IFRS Jargon

Last update 05/01/2020 Cash accounting – IFRS only accepts accounting for financial reporting on an accrual basis, see below. [IAS 1 27] However, tax authorities sometimes allow (smaller) entrepreneurs to prepare Financial Statements for tax filing purposes on a cash basis. The cash basis is much simpler, but its financial statement results can be very … Read more

Last update 12/12/2019 A business model assessment is needed for financial assets that meet the SPPI criterion, to determine whether they meet the criteria for classification as subsequently measured at amortised cost or FVOCI. [IFRS 9 B4.1.1 ] Financial assets that do not meet the SPPI criterion are classified as at FVPL irrespective of the … Read more

Last update 02/08/2019 A business combination is: a transaction or event in which acquirer obtains control over a business (e.g. acquisition of shares or net assets, legal mergers, reverse acquisitions). Transactions sometimes referred to as ‘true mergers’ or ‘mergers of equals’ are also business combinations as that term is used in IFRS 3. The three … Read more

Last update 10/12/2019 Breach of Contract – Contracting party’s actual failure or refusal to perform (or a clear indication of its intentions to not perform) its obligations under the contract. A breach could be effected by: repudiation of obligations before the beginning of the contract, repudiation of obligations before its completion, or a conduct that … Read more

Last update 13/12/2019 Bonus certificates are financial instruments. Bonus certificates represent patrimonial rights (wikipedia-link) as defined in the terms and conditions of issue of those bonds. Bonus certificates are participation products that feature full upside participation and a conditional capital protection as long as the underlying asset doesn’t cross a predefined threshold (barrier). In most … Read more

Last update 13/12/2019 Bonds or debentures are financial instruments. A bond is a certificate or evidence of a debt on which the issuing company or governmental body promises to pay the bondholders a specified amount of interest for a specified length of time and to repay the loan on the expiration date. A bond may … Read more

Last update 02/08/2019   The table below provides examples of biological assets, agricultural produce, and products that are the result of processing after harvest: Biological assets Agricultural produce Products that are the result of processing after harvest Sheep Wool Yarn, carpet Trees in a timber plantation Felled trees Logs, lumber Dairy cattle Milk Cheese Pigs … Read more

Last update 09/12/2019 [IFRS 9 Fair value hedge] The adjustment to the amortized cost basis of the hedged item from applying fair value hedge accounting is referred to as a basis adjustment. Basis adjustments are accounted for in the same manner as other components of the amortized cost basis of the hedged item.  Explanations: Basis … Read more

Last update 17/11/2019 Associate – IFRS 12 Definition: An entity, including an unincorporated entity such as a partnership, over which the investor has significant influence, and that is neither a controlled entity nor an interest in a joint venture. Associates are all entities over which the group has significant influence but not control or joint … Read more

Last update 06/01/2020 IFRS 16 Leases introduced the term ‘Assets of low value’. IFRS 16 does not provide much guidance to assess what ‘low value’ means. There is no definition. The value referred to as ‘low value’ is the value of the asset when it was new, regardless of the age of the asset at … Read more