ifrs news - pwc...ifrs news – february 2016 3 iasb issues narrow-scope amendments to ias 12 john...
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IFRS news – February 2016 1
The plane has landed - the IASB has published its new leasing standard! The IASB has finally finished its long-standing project on lease accounting and released IFRS 16 Leases. Holger Meurer from Accounting Consulting Services looks into the details.
Almost eight years after Sir David Tweedie, then IASB chairman, expressed his wish to fly in an aircraft that is on an airline’s balance sheet at least once before he dies, the IASB has introduced a new accounting model for lessees and made his wish come true – just a few days after Christmas.
However, it actually was a long-distance flight and one might argue whether it really ended with a soft landing…
What has changed?
Lessee accounting
Under IFRS 16 lessees no longer distinguish between a finance lease (on balance sheet) and an operating lease (off balance sheet). Instead, for virtually all lease contracts the lessee recognises a lease liability reflecting future lease payments and a ‘right-of-use’ asset. The new model is based on the rationale that economically a lease contract is equal to acquiring the right to use an asset with the purchase price paid in instalments.
Lessees recognise interest expense on the lease liability and a depreciation charge on the ‘right-of-use’ asset. Compared to the accounting for operating leases under IAS 17, this does not only change the presentation within the income statement (under IAS 17 lease payments are presented as a single amount within
operating expenses) but also the total amount of expenses recognised in each period. Straight-line depreciation of the right-of-use asset and application of the effective interest rate method to the lease liability will result in a higher total charge to profit or loss in the initial years, and decreasing expenses during the latter part of the lease term. The graph below illustrates this effect:
In the cash flow statement, lease payments relating to contracts previously classified as operating leases will no longer be shown in full within operating cash flow. The parts of the lease payments that reflect the repayment of the principal portion of the lease liability will be included in financing activities. The presentation of the interest portions depends on the entity’s general accounting policy regarding interest paid (that is, either within operating or within financing activities). Payments for short-
IFRS news
In this issue:
1 IFRS 16 Leases
A glance at the new
standard
3 Narrow-scope
amendments to IAS 12
Recognition of deferred tax
assets on unrealised losses
4 Current IC rejections
Various topics
5 P*Q crashes
6 Cannon Street Press
Insurance contracts
Revenue from contracts with customers
Measurement of interests in associates and joint ventures
7 IC rejections
IAS 12
11 The bit at the back...
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IFRS news – February 2016 2
term leases, for leases of low-value assets and variable lease payments not included in the measurement of the lease liability are part of operating activities.
Exemptions
For short-term leases (12 months or less) and leases of low-value assets (assets with a value of USD 5,000 or less when new) the IASB has included optional exemptions. If an entity elects one of these exemptions, the lease contract is accounted for in a way that is similar to current operating lease accounting (that is, payments are recognised on a straight-line basis or another systematic basis that is more representative of the pattern of the lessee’s benefit).
Lessor accounting
Lessor accounting stays almost the same as under IAS 17. However, IFRS 16 adds significant new disclosure requirements. IFRS 16 requires further information about how the lessor manages its risk related to the residual interest in the underlying asset. Furthermore, a lessor now has to disaggregate the disclosures required in IAS 16 for each class of property, plant and equipment into assets subject to an operating lease and not subject to an operating lease.
Comprehensive guidance on the definition of a lease
IFRS 16 defines a lease as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. This definition looks quite straightforward at first glance. In practice, however, it will be challenging to assess what makes a leased asset an ‘identified’ asset and what it takes to convey a ‘right-of-use’.
To facilitate this analysis the IASB has included comprehensive guidance on the definition of a lease that goes into far more detail than the current guidance in IAS 17 and IFRIC 4.
…and what are the effects om KPIs?
For lessees that have entered into lease contracts classified as operating leases
under IAS 17, the new standard may have a huge impact. Obviously, the recognition of a lease liability for almost all lease contracts results in an increase of debt to equity ratios.
Balance sheet related ratios are only one part of the story. As the interest element of lease payments will now be presented as finance costs, earnings before interest and tax (EBIT) are expected to be higher under the new standard. Earnings before interest, tax, depreciation and amortization (EBITDA) are even higher still because of the depreciation of the right-of-use asset.
Transition
IFRS 16 shall be applied for annual reporting periods beginning on or after 1 January 2019. Earlier application is permitted. However, as there are several interactions between IFRS 16 and IFRS 15 Revenue from contracts with customers, early application is restricted to entities that also (early) apply IFRS 15.
For lessees, IFRS 16 includes several expedients and reliefs on transition. In particular, the IASB allows a simplified approach as an alternative to a full retrospective application in accordance with IAS 8. Under that approach, the cumulative effect of initial application is recognised as an adjustment to the opening balance of retained earnings at the date of initial application. Comparative information is not restated.
Existing leases are grandfathered. Lessees and lessors do not need to reassess whether a contract already on their books at the date of transition meets the definition of a lease.
Next steps
The final standard is effective from 1 January 2019. This new guidance might require changes to systems, processes and controls. Management will need to assess implications as early as this year to ensure ample time to embrace the change and capture information needed for transition.
For further detail please see In Depth, our recent webcast and look out for more guidance by following the news on Inform.
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IFRS news – February 2016 3
IASB issues narrow-scope amendments to IAS 12
John Chan from Accounting Consulting Services brings us up to speed on the clarified guidance for recognising deferred tax assets on unrealised losses.
The amendments arose from a question
submitted to the IC about the deferred tax accounting for deferred tax assets arising on
debt investments measured at fair value.
The IASB observed diversity in practice and therefore developed narrow-scope
amendments to clarify IAS 12.
Are there any changes to the principles in IAS 12?
No. The amendments clarify the guidance in
IAS 12 by adding examples and elaborating on some of the requirements in more detail.
They do not change the underlying
principles for the recognition of deferred tax assets.
What are the clarifications?
When does a temporary difference arise?
The amendments clarify that a temporary
difference is calculated by comparing the
carrying amount of an asset against its tax base at the end of the reporting period.
When an entity determines whether or not a
temporary difference exists, it should not consider
(1) the expected manner of recovery of the
related assets (for example, by sale or by use); or
(2) whether it is probable that any deferred
tax asset arising from a deductible temporary difference will be recoverable.
How is future taxable profit estimated?
The IASB clarified that:
(1) determining the existence and amount of
temporary differences; and
(2) estimating future taxable profit against which deferred tax assets can be utilised
are two separate steps.
