Compliance with laws and regulations

Protective rights

by

Protective rights relate to fundamental changes to the activities of an investee or apply in exceptional circumstances. However, not all rights that apply in exceptional circumstances or are contingent on events are protective. Because protective rights are designed to protect the interests of their holder without giving that party power over the investee to which those rights relate, an investor that holds only protective rights cannot have power or prevent another party from having power over an investee.

Right to control the use of the identified asset in IFRS 16 – Best read

by

Right to control the use of the identified asset – A contract conveys the right to control the use of an identified asset for a period of time if, throughout the period of use, the customer has the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset. Right to obtain substantially all of the economic benefits from use of the identified asset A customer can obtain economic benefits either directly or indirectly (e.g., using, holding or subleasing the asset). Economic benefits include the asset’s primary outputs (i.e., goods or services) and any by-products (e.g., renewable energy credits that are generated through use … Read more

IFRS 16 Right to direct the use of the identified asset

by

IFRS 16 Right to direct the use of the identified asset Requiring a customer to have the right to direct the use of an identified asset is a change from IFRIC 4. A contract may have met IFRIC 4’s control criterion if, for example, the customer obtained substantially all of the output of an underlying asset and met certain price-per-unit-of-output criteria even though the customer did not have the right to direct the use of the identified asset as contemplated by IFRS 16. Under IFRS 16, such arrangements would no longer be considered leases [IFRS 16 B24] A customer has the right to direct the use of an identified asset throughout the period of use when either: IFRS 16 Right … Read more

Stewardship and agency theory

by

Stewardship and agency theory – This part is a more detailed explanation of the revised Conceptual Framework for Financial Reporting 2018 (Conceptual Framework) issued by the International Accounting Standards Board (IASB) regarding Control as part of chapter 4 – The Elements of Financial Statements, section 4.25 on one party (a principal) engaging another party (an agent) to act on behalf of, and for the benefit of, the principal. The view of ‘stewardship’ given in the current Conceptual Framework mentions that management are accountable to the entity’s capital providers for the custody and safekeeping of the entity’s economic resources and for their efficient and profitable use, including protecting them from unfavorable economic effects such as inflation and technological changes. Management are … Read more