Engineering and Construction contract costs

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Last update 21/12/2019 Engineering and Construction contract costs – This part relates to a complete explanation of IFRS 15 Revenue from contracts with customers in respect of Engineering & Construction contracts, see Revenue from Engineering & Construction contracts. IFRS 15 also specifies the accounting treatment for certain costs an entity incurs in obtaining and fulfilling … Read more

Other business models

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Last update 29/11/2019 Other business models are the business model you arrive at when a financial asset and its handling in a business does to lead to the ‘hold to collect’ or ‘hold to collect and sell’ business models. Financial assets are measured at fair value through profit or loss if they are not held … Read more

Embedded derivatives Equity kicker

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Last update 22/12/2019 Embedded derivatives Equity kicker – A more specific type of embedded derivative that is often found in practice relates to a type of funding provided by venture capital entities is the equity kicker. It is many times part of a sales of a part of a business of a listed company, financed … Read more

Orderly transaction

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Last update 05/01/2020 IFRS 13 Definition of orderly transaction: A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (eg a forced liquidation or distress sale). A transaction that … Read more

Elimination of the parents investment

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Last update 23/12/2019 Elimination of the parents investment – The parent company will report the ‘investments in subsidiaries’ as an asset, with the subsidiary reporting the equivalent equity owned by the parent as equity on its own accounts. At the consolidated level, an elimination adjustment must be recorded so that the consolidated statement is not … Read more

Option to renew a contract

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Last update 20/12/2019 Allocation of the transaction price to an option to renew a contract (application of IFRS 15) Cloud Co. enters into a contract with a customer for a licence of its software and a non-cancellable one-year subscription to access the licensed application (the cloud services). The contract amount for the software licence is … Read more

Elimination of intra-group transactions

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Last update 23/12/2019 Elimination of intra-group transactions – Intra-group transactions are transactions between entities within a group of entities and that group is consolidated into one set of Consolidated Financial Statements. Intra-group transactions are not with third parties outside the scope of consolidation (this means the group of companies consolidated to one unit). In the … Read more

Option for discounted software

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Last update 20/12/2019 Option for discounted software – A customer receives a discount for purchasing a bundle of goods or services if the sum of the stand-alone selling prices of those promised goods or services in the contract exceeds the promised consideration in a contract. Except when an entity has observable evidence in accordance with … Read more

Eligibility for the premium allocation approach

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Last update 17/12/2019 Eligibility for the premium allocation approach – The premium allocation approach is permitted if, and only if, at the inception of the group of contracts one of the following conditions are met [IFRS 17 53]: The entity reasonably expects that such simplification would produce a measurement of the liability for remaining coverage … Read more

Operating segment

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Last update 06/01/2020 IFRS 8 Definition: An operating segment is a component of an entity: that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and … Read more