IFRS Topics

Last update 01/12/2019 Examples of adjustments of errors – When errors affecting income are discovered, careful analysis is necessary to determine the required action to correct the account balances. As indicated, most errors will be caught and adjusted prior to closing the books. The few material errors not detected until subsequent periods and those that … Read more

Last update 16/12/2019 Examples hold assets and collect cash – The following are examples of when the objective of an entity’s business model may be to hold financial assets to collect the contractual cash flows. This list of examples is not exhaustive. Furthermore, the examples are not intended to discuss all factors that may be … Read more

Last update 16/12/2019 Examples collecting cash and selling assets – The following are examples of when the objective of the entity’s business model may be achieved by both collecting contractual cash flows and selling financial assets. This list of examples is not exhaustive. Furthermore, the examples are not intended to describe all the factors that … Read more

Last update 18/12/2019 Example Variable fee approach for measurement – The variable fee approach (VFA) is applied to insurance contracts with direct participation features that contain the following conditions (‘eligibility criteria’) at initial recognition: the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items; the entity … Read more

Last update 26/11/2019 Example Understanding related party disclosures shows two disclosures of related-party transactions. Here is a real life disclosure from Petrobas in Brasil followed by an example from IAS 24: Exemption from disclosure (IAS 24 25) Government G directly or indirectly controls Entities 1 and 2 and Entities A, B, C and D. Person … Read more

Last update 21/12/2019 Example of hyperinflation accounting – Here is an example of hyperinflation accounting (change from functional currency (ARS) to presentation currency (USD)) and a limited disclosure on hedge accounting for a net investment in a foreign operation (Third-party financing of EUR operations in EUR-denominated notes). Hyperinflation accounting (Source: www.ft.com, ‘American companies count cost … Read more

Last update 01/12/2019 Example impairment and revaluation of a building – On January 1, 2005 OwnPlus Inc. purchased a building for €2 million. Its estimated useful life at that date was 20 years and the company uses the straight-line depreciation method. On December 31, 2009 the government embarked on a plan to construct a fly-over adjacent … Read more

Last update 22/12/2019 Example IFRS 9 Applying the own use scope exemption – [IFRS 9.2 Scope] The case: Entity XYZ enters in to a contract to buy 100 tonnes of copper for CU200/tonne. The contract permits XYZ to take physical delivery of the copper at the end of 12 months or to settle net in cash, … Read more

Last update 22/12/2019 Example financing component in a contract- This is an example of the workings of IFRS 15 60 – 64. A vendor enters into a contract with a customer to build and supply a new machine. Control over the completed machine will pass to the customer in two years’ time (the vendor’s performance … Read more

Last update 21/12/2019 Fair value hedge of changes in the benchmark interest rate for a variable-rate debt obligation Example fair value hedge On January 1, Year 1 ABC Corp. issues a floating-rate non-amortizing debt instrument with a maturity of two years. The variable-rate liability resets every six months at the six-month LIBOR rate. The six-month … Read more