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IFRS 9 Financial instruments

Classification, measurement and impairment of financial assets

IFRS 9 Financial Instruments (IFRS 9) introduced major accounting changes for financial assets that significantly impacted the financial statements of all types of lending organizations, such as banks, financial cooperations, and leasing companies. Here the focus is on classification and measurement – including impairment loss provisions – of smaller lending organizations’ financial assets. Other significant changes that may impact smaller …

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The Elements of Financial Statements

Present obligation as a result of past event

Obligation: A duty or responsibility to act or perform in a certain way. Obligations may be legally enforceable as a consequence of a binding contract or statutory requirement. Obligations also arise, however, from normal business practice, custom and a desire to maintain good business relations or act in an equitable manner.

It is important to distinguish between a present obligation …

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Financial Statements and the Reporting entity

Going concern assumption

Going concern is one the fundamental assumptions in accounting on the basis of which financial statements are prepared. Financial statements are prepared assuming that a business entity will continue to operate in the foreseeable future without the need or intention on the part of management to liquidate the entity or to significantly curtail its operational activities. Therefore, it is assumed …

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IFRS 15 Revenue from Contracts with Customers

Transfer of control for performance obligations excluding distinct licences

IFRS 15 indicates that an entity must determine, at contract inception, whether it will transfer control of a promised good or service over time. If an entity does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time. A performance obligation is satisfied over time if it meets one of the following criteria:…

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IFRS 15 Revenue from Contracts with Customers

Transfer of control for distinct software licences

The standard provides additional application guidance to help entities determine when control transfers for distinct licences of intellectual property, based on the nature of the promise to the customer. This application guidance is applicable for both perpetual and term software licences.

 

IFRS 15 states that entities provide their customers with either:

 

If the licence does not meet …

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IFRS 15 Revenue from Contracts with Customers

Considerations for cloud arrangements

Cloud services arrangements may include the cloud services (such as software-as-a-service (SaaS)) or other products or services. These arrangements also frequently include a licence of the software, for which the customer may (or may not) have the right to take possession. Cloud services entities also frequently offer professional services, such as implementation, data migration, business process mapping, training and project …

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IFRS 15 Revenue from Contracts with Customers

Unspecified additional software products

As part of a contract with a customer, a software entity may license software today and promise to deliver unspecified additional software products in the future. For example, the software entity may agree to deliver all new products to be introduced in a family of products over the next two years.

 

Unspecified additional software products may be treated …

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IFRS 15 Revenue from Contracts with Customers

Specified upgrades for software contracts

Entities may provide customers with the right to specified upgrades or enhancements as part of a software arrangement. Under IFRS 15, entities will need to evaluate whether the rights to receive specified upgrades or enhancements are promised goods or services and potentially separate performance obligations. If the specified upgrade is a separate performance obligation, a portion of the …

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IFRS 15 Revenue from Contracts with Customers

Licences of intellectual property

The determination of whether a licence is distinct may require judgement. In some software arrangements, a software licence will be distinct because it is the only promise in the contract. In other arrangements, the customer will be able to benefit from the licence on its own or with readily available resources and it will be separately identifiable from the

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IAS 12 Income Taxes
IFRIC 23 Uncertainty over Income Tax Treatments

Uncertainty in income tax measurement

In assessing whether uncertainty over income tax treatments exists, an entity may consider a number of indicators including, but not limited to, the following:

  • Ambiguity in the drafting of relevant tax laws and related guidelines (such as ordinances, circulars and letters) and their interpretations
  • Income tax practices that are generally applied by the taxation authorities in specific jurisdictions and situations
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