Estimating future taxable profit inherently includes the expectation that an entity will
recover more than the carrying amount of
an asset. Therefore, if an entity considers it is probable that it can realise more than the
carrying amount of an asset at the end of a
reporting period, it should incorporate this assumption into its estimate of future
taxable profit.
Is the recoverability of a deferred tax asset assessed collectively or separately?
It depends on the tax law. Deferred tax
assets are assessed in combination with other deferred tax assets where the tax law
does not restrict the source of taxable profits
against which particular types of deferred tax assets can be recovered. Where
restrictions apply, deferred tax assets are
only assessed in combination with those of the same type.
How do deferred tax assets affect
future taxable profit?
The tax deduction resulting from the
reversal of deferred tax assets is excluded
from the estimated future taxable profit used to evaluate the recoverability of those
assets.
Effective date and transition
The amendments are effective for annual
periods beginning on or after 1 January
2017. Earlier application is permitted. An entity may, on initial application of this
amendment, elect to recognise any change
in the opening equity of the earliest comparative period presented in the
opening retained earnings (or in another
component of equity, as appropriate), without allocating the change across
different equity components.
Who is affected?
The amendments are not limited to any specific type or class of assets and clarify several of the general principles underlying the accounting for deferred tax assets.
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IFRS news – February 2016 4
Current IFRIC rejectionsThe IC has recently decided not to take on a number of issues to its agenda. Gabriela Mendez, Joanna Demetriou and Anna Schweizer from Accounting Consulting Services examine the practical implications.
A very small percentage of the issues discussed by the IC result in an interpretation (see our NIFRIC-series below and in previous editions of IFRS News). As there were so many issues rejected at the January IC meeting, we felt it was worthwhile having a closer look.
IFRS 5 Non-current assets held for sale and discontinued operations
To what extent can an impairment loss be allocated to non-current assets within a disposal group?
The IC confirmed that the amount of impairment that should be recognised for a disposal group would not be restricted by the fair value less costs of disposal or value in use of those non-current assets that are within the scope of the measurement of IFRS 5. Consequently, a non-current asset measured under IFRS 5 could be measured at a lower amount than its recoverable amount under IAS 36.
How to present intragroup transactions between continuing and discontinued operations
The IC clarified the requirement to eliminate intra-group transactions even between continuing and discontinuing operations, since IFRS 5 requirements do not override the consolidation requirements under IFRS 10. However, the IC observed that, depending on the particular facts and circumstances, an entity may have to provide additional disclosures in order to enable users to evaluate the financial effects of discontinued operations. In this light the IC suggested this to be considered in the wider context of a comprehensive review of IFRS 5.
Other various IFRS 5-related issues
The IC has received and discussed a number of issues relating to the application of IFRS, including scope, measurement and presentation. Because of the number and variety of unresolved issues the IC
concluded that a broad-scope project on IFRS 5 might be warranted.
IFRS 9 Financial Instruments – Transition issues relating to hedging
Can an entity treat a hedging relationship as a continuing hedging relationship on transition from IAS 39 to IFRS 9 if the entity changes the hedged item in a hedging relationship from an entire non-financial item (as permitted by IAS 39) to a component of the non-financial item (as permitted by IFRS 9) in order to align the hedge with the entity’s risk management objective?
The IC noted that changes to the designated hedged item cannot be applied retrospectively. As a result, the original hedge relationship could not be treated as a continuing hedge relationship on transition to IFRS 9.
Can an entity continue with its original hedge designation of the entire non-financial item on transition to IFRS 9 when the entity’s risk management objective is to hedge only a component of the non-financial item?
The IC observed that hedge designations of an entire non-financial item could continue on transition to IFRS 9 as long as they meet the qualifying criteria in IFRS 9.
IFRS 11 Joint Arrangements – Remeasurement of previously held interests
The IC addressed the measurement requirements for previously held interests in joint operations that do not meet the definition of a business under IFRS 3 in two scenarios:
a) when an entity that exercises joint control, or is party to a joint operation, obtains control; and
b) when a party to a joint operation, that has rights to the assets and obligations for the liabilities relating to the joint operation,
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IFRS news – February 2016 5
obtains joint control over the joint operations.
The IC clarified that the accounting for asset acquisitions follows a cost based approach and no remeasurement of previously held interests should be made.
IAS 12 Income taxes – Recognition of deferred taxes for the effect of exchange rate changes
When the tax base of a non-monetary asset or liability is determined in a currency that is different from the functional currency, temporary differences arise resulting in a deferred tax asset or liability. The IC confirmed that deferred tax charges or credits would be presented with other deferred taxes, instead of with foreign exchange gains or losses, in the statement of profit or loss. The IC also noted that when changes in the exchange rate are the cause of a major component of the deferred tax charge or credit, an explanation of this would help users understand the tax expense (income) for the period.
IAS 39 Financial Instruments: Recognition and Measurement – Separation of an embedded floor from a floating rate host contract
The IC received a request to clarify the application of the embedded derivative
requirements of IAS 39.AG33(b) in a negative interest rate environment.
The IC observed that:
(a) AG33(b) should be applied consistently, in both, negative and positive interest rate environments;
(b) an entity should compare the overall interest rate floor(*) for the hybrid contract to the market rate of interest for a similar contract without the interest rate floor (i.e. the host contract); and
(c) in order to determine the appropriate market rate of interest for the host contract, an entity is required to consider the specific terms of the host contract and the relevant spreads (including credit spreads) appropriate for the transaction.
The IFRS IC also noted that the above treatment would be equally applicable to financial liabilities accounted for in accordance with IFRS 9.
(*) The overall interest rate floor is the contractual benchmark interest rate plus contractual spreads and any premiums, discounts or other elements that would be relevant to the calculation of the effective interest rate.
P*Q crashes In January 2015 the IASB decided to postpone any further work on P*Q and defer this to the post
implementation review (PIR) of IFRS 13.
The exposure draft was issued in September 2014. It proposed that the unit of account was the
investment as a whole for a quoted investment in subsidiaries, joint ventures and associates. The
fair value of that investment would be the share price multiplied by the quantity of shares held
(P*Q).
A majority of the comment letters submitted did not agree with this approach. The respondents
agreed that the unit of account was the investment. However, they did not support that P*Q was
the most relevant measure. The fair value should be based on the unit, which is not the single
share. User forums generally supported P*Q as it is a verifiable measure.
The Board redeliberated the feedback for over a year and decided this research would be better
suited to the PIR, which we expect to commence at the end of 2016.
