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cuongtd Last update 06/01/2020 Similar economic characteristics – This is part of IFRS 8 Operating segments. When evaluating whether two segments have similar economic characteristics, the difference between their gross margins should be measured by their percentage difference, as illustrated in the example below. Topics hide Long-term average gross margin analysis Similar economic characteristics Long-term average … Read more
Last update 01/11/2019 The two definitions in functional currency and presentation currency to start with: Presentation currency is the currency that a group reports its consolidated profits in. This is a free choice available to a group and directly affects the headline reported profit. Functional currency and Presentation currency Functional currency is the currency of … Read more
Last update 28/12/2019 Significant insurance risk – An insurance contract is only in the scope of IFRS 17 if it transfers a significant amount of insurance risk to the entity (or reinsurer). Insurance risk is only significant if there is at least one scenario with commercial substance where the compensation paid by the insurer is … Read more
Last update 01/11/2019 Full derecognition with new assets liabilities retained is part of a decision model for the derecognition of financial assets. The derecognition can be a full derecognition, a full continued recognition, a full derecognition with recognition of new assets or liabilities retained or a continued involvement. The model is starting here Derecognition of … Read more
Last update 24/08/2019 Significance influence is a term used in IFRS regarding investments in joint ventures and associates as well as related parties. Significant influence (relating to interests in joint ventures) The power to participate in the financial and operating policy decisions of an activity but is not control or joint control over those policies. … Read more
Last update 18/11/2019 There are two accounting events in which an entity must deal with foreign currency translation: Purchases, sales, cash receipts, cash payments, investments and other (individual) financial transactions in a currency other than the functional currency of the entity accounting for these transactions, Foreign currency translation Conversion of financial statements of a foreign … Read more
Last update 13/12/2019 Significant increase in credit risk – IFRS 9 contains a rebuttable presumption that credit risk has increased significantly when contractual payments are more than 30 days past due [IFRS 9 5.5.11]. This means that when payments are 30-days past due, the financial asset is considered to have moved from Stage 1 to … Read more
Last update 28/11/2019 Foreign currency forward contracts is about one of the other changes from IAS 39 to IFRS 9 in respect of hedge accounting What is a forward element of forward contracts? A forward exchange contract is a special type of foreign currency transaction. Forward contracts are agreements between two parties to exchange two … Read more
Last update 13/12/2019 Shares are financial instruments. A share is a certificate evidencing the rights of the shareholder, to whom it is granted, in a company. Shares may take bearer or registered form. One share of stock represents a fraction of the share capital of a corporation. Shares to be issued – Shares for which consideration … Read more
Last update 22/12/2019 Foreign currency cash flows – IAS 7.25 requires cash flows arising from transactions in a foreign currency to be recorded at the exchange rate between an entity’s functional currency and the foreign currency at the date of the cash flow. A similar approach is required for cash flows of a foreign subsidiary … Read more