Common Elements of Customer Relationships

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Last update 16/11/2019 Common Elements of Customer Relationships determines whether a (intangible) customer relationship asset exists for IFRS 3 Business Combinations, one should consider several elements that create that intangible asset. Common Elements of Customer Relationships Topics hide Required Information Expectation of repeat patronage of its customer base Lifespan of customer relationships Common Elements of … Read more

Effective interest rate

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Last update 14/12/2019 Effective interest rate – The rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, an entity … Read more

Common cash flow classification errors in practice

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Last update 23/12/2019 Common cash flow classification errors in practice – Although the definitions of operating activities, financing activities and investing activities may appear straightforward, in practice a number of classification errors are frequently made. These include: Common cash flow classification errors in practice 1. Cash outflows related to the acquisition of intangible assets and … Read more

Effective interest method

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Last update 14/12/2019 The effective interest method is used in the calculation of the amortised cost of a financial asset or a financial liability and in the allocation and recognition of the interest revenue or interest expense in profit or loss over the relevant period. But many assets and liabilities valued at amortised cost are … Read more

Commitments in financial statements

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Last update 01/12/2019 Commitments in financial statements are items that are not reported as liabilities as of the balance sheet date. Some of these items are reported in the notes to the financial statements. Examples include non-cancelable (as at balance sheet date) binding contracts to rent space in the future or to purchase items at … Read more

Effective hedge – Example

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Last update 10/08/2019 Accounting policy example Financial assets are recognised initially at fair value, normally being the transaction price plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The subsequent measurement of financial assets depends on their classification, as set out below. The group de-recognises … Read more

Combination of Insurance Contracts

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Last update 19/12/2019 Combination of Insurance Contracts – An entity might enter into a series of insurance contracts with the same or a related counterparty to achieve an overall economic effect. In order to ensure that the accounting reflects the substance of these contracts, it might be necessary to combine the group or series of … Read more

Economic resource

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Last update 21/08/2019 An economic resource is a right by the reporting entity that has the potential to produce economic benefits. An economic resource in general has the form of an asset. This information is provided in the financial position. Potential to produce economic benefits – Within an economic resource, a feature that already exists and will … Read more

Economic life

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Last update 06/01/2020 Economic life also known as useful life is either Economic life the period over which an asset is expected to be economically usable by one or more users, or Economic life the number of production or similar units expected to be obtained from an asset by one or more users. Economic life … Read more