IAS 36 How Impairment test

IAS 36 How Impairment test is all about this – When looking at the step-by-step IAS 36 impairment approach it comes down to the following broadly organised steps: IAS 36 How Impairment test

  • What?? – Determining the scope and structure of the impairment review, explained here,
  • If and when? – Determining if and when a quantitative impairment test is necessary, explained here,
  • IAS 36 How Impairment test or understanding the mechanics of the impairment test and how to recognise or reverse any impairment loss, if necessary. Which is explained in this section…

The objective of IAS 36 Impairment of assets is to outline the procedures that an entity applies to ensure that its assets’ carrying values are not … Read more

Introduction IFRS 17 Insurance contracts

Introduction IFRS 17 Insurance contracts – More than 20 years in development, IFRS 17 represents a complete overhaul of accounting for insurance contracts. The new standard applies a current value approach to measuring insurance contracts and recognises profit as insurers provide services and are released from risk. The profit or loss earned from underwriting activities are reported separately from financing activities. Detailed note disclosures explain how items like new business issued, experience in the year, cash receipts and payments, and changes in assumptions affected the performance and the carrying amount of insurance contracts.

IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued, reinsurance contracts held and investment contracts with discretionary participation features an entity Read more

The relevant activities of an investee

The relevant activities of an investee – Don’t get fooled, relevant activities for financial reporting and consolidation purposes does not mean that the activities of an investee are the same as the activities of other entities (parent entity and subsidiary entities) consolidated into that one group. No…….. it is about whether the activities significantly affect the investee’s returns. In other words can the parent entity earn from the relevant activities.

Let that be clear!!

IFRS 10 introduces the concept of ‘relevant activities’. This is a critical part of the model. This concept clarifies which aspects of an investee’s activities must be under the direction of an investor for that investor to have control for consolidation purposes. The relevant activities of an investee

Examples of activities that, … Read more

Financing activities

Financing activities - Activities that result in changes in the size and composition of the contributed capital and borrowings of the entity.

Relevance

Relevance - Relevant financial information is capable of making a difference in decisions made by users if it has predictive value, confirmatory value or both.

Notes to the financial statements

Notes to the financial statements that contain information in addition to the statement of financial position, of financial performance, of changes in equity

Main FS Statements Insurance contracts

Main FS Statements Insurance contracts – These examples of the main Financial Statements statements demonstrate the requirements in respect of presentation and disclosure according to IFRS 17 Insurance contracts. They also include Main FS Statements Insurance contracts the requirements (introduced or amended) in respect of presentation and disclosure according to IFRS 9 Financial instruments and IFRS 7 Financial instruments: Disclosures.

It is prepared for illustrative purposes only and should be used in conjunction with the relevant financial reporting standards and any other reporting pronouncements and legislation applicable in specific jurisdictions. Main FS Statements Insurance contracts

Presentation of insurance service result Main FS Statements Insurance contracts

 

IFRS 17 83,
85,
B120 – B127

Clarifications:

Insurance revenue reflects the consideration to which the insurer

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Classification of cash flows

Classification of cash flows – IAS 7 10 requires an entity to analyse its cash inflows and outflows into three categories:

Operating activities

It is often assumed that this category includes only those cash flows that arise from an entity’s principal revenue producing activities.

However, because cash flows arising from operating activities represents a residual category, which includes any cash flows that do not qualify to be recorded within either investing or financing activities, these can include cash flows that may initially not appear to be ‘operating’ in nature (e.g. cash inflows from other revenue sources that are not from the sale of goods or rendering of services, such as proceeds … Read more

Common cash flow classification errors in practice

Common cash flow classification errors in practice – Although the definitions of operating activities, financing activities and investing activities may appear straightforward, in practice a number of classification errors are frequently made. These include: Common cash flow classification errors in practice

1. Cash outflows related to the acquisition of intangible assets and items of property, plant and equipment incorrectly included within operating activities.

Some items of property, plant and equipment are purchased from suppliers on standard credit terms that are similar to those for inventory and for amounts payable to other creditors. Because of this, the transactions for property, plant and equipment may incorrectly be included within changes in accounts payable for operating items. Consequently, unless payments for property, plant … Read more

Cash inflows and outflows offsetting

IAS 1 Presentation of financial statements paragraph 32 prohibits the offset of assets and liabilities, and income and expense, unless this is specifically required or permitted by another IFRS.

IAS 7 13 – 17 sets out requirements for, and examples of, individual cash inflows Cash inflows and outflows offsetting and outflows that are to be presented separately in respect of operating, investing and financing activities. The offset of cash inflows and outflows is not permitted (except in limited circumstances, that are relevant for financial institutions – see below), meaning that separate (gross) disclosure is required for cash flows, including those related to:

  • The purchase and sale of intangible assets, and items of property, plant and equipment
  • The drawdown and repayment of borrowings
  • The lending of
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