Diversity in practice has developed in this area whilst the Board has redeliberated. We expect this
to continue until the PIR is finalised. Entities should disclose the fair value model they have used
clearly in the financial statements. Significant implied premiums or discounts are likely to be
scrutinised by regulators. by Ruth Preedy
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IFRS news – February 2016 6
Have you seen the latest PwC IFRS blogs
Derek Carmichael tells the romantic history of the new leasing standard
Saad Siddique wanders on the road to global IFRS adoption
Cannon Street Press
Insurance contracts
The IASB deliberated the remainder of the technical decisions on the accounting for insurance contracts. It finalised the decisions related to the level of aggregation of insurance contracts for the measurement of onerous contracts and for the allocation of the contractual service margin proposing criteria and constraints for the aggregation. The IASB decided to provide no exception to the level of aggregation when regulation affects the pricing of contracts.
The IASB further decided to require an entity to specify at the inception of the contract how it viewed its discretion under the contracts, and to use that specification to distinguish between the effect of changes in market variables and changes in discretion.
The IASB plans to review the due process steps taken and decide upon balloting at its February meeting.
Revenue from contracts with customers
The IASB tentatively decided to amend IFRS 15 Revenue from contracts with customers to clarify the factors that indicate when two or more promises to transfer goods or services are not separately identifiable.
The IASB also decided to provide further practical expedients on transition and confirmed that it would not be making amendments to the requirements of IFRS 15 in a number of areas, including collectability, measuring non-cash consideration, presentation of sales taxes and the definition of a completed contract.
Principal/agent guidance
At a joint session with the FASB, the Boards confirmed the principle that an entity is principal in a transaction when it controls the specified good or service before that good or service is transferred to the customer. Several amendments will be made to the principal/agent guidance and related illustrative examples to clarify how this guidance should be applied will be added.
The IASB expects to issue the final amendments Clarifications to IFRS 15 in March 2016.
Measurement of interests in associates and joint ventures that in substance form part of the net investment
The IASB discussed the IC’s request for input on whether long-term interests that in substance form part of the net investment in an associate or joint venture should be tested for impairment by applying IAS 28, IFRS 9 or a combination of both.
The IASB supported the IC’s continued discussion of the issue and noted the possibility that the IC might develop an interpretation to clarify the type of interests that are included in the net investment.
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IFRS news – February 2016 7
IFRIC Rejections in short - IAS 12 Simon Whitehead and Satoshi Tsunoda of US Accounting Consulting Services examine the practical implications of IC rejections related to IAS 12.
Looking for an answer? Maybe it was already addressed by the experts.
The Interpretations Committee (IC) regularly considers anywhere up to 20 issues at its periodic meetings. A very small percentage of the issues discussed result in an interpretation. Many issues are rejected; some go on to become an improvement or a narrow scope amendment. The issues that are not taken on to the agenda end up as ‘IFRIC rejections’, known in the accounting trade as ‘not an IFRIC’ or NIFRICs. The NIFRICs are codified (since 2002) and included in the ‘green book’ of standards published by the IASB although they technically have no standing in the authoritative literature. This series covers what you need to know about issues that have been ‘rejected’ by the IC. We go standard by standard and continue with IAS 12 as per below.
IAS 12 is a standard that makes relatively
frequent appearances at IC meetings, giving
rise to over 20 IFRIC rejections to date. Space is too limited to cover them all in detail
so we will focus on the more interesting
issues. A full listing of all NIFRICs can be found in the table at the end of the article.
Classification of interest and penalties (June 2004)
A submitter asked the IC where interest and
penalties on under/overpaid income taxes
should be presented. The IC concluded that the disclosure requirements of IAS 1 and IAS
12 were sufficient to inform the user where
an entity had presented such amounts. As a result, the IC declined to provide any
guidance on the matter meaning that an
accounting policy election exists with respect to presentation of these amounts.
Assets in a corporate wrapper (November 2005 & July 2014)
The issue of assets in a corporate wrapper, or single asset entities, is one that has existed
for many years. The perceived problem is
that IAS 12 requires deferred taxes to be provided on both the consequences of
recovering the asset within the corporate
wrapper and the consequences of recovering the investment in the legal entity housing the
asset (that is, the corporate wrapper). Many
entities will assert that they will never sell the asset from within the wrapper but rather just
sell the entity that houses the asset, and as
such the ‘inside basis’ temporary difference is
irrelevant. There is no exception in IAS 12 to
avoid recording both temporary differences.
The IC originally rejected the submission back in 2005 because at the time the IASB
was working with the FASB to produce a
converged new income taxes standard. That project fell apart in 2009 amid strongly
negative feedback to an exposure draft, so
the issue was never resolved. When it returned to the IC in 2014, the IC concluded
it was unable to address the issue by way of
an interpretation because the standard’s requirements are clear, and the scope of any
amendment to the standard would go beyond
the remit of an annual improvement. Consequently, the IC recommended that the
IASB consider the issue as part of its research
project on income taxes.
In summary, it does not appear that the issue
will be addressed in the short term and
entities will likely have to continue to record two deferred tax positions on assets in
corporate wrappers.
Scope of IAS 12 (December 2005, March 2006, May 2009 & July 2014)
Over the years the IC has received a number
of questions about the scope of IAS 12. Submitters have questioned whether taxes
based on gross income or tonnage are
income taxes, and also whether uncertain tax positions are within the scope of the
income tax guidance or should be viewed as
provisions under IAS 37.
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IFRS news – February 2016 8
The IC has confirmed that income taxes are
only those taxes based on some measure of
net profit. Taxes based on gross income, or
taxes paid in lieu of profits based taxes
(such as tonnage taxes) do not meet the
definition of income taxes. The tax does not
need to be based on accounting profit before
tax to be an income tax, but it must be based
on some form of net amount of income less
expenses. Following the agenda decisions
confirming that levies, often described as a
tax, are in the scope of IAS 37 (March 2006
and May 2009), the IC further developed
IFRIC 21 clarifying the accounting for levies.
A certain amount of diversity in practice had
existed in respect of uncertain tax positions
with some believing that IAS 37 was the
appropriate place for them. The IC
confirmed in 2014 that uncertain tax
positions are income taxes and IAS 37
scopes out income taxes. This conclusion is
expected to be reconfirmed in the
forthcoming IC interpretation on
uncertainty in income taxes.
Recognition of deferred tax assets when an entity is loss-making (May 2014)
In considering whether a deferred tax asset
is recoverable, IAS 12 requires that entities
first look to taxable temporary differences,
then assess the availability of taxable
profits, and finally consider any tax
planning opportunities. One submitter
asked the IC whether it was appropriate to
use taxable temporary differences to justify
recognition of deferred tax assets when the
entity was expected to make losses.
