IFRScommunity.com

Hi, When a holder subscribe for preference shares, does it matter first to determine if its preparing its consolidated FS or separate FS under IAS 27? If it's preparing its separate FS under IAS 27, my question is how the requirement of IFRS 9 comes into play with IAS 27? More specifically, under IA...

I would say that's not a full IFRS, so if your entity is within a consolidated group that need to apply ifrs then I think that some retreatment would be needed.

I'm sorry, I don't know what this means and whether it makes sense. Putting the full ifrs compliance aside, what would be the subsequent accounting? Does it mean that you just record the rent expenses in the PL?

Does the companies acts of your country allow the use of IFRS accounts or should the company establish its accounts in accordance of your local GAAP?

What's the context of the section you quoted? Is it a requirement from your local GAAP?

My questions was, in the presence of other contingent settlement provisions along with the liquidation event, whether ias 32.25 b can apply to the liquidation event. The problem here is that liquidation event itself is not within the control of the issuer so should be liability, however exception ap...

AS per IAS 32.AG25 An option of the issuer to redeem the shares for cash does not satisfy the definition of a financial liability because the issuer does not have a present obligation to transfer financial assets to the shareholders. In this case, redemption of the shares is solely at the discretion...

According to IAS 32 paragraph 25, a financial instrument may require the entity to deliver cash or another financial asset, or otherwise to settle it in such a way that it would be a financial liability, in the event of the occurrence or non-occurrence of uncertain future events (or on the outcome o...

Just adding to my last comment, I think it's still possible to treat it as a capital contribution because the initial journal entry is: Dr Cash Dr Liability to third party Only if the parent gives nothing in exchange then, a second entries would be posted as follows: Dr Liability to third party Cr C...

HI ExIFRS: Just following up on this matter, and considering the entries you suggested, as follows: Dr Liability to third party Cr Liability to A (to be settled through provision of cash or some other resource) Alternatively Dr Liability to third party Cr Gain (it is effectively a gift from the pare...

I guess that sometimes, when the redemption of the prefs is contingent to certain events, e.g., IPO, liquidation, sale etc. When it's within the capacity of the issuer, then it's equity because the issuer have control over the occurrence of the event. However, if the issuer is a sub of another paren...

Thanks so much Marek, that's not been addressed yet, so equity wouldn't be disallowed as I understand.

In a situation where a subsidiary issues preference shares to its parent (100% ownership), the terms state that only the subsidiary has discretion over the redemption of the principal and dividend. A such decision is taken by the board. However, considering that the board is appointed by the shareho...

I think there is a tax proof question here, whether you explain the gap between expected tax expense and current tax expense in the tax proof, or you recognise a DT for losses carry forward maybe?

there are some guidance in IFRS 9 BC6.337 and 338, are they useful?

Yes, that would be a forward. When an investor subscribes for unpaid shares on which an obligation to pay arises for the investor, the investor would recognise an investment in subs and a liability. The liability would be measured at fair value. Do you agree? In that case, there is no difference bet...

Just to clarify, If you are preparing group accounts, than, the only option would be account for the prefs as per IFRS 9 or under IAS 28. If you are preparing separate FS, than, you can either account for the investment as a receivable under IFRS 9 or as an investment under IAS 27.10. If the instrum...

yes.

I was talking about french GAAP for statutory accounts. French GAAP for group accounts tends to converge with IFRS.

I think the presence of a dividend could be interpreted as a return associated with an ownership interest. Ultimately it's a judgement you need to make.

From your entity's separate FS's perspective, you can account for the instrument as an investment in the subs either at cost, under IFRS 9 or under equity method. If you are applying the equity method, then you can have a look at IAS 28.14, which says IFRS 9 doesn't apply to entities accounted under...

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...