wiley 2021 interpretation and application of IFRS standar 2021

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contributions to the US GAAP comparisons, interpretations and application material This edition contains interpretations and application of the IFRS Standards, as approved by the International Accounting Standards Board (Board) for issue up to 30 June 2020, that are required to be applied for accounting periods beginning on January 2021 This book is printed on acid‐free paper Copyright © 2021 by John Wiley & Sons, Ltd All rights reserved This publication contains copyright material of the IFRS® Foundation in respect of which all rights are reserved Reproduced by John Wiley & Sons Ltd with the permission of the IFRS Foundation No permission granted to third parties to reproduce or distribute For full access to IFRS Standards and the work of the IFRS Foundation please visit http://eifrs.ifrs.org No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, 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books For more information about Wiley products, visit our website at www.wiley.com ISBN: 978‐1‐119‐81863‐2 (pbk) ISBN: 978‐1‐119‐981864‐9 (epdf) ISBN: 978‐1‐119‐81865‐6 (epub) ISBN: 978‐1‐119‐81866‐3 (obook) ‘IFRS®’ is a registered trade mark of the IFRS Foundation and is used by John Wiley & Sons Ltd under licence subject to the terms and conditions contained therein Please contact the IFRS Foundation for details of countries where its trade marks are in use and/or have been registered Trademarks: Wiley and the Wiley Publishing logo are trademarks of John Wiley and Sons, Inc and/or its affiliates in the United States and/or other countries, and may not be used without written permission IFRS is a registered trademark of The International Accounting Standards Board All other trademarks are the property of their respective owners Wiley Publishing, Inc is not associated with any product or vendor mentioned in this book Table of Contents 10 11 COVER TITLE PAGE COPYRIGHT ABOUT THE AUTHORS INTRODUCTION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS INTRODUCTION THE CURRENT STRUCTURE PROCESS OF IFRSSTANDARD‐SETTING APPENDIX A: CURRENT INTERNATIONAL FINANCIAL REPORTING STANDARDS (IAS/IFRS) AND INTERPRETATIONS (SIC/IFRIC) APPENDIX B: IFRS FOR SMEs CONCEPTUAL FRAMEWORK INTRODUCTION CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING 2018 HIERARCHY OF STANDARDS IFRS PRACTICE STATEMENT 1—MANAGEMENT COMMENTARY FUTURE DEVELOPMENTS US GAAP COMPARISON PRESENTATION OF FINANCIAL STATEMENTS INTRODUCTION SCOPE DEFINITIONS OF TERMS FINANCIAL STATEMENTS GENERAL FEATURES STRUCTURE AND CONTENT FUTURE DEVELOPMENTS ILLUSTRATIVE FINANCIAL STATEMENTS US GAAP COMPARISON STATEMENT OF FINANCIAL POSITION INTRODUCTION SCOPE DEFINITIONS OF TERMS GENERAL CONCEPTS, STRUCTURE AND CONTENT CLASSIFICATION OF ASSETS CLASSIFICATION OF LIABILITIES CLASSIFICATION OF SHAREHOLDERS’ EQUITY FUTURE DEVELOPMENTS US GAAP COMPARISON STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME, AND CHANGES IN EQUITY INTRODUCTION FUTURE DEVELOPMENTS SCOPE DEFINITIONS OF TERMS CONCEPTS OF INCOME RECOGNITION AND MEASUREMENT STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME PRESENTATION IN THE PROFIT OR LOSS SECTION OTHER COMPREHENSIVE INCOME 10 STATEMENT OF CHANGES IN EQUITY 11 US GAAP COMPARISON STATEMENT OF CASH FLOWS INTRODUCTION SCOPE DEFINITIONS OF TERMS BACKGROUND PRESENTATION OTHER REQUIREMENTS DISCLOSURE AND EXAMPLES CONSOLIDATED STATEMENT OF CASH FLOWS US GAAP COMPARISON 10 NOTES ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS INTRODUCTION SCOPE DEFINITIONS OF TERMS IMPORTANCE OF COMPARABILITY AND CONSISTENCY IN FINANCIAL REPORTING ACCOUNTING POLICY SELECTING ACCOUNTING POLICIES CHANGES IN ACCOUNTING POLICIES CHANGES IN ACCOUNTING ESTIMATES CORRECTION OF ERRORS 10 US GAAP COMPARISON 12 INVENTORIES INTRODUCTION DEFINITIONS OF TERMS RECOGNITION AND MEASUREMENT METHODS OF INVENTORY EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES US GAAP COMPARISON 13 PROPERTY, PLANT AND EQUIPMENT INTRODUCTION