IFRS 9 Financial instruments quick and best snapshot

19/02/2021

IFRS 9 Financial instruments quick and best snapshot – no hedge accounting

IFRS 9 Financial instruments

And in some more detail….

Important to remember, where does IFRS 9 come from – the International Accounting Standards Board (IASB) developed if as a response to the financial crisis and it was issued on 24 July 2014. The standard includes the requirements previously issued and introduces limited amendments to the classification and measurement requirements for financial assets as well as the expected loss impairment model. It includes:

Classification and measurement of financial assets – principle-based, as opposed to rule-based, classification and measurement categories for financial assets;
Classification and measurement of financial liabilities – new requirements for handling changes in the fair value

1st and best IFRS Accounting for client money

12/02/2021

IFRS Accounting for client money

If an entity holds money on behalf of clients (‘client money’):

should the client money be recognised as an asset in the entity’s financial statements?
where the client money is recognised as an asset, can it be offset against the corresponding liability to the client on the face of the statement of financial position?

DEFINITION: Client money

“Client money” is used to describe a variety of arrangements in which the reporting entity holds funds on behalf of clients. Client money arrangements are often regulated and more specific definitions of the term are contained in some regulatory pronouncements. The guidance in this alert is not specific to any particular regulatory regime.

Entities may hold money on behalf of clients under many different contractual arrangements, for example:

a bank may hold money on deposit in a customer’s bank account;
a fund manager or stockbroker may hold money on behalf of a customer as a trustee;
an insurance broker may hold premiums paid by policyholders before passing them onto an insurer;
a lawyer or accountant may hold money on behalf of a client, often in a separate client bank account where the interest earned is for the client’s benefit.

Best intro to accounting for cryptocurrencies in 1 view

12/02/2021

Best intro to accounting for cryptocurrencies

the basics provides guidance on some of the basic issues encountered in accounting for cryptocurrencies, focussing on the accounting for the holder.

The popularity of cryptocurrencies has soared in recent years, yet they do not fit easily within IFRS’ financial reporting structure.

For example, an approach of accounting for holdings of cryptocurrencies at fair value through profit or loss may seem intuitive but is incompatible with the requirements of IFRS in most circumstances. Here the acceptable methods of accounting for holdings in cryptocurrencies are discussed while touching upon other issues that may be encountered.

Relevant IFRS

IAS 38 Intangible Assets – IAS 2 Inventories – IFRS 13 Fair Value Measurement

What is a cryptocurrency?

Cryptocurrency is digital or ‘virtual’ money, which uses cryptography to secure its transactions, to control the creation of additional currency units, and to verify the transfer of assets. Cryptography itself describes the process by which codes are written or generated to allow information to be kept secret.

In contrast to traditional forms of money which are controlled using centralised banking systems, cryptocurrencies use decentralised control. The decentralised control of a cryptocurrency works through a ‘blockchain’, which is a public transaction database, functioning as a distributed ledger.

This has advantages in that two parties can transact with each other directly without the need for an intermediary, saving time and cost.

IFRS 13 The best Fair value fundamentals

05/12/2020

IFRS 13 The best Fair value fundamentals discusses the key concepts in the fair value standards, including the definition of fair value, inputs to fair value measurements, and the fair value hierarchy. It also addresses certain issues associated with the application of these concepts.

1 Definition of fair value

The fair value standard defines fair value:

IFRS 13 9

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Under the fair value standard, fair value is based on the exit price (the price that would be received to sell an asset or paid to transfer a liability), not the transaction price or … Read more

11 Best fair value measurements under IFRS 13

05/12/2020

11 Best fair value measurements under IFRS 13 – Several IFRS standards provide guidance regarding the scope and application of for assets and liabilities. Here they are from 1 to 11…….

1 Investments in associates and joint ventures

Investments held by venture capital organizations and the like are exempt from IAS 28’s requirements … Read more

The 2 essential types of share-based payments

05/12/2020

Share-based payments are classified based on whether the entity’s obligation is to deliver its own equity instruments (equity-settled) or cash or other assets (cash-settled).

For equity-settled transactions, an entity recognises a cost and a corresponding entry in equity.

Measurement is based on the grant-date fair value of the equity instruments granted.

Market and non-vesting conditions are reflected in the initial measurement of fair value, with no subsequent true-up for differences between expected and actual outcome.

The estimate of the number of equity instruments for which the service and non-market performance conditions are expected to be satisfied is revised during the vesting period such that the cumulative amount … Read more

IFRS 7 Financial instruments Disclosures High level summary

05/12/2020

Scope IFRS 7 Financial instruments Disclosures High level summary
IFRS 7 applies to all recognised and unrecognised financial instruments (including contracts to buy or sell non-financial assets) except: Interests in subsidiaries, associates or joint ventures, where IAS 27/28 or IFRS 10/11 permit accounting in accordance with IAS 39/IFRS 9 Assets and liabilities resulting from IAS 19 Insurance contracts in accordance with IFRS 4 (excluding embedded derivatives in these contracts if IAS 39/IFRS 9 require separate accounting) Financial instruments, contracts and obligations under IFRS 2, except contracts within the scope of IAS 39/IFRS 9 Puttable instruments (IAS 32.16A-D).
Disclosure requirements: Significance of financial instruments in terms of the financial position and performance
Statement of financial position		Statement of