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Last update 21/12/2019 Loss-making or onerous construction contracts – This part relates to a complete explanation of IFRS 15 Revenue from contracts with customers in respect of Engineering & Construction contracts, see Revenue from Engineering & Construction contracts. Loss-making or onerous construction contracts IFRS 15 does not provide specific guidance on loss-making contracts, which are … Read more

Last update 20/12/2019 Long-term supply contracts – To apply IFRS 15, automotive parts suppliers (APSs) will need to change the way they evaluate long-term supply contracts. APSs need to use significant judgement when they identify separate performance obligations (i.e., units of account), which may be different from those identified under IAS 18. Topics hide Tooling … Read more

Last update 02/12/2019 Loans to an employee – See also Loans at below-market interest rates and Inter-company loans for further discussions on related-party loans. In contrast to the accounting for the below-market element of inter-company loans, the treatment of the below-market element of a loan to an employee is addressed by specific Standards. The effect … Read more

Last update 02/12/2019 Loans at below-market interest rates – Normally the transaction price of a loan (ie the loan amount) will represent its fair value. For loans made to related parties however, this may not always be the case as such loans are often not on commercial terms. Where this is the case, the fair … Read more

Last update 02/12/2019 Loan receivable classification and measurement – Once it has been determined that a loan receivable is within the scope of IFRS 9, it must be classified into one of three categories: Amortised cost; Loan receivable classification and measurement Fair Value through Profit or Loss (FVPL); or Loan receivable classification and measurement Fair … Read more

Last update 16/09/2019 Under IFRS 9, the scope of the three-stage impairment approach is extended to apply to such off-balance sheet items. An entity would consider the expected portion of the loan commitment that will be drawn down within the next 12 months when estimating 12-month expected credit losses (Stage 1), and the expected portion … Read more

Last update 18/11/2019 Limitations to financial reporting are many times presented with two clear limitations to the information provided by a general purpose financial report that are materiality and cost. Materiality. Information is material if its omission or misstatement could influence the decisions that users make on the basis of an entity’s financial information. Because … Read more

Last update 01/12/2019 Light Sweet Crude Oil commodity swap – If you need some background on commodity swaps, read this….. Light Sweet Crude Oil commodity swap The case An entity annual purchase 500 barrels of Light Sweet Crude Oil. These purchases are made in a regular pattern over the year. To ensure the price risk … Read more

Last update 29/11/2019 Licensing establishes a customer’s rights to the intellectual property of an entity. Licenses of intellectual property may include, but are not limited to, licenses of any of the following: Software (other than software subject to a hosting arrangement1) and technology Motion pictures, music, and other forms of media and entertainment Franchises Licensing … Read more

Last update 03/12/2019 Licences of intellectual property – The determination of whether a licence is distinct may require judgement. In some software arrangements, a software licence will be distinct because it is the only promise in the contract. In other arrangements, the customer will be able to benefit from the licence on its own or … Read more