Search found 345 matches
- 19 Jun 2023, 10:52
- Forum: IFRS-related topics
- Topic: Financial guarantee contract
- Replies: 12
- Views: 2561
Re: Financial guarantee contract
This arrangements doesn't seem to make much sense from a commercial stand point. While the facility is undrawn, there is no debt instrument. However, it seems that the guarantor will receive less premium once the facility is drawn and the debt crystalises. What sense does this make? Are you sure the...
- 12 Jun 2023, 17:16
- Forum: IFRS-related topics
- Topic: IAS 1.69
- Replies: 17
- Views: 3294
Re: IAS 1.69
You are looking at paragraph 73 as if this is an exception created only for rollovers, but that is not the case. Paragraph 73 is simply illustrating a case of when an obligation may be due within 12 months, but you have the right -- at the end of the reporting date -- to defer settlement for at leas...
- 12 Jun 2023, 16:29
- Forum: IFRS-related topics
- Topic: IAS 1.69
- Replies: 17
- Views: 3294
Re: IAS 1.69
Paragraph 73 is giving you an example of when a right to defer settlement for at least twelve months exists at the reporting date. Paragraph 73 is not an exception to paragraph 69 (c); it is rather an example of how paragraph 69 (d) should be interpreted.
- 12 Jun 2023, 14:28
- Forum: IFRS-related topics
- Topic: IAS 1.69
- Replies: 17
- Views: 3294
Re: IAS 1.69
Hello. I don't see any inconsistency between 1.69(c) and (d). In your example, the liability seems to be current because it is due within 12 months from the reporting date. You need to take paragraph 72A into consideration to assess whether the conditions that will allow you to defer settlement of t...
- 31 May 2023, 14:33
- Forum: IFRS-related topics
- Topic: First Business Model or First SPPI test?
- Replies: 16
- Views: 5720
Re: First Business Model or First SPPI test?
As Marek pointed out, IFRS 9 does not prescribe the order in which you need to apply the business model and SPPI assessments. You basically should do it in the order you find most efficient.
- 18 May 2023, 11:41
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
Thank you! Always a pleasure to help
- 15 May 2023, 15:47
- Forum: IFRS-related topics
- Topic: ias32
- Replies: 13
- Views: 2280
Re: ias32
Definitely not a financial liability (for the reason given by Marek), but in my opinion this should be a IAS 37 provision. Which case are you referring to, JRSB?
- 15 May 2023, 12:57
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
Ok. So let's imagine that you are hedging the firm commitment to purchase inventory with a forward, and let's assume that the forward as a positive value for you because the value of the inventory has increased in the meantime. If you apply hedge accounting, you will measure the derivative and firm ...
- 12 May 2023, 11:38
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
1 - yes, only when you recognise revenue (at that time you will then derecognise the firm commitment liability against revenue) 2 - for the fair value hedge of firm commitments, you will adjust the initial carrying amounts of the asset/liability with the cumulative fair value changes that you've bee...
- 10 May 2023, 11:12
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
It is a cash flow hedge because the cash flow you end up receiving has changed due to changes in the FX rate. But you can also see it as a fair value hedge because the fair value of the commitment changes due to changes in the FX rate. FX risk has this dual character. If you treat this hedge as a ca...
- 09 May 2023, 11:49
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
Hi DanSal, First of all, because the standards says so. But it does so because of the dual character of a firm commitment exposure in a foreign currency. If you have a firm commitment in your functional currency, the only thing that is affected during the life of the exposure is its fair value (the ...
- 04 May 2023, 10:23
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
I assume that you mean commodities prices in your own functional currency. In that case: If you want to hedge a highly probable forecast purchase of oil, that is a cash flow hedge (you want to fix the price and not have variability in your cash flow). If you want to hedge a firm commitment of an oil...
- 03 May 2023, 09:53
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
Yes, that is correct. Note however that this is only applicable to FX risk.
- 02 May 2023, 10:46
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
If it is a highly probable forecast transaction, it is a cash flow hedge. But if it is a firm commitment to receive USD, it can be accounted for as a cash flow hedge or a fair value hedge.
- 25 Apr 2023, 17:31
- Forum: IFRS-related topics
- Topic: Financial liability in foreign currency to cost amortized (with transaction cost in functional currency)
- Replies: 6
- Views: 1513
Re: Financial liability in foreign currency to cost amortized (with transaction cost in functional currency)
Yup. You can do it on materiality grounds. Just make sure you document the decision for future reference if needed.
- 25 Apr 2023, 17:19
- Forum: IFRS-related topics
- Topic: Financial liability in foreign currency to cost amortized (with transaction cost in functional currency)
- Replies: 6
- Views: 1513
Re: Financial liability in foreign currency to cost amortized (with transaction cost in functional currency)
I don't really see a problem. Think of this from a net cash flow perspective. In the beginning you had a net cash inflow of FCU 1,900 which was equivalent to CU 190,000. And in the end you will have a cash outflow of FCU 2,000 which will be equivalent in CU to whatever rate is prevailing at that tim...
- 25 Apr 2023, 09:38
- Forum: IFRS-related topics
- Topic: Financial liability in foreign currency to cost amortized (with transaction cost in functional currency)
- Replies: 6
- Views: 1513
Re: Financial liability in foreign currency to cost amortized (with transaction cost in functional currency)
Hello, Any costs that are considered to be transaction costs are so because they are an integral part of the financial instrument's effective interest. As such -- and in my opinion -- any transaction costs in a currency other than the financial instrument's currency should be converted into the fina...
