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Equity

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Last update 10/08/2019 Equity: The residual interest in the assets of the entity after deducting all its liabilities. Equity claim: A claim on the residual interest in the assets of the entity after deducting all its liabilities. Equity interests: For the purposes of IFRS 3, is used broadly to mean ownership interests of investor-owned entities … Read more

Components of a nominal amount

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Last update 27/11/2019 Definition Components of a nominal amount Components of a nominal amount are specified part(s) of the amount of an item. This could be a proportion of an entire item (such as, EUR 60 million of a fixed rate loan of EUR 100 million) or a layer component (for example, the bottom EUR … Read more

Entity-specific value

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Last update 10/08/2019 Entity-specific value or value in use is the present value of the cash flows an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability. This is not a concept in use … Read more

Components of a company’s pension liability

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Last update 22/12/2019 Components of a company’s pension liability – A company’s defined-benefit pension plans have three basic components: accrued-benefit obligations, or the future liabilities created by employees’ service; plan assets, used to pay pension benefits; and unamortized actuarial gains and losses. Setting aside unamortized actuarial gains and losses, when plan assets are less than … Read more

Enhancing qualitative characteristic

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Last update 10/08/2019 A qualitative characteristic that makes financial information more useful if the information both is relevant and provides a faithful representation. Comparability, verifiability, timeliness and understand-ability are qualitative characteristics that enhance the usefulness of information that both is relevant and provides a faithful representation of what it purports to represent. The enhancing qualitative … Read more

Complete detection of all IFRS 3 intangibles

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Last update 13/11/2019 Complete detection of all IFRS 3 intangibles explains it all, because detecting intangible assets can be a complex and challenging matter. Strategies to detect identifiable intangible assets vary depending on the facts and circumstances of the business combination and usually require a full review of the transaction. It is important to understand … Read more

Embedded derivatives

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Last update 04/01/2020 Embedded derivatives are part of a financial instrument that also includes a non-derivative host contract. The embedded derivative requires that some portion of the contract’s cash flows be modified in relation to changes in a variable, such as an interest rate, commodity price, credit rating, or foreign exchange rate. If a derivative … Read more

Common Elements of Customer Relationships

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Last update 16/11/2019 Common Elements of Customer Relationships determines whether a (intangible) customer relationship asset exists for IFRS 3 Business Combinations, one should consider several elements that create that intangible asset. Common Elements of Customer Relationships Topics hide Required Information Expectation of repeat patronage of its customer base Lifespan of customer relationships Common Elements of … Read more

Effective interest rate

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Last update 14/12/2019 Effective interest rate – The rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, an entity … Read more

Common cash flow classification errors in practice

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Last update 23/12/2019 Common cash flow classification errors in practice – Although the definitions of operating activities, financing activities and investing activities may appear straightforward, in practice a number of classification errors are frequently made. These include: Common cash flow classification errors in practice 1. Cash outflows related to the acquisition of intangible assets and … Read more