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Do the SPPI contractual cash flow characteristics test

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Last update 18/11/2019 Do the SPPI contractual cash flow characteristics test summarises the classification of financial assets. A typical example of an instrument where the contractual cash flows would not meet SPPI would be a debt instrument with an interest rate that is linked to the issuer’s share price. Similarly, a debt instrument with an … Read more

Non-adjusting events after the reporting date

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Last update 19/08/2019 Those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified: Those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and Those that are … Read more

No derecognition

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Last update 06/12/2019 No derecognition – Assets Together with full derecognition, this is the clearest type of transfer (all transfer possibilities, see below derecognition diagram). But keep in mind, 95% of transfers result in full recognition and are simple, the entity that has recorded a financial asset receives cash and removes the asset from its … Read more

Dismantle remove and restore items of PPE

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Last update 22/12/2019 Dismantle remove and restore items of PPE – Many entities have obligations to dismantle, remove and restore items of property plant and equipment and in IFRIC 1 such obligations are referred to as ‘decommissioning, restoration and similar liabilities’ [IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities]. Under IAS 16 Property, … Read more

Net realisable value

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Last update 19/08/2019 As a general rule (not only in IFRS) assets should not be carried at amounts greater than those expected to be realised from their sale or use. In the case of inventories this amount could fall below cost when items are damaged or become obsolete, or where the costs to completion have … Read more

Discount rates for intangible assets

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Last update 22/12/2019 Discount rates for intangible assets – An important event in accounting for an acquisition in a Business Combination has become the recognition and measurement of intangible assets, other than goodwill. In the past the difference between the consideration transferred (transaction, purchase or acquisition price) and the fair value of net assets acquired … Read more

Net investment hedge

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Last update 11/12/2019 The net investment hedge is one of three hedges defined in IFRS 9, the others are the fair value hedge and the cash flow hedge. Hedge accounting can bring a number of advantages over traditional accounting methods. The core benefit is that by addressing the timings mismatch associated with standard derivative accounting, … Read more

Discontinued operations

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Last update 02/11/2019 The definition: Discontinued operations is a component of an entity that either has been disposed off, or is classified as held for sale, and: represents a separate major line of business or geographical area of operations, Discontinued operations is part of a single coordinated plan to dispose of a separate major line … Read more

Net assets

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Last update 19/08/2019 Other word for equity or  the residual interest in the assets of the entity after deducting all its liabilities. Companies with negative net assets (or individuals with negative net worth) are usually in a lot of trouble. Frequently, one solution is to sell off assets in order to generate cash and pay down debt. Companies may also try … Read more

Discontinuation hedge accounting

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Last update 28/11/2019 Discontinuation hedge accounting is not a simple as one would think, three choices are available, no discontinuation (i.e. continue the hedge), full discontinuation of the hedge or partial discontinuation of the hedge. An entity would have to discontinue hedge accounting if the qualification criteria are no longer met. As also mentioned at … Read more