IFRSC Knowledge Base

Last updated: 15 April 2020 Arguably the biggest challenge in applying IAS 32 is making the distinction between financial liabilities (definition) and equity (definition). Contractual obligation to deliver cash or other financial assets Impact on the classification A critical feature in differentiating a financial liability from an equity instrument is the existence of a contractual … Read more

Last updated: 15 April 2020 Definitions essential in accounting for financial instruments are set out in IAS 32. Definition of a financial instrument A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity (IAS 32.11). ‘Contract’ and ‘contractual’ are … Read more

Last updated: 14 May 2020 Separate financial statements are covered in IAS 27 and are defined as financial statements in which investments in subsidiaries, joint ventures and associates and accounted either at cost, in accordance with IFRS 9 or using the equity method. When an entity does not have investments in subsidiaries, joint ventures or … Read more

Last updated: 26 February 2020 IAS 24 requires certain disclosures about related parties as it wants to draw users’ attention to the possibility that entity’s financial position and profit or loss may have been affected by the existence of related parties (IAS 24.1). Definition of a related party Definition of a related party is set … Read more

Last updated: 14 May 2020 Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds (IAS 23.5). Recognition of borrowing costs Core principle Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of … Read more

Last updated: 17 March 2020 Effects of changes in foreign exchange rates are dealt with in IAS 21. Specifically, IAS 21 is applied in (IAS 21.3): accounting for transactions and balances in foreign currencies, translating the results and financial position of foreign operations that are included in the financial statements of the entity by consolidation … Read more