Search found 910 matches

by Leo
07 Feb 2024, 10:44
Forum: IFRS-related topics
Topic: Souscription of preference shares after closing
Replies: 12
Views: 508

Souscription of preference shares after closing

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...
by Leo
07 Feb 2024, 08:40
Forum: IFRS-related topics
Topic: IAS 32 the fixed for fixed criteria
Replies: 0
Views: 271

IAS 32 the fixed for fixed criteria

(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...
by Leo
06 Feb 2024, 10:53
Forum: IFRS-related topics
Topic: Convertible bond at the option of the issuer
Replies: 3
Views: 224

Re: Convertible bond at the option of the issuer

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...
by Leo
06 Feb 2024, 01:02
Forum: IFRS-related topics
Topic: Convertible bond at the option of the issuer
Replies: 3
Views: 224

Re: Convertible bond at the option of the issuer

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...
by Leo
05 Feb 2024, 17:34
Forum: IFRS-related topics
Topic: Convertible bond at the option of the issuer
Replies: 3
Views: 224

Convertible bond at the option of the issuer

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...
by Leo
05 Feb 2024, 17:08
Forum: IFRS-related topics
Topic: Preference shares
Replies: 3
Views: 221

Re: Preference shares

Thanks guys!
by Leo
05 Feb 2024, 13:46
Forum: IFRS-related topics
Topic: Preference shares
Replies: 3
Views: 221

Preference shares

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...
by Leo
02 Feb 2024, 00:25
Forum: IFRS-related topics
Topic: NCI call
Replies: 0
Views: 600

NCI call

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...
by Leo
29 Jan 2024, 19:44
Forum: IFRS-related topics
Topic: Equity method exemptions
Replies: 18
Views: 1108

Re: Equity method exemptions

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.
by Leo
26 Jan 2024, 16:35
Forum: IFRS-related topics
Topic: Loss-making contract IFRS 15
Replies: 15
Views: 3394

Re: Loss-making contract IFRS 15

Ifrs9 ?
by Leo
26 Jan 2024, 15:56
Forum: IFRS-related topics
Topic: Loss-making contract IFRS 15
Replies: 15
Views: 3394

Re: Loss-making contract IFRS 15

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.
by Leo
26 Jan 2024, 12:58
Forum: IFRS-related topics
Topic: Loss-making contract IFRS 15
Replies: 15
Views: 3394

Re: Loss-making contract IFRS 15

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...
by Leo
21 Jan 2024, 23:25
Forum: IFRS-related topics
Topic: Instruments to be treated according to the equity method
Replies: 5
Views: 1291

Re: Instruments to be measured according to the participation method

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...
by Leo
18 Jan 2024, 21:07
Forum: IFRS-related topics
Topic: PP&E depreciation and impairment
Replies: 8
Views: 1664

Re: PP&E depreciation and impairment

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?
by Leo
18 Jan 2024, 20:06
Forum: IFRS-related topics
Topic: PP&E depreciation and impairment
Replies: 8
Views: 1664

Re: PP&E depreciation and impairment

what does that mean in practice?
by Leo
18 Jan 2024, 19:55
Forum: IFRS-related topics
Topic: PP&E depreciation and impairment
Replies: 8
Views: 1664

Re: PP&E depreciation and impairment

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...
by Leo
18 Jan 2024, 12:55
Forum: IFRS-related topics
Topic: PP&E depreciation and impairment
Replies: 8
Views: 1664

PP&E depreciation and impairment

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...
by Leo
15 Jan 2024, 13:06
Forum: IFRS-related topics
Topic: Convertible preference shares
Replies: 17
Views: 8062

Re: Convertible preference shares

Any thoughts?
by Leo
11 Jan 2024, 19:53
Forum: IFRS-related topics
Topic: IAS32- classification
Replies: 19
Views: 6561

Re: IAS32- classification

But that being said, I fully agree that companies should present their statutory accounts as faithfully as possible.
by Leo
11 Jan 2024, 18:55
Forum: IFRS-related topics
Topic: IAS32- classification
Replies: 19
Views: 6561

Re: IAS32- classification

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 ...
by Leo
11 Jan 2024, 18:42
Forum: IFRS-related topics
Topic: IAS32- classification
Replies: 19
Views: 6561

Re: IAS32- classification

auditors are focused on auditing the conso, so if the difference is under the threshold on individual entity level, they wouldn't bother.
by Leo
11 Jan 2024, 18:27
Forum: IFRS-related topics
Topic: IAS32- classification
Replies: 19
Views: 6561

Re: IAS32- classification

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.
by Leo
10 Jan 2024, 20:15
Forum: IFRS-related topics
Topic: IAS32- classification
Replies: 19
Views: 6561

Re: IAS32- classification

Let me put it differently, if a prefs provides mandatory redemption for the principal amount but the dividends are at the issuer's discretion. That's a compound financial instrument where the present value of the principal is a liability which is discounted by market rate, and the residual value in ...
by Leo
10 Jan 2024, 20:10
Forum: IFRS-related topics
Topic: IAS32- classification
Replies: 19
Views: 6561

Re: IAS32- classification

thanks, why this isn't a compound financial instrument? There is no contractual obligation to pay the principal.
by Leo
10 Jan 2024, 18:18
Forum: IFRS-related topics
Topic: IFRS 16 intercompany transfer of lease from one entity to another.
Replies: 5
Views: 1581

Re: IFRS 16 intercompany transfer of lease from one entity to another.

might there be some slight impact on DTA/DTL if that involves two countries within different tax jurisdictions?
by Leo
10 Jan 2024, 17:21
Forum: IFRS-related topics
Topic: Convertible preference shares
Replies: 17
Views: 8062

Re: Convertible preference shares

Just picking that up out of interest and also wanted to follow up with another question (related). I think, if you conclude that the preference shares are equity instruments, as DJP said, it clearly fails SPPI test. However, I think provided the instrument is not held for trading, the company can st...
by Leo
08 Jan 2024, 14:35
Forum: IFRS-related topics
Topic: IAS32- classification
Replies: 19
Views: 6561

Re: IAS32- classification

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 d...
by Leo
08 Jan 2024, 03:59
Forum: IFRS-related topics
Topic: Accounting treatment for swap facility
Replies: 10
Views: 1874

Re: Accounting treatment for swap facility

They are borrowers so sppi is not relevant.
by Leo
02 Jan 2024, 18:23
Forum: IFRS-related topics
Topic: Preference shares
Replies: 15
Views: 1696

Re: Preference shares

Thanks Ketan.
by Leo
02 Jan 2024, 14:18
Forum: IFRS-related topics
Topic: Preference shares
Replies: 15
Views: 1696

Re: Preference shares

Looking at the definition of an equity instrument under IAS 32, it says: The instrument is an equity instrument if, and only if, both conditions are met: (a) no contractual obligation to be settled in cash (b) if the instrument will or may be settled in the issuer's own equity instrument, it is [......