The IC confirmed that even if an entity
expects to make losses, deferred tax assets
should be recognised to the extent of
deferred tax liabilities of the same nature.
Deferred tax liabilities are sources of future
taxable income that are recognised on the
balance sheet, so if the entity has deferred
tax assets that can create deductions in the
same future periods as the liabilities reverse,
then the assets should be recognised.
Discounting of current taxes payable (June 2004)
A submitter asked whether current income
taxes payable should be discounted when the entity is permitted to pay the taxes over a
period greater than twelve months. The IC
generally supported discounting, but was concerned that discounting current taxes
potentially conflicted with IAS 20, which at
that time required that additional interest should not be imputed for government loans
at below market interest rates. However, at
the time that the issue was discussed, the conflict was expected to be resolved by the
IASB’s tentative decision to withdraw IAS 20.
Upon withdrawal of IAS 20, the IC did not think the issue would be unclear. On that
basis, the IC noted that current taxes payable
should be discounted if material.
However, the IASB later decided not to withdraw IAS 20 and in fact amended it for periods beginning on or after 1 January 2009 to require imputing of interest for off-market government loans. While this might have been expected to resolve the issue in favour of discounting, by January 2009 the income tax convergence project was in full swing, and at a joint meeting of the Boards that month, the IASB and FASB decided to remain silent on the issue of discounting current taxes. While this project was ultimately shelved4, the fact that the IASB had declined to take a position on the issue of discounting current taxes has led to continued diversity in practice. In our opinion, a policy choice exists and entities may choose to discount current taxes, but are not required to do so.
Summary of IAS 12 rejections
Topic Summary conclusion
Asset revaluation (February 2002)
Not added to the agenda as IAS 12 provides sufficient guidance on whether
changes in fair value of assets gives rise to taxable temporary differences and
deferred tax liabilities.
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IFRS news – February 2016 9
Topic Summary conclusion
Effective tax rates (February 2002)
Not added to the agenda as IAS 12 provides sufficient guidance on effective
tax rates to be used by entities that have low effective tax rates, for example,
because some income is exempt from tax.
Non-depreciable/ depreciable assets (August 2002)
Not added to the agenda as SIC-211, IAS 16 and IAS 12 provide adequate
guidance on the tax rate for calculating the deferred tax asset or liability on
investment property2 held under a finance lease.
Deferred tax on distributions3 (February 2003)
The IC considered whether an entity should recognise deferred tax assets on
recognising an equity instrument, and whether the income tax benefit should
be recognised in income or equity. In April 2003 the IASB reaffirmed that the
tax consequences of dividends are recognised when a liability to pay the
dividend is recognised.
Accounting under the
tax consolidation
system3 (April 2003)
The issue concerns recognition and measurement of tax assets and liabilities
where a wholly owned subsidiary leaves a tax consolidation group. The IC
noted that this issue was relevant only to separate financial statements, and
that it would be difficult to provide guidance that could be applied
consistently given that tax laws in each jurisdiction are different, and thus did
not add the issue on its agenda.
Discounting of
current taxes payable
(June 2004)
Not added to the agenda but the IC noted that current taxes payable should be
discounted when the effects are material. Today a policy choice exists for the
reasons set out in the article above.
Classification of
interest and penalties
(June 2004)
The disclosure requirements of IAS 12 and IAS 1 provide adequate
transparency of interest and penalties that arise from unpaid tax obligations.
Carry-forward of
unused tax losses and
tax credits
(June 2005)
The IC agreed that the probability criterion for the recognition of deferred tax
assets arising from the carry-forward of unused tax losses and unused tax
credits is generally applied to portions of the total amount.
Deferred tax relating
to finance leases
(June 2005)
Not added to the agenda because the issue fell directly within the scope of the
IASB/FASB convergence project4.
Non-amortisable
intangible assets
(August 2005)
Not added to the agenda as this fell within the scope of the IASB/FASB
convergence project4. The IC also noted that SIC-211 has a specific limited
scope and does not address this particular issue.
Single asset entities
(November 2005)
Not added to the agenda as it was covered by the IASB/FASB convergence
project4.
Income taxes scope
(December 2005 and
March 2006)
Taxes do not need to be based on a figure that is exactly accounting profit to
be within the scope of IAS 12. The term 'taxable profit' implies a notion of a
net rather than gross amount.
Unremitted foreign
income of overseas
branches
(July 2007)
Not added to the agenda because the recognition of deferred tax liabilities for
temporary differences relating to investments in subsidiaries, branches,
associates and joint ventures was being addressed by the IASB/FASB
convergence project4.
Classification of
tonnage taxes by
shipping companies
(May 2009)
Income tax is a tax based on a measure of net profit, not gross receipts. A
tonnage tax is a tax based on a gross measure of results of operations. Not
added to the agenda because the IC concluded that IAS 12 is clear in this
regard.
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IFRS news – February 2016 10
Topic Summary conclusion
Rebuttable
presumption to
determine the
manner of recovery
(November 2011)
The presumption that the carrying amount of an investment property
measured at fair value will be recovered through sale can also be rebutted in
circumstances other than the case described in paragraph 51C, provided that
sufficient evidence is available.
Accounting for
market value uplifts
introduced by a new
tax regime
(July 2012)
The IC noted that a market value uplift arising from a tax law change adjusts
the related asset’s ‘tax base’, which gives rise to a deductible temporary
difference. A deferred tax asset should be recognised to the extent it meets the
recognition criteria in paragraph 24 of IAS 12.
Impact of an internal
reorganisation on
deferred tax amounts
related to goodwill
(May 2014)
Transferring accounting goodwill within the consolidated group would not
meet the initial recognition exception because the asset had previously existed
in the consolidated financial statements. The IC considered that the existing
IFRS requirements and guidance were sufficient.
Recognition and
measurement of
deferred tax assets
when an entity is loss-
making
(May 2014)
A deferred tax asset is recognised for the carryforward of unused tax losses to
the extent of the existing taxable temporary differences that reverse in an
appropriate period (after taking into account any restrictions), regardless of
an entity's expectation of future tax losses. The IC concluded that neither an
Interpretation nor an amendment to the Standard was needed.
Recognition of
current income tax on
uncertain tax position
(July 2014)
IAS 12, not IAS 37, provides the relevant guidance on recognition. The IC
noted that sufficient guidance exists5.
