Discontinued operations

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The definition: Discontinued operations is a component of an entity that either has been disposed off, or is classified as held for sale, and:

  1. represents a separate major line of business or geographical area of operations, Discontinued operations
  2. is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
  3. is a subsidiary acquired exclusively with a view to resale. Discontinued operations

and the second definition: A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit or a group … Read more

Presentation of discontinued operations

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The presentation of discontinued operations is part of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Presentation of discontinued operations

The profit or loss for the year on discontinued operations is presented as a separate line in the statement of profit or loss and other comprehensive income after the figure ‘profit for the year’. Presentation of discontinued operations

The line items from ‘Revenue’ to ‘profit for the year’ should therefore include continuing operations only. The figure for discontinued operations should include the post tax gain or loss on disposal of the assets of the operation (if sold) or the gain or loss on re-measurement following transfer to ‘held for sale’ (if relevant). Presentation of discontinued operations

If … Read more

IFRS 12 Disclosure of Interest in Other Entities

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IFRS 12 Disclosure of Interest in Other Entities is a consolidated disclosure standard requiring a wide range of disclosures about an entity’s interests in subsidiaries, joint arrangements, associates and unconsolidated ‘structured entities’. Disclosures are presented as a series of objectives, with detailed guidance on satisfying those objectives.

IFRS 12

Source: PKF Summaries & Snapshots

Or in more detail……

SCOPE

DEFINITIONS

SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS

Applied by entities that have an interest in: Subsidiaries; joint arrangements, associates; and unconsolidated structured entities.

IFRS 12 does not apply to:

  • Post-employment benefit plans or other long-term employee benefit plans to which IAS 19 Employee Benefits applies,

  • Separate financial statements, where IAS 27 Separate Financial Statements applies

  • An interest held by an entity that

… Read more

Revenue recognition at a point in time

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Revenue recognition at a point in time is included in IFRS 15 Revenue from Contracts with Customers (contents page is here), that introduced a single and comprehensive framework which sets out how much revenue is to be recognised, and when. The core principle is that a vendor should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. See a summary of IFRS 15 here. Revenue recognition at a point in time

We can say that performance obligation satisfied at a … Read more

IFRS 15 Revenue recognition

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IFRS 15 Revenue recognition is a primary and fundamental subject in the recognition of revenue. There are two ways of recognising revenue, revenue recognition over time and revenue recognition at a point in time. Revenue recognition over time is often referred to as the ‘Percentage of completion‘ method under the (superseded) IAS 11 Construction contracts.

The general principle is the revenue is recognised at a point in time (and as such it is the most common type of sales transaction at least in volume, just think of: a retailer sells a candy bar for cash in the shopping mall). As a result there are three criterion (see below ability, direct the use and obtain benefits from) that … Read more

IFRS 16 Lease term explained

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IFRS 16 Lease term explained or the lease term includes the following items (IFRS 16 18):

  • non-cancellable period of a lease; IFRS 16 Lease term explained
  • periods covered by an option to extend the lease – if the lessee (customer) is reasonably certain to exercise that option; and
  • periods covered by an option to terminate the lease – if the lessee (customer) is reasonably certain not to exercise that option.

The lease term should not go beyond the ‘enforceable period’ which lasts up to a point when both parties have the right to terminate the lease without permission from the other party with no more than an insignificant penalty (IFRS 16 B34).

Legal framework in a given country plays … Read more

IFRS 10 Cases of no consolidation requirements

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This is what this is about

IFRS 10 Cases of no consolidation requirements

This requires all parent entities to present consolidated financial statements, other than:IFRS 10 Cases of no consolidation requirements

IFRS 10 Cases of no consolidation requirements

Conditions for a parent entity to be exempt from consolidation [IFRS 10 4]

A parent is not required to present consolidated financial statements if

… Read more

Assessment of investment entities

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The assessment of investment entities is documenting whether an entity meets the definition, all facts and circumstances should be considered, including the entity’s purpose and design [IFRS 10 B85A]. It will often be straightforward to determine whether an entity is an investment entity. However, in view of the fundamental importance this assessment has on affected entities’ financial statements, IFRS 10 provides extensive application guidance.

More detail on each element of the definition is provided below:

1 Investment services condition

One of the essential activities of an investment entity is that it obtains funds from investors in order to provide those investors with investment management services. This is a feature that distinguishes investment entities and other entities, although … Read more

The way to IFRS 9 Financial Instruments

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This is the way to IFRS 9 Financial Instruments, introducing the why? for this new IFRS standard. In July 2014 the International Accounting Standards Board (IASB) published the 4th and final version of IFRS 9 Financial Instruments.

The way to IFRS 9 Financial Instruments

This was the conclusion of a major project started in 2002 as part of the Norwalk Agreement (WIKI) between the IASB and US Financial Accounting Standards Board (FASB) as a long term reform of financial instrument accounting. The way to IFRS 9 Financial Instruments

The project had been divided into three phases in order to allow a step by step approach. Once a phase was completed, the corresponding chapters were created in IFRS 9 … Read more