IFRS Jargon

Last update 16/08/2019 Costs of disposal, other than those that have been recognised as liabilities, are deducted in measuring fair value less costs of disposal. Examples of such costs are legal costs, stamp duty and similar transaction taxes, costs of removing the asset, and direct incremental costs to bring an asset into condition for its … Read more

Last update 31/12/2019 Fair value hierarchy – To increase the consistency and comparability in fair value measurements and related disclosures, IFRS 13 (paras 72-90) established a fair value hierarchy that categorises the inputs to valuation techniques into three levels: Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities, Level 2: … Read more

Last update 11/12/2019 The fair value hedge is one of three hedges defined in IFRS 9, the others are the cash flow hedge and the hedge of a net investment. 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 … Read more

Last update 13/12/2019 [IFRS 17 Insurance contracts – Fair value approach] An entity can elect to use the fair value approach if the full retrospective approach is impracticable, and it should use the fair value approach if the modified retrospective approach is impracticable. Applying the fair value approach: The contractual service margin is determined as … Read more

Last update 06/01/2020 IAS 32, IAS 36, IFRS 1, IFRS 9, IFRS 13 Definition Fair value:  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. IFRS 16 Definition Fair value: For the purpose of applying the … Read more

Last update 10/12/2019 Factoring and reverse factoring – There is no specific guidance in IFRS on the classification of cash flows from traditional factoring or reverse factoring arrangements. Topics hide Introduction Cash flow presentation Factoring and reverse factoring Introduction Traditional factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party … Read more

Last update 25/11/2019 Previous guidance allowed/required items to be classified as extraordinary when they were deemed both unusual and infrequent. Events or transactions meeting the criteria for classification as extraordinary were required to be segregated from the results of ordinary operations (Operational income or income from operations) and shown separately in the income statement, net … Read more

Last update 20/11/2019 Expected Credit Losses IFRS 13 definition: The weighted average of credit losses with the respective risks of a default occurring as the weights. Under the “expected credit loss” model, an entity calculates the allowance for credit losses by considering on a discounted basis the cash shortfalls it would incur in various default scenarios … Read more

Last update 05/01/2020 IFRS 13 Definition of expected cash flow: The probability-weighted average (ie mean of the distribution) of possible future cash flows. Context Topics hide Estimated cash flow and expected cash flow Expected cash flow Estimated cash flow and expected cash flow In the past, accounting pronouncements have used the terms estimated cash flow … Read more

Last update 27/12/2019 The expected attrition rate is used in valuing customer-related assets using the Multi-period excess earnings method (MPEEM), a discounted cash flow model, the valuation expert should identify the portion of revenue expected to be generated through repeat customers existing as of the valuation date. The estimated future revenue is derived from the … Read more