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Performance obligation

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Last update 06/12/2019 Performance obligation – [IFRS 15 Appendix A – Defined terms] Such an obligation is a promise in a contract with a customer to transfer to the customer either: a good or service (or a bundle of goods or services) that is distinct; or a series of distinct goods or services that are … Read more

Estimating fair value

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Last update 22/12/2019 Estimating fair value – To start this narrative on fair value measurement three things to keep in mind!!!! Fair value measurement is an estimation process, not a scientific method: Uncertainty is key, what are the expected cash flows, what type of industry is concerned, at what stage of the Business Life Cycle … Read more

Percentage of completion method Construction

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Last update 08/12/2019 Percentage of completion method Construction – The percentage of completion method is used when the contract involves the completion of more than one act. Under the percentage of completion method, revenue is recognized proportionately with “the extent of work accomplished” by the contractor, by reference to the performance of each act (performance … Read more

Estimates of future cash flows

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Last update 17/12/2019 Estimates of future cash flows – The first element of measuring fulfilment cash flows in the general model (see ‘General model of measurement of insurance contracts‘) is an estimate of future cash flows within the contract boundary period of each contract in a group. Here is how the estimates of future cash flows … Read more

Past due

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Last update 21/08/2019 A financial asset is past due when a counterparty has failed to make a payment when that payment was contractually due. IFRS 9: Past due status and more than 30 days past due rebuttable presumption: This sets out a rebuttable presumption that the credit risks on a financial asset has increased significantly since … Read more

Equity reserves

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Last update 22/11/2019 Equity reserves are part of owner’s equity, Equity is defined as follows: The residual interest in the assets of the enterprise after deducting all of its liabilities. Equity reserves are defined/described in several IFRS Standards, let’s see…. Equity consists of several components such as Share capital, Treasury shares (issued shares held by … Read more

Pass-through conditions

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Last update 09/12/2019 Pass-through conditions – A ‘pass-through’ transfer is a transaction where an entity keeps the legal title and rights to the cash flows from a financial asset (hence condition in IFRS 9.3.2.4(a) is not met), but enters into an arrangement with a third party under which those cash flows will be passed to … Read more

Equity investments at FVOCI

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Last update 12/12/2019 Equity investments at FVOCI – IFRS 9 requires all equity investments to be measured at fair value. The default approach is for all changes in fair value to be recognised in profit or loss. However, for equity investments that are neither held for trading nor contingent consideration recognised by an acquirer in … Read more

Outcome uncertainty

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Last update 07/01/2020 Outcome uncertainty is uncertainty about the amount or timing of any inflow or outflow of economic benefits that will ultimately result from an asset or liability. It is different from measurement uncertainty and existence uncertainty. Outcome uncertainty “Uncertainty” in accounting refers to the difficulty of predicting outcomes because of limited or inexact … Read more

Equity instruments held for trading?

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Last update 12/12/2019 This Equity instruments held for trading question is part of the decision model for the classification and measurement of financial assets, that started in the IFRS 9 Framework for financial assets. But you can also read it without doing the test …. off course? OK the financial asset is an equity instrument. … Read more