Performance obligations construction industry

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Last update 01/11/2019 A construction contract may, in theory, be broken down into many promises that may need to be accounted for separately, the performance obligations construction industry. However, the contract for the construction service can continue to be accounted for as one performance obligation if the contractor can demonstrate that: Performance obligations construction industry … Read more

Pass through testing

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Last update 29/11/2019 Pass through testing provides some examples to learn which types of financial instruments/transactions qualify for accounting for a pass-through arrangement. All the following conditions have to be met to conclude that such pass-through arrangements meet the criteria for a transfer: [IFRS 9 3.2.5] The entity has no obligation to pay amounts to … Read more

Pass through arrangements

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Last update 29/11/2019 Pass through arrangements – If there is no transfer of contractual rights under IFRS 9 3.2.4 (a), an entity should determine if there is an obligation to pass on the cash flows of the financial asset under a pass-through arrangement. For example, a transferor that is a trust or SPE may issue … Read more

Own use contracts

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Last update 28/11/2019 Own use contracts is one of the other changes from IAS 39 to IFRS 9 in respect of hedge accounting. What are own use contracts Generally, a contract to buy or sell a non-financial item is not within the scope of IFRS 9. However, certain contracts to buy or sell a non-financial … Read more

Overview of the amendments IFRS 3

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Last update 02/12/2019 Overview of the amendments IFRS 3 – In May 2019 amendments to IFRS 3 Business Combinations were published by IASB. See the introduction in Redefinition of a business. IFRS 3 continues to adopt a market participant’s perspective to determine whether an acquired set of activities and assets is a business. The amendments: … Read more

Overview hedge accounting

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Last update 16/11/2019 Overview hedge accounting provides what is says, an overview to start understanding hedge accounting under IFRS 9. Every entity faces risks from its business environment that can impact expected cash flows or the fair value of its assets and liabilities and, accordingly, have an effect on its earnings. An entity may face … Read more

Output method Measuring progress to completion

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Last update 12/11/2019 Output method Measuring progress to completion is part of IFRS 15 Revenue from Contracts with Customers (contents page is here), that  introduced a single and comprehensive framework which sets out how much revenue is to be recognised, and when. The core principle is that a vendor should recognise revenue to depict the … Read more

Order or production backlog

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Last update 01/12/2019 Order or production backlog – In a Business Combinations, this is a intangible asset and is therefore recognised separately from goodwill, provided that its fair values can be measured reliably. This marketing-related intangible asset meets the definition of an intangible asset because it arises from contractual or other legal rights. An order … Read more

Options to purchase additional goods or services

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Last update 14/09/2019 Contracts frequently include options for customers to purchase additional goods or services in the future. Customer options that provide a material right to the customer (such as a free or discounted good or service) give rise to a separate performance obligation. In this case, the performance obligation is the option itself, rather … Read more

Option to put a non-financial asset

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Last update 12/12/2019 Topics hide Option to put a non-financial asset Practice of settling net forward contract to purchase a commodity Option to put a non-financial asset Related posts: Option to put a non-financial asset Entity XYZ owns an office building. XYZ enters into a put option with an investor that permits XYZ to put … Read more