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Credit risk on the hedged item

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Last update 27/11/2019 IFRS 9 requires that, to achieve hedge accounting, the impact of changes in credit risk (this is credit risk on the hedging instrument and credit risk on the hedged item) should not be of a magnitude such that it dominates the value changes, even if there is an economic relationship between the hedged … Read more

Impairment – Example

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Last update 05/02/2019 Accounting example Impairment of property, plant and equipment, intangible assets, and goodwill The group assesses assets or groups of assets, called cash-generating units (CGUs), for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or CGU may not be recoverable; for example, changes in the group’s … Read more

Credit risk exposures

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Last update 27/11/2019 Many financial institutions hedge the credit risk (i.e. insure credit risk exposures) arising from loans or loan commitments using credit default swaps (CDS). This would often result in an accounting mismatch, as loans and loan commitments are typically not accounted for at fair value through profit or loss. The simplest accounting would … Read more

IFRS 3 Measurement period

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Last update 16/12/2019 IFRS 3 Definition: Measurement period – the period after the acquisition date during which the acquirer may adjust the provisional amounts recognized for a business combination, providing the acquirer with a reasonable time to obtain the information necessary to apply the requirements of IFRS 3. The measurement period shall not exceed one … Read more

Creating a new contract or not?

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Last update 05/12/2019 Creating a new contract or not – What is a modification of a contract and what is a new contract? The way chosen in IFRS 15 Revenue from Contracts with Customers is that the general rule is that a modification is a continuation of an existing contract with some changes. To account … Read more

Identified asset

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Last update 24/11/2019 Identified asset, a term from IFRS 16 Leases. Let’s see what it is all about…. An asset is identifiable if it either: Is separable, i.e., is capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset or liability, … Read more

Costs to issue or buy back issued shares

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Last update 07/11/2019 The accounting rule: Costs to issue or buy back issued shares by the issuing entity are accounted for as a deduction from equity, net of any related income tax benefit (the issue or buy back not being part of a business combination).  An entity typically incurs various costs in issuing or acquiring its … Read more

Hold to collect and sell

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Last update 28/12/2019 Hold to collect and sell – this is part of the classification of financial assets. Classification determines how financial assets and financial liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. IFRS 9 introduces a logical approach for the classification of financial assets, … Read more

Costs of issuing and reacquiring equity instruments

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Last update 16/09/2019 The accounting rule: Costs of issuing or reacquiring equity instruments (other than in a business combination) are accounted for as a deduction from equity, net of any related income tax benefit. Costs of issuing and reacquiring equity instruments An entity typically incurs various costs in issuing or acquiring its own equity instruments. … Read more

Hold to collect

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Last update 27/12/2019 Hold to collect is a business model defined under IFRS 9. This is part of the classification of financial assets. The objective of the ‘hold to collect’ business model is to hold financial assets to collect their contractual cash flows, rather than with a view to selling the assets to generate cash … Read more