IFRS Jargon

Last update 21/08/2019 A provision is a liability of uncertain timing or amount. To better understand the nature of the financial reporting line ‘Provisions’ a comparison is made with other liabilities and contingent liabilities. From their nature provisions are more or less in between other liabilities (less uncertain) and contingent liabilities (more uncertain). Provisions and … Read more

Last update 22/10/2019 Rights designed to protect the interest of the party holding those rights without giving that party power over the entity to which those rights relate. Protective rights relate to fundamental changes to the activities of an investee or apply in exceptional circumstances. However, not all rights that apply in exceptional circumstances or are contingent … Read more

Last update 21/08/2019 A method of accounting whereby a venturer’s share of each of the assets, liabilities, revenue and expenses of a jointly controlled entity is combined line by line with similar items in the venturer’s financial statements or reported as separate line items in the venturer’s financial statements. Joint venture accounting (JV) A joint … Read more

Last update 21/08/2019 Accounting policy example Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating … Read more

Last update 03/08/2019 Property, plant and equipment (formerly know as Tangible fixed assets, in short PPE) are tangible items that: are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period. Recognition of property, plant … Read more

Last update 20/12/2019 Promises to transfer distinct goods or non-insurance services – In a final step, after separating non-closely related embedded derivatives and distinct investment components (see ‘Separation of Insurance Contracts‘, an entity should separate from the host insurance contract any promise to transfer distinct goods or non-insurance services to a policyholder. A good or … Read more

Last update 18/12/2019 What is a weighted mean? Probability-weighted mean A weighted mean is a kind of average. Instead of each data point contributing equally to the final mean, some data points contribute more “weight” than others. If all the weights are equal, then the weighted mean equals the arithmetic mean (the regular “average” you’re … Read more

Last update 13/12/2019 The probability of default (PD) represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months (12M PD) or over the remaining lifetime (Lifetime PD) of the obligation. See also ‘Definition of Default‘. PD is defined as the probability of whether borrowers will default on their obligations … Read more

Last update 23/08/2019 Omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or a misuse of, faithfully representative information that: Was available when financial statements for those periods were authorised for issue; and Could reasonably be expected to have been obtained and taken … Read more

Last update 07/01/2020 Primary users of general purpose financial reports – IAS 1 9 defines the purpose of financial statements as follows: ‘……The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic … Read more