History of intangible assets

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Last update 22/12/2019 History of intangible assets – In November 1983, the International Accounting Standards Committee (IASC) approved the International Accounting Standards IAS 22 ‘Accounting for Business Combinations’ that contained the principles for accounting for goodwill. IAS 22, being concerned with business combinations, does not define goodwill. It also does not address the issues of … Read more

Valuation techniques Income approach

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Last update 05/01/2020 Valuation techniques Income approach – When valuing a company as a going concern there are three main valuation methods used by industry practitioners: the cost approach, the market approach and the income approach.  These are the most common methods of valuation used in investment banking, equity research, private equity, corporate development, mergers … Read more

Historical cost measurement

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Last update 30/09/2019 The historical cost of an asset is the amount paid for it and the historical cost of a liability is the amount received in respect of it or the amount expected to be paid to satisfy it. Historical cost accounting is interpreted to require that the amount at which an asset is … Read more

Valuation techniques Cost approach

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Last update 06/01/2020 Valuation techniques Cost approach – When valuing a company as a going concern there are three main valuation methods used by industry practitioners: the cost approach, the market approach and the income approach.  These are the most common methods of valuation used in investment banking, equity research, private equity, corporate development, mergers & … Read more

Hedging of a highly probable debt issuance

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Last update 22/12/2019 Hedging of a highly probable debt issuance – Q: Does IFRS 9 allow a highly probable forecast foreign currency debt issuance as eligible as a hedged item in a cash flow hedge of interest rate risk if the currency of issuance is not yet known? Considerations: At 1 January 200X, entity A, … Read more

Unit of account

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Last update 25/08/2019 The group of rights, the group of obligations or the group of rights and obligations, to which recognition and measurement requirements are applied. But also the level at which an asset or a liability is aggregated or disaggregated in IFRS for recognition purposes based on the particular IFRS standard. Example: Y Ltd … Read more

Hedging instruments

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Last update 27/11/2019 IAS 39 placed several restrictions on the types of instruments that can qualify as hedging instruments for hedge accounting purposes. This is to reflect that hedge accounting was mainly intended to address accounting mismatches that resulted from requiring derivatives to be accounted for at fair value through profit or loss. IFRS 9 … Read more

Understandability

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Last update 25/08/2019 An enhancing qualitative characteristic possessed by financial information that is classified, characterised and presented clearly and concisely. The Conceptual Framework provides the following guidance [Conceptual Framework 2.34 – 2.36]: Classifying, characterising and presenting information clearly and concisely makes it understandable. Some phenomena are inherently complex and cannot be made easy to understand. Excluding information … Read more

Hedging a component of a group

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Last update 27/11/2019 Hedging a component of a group provides clear examples of hedge accounting in practice. A group designation can also consist of hedging a component of a group of items, such as a layer component of a group. A component could also be a proportion of a group of items, such as 50% … Read more

Transaction costs

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Last update 25/08/2019 Transaction costs are of importance in IFRS because they are or are not included in the carrying value at initial recognition. The differences are as follows: Assets at amortised costs are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried … Read more