What is new on IFRS?

Size: px

Start display at page:

Download "What is new on IFRS?"

Cecilia Green
6 years ago
Views:

1 What is new on IFRS?

2 Agenda 1. What s new for What is in the pipeline IFRS 15 Revenue from contract with customers IFRS 9 Financial instruments IAS 41 Amendments ( bearer plants ) PwC Slide 2

3 1 What s new for 2014 (selected changes)

4 IFRIC 21 - Levies Scope Levies in the scope of IAS 37 Timing and amount to pay is certain Key provisions What is the obligating event that gives rise to a liability? Event identified by the legislation triggering obligation to pay When is a liability to pay a levy recognised? When the obligating event occurs At a point of time or over time Trigger by reaching minimum threshold Same recognition principles in interim period PwC Slide 4

5 Transition and effective date Annual periods beginning on or after 1 January 2014 Retrospectively applied Same recognition principles in interim period PwC Slide 5

6 Amendments to existing standards Standard Amended IFRS 10, IFRS 12 and IAS 27 IAS 32 IAS 36 Description Amendments applicable to Investment entities They are now required to account for investments in subsidiaries at fair value and add disclosures The amendments clarify that the right of set-off must be available today that is, it is not contingent on a future event. Add disclosures. Removes the requirement to disclose recoverable amount when a cash generating unit (CGU) contains goodwill or indefinite lived intangible assets but there has been no Impairment, unless an impairment loss has been recognised or reversed. PwC Slide 6

7 2 What is in the pipeline IFRS 15 - Revenue from contracts with customers

8 IFRS 15 Where are we now? Standard issued 28 May 2014 Largely converged with US GAAP Effective from 1 January 2017 with early adoption permitted Remember Actual words will be important Facts and circumstances Practice will develop New model - new mindset PwC 8

9 IFRS 15 Revenue recognition model IAS 18 /11 Separate models for: Construction contracts Goods Services IFRS 15 Single model for performance obligations: Satisfied over time Satisfied at a point in time Focus on risk and rewards Focus on control Limited guidance on: Multiple element arrangements Variable consideration Licences More guidance: Separating elements, allocating the transaction price, variable consideration, licences, options, repurchase arrangements and so on. PwC 9

10 Scope Revenue is income from ordinary activities IAS 18 IFRS 15 Revenue from contracts with customers IAS 11 Performance obligations Sale of services satisfied over Sale of time goods Performance obligations Construction contracts satisfied at a point in time Royalties Dividends IAS 17: leasing income Interest IAS 39 IAS 39 Other income: government grants, investment property, agriculture and so on. PwC 10

11 Revenue the five step approach Core principle Revenue recognised to depict transfer of goods or services Step 1 - Identify the contract with the customer Step 2 - Identify the separate performance obligations in the contract Step 3 - Determine the transaction price Step 4 - Allocate the transaction price Step 5 - Recognise revenue when (or as) a performance obligation is satisfied PwC 11

12 2 What is in the pipeline IFRS 9 Financial Instruments

Classification and measurement Key changes Introduction FV-OCI category with recycling for debt instruments Clarify hold to collect business model Clarify solely payments of principal

13 Classification and measurement Key changes Introduction FV-OCI category with recycling for debt instruments Clarify hold to collect business model Clarify solely payments of principal and interest (SPPI) for certain instruments (i.e. modification test ) Revised transition guidance to require all phases IFRS 9 adopted together once final standard is issued. PwC Slide 13

14 Classification and measurement of debt instruments Business Model Assessment Overview Is objective of the entity s business model to hold the financial assets to collect contractual cash flows? No Is the financial asset held to achieve an objective by both collecting contractual cash flows and selling financial assets? No Yes Yes Do contractual cash flows represent solely payments of principal and interest? Yes Yes Does the company apply the fair value option to eliminate an accounting mismatch? No No No Yes Fair value through P&L Amortised cost FV-OCI PwC Slide 14

15 Impairment - Credit deterioration model Recognition of expected credit losses Change in credit quality since initial recognition 12 month expected credit losses Lifetime expected credit losses Lifetime expected credit losses Interest revenue Effective interest on gross carrying amount Effective interest on gross carrying amount Effective interest on amortised cost carrying amount (i.e. net of credit allowance) Stage 1 Stage 2 Stage 3 Initial recognition* *except for purchased or originated credit impaired assets Assets with significant increase in credit risk since initial recognition* Credit impaired assets PwC Slide 15

16 General hedging Key proposal Retain three types of hedges Still need documentation and designation Greater alignment with risk strategy: Non-financial items Derivatives as hedged item Net exposures Accounting for time value of options and forwards Removal of effectiveness bright lines PwC Slide 16

17 2 What is in the pipeline IAS 41 Amendments ( bearer plants )

18 Exposure draft of IAS 41 Amendment - Bearer plants Overview of IAS 41 Biological assets can be plant or animal and bearer or consumable Bearer - are expected to bear produce for more than one period, e.g. apple trees or dairy cows. Biological Asset Consumable - will be harvested as agricultural produce or sold as biological assets e.g. Beef cattle or timber forest Plants Animals IAS 41 amendment Scope bearer plants out of IAS 41 and into IAS 16 Bearer Consumable Bearer Consumable PwC Slide 18

19 Exposure draft of IAS 41 Amendment - Bearer plants Key proposal Bearer plants are in the scope of IAS 16 not IAS 41 Initial cost is accumulated and capitalised until the plant is in the location and condition necessary to bear produce The plant is accounted for at cost or revaluation The biological asset growing on the plant will remain in IAS 41 measured at FV less cost to sell until harvest PwC Slide 19

20 Thank you PwC youtube.com/pwc PwC Brasil This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers LLP. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

IFRS update Israel December 2013

IFRS update Israel December 2013 www.pwc.com IFRS update Israel December Agenda 1. What s new? 2. Developments at the IASB - Leases - Revenue - Financial instruments - Conceptual framework - Rate regulation 3. Future improvements to IFRSs