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

Earnings per share

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Last update 19/12/2019 Earnings per share – The objective of IAS 33 Earnings per share is prescribing principles for the determination and presentation of earnings per share, so as to improve performance comparisons between different entities in the same reporting period and between different reporting periods for the same entity. Earnings per share is mostly … Read more

Onerous contract

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Last update 01/09/2019 A contract for the exchange of assets or services in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits or service potential expected to be received under it. So these a loss-making contracts. Such a contract can represent a main financial burden for an entity. Here … Read more

Drawbacks and Benefits of Intangible assets

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Last update 04/12/2019 Drawbacks and Benefits of Intangible assets – Intangibles have become a more prominent reporting line in IFRS financial reporting. Here are some remarks on their current use. Benefits of Intangible assets Drawbacks and Benefits of Intangible assets Intangible assets form a major proportion of the modern businesses and are a primary area … Read more

Offsetting

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Last update 07/01/2020 Offsetting – Identifying, recognising and measuring both an asset and a liability as separate units of account, but presenting them in the statement of financial position as a single net amount. Offsetting, otherwise known as netting, takes place when entities present their rights and obligations to each other as a net amount … Read more