Example fair value hedge

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Last update 21/12/2019 Fair value hedge of changes in the benchmark interest rate for a variable-rate debt obligation Example fair value hedge On January 1, Year 1 ABC Corp. issues a floating-rate non-amortizing debt instrument with a maturity of two years. The variable-rate liability resets every six months at the six-month LIBOR rate. The six-month … Read more

Portfolio of insurance contracts

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Last update 04/01/2020 A portfolio of insurance contracts are insurance contracts subject to similar risks and managed together. Level of Aggregation Entities should aggregate contracts at inception in groups for recognition, measurement, presentation, and disclosure. Groups should not be reconsidered after initial recognition. An entity should initially identify portfolios of insurance contracts. A portfolio of … Read more

Events after the Reporting period

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Last update 27/10/2019 When should a reporting entity recognise events after the reporting period in the financial statements that are being finalised? What are the disclosures that should be given about the date when the financial statements were authorised for issue and about the events after the reporting date? The answers look a bit colorful … Read more

Period cost

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Last update 21/08/2019 Period cost is any cost that cannot be capitalized as direct cost relating to inventory, property, plant and equipment or investment property. A period cost is more closely associated with the passage of time than with a transactional event. It can be capitalized as fixed production overhead and general overhead in the … Read more

Performance obligation

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Last update 06/12/2019 Performance obligation – [IFRS 15 Appendix A – Defined terms] Such an obligation is a promise in a contract with a customer to transfer to the customer either: a good or service (or a bundle of goods or services) that is distinct; or a series of distinct goods or services that are … Read more

Estimating fair value

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Last update 22/12/2019 Estimating fair value – To start this narrative on fair value measurement three things to keep in mind!!!! Fair value measurement is an estimation process, not a scientific method: Uncertainty is key, what are the expected cash flows, what type of industry is concerned, at what stage of the Business Life Cycle … Read more

Percentage of completion method Construction

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Last update 08/12/2019 Percentage of completion method Construction – The percentage of completion method is used when the contract involves the completion of more than one act. Under the percentage of completion method, revenue is recognized proportionately with “the extent of work accomplished” by the contractor, by reference to the performance of each act (performance … Read more

Estimates of future cash flows

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Last update 17/12/2019 Estimates of future cash flows – The first element of measuring fulfilment cash flows in the general model (see ‘General model of measurement of insurance contracts‘) is an estimate of future cash flows within the contract boundary period of each contract in a group. Here is how the estimates of future cash flows … Read more

Past due

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Last update 21/08/2019 A financial asset is past due when a counterparty has failed to make a payment when that payment was contractually due. IFRS 9: Past due status and more than 30 days past due rebuttable presumption: This sets out a rebuttable presumption that the credit risks on a financial asset has increased significantly since … Read more