Best focus on IFRS 16 Leases

Focus on IFRS 16 Leases

 

Best focus on IFRS 16 Leases Best focus on IFRS 16 Leases

(Source https://www.bdo.global/en-gb/services/audit-assurance/ifrs/ifrs-at-a-glance)

Focus on IFRS 16 Leases or in slightly more detail…..

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IFRS 15 Revenue from contracts with customers Quick best overview

IFRS 15 Revenue from contracts with customers

the easy way to obtain an solid overview

IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from contracts with customers

(Source https://www.bdo.global/en-gb/services/audit-assurance/ifrs/ifrs-at-a-glance)

What is the

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Best guide IFRS 16 Lessor modifications

Best guide IFRS 16 Lessor modifications

summarises the accounting for lessor modifications that depends on – and may change – the lease classification.

Unlike IAS 17 Leases, the new standard provides detailed guidance on the lessor accounting for lease modifications, with separate guidance for modifications to finance leases and operating leases.

However, additional complexities arise for modifications of a finance lease receivable not accounted for as a separate lease for which, under paragraph 80(b) of IFRS 16, the lessor applies the requirements of IFRS 9 Financial Instruments. A number of issues arise due to differences in the basic concepts between IFRS 16 and IFRS 9.

The following diagram summarises the accounting for lease modifications by a lessor.

Best guide IFRS 16 Lessor modifications

Separate lease Not a separate lease – Finance to operating Not a separate lease – Finance to finance Lessor modifications to operating expenses

* A lessee reassessment of whether it is reasonably certain to exercise an option to extend, or not to exercise a termination option, included in the original lease contract is not a lease modification

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1st and best IFRS Accounting for client money

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.

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IFRS 9 Retain all risks and rewards

IFRS 9 Retain all risks and rewards is part of a decision model for the derecognition of financial assets. The derecognition can be a full derecognition, a full continued recognition, a full derecognition with recognition of new assets or liabilities retained or a continued involvement. The model is starting here. Derecognition of financial assets IFRS 9 Retain all risks and rewards IFRS 9 Retain all risks and rewards

Step 5 Has the entity retained substantially all risks and rewards? [IFRS 9 3.2.6(b)]

If this comparison demonstrates that the entity’s exposure to the variability in the present value of the future net cash flows (discounted at the appropriate current market interest rate) from the financial asset does not change Read more

Transfer of control for distinct licences

Transfer of control for distinct licences Transfer of control for distinct licences – IFRS 15 indicates that an entity must determine, at contract inception, whether it will transfer control of a promised good or service over time. If an entity does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time. A performance obligation is satisfied over time if it meets one of the following criteria: Transfer of control for distinct licences

  • The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs – by providing hosting services, for example. Transfer of control for distinct licences
  • The entity’s performance creates or enhances an asset that the customer controls as the asset is created
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Performance obligation

A performance obligation is a promise in a contract to transfer to the customer either 1 distinct goods/services or 2 a series of distinct goods/services

Offsetting

Offsetting - Identifying, recognising and measuring both an asset and a liability as separate units of account, but presenting them as a net asset or liability

Realisation principle in 2 Principles and 2 Best Read Cases

The realisation principle is the concept that revenue can only be recognised once the underlying goods or services are delivered.

Restrictions on transferred assets

Restrictions on transferred assets - Stipulations that limit or direct the purposes for which a transferred asset may be used, but do not specify future benefit