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Topics hide Definition of provision IAS 37: ‘Onerous Contracts – Cost of Fulfilling a Contract’ The key definition of provision Considerations Specific types of provisions/no-provisions Definition of provision The definition of provision is key to IAS 37. A provision is a liability of uncertain timing or amount, meaning that there is some question over either … Read more
Topics hide Change in ownership in a subsidiary Change in ownership in a subsidiary that do not result in loss of control Parent’s accounting treatment: Examples Parent sells shares in a subsidiary Parent acquires additional shares in a subsidiary Subsidiary issues new shares Change in ownership in a subsidiary that do result in loss of … Read more
Topics hide IFRS 10 Consolidated Financial Statements IFRS 10 Accounting requirements Non-controlling interests Loss of control IFRS 10 Consolidated Financial Statements IFRS 10 Accounting requirements 19 A parent shall prepare consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. 20 Consolidation of an investee shall begin from the … Read more
Topics hide Contingencies Recognition criteria for provisions and contingent liabilities Contingent Liabilities Recognition criteria for contingent assets Recognition criteria for contingent consideration Earn-outs Contingent consideration in shares or cash Goodwill and contingent consideration 12 month measurement period Examples Recognition criteria for contingent settlement provisions Illustration of classification process for contingent settlement provisions Recognition criteria for … Read more
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
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
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
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
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
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