IFRS 7 Financial instruments Disclosures High level summary

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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

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Leveraged buyout IFRS 3 best reporting

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Leveraged buyout IFRS 3 best reporting – In corporate finance, a leveraged buyout (LBO) is a transaction where a company is acquired using debt as the main source of consideration. These transactions typically occur when a private equity (PE) firm borrows as much as they can from a variety of lenders (up to 70 or 80 percent of the purchase price) and funds the balance with their own equity. Leveraged buyout IFRS 3 best reporting

1 The process and business reason

The use of leverage (debt) enhances expected returns to the private equity firm. By putting in as little of their own money as possible, PE firms can achieve a large return on equity (ROE) and internal … Read more

Consolidated financial statements

IFRS 10 Definition of consolidated financial statements

The financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.

ParentAn entity that controls one or more entities.

The other types of financial statements are unconsolidated financial statements (or company accounts) and combined financial statements.

Single economic entity concept

The concept of a single economic entity is illustrated in the example below:

Example – Single economic entity concept

A subsidiary buys an asset from a third party for CU 100. It subsequently sells the asset on to its parent for CU 130. The subsidiary records a profit

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Commodity finance IFRS the 6 best examples

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Commodity finance IFRS the 6 best examples – A key issue is whether the contract to deliver a non-financial item (the commodity) falls within the scope of IFRS 9 Financial Instruments. Although IFRS 9 would appear to apply only to financial assets and financial liabilities, certain contracts for non-financial items are also within its scope.

The scope of IFRS 9

In determining whether the transaction is within the scope of IFRS 9, key guidance is set out in IFRS 9 2.4. IFRS 9 2.4 notes that

This Standard shall be applied to those contracts to buy or sell a non-financial item that can be settled net in cash or in another financial instrument, or by Read more

IAS 1 Quick-start Presentation of Financial Statements

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IAS 1 Quick-start Presentation of Financial Statements

Intro

IAS 1 Presentation of Financial Statements sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction.

The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.

IAS 1 was reissued in September 2007 and applies to annual periods beginning on or after 1 January 2009.

Compliance

Financial statements should include an explicit and unreserved statement

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Non-current assets held for sale

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The core principle is that a non-current assets is deemed to be held for sale if its carrying value is expected to be recovered through selling it rather than using it. Making this judgment has two important accounting implications: Non-current assets held for sale

  1. It is carried within current assets in the statement of financial position; and Non-current assets held for sale
  2. It is not depreciated from the date of reclassification. Non-current assets held for sale

The conditions

In order to make this judgment, the asset must meet two strict conditions:

  1. It is available for immediate sale in its present condition at the date Non-current assets held for saleclassification to “held for sale” is made (this means the asset cannot be
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The way to IFRS 9 Financial Instruments

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This is the way to IFRS 9 Financial Instruments, introducing the why? for this new IFRS standard. In July 2014 the International Accounting Standards Board (IASB) published the 4th and final version of IFRS 9 Financial Instruments.

The way to IFRS 9 Financial Instruments

This was the conclusion of a major project started in 2002 as part of the Norwalk Agreement (WIKI) between the IASB and US Financial Accounting Standards Board (FASB) as a long term reform of financial instrument accounting.

The project had been divided into three phases in order to allow a step by step approach. Once a phase was completed, the corresponding chapters were created in IFRS 9 and withdrawn from IAS … Read more

Factoring and reverse factoring

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Factoring and reverse factoring – There is no specific guidance in IFRS on the classification of cash flows from traditional factoring or reverse factoring arrangements. However, there is some guidance in the Accounting Standards that is helpful in determining the most appropriate presentation.

First and foremost, IAS 1 Presentation of Financial Statements requires that the statement of financial position include line items that present the following, including:

  • Trade and other payables Factoring and reverse factoring
  • Financial liabilities (excluding trade and other payables and provisions).  Factoring and reverse factoring

IAS 1 70 also provides a useful description of trade payables, stating that: “Some current liabilities, such as trade payables and some accruals for employee and other operating costs, … Read more

IAS 34 Interim financial statements

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IAS 34 Interim financial statements provide all there is to know for producing Interim financial statements, what, where, when and what is in them.

Objective

IAS 34 prescribes the guidelines for an entity regarding the preparation of interim financial statements by providing information about the minimum contents of interim financial reports along with the recognition and measurement principles for such financial reports. These interim financial reports will provide the most recent activities, circumstances and financial affairs of the reporting entity

Scope

IAS 34 does not define, which entity is required to publish the interim financial reports, the time period after the end of interim period within which these financial reports should be published and how frequently these Read more

Government grants and assistance

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The receipt of government grants and assistance by an entity may be significant for the preparation of the financial statements for two reasons. Firstly, if resources Government grants and assistancehave been transferred, an appropriate method of accounting for the transfer must be found. Secondly, it is desirable to give an indication of the extent to which the entity has benefited from such assistance during the reporting period. This facilitates comparison of an entity’s financial statements with those of prior periods and with those of other entities.

Scope/Objective

IAS 20 is applied in accounting for, and in the disclosure of, government grants and in the disclosure of other forms of government assistance.

Government grants are sometimes called by other names such … Read more