Search found 1075 matches

by Marek Muc
30 Nov 2020, 23:04
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

I won't say I'm 100% sure, but in marea's case you have no obligation to pay dividends unless you declare one for ordinary shareholders. Which may never happen and that's why these preference shares are not a liability. It would seem to be against this logic to recognise these preference dividends i...
by Marek Muc
30 Nov 2020, 20:40
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

well, the general rule is that equity instruments are not remeasured subsequently, so you won't recognise undistributed dividends in SoFP
once a dividend is paid it will be recognised as a typical dividend, i.e. debited directly to equity (e.g. retained earnings)

sounds too good to be true, hm? :)
by Marek Muc
30 Nov 2020, 19:47
Forum: IFRS-related topics
Topic: Security deposit for renewable lease
Replies: 8
Views: 41

Re: Security deposit for renewable lease

I would set the repayment date consistently with the lease term, how does this sound to you?
by Marek Muc
30 Nov 2020, 19:44
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

PS. and congrats to you marea for starting the most discussed topic so far ;)
by Marek Muc
30 Nov 2020, 19:20
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

I suppose the liquidation is not planned, otherwise we would fall under IAS 32.16C
by Marek Muc
30 Nov 2020, 14:12
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

yes, I'm talking about that cumulative dividend that will build up unrecognised in financial statements even though there's contractual obligation to pay it at liquidation but after re-reading para 16C I see that it covers only instances when: 1/ liquidation either is certain to occur and outside th...
by Marek Muc
30 Nov 2020, 12:35
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

I'm also thinking about financial statements. You don't remeasure equity after initial recognition, so with cumulative preference shares you'll end up with huge 'hidden' liability payable at liquidation.
by Marek Muc
30 Nov 2020, 12:12
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

Thanks marea for digging this out. I must admit that I have no clue how to reconcile the quoted paragraph from DP with IAS 32.16C.

PS direct link to the DP (par. 3.15 page 43)
https://www.ifrs.org/-/media/project/fi ... e-2018.pdf
by Marek Muc
30 Nov 2020, 11:43
Forum: General accounting and financial reporting discussion
Topic: Accrual for audit fees
Replies: 24
Views: 92

Re: Accrual for audit fees

I think that the audit fees should be spread through Feb 20X2. Audit is a service like any other and there's still lots of work left in Jan-Feb 20X2, so there's no reason to charge full amount in 20X1. Of course this is immaterial, especially given that those fees will 'roll-over' in following years...
by Marek Muc
29 Nov 2020, 20:32
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

hm, so apparently a counterpoint, too bad it's left without any explanation...
by Marek Muc
29 Nov 2020, 19:51
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

only paras 16A and 16B are about puttable instruments
by Marek Muc
29 Nov 2020, 19:00
Forum: General accounting and financial reporting discussion
Topic: Accrual for audit fees
Replies: 24
Views: 92

Accrual for audit fees

A very basic question applicable to all accounting frameworks :) Entity’s financial year = calendar year. On 1 Sep 20X1 Entity contracts an auditor to issue an opinion on its financial statements for year ended on 31 Dec 20X1. Auditor’s fee is $100k. Auditor does interim work, assesses control envir...
by Marek Muc
29 Nov 2020, 18:46
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

@marea it's still a liability, see IAS 32.16C @JRSB not only it can differ by country, it can differ by each issued instrument :) If the terms of preference shares were such that the unpaid dividends are forfeited on liquidation and preference shareholders are treated as ordinary shareholders then y...
by Marek Muc
29 Nov 2020, 18:36
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 34
Views: 176

Re: Current or non-current loan

the example is in substance identical to Example 6 to IAS 37, hm? Funny because as I read the latest JRSB's post I see it being used to argue for both approaches :) In my opinion the facts in the year being reporting, and at the year end, are most relevant to the user. Forward looking statements (as...
by Marek Muc
29 Nov 2020, 18:25
Forum: IFRS-related topics
Topic: Guidance - Invt in Associate - Equity Accounting
Replies: 10
Views: 73