Recognition of
deferred tax for a
single asset in a
corporate wrapper
(July 2014)
IAS 12 requires an entity to recognise both inside and outside basis temporary
differences arising from investments in assets within corporate wrappers. The
IC decided not to take the issue onto its agenda because of the broad nature
but recommended to the IASB that it should analyse and assess these
concerns in its research project on Income Taxes.
Tax rate for the
measurement of
deferred tax relating
to an investment in an
associate
(March 2015)
If one part of the temporary difference is expected to be received as dividends,
and another part is expected to be recovered upon sale or liquidation,
different tax rates would be applied to the parts of the temporary difference in
order to be consistent with the expected manner of recovery.
1 As a result of the amendment to IAS 12 in 2010, SIC-21 was superseded, and the guidance in SIC-21 was incorporated into IAS 12.
2 Since the date of this IFRIC rejection, IAS 12 has been amended to include a rebuttable presumption that investment property carried at fair value will be recovered through sale.
3 Included in the ‘green book’ although not part of the IC Update at the time.
4 The income tax IASB/FASB convergence project resulted in an exposure draft in March 2009. However, after an analysis of the comment letters in October 2009, the IASB decided not to proceed with the project.
5 Subsequently the IC decided to proceed with a broader project on accounting for uncertainties in income taxes that is expected to confirm this conclusion that IAS 12 is the relevant standard.
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IFRS news – February 2016 11
The bit at the back.....
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[email protected]: Tel: +44 (0) 207 212 3238
Financial instruments and financial services
[email protected]: Tel: + 44 (0) 207 212 5697 [email protected]: Tel: + 44 (0) 207 804 4464
IFRS news editor
Anna Schweizer [email protected]: Tel: +44 (0) 207 804 3129
www.pwc.com/ifrs
IFRS news – March 2016 1
Alternative Performance Measures – better described as ‘profits before unfortunate debits’?
The use of Alternative Performance Measures (APMs) is widespread. A recent analysis of reporting practices in the UK FTSE 100 revealed a need for more transparency, especially under the light of the ESMA guidance applicable for all announcements after 3 July 2016. Jennifer Lau and Anna Schweizer from Accounting Consulting Services look into the details.
The good news first: Our review of all the FTSE 100 companies with year-ends from 1 April 2014 to 31 March 2015 revealed that most companies explain their APMs and reconcile these to GAAP measures. However, such reconciliations are not always easy to find.
Our surveys show that investors find APMs useful, but would like more transparency over the information disclosed. We expect increasing regulator scrutiny (not only in Europe) over the use and disclosure of APMs and that the ESMA guidelines will significantly impact the disclosure of APMs. Companies should now be thinking about what they need to do to publish transparent, unbiased and comparable information on their financial performance.
Key findings
Our key findings can be summarised as follows:
95% of the FTSE 100 adjust their GAAP profit numbers.
Adjustments almost always have a favourable impact on profit.
Companies commonly adjust for: acquired intangibles amortisation; asset impairment; interest, depreciation, amortisation and tax.
Descriptions of reconciling items are often too broad to understand what they relate to.
Inconsistencies as to where and how reconciliations are presented.
These findings may not surprise, but they do suggest more work is needed by companies to ensure they comply with the ESMA guidelines.
Use of adjusted profit measures
95% of the FTSE 100 disclose an adjusted profit number. There was a range of alternative terms used to describe the adjusted profit figure with the most popular being:
Adjusted operating profit (39%)
Adjusted PBT (35%)
EBITDA/adjusted EBITDA (11%)
Such a variety of approaches, sometimes between competitors and industries, often
IFRS news
In this issue:
1 Alternative
Performance Measures
An analysis of the current
status
3 More guidance for
banks
IFRS 9 impairment
5 IAS 7 amendment
How to implement new
guidance?
7 Cannon Street Press
Insurance contracts
Goodwill and Impairment
Interests in associates and joint ventures
Non-current liabilities
FICE
8 IC rejections
IAS 16
10 The PwC leases library
11 The bit at the back...
For further information or to
subscribe, contact us at
or register online.
www.pwc.com/ifrs
IFRS news – March 2016 2
makes it difficult for readers to understand and compare APMs.
A review of the total number of adjustments showed that movements in aggregate for all companies with an APM went from a GAAP figure of roughly £119bn to £187bn. Of the 95 companies that presented an adjusted profit figure only 12 reported a number less than the original GAAP figure.
What is being adjusted?
A variety of terms is used to describe the adjustments from GAAP numbers to APMs. The most common adjustments relate to:
acquired intangibles amortisation,
asset impairment; interest, depreciation, amortisation
and taxation; bank specific adjustments for those in
the banking industry.
Although there are a large number of adjustments being made, the value of adjustments represents a small proportion in comparison to the overall value. For example, 10% of companies are adjusting for pension-related items and nearly 30% of companies are adjusting for acquisition-related costs yet these represent only 0.4% and 0.7% of the total value of adjustments. The question for companies to ask is whether these adjustments are material enough to be separately identified.
28% (£6bn) of adjustments remain uncategorised because the descriptions provided were not adequate to assign the adjustment to a category.
Placement of the reconciliation
While most companies (98%) provided a reconciliation of the APM to GAAP, there was no consistency in where they were reported and in some circumstances they were reported in more than one place:
Front half (45%),
Face of the primary statements (37%), Notes to the financial statements
(57%),
Other sections (7%).
This is not a problem unless, as was the case with a few companies, there is a lack of signposting to where the reconciliation could be found.
ESMA guidance
The guidelines apply to APMs disclosed in regulated information published by issuers with securities traded on regulated markets. These include APMs presented in the ‘front half’ of annual reports and interim financial reports, but exclude financial information provided in the audited financial statements of the accounts. They also apply to APMs in other regulated information published by an entity such as management reports, prospectuses, or ad-hoc disclosures on financial earnings.
An APM is “a financial measure of historical or future performances, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.”
Under the guidelines, issuers are required to:
Define APMs in a clear and readable way and give meaningful labels (impairments and restructuring charges are ‘rarely … unusual or non-recurring’).
Reconcile APMs to the most directly reconcilable GAAP line item explaining material reconciling items.
Explain the use of APMs so users understand relevance and reliability.
Not display APMs with more prominence, emphasis or authority than GAAP measures.
Present APMs with comparatives which also need to be reconciled.
Define APMs consistently over time and justify any changes made.
Next steps
APMs continue to be a hot topic for many from regulators and investors right through to the media. Based on our findings we think that more work will need to be done by companies to make their reconciling items relevant, understandable and not misleading.
www.pwc.com/ifrs
IFRS news – March 2016 3
More guidance for banks on IFRS 9 impairmentThe IASB issued its final version of IFRS 9 Financial Instruments in July 2014, but for banks this is not the end of the story. Hannah King from Accounting Consulting Services tells us about recent developments.
