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Hedged item Risk components Separately identified

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Last update 23/12/2019 Hedged item Risk components Separately identified – Q: What is the necessary evidence to document that changes in cash flows or fair value attributable to changes in a hedged component are separately identifiable? Does a risk component that is an input in the manufacturing process of a non-financial item suffice? Considerations: Hedged … Read more

Timeliness

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Last update 25/08/2019 An enhancing qualitative characteristic possessed by information that is available to decision-makers in time to be capable of influencing their decisions. The Conceptual Framework provides the following guidance [Conceptual Framework 2.33]: Timeliness means having information available to decision-makers in time to be capable of influencing their decisions. Generally, the older the information is the … Read more

Hedged item Risk components Reliable measurement

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Last update 23/12/2019 Hedged item Risk components Reliable measurement – Q: What evidences that changes in cash flows or fair value attributable to changes in a hedged component are reliably measurable? Considerations: Hedged item Risk components Reliable measurement To be eligible for designation as a hedged item, a risk component must be a separately identifiable … Read more

Time Value of Money

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Last update 04/01/2020 Time Value of Money – it is just an IFRS sophistication of interest and discounting to present value. The concept of time value of money is best explained in a simple way: a dollar today is worth more than a dollar in the future. Imagine receiving $1,000 today and putting it in … Read more

Hedged item Risk components Market structure

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Last update 23/12/2019 Hedged item Risk components Market structure – Q: What is the relationship between a risk component in an eligible hedged component of a non-financial item and the market structure in which the hedging activity takes place? Hedged item Risk components Market structure Considerations: Hedged item Risk components Market structureTo be eligible for … Read more

Three stages Expected Credit Losses

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Last update 07/12/2019 The three stages Expected Credit Losses are the way of forward looking loss provision accounting for certain financial assets under IFRS 9 Financial Instruments. After initial recognition, the three stages of impairment loss calculation and interest revenue recognition are applied each reporting date as follows: Stage 1: Credit risk has not increased … Read more

Hedged item Cash flow hedges Future interest flows

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Last update 22/12/2019 Hedged item Cash flow hedges Future interest flows – Q: Does IFRS 9 allow the following cash flow hedge designations of future interest flows? Considerations:Consider the following cases. Note: In all scenarios both the swap and the hedged debt are denominated in Company A’s functional currency. Case 1Company A enters into a … Read more

The five contract identification criteria

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Last update 06/01/2020 The five contract identification criteria – These criteria are part of the first step in the application of the core principle in IFRS 15.  IFRS 15 9 Revenue from Contracts with Customers is applied to contracts with customers that meet all of the following five contract identification criteria (contract existence): The contract … Read more

Hedge Risk components General requirements

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Last update 27/11/2019 Risk components General requirements is about hedging risk components be it financial or non-financial risks (new in IFRS 9). Instead of hedging the total changes in fair values or cash flows, risk managers often enter into derivatives to only hedge specific risk components. Managing a specific risk component reflects that hedging all … Read more

The acquisition method

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Last update 27/12/2019 The acquisition method – Assuming that a transaction is concluded to be a business combination, IFRS 3 requires that a business combination be accounted for by applying what is referred to as the acquisition method. The IFRS/US GAAP replaced the term “purchase method,” which previously was used to describe the method of … Read more