by pub_acco
06 May 2021, 16:17
Forum: IFRS-related topics
Topic: OCI Impact on CF
Replies: 7
Views: 143

Re: OCI Impact on CF

I am assuming AQS is calculating the changes in working capital based on the consolidated balances, which include the effect of exchange differences. If you first calculate the changes based on the foreign currency balances and then translate the changes using the same rate as PL, the OCI translatio...
by pub_acco
06 May 2021, 15:37
Forum: General accounting and financial reporting discussion
Topic: Unconsolidated subsidiaries in practice
Replies: 6
Views: 135

Re: Unconsolidated subsidiaries in practice

Thank you, JRSB. It's a cool approach to find a way out based on ISAs. Now I'm convinced it's best for me to talk to my auditors to agree on an acceptable approach.
by pub_acco
04 May 2021, 15:32
Forum: IFRS-related topics
Topic: Hedge Accounting for Embedded Derivative
Replies: 6
Views: 151

Re: Hedge Accounting for Embedded Derivative

Oops, I believed it was a financial liability that embedded a derivative. Right, if it is a financial asset, then the host contract and embedded derivative must be accounted for together as.a single unit. That said, it is possible to designate the embedded derivative as a hedged item in a certain si...
by pub_acco
04 May 2021, 14:05
Forum: IFRS-related topics
Topic: Hedge Accounting for Embedded Derivative
Replies: 6
Views: 151

Re: Hedge Accounting for Embedded Derivative

You can designate the embedded derivative as a hedged item but usually you don't need to. You will have to measure both the ED and the hedging derivative at FVTPL, and in this way the P&L impact will be naturally cancelled by each other's. Anyway, you have to record an asset and liability separately...
by pub_acco
04 May 2021, 13:53
Forum: General accounting and financial reporting discussion
Topic: Unconsolidated subsidiaries in practice
Replies: 6
Views: 135

Re: Unconsolidated subsidiaries in practice

Yeah, I'm currently taking that approach for several subsidiaries, and perhaps I need to do so too for the other subsidiaries.
by pub_acco
03 May 2021, 03:11
Forum: General accounting and financial reporting discussion
Topic: Unconsolidated subsidiaries in practice
Replies: 6
Views: 135

Re: Unconsolidated subsidiaries in practice

You're right! The subsidiaries in mind are no longer immaterial from a purely accounting perspective, but it's often a big deal for small entities to prepare FS on time. We consolidates 300+ subsidiaries in two weeks and completes the audit of short-note FS in one month. It's difficult or just costl...
by pub_acco
02 May 2021, 06:59
Forum: General accounting and financial reporting discussion
Topic: Unconsolidated subsidiaries in practice
Replies: 6
Views: 135

Unconsolidated subsidiaries in practice

All the subsidiaries must be consolidated unless IFRS 10's exemption applies, but I believe it's common in practice to skip fully consolidating some negligible subsidiaries. I'm interested in how you treat such ignored subsidiaries in practice. The approaches I've seen in practice are: - State the i...
by pub_acco
08 Apr 2021, 02:12
Forum: IFRS-related topics
Topic: Material Accounting Policies
Replies: 15
Views: 236

Re: Material Accounting Policies

As if obsessed with disclosing accounting standards rather than disclosing the accounts of an entity!
by pub_acco
07 Apr 2021, 15:40
Forum: IFRS-related topics
Topic: 'Service condition' IFRS 2
Replies: 12
Views: 149

Re: 'Service condition' IFRS 2

I'm not that good at IFRS 2, but to me the good leaver condition sounds like a vesting condition. If not, then two years of service is the only vesting condition and thus all the options are treated as vested in two years, are they? That sounds a little bit odd.
by pub_acco
07 Apr 2021, 13:24
Forum: IFRS-related topics
Topic: Material Accounting Policies
Replies: 15
Views: 236

Re: Material Accounting Policies

I do have experience to rebut an auditor's comment using the "obscuring" provision. It could take decades to change the mindset of regulators, but it would be really nice if they focused more on "obscuring" disclosures.
by pub_acco
06 Apr 2021, 14:28
Forum: IFRS-related topics
Topic: Material Accounting Policies
Replies: 15
Views: 236

Re: Material Accounting Policies

That's a good point. We might be able to leverage this amendment to fight against "checklist" people (auditors in mind :roll:). It's good news that IASB seems really concerned about the checklist approach as discussed in the recent ED https://www.ifrs.org/news-and-events/2021/03/iasb-proposes-a-new-...