IFRS Jargon

Last update 18/12/2019 Stochastic Modeling in Insurance – Some general introduction in addition to this narrative is provided in wikipedia, Stochastic Modeling (insurance). Recent cataclysmic events like the tsunami, torrential downpour, floods, cyclones, earthquakes, etc. underscore the fact that everyone would like to be assured that there is some (non-supernatural) agency to bank upon in … Read more

Last update 24/08/2019 Exact wording: Stand-alone selling price of a good or a service. The price at which an entity would sell a promised good or service separately to a customer. The best evidence of standalone selling price is the price that the entity charges for the good or service in a separate transaction with a … Read more

Last update 20/12/2019 Stand ready obligations – In step two of IFRS 15, an entity is required to identify all of the performance obligations promised in a contract with a customer. In many cases, the performance obligations are readily apparent in the contract. In other cases, promises implicit in the contract may qualify as performance … Read more

Last update 20/12/2019 Software warranties – A customer may have the option to separately purchase a warranty on a product (e.g., computer hardware, networking equipment) for a period of time at the point of sale or the warranty may be explicitly stated in the contract. Software warranties Software warranties Software warranties Warranties may fall into … Read more

Last update 14/11/2019 Next to recording loss allowances based on expected credit losses under the ‘general approach’  IFRS 9 has also made it possible to use a Simplified approach Lifetime expected credit losses for trade receivables, contract assets and lease receivables. Under the “expected credit loss” model, an entity calculates the allowance for credit losses … Read more

Last update 06/01/2020 Similar economic characteristics – This is part of IFRS 8 Operating segments. When evaluating whether two segments have similar economic characteristics, the difference between their gross margins should be measured by their percentage difference, as illustrated in the example below. Topics hide Long-term average gross margin analysis Similar economic characteristics Long-term average … Read more

Last update 28/12/2019 Significant insurance risk – An insurance contract is only in the scope of IFRS 17 if it transfers a significant amount of insurance risk to the entity (or reinsurer). Insurance risk is only significant if there is at least one scenario with commercial substance where the compensation paid by the insurer is … Read more

Last update 24/08/2019 Significance influence is a term used in IFRS regarding investments in joint ventures and associates as well as related parties. Significant influence (relating to interests in joint ventures) The power to participate in the financial and operating policy decisions of an activity but is not control or joint control over those policies. … Read more

Last update 13/12/2019 Significant increase in credit risk – IFRS 9 contains a rebuttable presumption that credit risk has increased significantly when contractual payments are more than 30 days past due [IFRS 9 5.5.11]. This means that when payments are 30-days past due, the financial asset is considered to have moved from Stage 1 to … Read more

Last update 13/12/2019 Shares are financial instruments. A share is a certificate evidencing the rights of the shareholder, to whom it is granted, in a company. Shares may take bearer or registered form. One share of stock represents a fraction of the share capital of a corporation. Shares to be issued – Shares for which consideration … Read more