Equity reserves

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Last update 22/11/2019 Equity reserves are part of owner’s equity, Equity is defined as follows: The residual interest in the assets of the enterprise after deducting all of its liabilities. Equity reserves are defined/described in several IFRS Standards, let’s see…. Equity consists of several components such as Share capital, Treasury shares (issued shares held by … Read more

Pass-through conditions

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Last update 09/12/2019 Pass-through conditions – A ‘pass-through’ transfer is a transaction where an entity keeps the legal title and rights to the cash flows from a financial asset (hence condition in IFRS 9.3.2.4(a) is not met), but enters into an arrangement with a third party under which those cash flows will be passed to … Read more

Equity investments at FVOCI

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Last update 12/12/2019 Equity investments at FVOCI – IFRS 9 requires all equity investments to be measured at fair value. The default approach is for all changes in fair value to be recognised in profit or loss. However, for equity investments that are neither held for trading nor contingent consideration recognised by an acquirer in … Read more

Outcome uncertainty

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Last update 07/01/2020 Outcome uncertainty is uncertainty about the amount or timing of any inflow or outflow of economic benefits that will ultimately result from an asset or liability. It is different from measurement uncertainty and existence uncertainty. Outcome uncertainty “Uncertainty” in accounting refers to the difficulty of predicting outcomes because of limited or inexact … Read more

Equity instruments held for trading?

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Last update 12/12/2019 This Equity instruments held for trading question is part of the decision model for the classification and measurement of financial assets, that started in the IFRS 9 Framework for financial assets. But you can also read it without doing the test …. off course? OK the financial asset is an equity instrument. … Read more

Other comprehensive income

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Last update 25/08/2019 Other comprehensive income comprises items of income and expense (including reclassification adjustments) that are not recognised in profit or loss as required or permitted by other IFRSs. IFRS in respect of the classification of gains or losses in other comprehensive income or profit or loss/profit and loss is directed by the notion … Read more

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