IFRS 9 introduces a new expected credit
loss (ECL) approach to impairment provisioning for financial instruments: a
radical move away from the current
incurred loss model in IAS 39. Following the issue of IFRS 9, two bodies - the Basel
Committee on Banking Supervision (the
Committee) and the Enhanced Disclosure Task Force (EDTF) - have recently
published guidance in respect of the ECL
requirements in IFRS 9.
Both publications are aimed at large
internationally active banks, but other large
and more sophisticated banks may also find the additional guidance relevant.
Basel Committee Guidance on
accounting for ECL for banks
In December 2015, the Committee issued its
‘Guidance on credit risk and accounting for
expected credit losses’. This sets out supervisory guidance on sound credit risk
practices associated with the
implementation and ongoing application of ECL accounting frameworks, such as that
introduced in IFRS 9.
Notably, the Committee expects a disciplined, high-quality approach to
assessing and measuring ECL by banks.
The Guidance discusses some of the areas requiring significant judgement involved in
implementing the ECL requirements, as
well as highlighting the need for good governance, controls, processes and
disclosure.
Forward looking information
Amongst other things, the Committee
emphasises the importance of including a
wide range of relevant, reasonable and supportable forward-looking information,
including macroeconomic data, in a bank’s
accounting measure of ECL. In particular, banks should not ignore future events
simply because they have a low probability
of occurring or on the grounds of increased cost or subjectivity. This has particular
relevance for one-off uncertain events, for
example, a future vote on the UK leaving the European Union. However, the Committee
does acknowledge that in certain
exceptional circumstances, information about a future event may not be reasonable
and supportable, in which case it should be
excluded from the determination of ECL.
‘Low credit risk’ exemption
In the Committee’s view, the use of the
practical expedients in IFRS 9 should be limited for internationally active banks. This
limitation includes restricting the use of the
‘low credit risk’ exemption for lending exposures (although there still may be some
scope to use this exemption for securities).
Using the exemption in IFRS 9 negates the need to assess whether there has been a
significant increase in credit risk since
initial recognition for those financial
instruments that are of low credit risk (for
example, investment grade). Not being able
to take advantage of the exemption could involve considerable more work and
analysis.
EDTF IFRS 9 Impairment disclosure recommendations
In November 2015, the EDTF published a
report ‘Impact of Expected Credit Loss Approaches on Bank Risk Disclosures’. This
recommends disclosures in banks’ annual
reports to help the market understand an ECL approach to impairment, such as that
in IFRS 9.
www.pwc.com/ifrs
IFRS news – March 2016 4
Transition period from now to adoption
IFRS 9 comes into effect from 2018. The
EDTF highlights that disclosures are needed
in the transition period leading up to adoption of IFRS 9, starting with 31
December 2015 annual reports. As
summarised in the diagram below, the EDTF recommends a gradual, phased
approach to disclosures during this
transition period. The EDTF suggests that initially the focus should be on qualitative
disclosures. Quantitative information about
the impact of IFRS 9 should follow, but at the latest in 2017 annual reports.
Ongoing ‘permanent’ disclosures
The EDTF also recommends disclosures that will apply on a permanent basis once
IFRS 9 has been adopted and which go
considerably further than those required by accounting standards. For example, the
EDTF recommends that banks offer sensitivity disclosures. These would show
the key drivers of change in credit losses
when they are meaningful and relevant to understanding material changes.
What’s next?
Banks, in particular internally active banks and other large more sophisticated banks, should consider the implications of the Basel Guidance and the EDTF’s disclosure recommendations. Banks should determine the extent to which the additional guidance applies and how they plan to incorporate it into their IFRS 9 implementation processes.
In doing so, banks will need to consider the views of their local regulator.
As well as the ongoing disclosure requirements post IFRS 9 implementation, banks should consider the transition disclosures needed now and up to the first period of adoption of IFRS 9.
Indicative timeline for implementing the EDTF disclosure recommendations in the transition period:
2015 2016 2017 2018 (and beyond)
• Explain general concepts of an ECL approach • Describe current impairment approaches and compare with
ECL approach • Explain implementation strategy, including timeline, key
milestones and responsibilities
General concepts, differences from current approach & implementation strategy
• Explain how key concepts and credit risk modelling techniques will be implemented
• Explain new governance, processes and controls and how they relate to existing governance, process and controls
• Explain expected impact on capital planning
Detailed principles, risk management organisation & capital planning impact
• Provide quantitative assessment of the potential impact once practical and reliable (by 2017 annual reports at latest)
• Consider further temporary disclosures
Quantitative disclosures
Increasing granularity of disclosure
• Provide IFRS 7 transition disclosures in first interim period after adoption
• Consider all EDTF recommendations
Full adoption of IFRS 9
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IFRS news – March 2016 5
IAS 7 ‘net debt’ amendment: How to implement new guidance?
John Chan from Accounting Consulting Services brings us up to speed on the narrow-scope amendment to IAS 7 Statement of cash flows and shows how entities might fulfil the new disclosure requirement.
Borrowings form a major part of nearly
every business and operation. Information about changes in borrowings helps users of
financial statements evaluate the financial
health of an entity.
Even though IAS 7 and IFRS 7 require
some disclosures, users still remarked that
they find it difficult to understand changes of borrowings across periods. The IASB has
thus amended IAS 7 as part of its
Disclosure Initiative to address those concerns.
What is the additional disclosure
required?
Objective and scope
The objective of the revised disclosures is
to help users evaluate changes in borrowings.
As neither borrowings nor ‘net debt’ are
defined in IFRS, the IASB requires that
the disclosures apply to liabilities arising
from financing activities.
The disclosure requirements also apply to:
Financial assets arising from financing
activities (for example derivative assets that hedge long-term borrowings).
Other assets and liabilities. Entities
should also include other assets and liabilities that might be included in
other categories within the cash flow
statement if that would meet the
disclosure objective (for example, cash and cash equivalents and interest
payments that are classified as
operating activities).
Required disclosures
Entities should disclose changes of the
items above arising from cash flows and non-cash changes (for example,
acquisitions, disposals and exchange
differences).
Disclosure format
The amendment does not mandate any
specific format and management should consider the disclosure that best meets the
objective based on their circumstances.
Different ways of meeting the disclosure objective are described below.
