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Last update 21/08/2019 A provision is a liability of uncertain timing or amount. To better understand the nature of the financial reporting line ‘Provisions’ a comparison is made with other liabilities and contingent liabilities. From their nature provisions are more or less in between other liabilities (less uncertain) and contingent liabilities (more uncertain). Provisions and … Read more
Last update 29/11/2019 Factoring of trade debtors is by far the most common transaction entered into by non-financial entities that requires assessment against the derecognition criteria. Surprisingly, IFRS 9 does not mention it in its examples. Factoring of trade debtors can serve as a useful example to illustrate derecognition requirements. Factoring of trade debtors Example: … Read more
Last update 22/10/2019 Rights designed to protect the interest of the party holding those rights without giving that party power over the entity to which those rights relate. Protective rights relate to fundamental changes to the activities of an investee or apply in exceptional circumstances. However, not all rights that apply in exceptional circumstances or are contingent … Read more
Last update 21/12/2019 Extra disclosures IFRS 15 contracts – 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. Contract balances The disclosures related to contract balances are extensive and intended to enable users to understand … Read more
Last update 21/08/2019 A method of accounting whereby a venturer’s share of each of the assets, liabilities, revenue and expenses of a jointly controlled entity is combined line by line with similar items in the venturer’s financial statements or reported as separate line items in the venturer’s financial statements. Joint venture accounting (JV) A joint … Read more
Last update 22/12/2019 The scope of IFRS 6 Exploration for and Evaluation of Mineral Resources is limited to the recognition, measurement and disclosure of expenditure incurred in the phase covering the Exploration for and Evaluation (Exploration and evaluation) of mineral resources. Although the term used is ‘mineral resources’, the definitions in IFRS 6 clarify that … Read more
Last update 21/08/2019 Accounting policy example Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating … Read more
Last update 01/12/2019 Executory contracts are contracts under which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent. Hence an executory contract contains a combined right and obligation constituting a single asset or liability. The entity has an asset if the terms of the … Read more
Last update 03/08/2019 Property, plant and equipment (formerly know as Tangible fixed assets, in short PPE) are tangible items that: are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period. Recognition of property, plant … Read more
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