IFRS 2 Fair value of equity instruments granted

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IFRS 2 Fair value of equity instruments granted – Share-based payment transactions with employees are measured with reference to the fair value of the equity instruments granted (IFRS 2.11).

The fair value of a equity instrument granted is determined as follows (IFRS 2.16-17):

  • If market prices are available for the actual equity instruments granted – i.e. shares or share options with the same terms and conditions – then the estimate of fair value is based on these market prices. IFRS 2 Fair value of equity instruments granted
  • If market prices are not available for the equity instruments granted, then the fair value of equity instruments granted is estimated using a valuation technique.

IFRS … Read more

Investments in Joint Ventures Overview

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Investments in Joint Ventures Overview that is what this is……

An entity with joint control of an investee shall account for its investment in a joint venture using the equity method except when that investment qualifies for exemption in IAS 28. Investments in Joint Ventures Overview

The exemptions include:Investments in Joint Ventures Overview

  • if the entity is a parent that is exempt from preparing consolidated financial statements by the scope exception in paragraphs 4(a) of IFRS 10 Consolidated Financial Statements; or Investments in Joint Ventures Overview
  • all of the following apply: Investments in Joint Ventures Overview
    1. the entity is a wholly-owned subsidiary, or is a partially-owned subsidiary of another entity and its other owners, including those
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IFRS 3 Acquired process is substantive?

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IFRS 3 Acquired process is substantive? – IFRS 3 requires a business to include, as a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Because all asset acquisitions include inputs, the existence of a substantive process is what distinguishes an asset or group of assets from a business. Entities can no longer presume that a set contains a process if the set generates revenues before and after the transaction. Further analysis is required to determine whether the set contains a substantive process.

Implementation of IFRS 3 revealed difficulties in assessing whether the acquired processes are sufficient to constitute one of the elements of a business; whether any missing Read more

IFRS 3 Identify a business

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IFRS 3 Identify a business – An entity shall determine whether a transaction or other event is a business combination by applying the definition in IFRS 3, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition. See also the accounting treatment acquisition of a business or asset(s) 

Guidance on identifying a business combination and the definition of a business are as follows:

The definition of a business: An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services … Read more

Creating a new contract or not?

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Creating a new contract or not – What is a modification of a contract and what is a new contract?

The way chosen in IFRS 15 Revenue from Contracts with Customers is that the general rule is that a modification is a continuation of an existing contract with some changes. To account for a change (modification) in a contract as being a new contract some hurdles have to be taken.

So, an entity must determine whether the modification creates a separate contract or whether it will be accounted for as part of the existing contract.

Two criteria must be met for a modification to be treated as a separate contract:

  • the additional goods and services are distinct
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Identify the contract with the customer

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Identify the contract with the customer – This part relates to a complete explanation of IFRS 15 Revenue from contracts with customers in respect of Engineering & Construction contracts, see Revenue from Engineering & Construction contracts. Identify the contract with the customer


The model in IFRS 15 applies to each contract with a customer. Contracts may be written, oral or implied by an entity’s customary business practices, but must be legally enforceable and meet specified attributes. Identify the contract with the customer

Attributes of a contract Identify the contract with the customer

To help entities determine whether (and when) their arrangements with customers are contracts within the scope of the model in the standard, the Board … Read more

What can happen to a contract with a customer?

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What can happen to a contract with a customer? – IFRS 15 Revenue from Contracts with Customers (contents page is here) 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.

In step 1 Identify the contract there are some specifically identified circumstances to capture the day-to-day complexities of selling products and services to customers into … Read more

Leases

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Leases explained along defined terms to obtain a quick overview. An overview is provided here.

Definitions from IFRS 16 Leases are:

IFRS 16 Leases: 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.

Lease payments – Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the following: Lease

  1. fixed payments (including in-substance fixed payments), less any lease incentives;
  2. variable lease payments that depend on an index or a rate;
  3. the exercise price of a purchase option if the lessee is reasonably certain to exercise that option;
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