- 24 Apr 2023, 11:35
- Forum: IFRS-related topics
- Topic: Hedge Accounting
- Replies: 30
- Views: 14240
Re: Hedge Accounting
Hi Daniel, This is quite a vast topic that is not easy to explain in a few words. Hedge accounting is designed to address an accounting mismatch created by IFRS 9 rules. When companies hedge existing or futures exposures, they often use derivatives. Derivatives are always accounted for at FVTPL, but...
- 03 Apr 2023, 11:02
- Forum: IFRS-related topics
- Topic: Redeemable preferred shares and equity accounting
- Replies: 8
- Views: 1547
Re: Redeemable preferred shares and equity accounting
By the description it looks like this is a debt instrument. You may have voting rights, but you don't seem to be exposed to any variable returns. Why FVTPL though?
- 16 Mar 2023, 14:52
- Forum: IFRS-related topics
- Topic: Selling a minorities of shareholding
- Replies: 8
- Views: 1595
Re: Selling a minorities of shareholding
IAS 32 tells you what an equity instrument is, not how to deal with changes in a group structure. In a nutshell, if you reduce your stake in a sub without losing control: - you shall not recalculate goodwill - a profit or loss does not arise in the consolidated financial statements, and - the increa...
- 16 Mar 2023, 14:19
- Forum: IFRS-related topics
- Topic: Selling a minorities of shareholding
- Replies: 8
- Views: 1595
Re: Selling a minorities of shareholding
IFRS 10 (paragraph 23)
- 16 Mar 2023, 11:18
- Forum: IFRS-related topics
- Topic: Goodwill impairment
- Replies: 5
- Views: 1079
Re: Goodwill impairment
:) Hopefully the sub will really continue operating, otherwise that GW would be immediately impaired, hehehhe I think you are a bit confused about where the money goes to. Say that Company A buys Company B. Let's assume that Company B is a private company and held by one single shareholder (Mr Rich)...
- 16 Mar 2023, 11:02
- Forum: IFRS-related topics
- Topic: Goodwill impairment
- Replies: 5
- Views: 1079
Re: Goodwill impairment
The cash will go to the shareholder(s) of the acquired business, not to the business itself. Normally, there will be no equity adjustments in the accounts of the acquiree (just a change of ownership).
- 16 Mar 2023, 10:57
- Forum: IFRS-related topics
- Topic: Employee Benefits and IFRS 9
- Replies: 4
- Views: 1717
Re: Employee Benefits and IFRS 9
Very good question. IFRS 7 scopes out employer's rights and obligations arising from employee benefit plans (IFRS 7 o 3 (b)). It does not say anything about other employee benefits, so one could conclude that some of the benefits you are mentioning are financial liabilities under IAS 32 and would fa...
- 16 Mar 2023, 10:15
- Forum: IFRS-related topics
- Topic: Goodwill impairment
- Replies: 5
- Views: 1079
Re: Goodwill impairment
Hello, I think first you need to understand what Goodwill is. When a company acquires a business and is deemed to have control over that business, it will need to consolidate the financial statements of both companies. At the time of acquisition, you need to identify and recognise all the assets and...
- 15 Mar 2023, 11:09
- Forum: IFRS-related topics
- Topic: IFRS 9 - Loan facility at below market interest rate (intercompany loan)
- Replies: 6
- Views: 1262
Re: IFRS 9 - Loan facility at below market interest rate (intercompany loan)
Indeed it does, but this is a transaction between two entities under common control. I wonder how "commited" this facility is, and so I think you can make a case not to recognise this facility. Otherwise you need to apply paragraph 4.2.1 (d).
- 14 Mar 2023, 17:21
- Forum: IFRS-related topics
- Topic: IFRS 9 - Loan facility at below market interest rate (intercompany loan)
- Replies: 6
- Views: 1262
Re: IFRS 9 - Loan facility at below market interest rate (intercompany loan)
The credit facility is a loan commitment and it is explicitly excluded from IFRS 9 (see paragraph 2.1 (g)). You don't account for it, although IFRS 9's impairment requirements do apply.
So yes, you should account for the drawdowns as separate financial instruments.
So yes, you should account for the drawdowns as separate financial instruments.
- 13 Mar 2023, 16:57
- Forum: IFRS-related topics
- Topic: Interest rate risk affecting fair value
- Replies: 8
- Views: 1964
Re: Interest rate risk affecting fair value
Yes Marek, you are right. Changes in interest rate will have an impact on fixed instruments at amortised cost for fair value disclosure purposes.
I simply assumed that the question was asked in regard to sensitivity analysis disclosures.
I simply assumed that the question was asked in regard to sensitivity analysis disclosures.
- 13 Mar 2023, 10:12
- Forum: IFRS-related topics
- Topic: Interest rate risk affecting fair value
- Replies: 8
- Views: 1964
Re: Interest rate risk affecting fair value
"and thereby recalculate the difference between the amortised cost in the books at a given reporting date, and the revised amortised cost at that date. Is that right ?" No, if you only have fixed-rate instruments accounted for at amortised cost, your P&L/Equity does not get affected by...
- 13 Mar 2023, 09:35
- Forum: IFRS-related topics
- Topic: Interest rate risk affecting fair value
- Replies: 8
- Views: 1964
Re: Interest rate risk affecting fair value
Answering your questions: "would the fair value of the loan change due to changes in market interest rates, such that the profit/loss for the year or equity as at year end would be affected?" -- no, if the loan is at amortised cost and interest rate is fixed, there will be no impact on P&a...