Disclosure examples
Reconciliation table
The amendment suggests a reconciliation
between the opening and closing balances
of the items above would meet the disclosure requirement. This may be the
best way of meeting the disclosure objective
where entities have several different items to be disclosed or where non-cash changes
arise from different transactions or events.
A tabular reconciliation could look as follows:
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IFRS news – March 2016 6
(1) The amendment requires that the link between the reconciliation and the balances and amounts presented in balance sheet and cash flow statement is explained. Management should consider the balance sheet and disclosure objective when deciding how much detail to disclose.
(2) The amendment requires separate disclosure of changes in assets and liabilities classified in
financing activities from changes on other assets and liabilities included in other categories.
(3) The example assumes that the bank overdraft is repayable on demand and forms an integral
part of the entity’s cash management.
Narrative descriptions
Narrative disclosures might be appropriate
when there are only few items to be
disclosed or where there are limited non-cash changes, for example:
During the year ended 31 December 20x7,
the non-cash changes on long-term bank
borrowings amounted to USD 3 million arising from unrealised foreign exchange
differences.
Other insights
Some preparers may already make similar disclosures in accordance with local
guidance or on a voluntary basis. Such
existing disclosures may not fully align with the revised requirements, so management
should examine the items included in the
disclosures for completeness, proper
segregation of other assets and liabilities and linkage to the balance sheet and cash
flow statement.
Effective date and transition
The amendment is effective for annual
periods beginning on or after 1 January
2017. Earlier application is permitted. When an entity first applies the amendment, it is
not required to provide comparative
information in respect of preceding periods.
Who is affected?
The amendment will affect every entity
preparing IFRS financial statements. However, the information required should
be readily available. Preparers should
consider how to best present the additional information explaining the changes in
liabilities arising from financing activities.
Acquisition Interest
accretion
Foreign
exchange
movement
New
leases
Fair
value
change
'000 '000 '000 '000 '000 '000 '000 '000
Short-term bank borrowings 10,000 (300) - - - - - 9,700
Long-term bank borrowings 22,000 500 3,000 - 3,000 - - 28,500
Other long-term borrowings 1,000 (400) - - - - - 600
Finance lease liabilities 3,000 (250) - 200 - 500 - 3,450
Interest payable 456 (2,100) - 2,500 - - - 856
Assets held to hedge long-
term borrowings
(300) 150 - - - - (40) (190)
36,156 (2,400) 3,000 2,700 3,000 500 (40) 42,916
(2) Cash and cash equivalents
(other than bank overdraft)
(30,000) 300 - - 250 - - (29,450)
(2)(3) Bank overdraft 2,100 (200) - - - - - 1,900
Cash and cash equivalents (27,900) 100 - - 250 - - (27,550)
8,256 (2,300) 3,000 2,700 3,250 500 (40) 15,366
Non-cash changesCash
flows
At 1
January
20x7
At 31
December
20x7
(1)
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IFRS news – March 2016 7
Cannon Street Press
Insurance contracts
The IASB instructed the staff to start the balloting process. The IASB will discuss the effective date and any sweep issues that
arise in the drafting process at a future meeting. The final standard is expected around the end of 2016.
Goodwill and Impairment
The IASB continued its discussions. No decisions were made. The IASB will continue its discussions at future meetings
and consider the steps it needs to take before holding further discussions with the FASB.
Measurement of interests in associates and joint ventures
The IASB discussed the IC’s request for input on whether long-term interests that in substance form part of the net investment in an associate or joint venture should be tested for impairment by applying IAS 28, IFRS 9 or a combination of both.
The IASB supported the IC’s continued discussion of the issue and noted the possibility that the IC might develop an interpretation to clarify the type of
interests that are included in the net investment.
The IASB agreed that such long-term interests would be recognised and measured by applying the requirements of IFRS 9. The IASB further agreed that entities would apply the impairment requirements of IFRS 9 and IAS 28 when assessing the net investment. Feedback from the IASB will be provided to the IC at a future meeting.
Non-current liabilities: conditions that are tested after the end of the reporting period
The IASB considered how its proposals in the ED Classification of Liabilities should be applied when conditions in the lending agreement are tested or reviewed after the end of the reporting period. The Board tentatively decided that:
compliance with any conditions in the lending agreement is assessed as at the reporting date;
the proposed amendment to the Standard should include the requirement that compliance with a condition as at the end of the reporting period should determine whether a right subject to that condition should
affect classification even in cases where the conditions are tested subsequent to the year-end;
when an agreement includes a periodic review clause and the right to defer settlement is subject to the lenders review, the entity has a right to defer settlement only up to the date of the periodic review.
At a future meeting, the staff will present analysis that examines the guidance with respect to the transfer of equity as a means of settlement and that confirms the Board’s proposals by using specific examples raised in the comment letters.
Financial Instruments with characteristics of equity
The IASB discussed the further developments of the three approaches it has identified as possible ways of improving IAS 32 Financial Instruments. The IASB’s discussions focused on the presentation of sub-classes of liabilities
including presenting income and expense from particular type of liabilities, and the attribution of profit or loss and other comprehensive income to sub-classes of equity. No decisions have been made.
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IFRS news – March 2016 8
IFRIC Rejections in short - IAS 16 Tatiana Geykhman of Accounting Consulting Services examines the practical implications of IC rejections related to IAS 16.
Looking for an answer? Maybe it was already addressed by the experts.
The Interpretations Committee (IC) regularly considers anywhere up to 20 issues at its periodic meetings. A very small percentage of the issues discussed result in an interpretation. Many issues are rejected; some go on to become an improvement or a narrow scope amendment. The issues that are not taken on to the agenda end up as ‘IFRIC rejections’, known in the accounting trade as ‘not an IFRIC’ or NIFRICs. The NIFRICs are codified (since 2002) and included in the ‘green book’ of standards published by the IASB although they technically have no standing in the authoritative literature. This series covers what you need to know about issues that have been ‘rejected’ by the IC. We go standard by standard and continue with IAS 16 as per below.
IAS 16 covers recognition, measurement, and disclosure of property, plant and equipment (PPE). Nine matters related to IAS 16 have resulted in an agenda rejection by the IC.
Depreciation
A number of issues have been submitted to the IC on the acceptable methods of depreciation.
Production method (May 2004)
The IC considered the so-called production method of depreciation. An example is the use of the road that is expected to increase over time. The IC considered whether this method could be used for an asset whose benefits were not consumed directly through use. The IC rejected the issue and deferred this to the Board. The units of production method results in a charge based on the expected use or output. It can be used where this method reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
Interest method (November 2004)
The IC also rejected a submission asking about the interest method of depreciation. Under this method, the depreciated amount of an asset reflects the present value of future net cash flows expected from it, and thus the asset would be treated similarly to a receivable.
