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IAS 37 Provisions – best estimate and timely recognition

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IAS 37 Provisions are liabilities of uncertain timing or amount A provision is recognised for a legal or constructive obligation arising from a past event, if there is a probable outflow of resources and the amount can be estimated reliably. ‘Probable’ in this context means more likely than not. A ‘constructive obligation’ arises when an entity’s … Read more

Asset definition

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Topics hide Asset definition IAS 38 Intangible assets Analysis of the asset definition Conceptual Framework for Financial Reporting Right Potential to produce economic benefits Control Asset definition There are two asset definitions in current IFRS Standards, in IAS 38 Intangible assets and in the Conceptual Framework for Financial Reporting. The wording deviated but the meaning … Read more

Derivative meaning for IFRS 9

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Topics hide Derivative meaning Accounting Example derivatives Gross/Net Settlement Small initial net investment Non-financial variables Hedge accounting qualification criteria Hedge effectiveness Hedging instrument Hedged Items Discontinuation of hedge accounting Aggregate exposures Derivative meaning A derivative, by definition, is a financial instrument or other contract within the scope IFRS 9 with all three of the following … Read more

Onerous

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This is an overview of the use of onerous in the IFRS Standards, the major Standard being IAS 37 (see below). Topics hide IAS 37: ‘Onerous Contracts – Cost of Fulfilling a Contract’ Conceptual Framework – Executory contracts IFRS 3 Business combinations IFRS 9 Own use contracts IFRS 15 Revenue from contracts with customers IFRS … Read more

Ordinary shares issued and EPS

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Topics hide Ordinary shares issued and EPS Ordinary shares issued to settle liabilities EPS implications Case – Ordinary shares issued to settle liabilities Ordinary shares issued to acquire assets EPS implications Case – Ordinary shares issued to acquire an asset Ordinary shares issued to acquire a business EPS implications Contingent consideration Acquisitions of associates and … Read more

Written put options and forwards for EPS calculations

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Topics hide Written put options and forwards EPS implications Dilutive or anti-dilutive? Denominator adjustment – The reverse treasury share method Case – Written puts Workings Written put options and forwards Written puts and forwards, as discussed in this narrative, are those that may require an entity to purchase its ordinary shares. Typically, these instruments are … Read more

The reverse treasury share method

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Use back button from the brower Topics hide Denominator adjustment – The reverse treasury share method Denominator adjustment – The reverse treasury share method IAS 33 prescribes a specific method, commonly referred to as the ‘reverse treasury share method’, for determining the dilutive effect of written puts and forwards. This method is similar to the … Read more

Convertible instruments in EPS calculations

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Convertible instruments in EPS calculations Convertible instruments are instruments other than stand-alone options that by their terms may be converted in whole or in part into the ordinary shares of an entity, such as convertible bonds or convertible preference shares. If these instruments fall in the scope of IAS 32 Financial Instruments: Presentation, then they … Read more

Preference shares in EPS Calculations

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Preference shares in EPS Calculations Preference shares may in accordance with IAS 32 Financial Instruments: Presentation be classified as a whole or by their component parts into a financial liability and/or an equity instrument, depending on their terms. They may be convertible into ordinary shares. An entity needs to consider whether equity-classified preference shares are … Read more

Contingently issuable ordinary shares for IAS 33 EPS

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Topics hide Contingently issuable ordinary shares EPS implications Dilutive or anti-dilutive? How to apply the test for different conditions in a contingent share agreement Contingencies related to price levels Contingencies related to earnings targets and price levels Other contingencies Case – Contingently issuable ordinary shares Workings Contingently issuable ordinary shares For EPS purposes, contingently issuable … Read more