Re: Guidance - Invt in Associate - Equity Accounting

IFRS 11.B10 is not applicable here, B10 concerns situations when unanimous consent is needed, but parties are unable to reach it in OP's scenario, the other investor can unilaterally direct the relevant activities of X because of the role of BOD chair, so I don't see joint control now but the import...
by Marek Muc
29 Nov 2020, 18:16
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

On liquidation, equity holders receive cash on a pro rata basis of what's left after paying all creditors These preference shareholders (if I understand correctly) are entitled to receive all previously accrued dividends which were not at the discretion of the entity, but set contractually. So prefe...
by Marek Muc
29 Nov 2020, 18:05
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

perhaps we don't have the same understanding of facts, What I understood is that entity is contractually obliged to 'accrue' dividend on preference shares. It doesn't have to pay it each year, but ultimately all accrued but unpaid dividends have to be paid. So only timing is at the discretion of the...
by Marek Muc
29 Nov 2020, 17:56
Forum: After hours
Topic: Earnings based on IFRS Knowledge
Replies: 13
Views: 248

Re: Earnings based on IFRS Knowledge

nice salary!

but it's great, enforcers should earn decent salaries
BTW FRC's review reports are of high quality IMO, probably thanks to high quality staff that they are able to hire
by Marek Muc
28 Nov 2020, 20:30
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

Which part is the equity part in your opinion, JRSB?
by Marek Muc
28 Nov 2020, 20:28
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 34
Views: 176

Re: Current or non-current loan

Jonny wrote: 28 Nov 2020, 14:42 Would it be current also under IAS 1 as currently effective?
viewtopic.php?p=2985#p2985
by Marek Muc
28 Nov 2020, 15:16
Forum: IFRS-related topics
Topic: Guidance - Invt in Associate - Equity Accounting
Replies: 10
Views: 73

Re: Guidance - Invt in Associate - Equity Accounting

I agree with pub_acco

https://ifrscommunity.com/knowledge-bas ... s-a-parent

And it would be interesting to know why significant influence only (and not joint control)
by Marek Muc
28 Nov 2020, 14:13
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 34
Views: 176

Re: Current or non-current loan

But in the Grant Thorton publication, the entity satisfied at reporting date all the covenants that will be tested in next 12 months, so it's a substantially different scenario
by Marek Muc
28 Nov 2020, 14:10
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

Have a look a references in this section https://ifrscommunity.com/knowledge-base/financial-liabilities-vs-equity/#link-pro-rata-share-of-the-net-assets-on-liquidation And simply put, these shares do not meet the definition of equity, there's no 'residual interest in the assets after deducting all o...
by Marek Muc
28 Nov 2020, 11:52
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

To me they are financial liabilites in their entirety, there's fixed coupon , there's no 'residual interest in the assets after deducting all of its liabilities'

Plus:
https://ifrscommunity.com/knowledge-bas ... etual-debt
by Marek Muc
28 Nov 2020, 10:49
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

By % of dividends, you mean % of the face value of shares? If so, those shares are financial liabilities in their entirety
by Marek Muc
27 Nov 2020, 20:44
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

Regular shares don't receive any payments other than dividends at full discretion of the company

I don't understand what you mean by outstanding cummulative amount
by Marek Muc
27 Nov 2020, 19:38
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 225

Re: Financial Instruments with Characteristics of Equity

And apart from liquidation, is it a regular share?
by Marek Muc
27 Nov 2020, 19:14
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 34
Views: 176

Re: Current or non-current loan

What a great discussion we're having here! :) In the meantime, we must remember that these amendments to IAS 1 are not effective until 2023. On the other hand, the IASB stated that these amendments clarify, but do not change, requirements of IAS 1, so they kind of apply under IAS 1 as currently effe...