The IC noted that the depreciation method should reflect the manner in which future economic benefits of the asset are consumed. For example, straight-line depreciation would be the most appropriate
method where a road is used equally over time.
Revenue-based methods
IAS 16 establishes the principle for the basis of depreciation as being the expected pattern of consumption of the future economic benefits of an asset. In the case of a toll road, consumption might be low in the early periods and high in later periods. The IC discussed in November 2011 and March 2012 whether a unit of production method (expected use or output) might be more appropriate to reflect the pattern of consumption of the expected future economic benefits and suggested a clarification of IAS 16 and IAS 38.
The IASB then clarified that the use of revenue-based methods to calculate depreciation of an asset is presumed to be an inappropriate basis, because revenue reflects factors other than the consumption of the economic benefits embodied in the asset. In May 2014 the IASB amended IAS 16 and IAS 38. These amendments are effective for annual periods beginning on or after 1 January 2016.
Cost of testing (July 2011)
The IC was asked to clarify what could be viewed as sales proceeds from testing an asset. The submission considered an industrial group consisting of several autonomous plants in a jurisdiction subject to local regulation. The regulation required a ‘commercial production date’ to be identified for the industrial complex as a whole. The submission asked whether the proceeds from the plants already in operation could be offset against the costs of
www.pwc.com/ifrs
IFRS news – March 2016 9
testing the plants that are not yet available for use.
The IC noted that the cost of testing and
proceeds from testing should be determined separately for each PPE item. The IC thought
that the IAS 16 guidance is sufficient to determine when a PPE item is available for
use and to distinguish proceeds that reduce
costs of testing an asset from revenue from production. Diversity in practice was not
expected.
Summary of IAS 12 rejections
Topic Summary conclusion
Depreciation of fixed assets (May 2004)
The IC considered the use of the production method of depreciation for an
asset not consumed directly in relation to the level of use. An example is the use of a road that is expected to increase over time. The IC believed this
was a conceptual area and recommended that the Board consider this topic
as part of the Concepts project.
Depreciation of assets under operating leases (November 2004)
The IC concluded that the use of interest method of depreciation is not appropriate. Under this method, the depreciated amount of an asset
reflects the present value of future net cash flows expected from it.
Revaluation of investment properties under construction (November 2006)
Following the recommendation from the IC, the Board amended IAS 16
and IAS 40 in May 2008 to state that investment property under
construction should be accounted for under IAS 40.
Sale of assets held for rental (May 2007)
The IC received a question on presentation of gains or losses where an entity holds assets for rental and sells these assets afterwards.
Following this submission, the Board amended IAS 16 in May 2008,
clarifying that proceeds from the sale of assets held for rental should be recognised as revenue under IAS 18. The Board concluded that gross
presentation would better reflect the ordinary activities for entities that
routinely sell PPE items held for rental.
Disclosure of idle assets and idle construction in progress (May 2009)
As IAS 16 encourages, but does not specifically require, disclosure of temporarily idle assets and construction in progress, the IC was asked to clarify the expected extent. The IC concluded that on the basis of the IAS 1, the requirement to disclose additional information that is relevant to an understanding of the financial statements, no additional guidance is needed.
Cost of testing (July 2011)
The IC considered whether the proceeds from plants already in operation could be offset against the costs of testing plants that are not yet available for use provided all plants belong to the same industrial group. The IC rejected the issue on the basis that IAS 16 provides sufficient guidance to identify the date at which an item of PPE is ‘available for use’ and, therefore, to distinguish proceeds that reduce costs of testing an asset from revenue from commercial production.
Purchase of right to use land (September 2012)
The IC was asked to clarify the accounting for the purchase of a right to use land, and rejected the issue based on the fact pattern being territory specific.
Notwithstanding the IC observed that the existence of an indefinite period does not prevent the ‘right of use’ from qualifying as a lease in accordance with IAS 17.
www.pwc.com/ifrs
IFRS news – March 2016 10
Disclosure of borrowing costs for assets under the revaluation model (May 2014)
For PPE carried at fair value, the capitalisation of borrowing costs is not required. The IC confirmed that as part of the requirement to disclose the amount at which such assets had been carried under the cost model includes the disclosure of capitalised borrowing costs.
Accounting for core inventories (November 2014)
The IC was asked to clarify whether ‘core inventories’ should be accounted for under IAS 2 or under IAS 16. The IC observed that what might constitute ‘core inventories’ and how they are accounted for, could vary between industries. The IC noted that it did not have clear evidence that the differences in accounting were caused by differences in how IAS 2 and IAS 16 were being applied and removed this issue from its agenda.
The leases library
by Derek Carmichael
And opening in next month’s IFRS News:
The leases lab!
Reception
In brief A summary introduction to the new standard
Reference section
In depth A detailed look at the requirements of the new
standard, with practical examples of the application of key principles
Critical analysis
IFRS blog
PwC’s dedicated IFRS blog discusses and debates the hot topics in IFRS and leasing
Media
Webcast Patrina Buchanan (IASB), Derek Carmichael and Jay
Tahtah (PwC) discuss the highlights of the new standard
Interview on the practical impacts of IFRS 16 Jay Tahtah talks to Derek Carmichael about practical
implications on companies of the new standard
Specialist subjects
In the spotlight: Key questions to think
about for individual industries, including
Retail & consumer and Real estate.
New arrivals expected soon!
Recommended reading
Are you ready? A look at the impact on systems, processes and
reporting
www.pwc.com/ifrs
IFRS news – March 2016 11
The bit at the back.....
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. It does not take into account any objectives, financial situation or
needs of any recipient; any recipient should not act upon the information contained in this publication without obtaining independent professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this
publication or for any decision based on it. © 2016 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate
and independent legal entity.
For further help on IFRS technical issues contact:
Business combinations and adoption of IFRS
[email protected]: Tel: + 44 (0) 207 804 2930
[email protected]: Tel: + 44 (0) 207 213 2123
Liabilities, revenue recognition and other areas
[email protected]: Tel: +44 (0) 207 213 5336
[email protected]: Tel: +44 (0) 207 212 3238
Financial instruments and financial services
[email protected]: Tel: + 44 (0) 207 212 5697 [email protected]: Tel: + 44 (0) 207 804 4464
IFRS news editor
Anna Schweizer [email protected]: Tel: +44 (0) 207 804 3129