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Yes, companies follow the same codification. And don't get me cancelled here, but I think there is a culture element in it. French people like when it's clear, so they practice an accounting by rules as opposed to IFRS. The concept of fair value is almost inexistent in French GAAP, and accounting is...

There might not be any fair value changes at all. But strictly speaking, is there a derivative instrument there?

the shares will be issued in Feb.

that's a very good remark JRSB! I think if it's unpaid capital, there is an obligation to pay cash by the investor. However, you could argue that in an agreement where the investor agree to subscribe for the shares at X LC when the shares are issued, there is also an obligation to pay. They look the...

British companies are not tidy at all when it comes to accounting. I've seen some quite large groups doing conso in a spreadsheet, and some incapable of providing a statutory TB in one click! In my experience, french companies are the best in bookkeeping. Hyperion is the old SAP BFC, it was disconti...

Hi, Anyone interested to discuss this? In case of a situation mentioned in the snap shot, what would be the treatment of the preference shares? Do they follow IFRS 2 or IAS 32? and what does it really mean in terms of the accounting entries? https://assets.kpmg.com/content/dam/kpmg/be/pdf/2019/01/if...

Merci! tous les clignotants sont au vert, like we say in french.

Sorry, I meant a derivative instrument, e.g., a forward or future.

Hi, In a case where the investor and the issuer have agreed (materialised by signature of an agreement) that the investor would subscribe for 500 prefs for an amount of 1 millions LC, in Feb 2024. The agreement was signed in Dec 2023. In this case, is there a derivative instrument from the perspecti...

(a) If an entity receives cash and gives the investor the option to convert the amount into a fixed number of shares, then it's an equity instrument classified as equity. (IAS 32 11 (a) (i) & (b) (i)) (b) If an entity received cash and gives the investor the option to convert the amount into cas...

On the PWC's case, just a question, A financial liability is: a contract that will or may be settled in the entity’s own equity instruments and is: (i)a non‑derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments; or (ii)a derivative t...

Hi Kevin, thanks for sharing! It seems that when the issuer has solely the option to convert, in this case, depending on management's own judgement, it can vary from liability to equity. I guess 99/100, people would choose the equity classification. In the case you shared, if there is no cash redemp...

In case of a fixed rate convertible bond that provide the issuer the option, at its own discretion, to convert the principal and any accrued interest at the same rate, then the instrument is classified as equity in its entirety. This is because the issuer can avoid paying cash; (IAS 32.11.a.i) and a...

Thanks guys!

A company issues preference shares. The preference shares carry a discretionary dividend. The preference shareholders have a right to convert the prefs into ordinary shares if agreed by XX% of the pref shareholders. If not converted, preference shares are irredeemable. If converted, it would be conv...

Hi, If parent A holds 60% of the shares in a sub (the other 40% is held by another investor B), and there is a clause allowing parent A to buy the 40% of the shares from investor B (NCI call), and also, investor B can require parent A to buy the 40% of the NCI shares. The agreement is symmetrical an...

I think if your company elects to apply the investment accounting under IFRS 10, it means you can produce separate financial statements and account for the investments at fair value under IFRS 9.

I don't know whether in this context, applying IFRS 9 is the only option.

Ifrs9 ?

And that is even you know the contract will be loss making, you still can't book a provision is that correct? You have to wait for the losses to occur.

Just wanted to double check that, the application of IAS 37, onerous contract provision is under the assumption that the contract cannot be terminated without incurring a penalty, is that correct? I haven't noticed the mention of this point in the original post. In a case that the contract can be te...

I think even IAS 32 deals with the classification of financial instrument from the issuer's perspective, it is important to assess whether an instrument either equity or liability. If it's an equity instrument, the instrument might be included in the equity method to account for the investment. Howe...

I think it depends on the materiality, if the company has noticed that the initial depreciation was overly pessimistic, then, they can readjust the depreciation rate, thus, extending the useful life, correct?

what does that mean in practice?

Thanks Ketan for this lengthy explanation! By prospective, I meant, if an asset is, let's say, depreciated from 100 LC down to 50 LC. and the fair value of the asset is now 60 LC. Then, from now, onwards, the company would stop depreciating the asset until the point in time when the fair value of th...

Hi, Just wanted to confirm, if an asset accounted at cost in accordance with IAS 16, for 100 LC. Depreciated for 20LC, and impaired for 30LC, YTD. And a valuation recently performed indicated that the fair value of the asset is 100LC. In that case, the impairment of 30LC could be reversed, and new d...

Any thoughts?

But that being said, I fully agree that companies should present their statutory accounts as faithfully as possible.

That's a fair point, but from someone who did prepare the conso accounts (and also audited a few), it's a nighmare to split account the intercompany loans, the software can't eliminate it properly so you have to plugg manual entries. At the year end, it's not something you want to spend your nights ...

auditors are focused on auditing the conso, so if the difference is under the threshold on individual entity level, they wouldn't bother.

Agree, it's a compound instrument, provided there is something left in equity. However, in practice, I would guess that most of the companies would take the shortcut to say it's full liability.