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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
Last update 20/12/2019 Promises to transfer distinct goods or non-insurance services – In a final step, after separating non-closely related embedded derivatives and distinct investment components (see ‘Separation of Insurance Contracts‘, an entity should separate from the host insurance contract any promise to transfer distinct goods or non-insurance services to a policyholder. A good or … Read more
Last update 16/12/2019 Examples hold assets and collect cash – The following are examples of when the objective of an entity’s business model may be to hold financial assets to collect the contractual cash flows. This list of examples is not exhaustive. Furthermore, the examples are not intended to discuss all factors that may be … Read more
Last update 18/12/2019 What is a weighted mean? Probability-weighted mean A weighted mean is a kind of average. Instead of each data point contributing equally to the final mean, some data points contribute more “weight” than others. If all the weights are equal, then the weighted mean equals the arithmetic mean (the regular “average” you’re … Read more
Last update 16/12/2019 Examples collecting cash and selling assets – The following are examples of when the objective of the entity’s business model may be achieved by both collecting contractual cash flows and selling financial assets. This list of examples is not exhaustive. Furthermore, the examples are not intended to describe all the factors that … Read more
Last update 13/12/2019 The probability of default (PD) represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months (12M PD) or over the remaining lifetime (Lifetime PD) of the obligation. See also ‘Definition of Default‘. PD is defined as the probability of whether borrowers will default on their obligations … Read more
Last update 18/12/2019 Example Variable fee approach for measurement – The variable fee approach (VFA) is applied to insurance contracts with direct participation features that contain the following conditions (‘eligibility criteria’) at initial recognition: the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items; the entity … Read more
Last update 23/08/2019 Omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or a misuse of, faithfully representative information that: Was available when financial statements for those periods were authorised for issue; and Could reasonably be expected to have been obtained and taken … Read more