General model in Insurance contracts measurement

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Topics hide General model in Insurance contracts measurement The General Model Estimates of future cash flows Insurance contract boundary Cash flows within the contract boundary Explicit cash flows Insurance contract discount rates Discount rates and characteristics of cash flows Current discount rates consistent with observable market prices Bottom-up approach Top-down approach Discount rates beyond the … Read more

ECL: How to Measure Probability of Default

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Expected credit loss challenges many experienced accountants and finance people, because it contains the element of uncertainty and some sort of guessing or estimating what can happen in the future. That’s why it is “expected” after all. I wrote a few articles about the process of applying ECL in your accounts, so let me just … Read more

Definition of Material – Important changes to IAS 1 and IAS 8

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Topics hide Definition of Material Applying materiality when preparing financial statements, by: Materiality as a filter Definition of Material Amendments on accounting policy disclosures Definition of Material The Definition of Material (with amendments to IAS 1 and IAS 8) puts the spotlight on: Applying materiality when preparing financial statements, by: Encouriging IFRS reporting specialists to … Read more

Projected Unit Credit Method (IAS 19) with Example

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Recently I got across the interesting question. One lady working for a company adopting IFRS for the first time asked me if they can still mark their financial statements as compliant with IFRS, if they do not apply projected unit credit method, but do apply everything else. In her view, it was extremely difficult and … Read more

Landlord Lease modifications

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Topics hide Landlord Lease modifications / Rental modifications 1 Modifications to operating leases – General considerations 2. Modifications to operating leases related to COVID-19 3 Changes to operating leases that are not lease modifications 4 Changes to operating leases that are not lease modifications 5 Modifications to finance leases 5.1 Separate lease 5.2 Not a … Read more

IFRS 17 – The 3 Greatest Misconceptions

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To err is human. But the following mistakes are not the ones you can afford to make in a board meeting or a job interview. Because, no matter how right these notions sound or how prevalent these views are, they are still very “wrong”: IFRS 17 is for insurance “companies” IFRS 17 is for “all” … Read more

Focus definition or best trends in IFRS reporting based on IAS 1

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Topics hide Focus definition or Trends in IFRS reporting Example Report Corp. (IAS 1.49, IAS 1.51(a)) Structure of the notes Materiality matters 1. Example Report Corp. How did we arrive at these numbers? What are the risks included in these financial statements? How is the Group/Company organised? What are the conditional items not yet recognised? … Read more

Sub-leases of real estate – IFRS 16 Best short read

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Sub-leases of real estate New classification guidance means that more sub-leases are finance leases under IFRS 16 than previously, impacting the financial position and financial performance of intermediate landlords. A sub-lease is a transaction in which a lessee (or ‘intermediate lessor’) grants a right to use the underlying asset to a third party, and the … Read more

Lease calculation – IFRS 16 Structured best approach

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Topics hide Lease calculation The 5-step lease calculations model Step 1. Identification of a lease contract Step 2 Lease term Lease Options to Extend or Terminate Reassessment of Lease Term Step 3 Initial measurement of the lease liabilty Right-of-Use Asset Subsequent Measurement of Lease Liability Step 4 Historical reporting Step 5 Historical changes to the … Read more