FUTURE DEVELOPMENTS DEFINITIONS OF TERMS RECOGNITION AND MEASUREMENT DERECOGNITION DISCLOSURES EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES US GAAP COMPARISON 14 10 BORROWING COSTS INTRODUCTION DEFINITIONS OF TERMS RECOGNITION AND MEASUREMENT US GAAP COMPARISON 15 11 INTANGIBLE ASSETS INTRODUCTION SCOPE DEFINITIONS OF TERMS RECOGNITION AND MEASUREMENT DISCLOSURES EXAMPLE OF FINANCIAL STATEMENT DISCLOSURE US GAAP COMPARISON 16 12 INVESTMENT PROPERTY INTRODUCTION DEFINITIONS OF TERMS IDENTIFICATION RECOGNITION AND MEASUREMENT PRESENTATION AND DISCLOSURE EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES US GAAP COMPARISON 17 13 IMPAIRMENT OF ASSETS AND NON‐CURRENT ASSETS HELD FOR SALE INTRODUCTION DEFINITIONS OF TERMS: IMPAIRMENT OF ASSETS IMPAIRMENT OF ASSETS (IAS 36) EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES FUTURE DEVELOPMENTS DEFINITIONS OF TERMS: NON‐CURRENT ASSETS HELD FOR SALE NON‐CURRENT ASSETS HELD FOR SALE DISCONTINUED OPERATIONS EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES 10 US GAAP COMPARISON 18 14 CONSOLIDATIONS, JOINT ARRANGEMENTS, ASSOCIATES AND SEPARATE FINANCIAL STATEMENTS INTRODUCTION DEFINITIONS OF TERMS CONSOLIDATED FINANCIAL STATEMENTS EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES JOINT ARRANGEMENTS ASSOCIATES EQUITY METHOD OF ACCOUNTING EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES SEPARATE FINANCIAL STATEMENTS 10 DISCLOSURE REQUIREMENTS 11 US GAAP COMPARISON 19 15 BUSINESS COMBINATIONS INTRODUCTION DEFINITIONS OF TERMS BUSINESS COMBINATIONS AND CONSOLIDATIONS BUSINESS COMBINATIONS DISCLOSURE REQUIREMENTS EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES FUTURE DEVELOPMENTS US GAAP COMPARISON NOTE 20 16 SHAREHOLDERS' EQUITY INTRODUCTION DEFINITIONS OF TERMS RECOGNITION AND MEASUREMENT PRESENTATION AND DISCLOSURE 21 22 23 24 25 26 27 PRESENTATION AND DISCLOSURE CLASSIFICATION BETWEEN LIABILITIES AND EQUITY SHARE ISSUANCES AND RELATED MATTERS FUTURE DEVELOPMENTS EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES US GAAP COMPARISON 17 SHARE‐BASED PAYMENT INTRODUCTION SCOPE DEFINITIONS OF TERMS OVERVIEW RECOGNITION AND MEASUREMENT EQUITY‐SETTLED SHARE‐BASED PAYMENTS CASH‐SETTLED SHARE‐BASED PAYMENTS SHARE‐BASED PAYMENT TRANSACTIONS WITH CASH ALTERNATIVES SHARE‐BASED TRANSACTIONS AMONG GROUP ENTITIES 10 DISCLOSURE 11 EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES 12 US GAAP COMPARISON 13 APPENDIX: EMPLOYEE SHARE OPTIONS VALUATION EXAMPLE UNDER IFRS 18 CURRENT LIABILITIES, PROVISIONS, CONTINGENCIES AND EVENTS AFTER THE REPORTING PERIOD INTRODUCTION DEFINITIONS OF TERMS RECOGNITION AND MEASUREMENT DISCLOSURES PRACTICAL EXAMPLES REPORTING EVENTS OCCURRING AFTER THE REPORTING PERIOD EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES US GAAP COMPARISON 19 EMPLOYEE BENEFITS INTRODUCTION DEFINITIONS OF TERMS BACKGROUND BASIC PRINCIPLES OF IAS 19 POST‐EMPLOYMENT BENEFIT PLANS EMPLOYER'S LIABILITY AND ASSETS MINIMUM FUNDING REQUIREMENT OTHER PENSION CONSIDERATIONS DISCLOSURES FOR POST‐EMPLOYMENT BENEFIT PLANS 10 EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES 11 OTHER EMPLOYEE BENEFITS 12 US GAAP COMPARISON 20 REVENUE FROM CONTRACTS WITH CUSTOMERS INTRODUCTION DEFINITIONS OF TERMS SCOPE THE REVENUE MODEL CONTRACT COST PRESENTATION DISCLOSURE EXAMPLE OF FINANCIAL STATEMENT DISCLOSURES SPECIFIC TRANSACTIONS INIFRS 15 10 OTHER SPECIFIC TRANSACTIONS 11 US GAAP COMPARISON 21 GOVERNMENT GRANTS INTRODUCTION SCOPE DEFINITIONS OF TERMS RECOGNITION OF GOVERNMENT GRANTS PRESENTATION AND DISCLOSURE OTHER ISSUES SERVICE CONCESSIONS US GAAP COMPARISON 22 LEASES INTRODUCTION DEFINITIONS OF TERMS CLASSIFICATION OF LEASES RECOGNITION AND MEASUREMENT DISCLOSURE REQUIREMENTS EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES US GAAP COMPARISON 23 FOREIGN CURRENCY INTRODUCTION DEFINITIONS OF TERMS SCOPE, OBJECTIVES AND DISCUSSION OF DEFINITIONS FOREIGN CURRENCY TRANSACTIONS 28 29 30 31 32 33 34 TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS GUIDANCE APPLICABLE TO SPECIAL SITUATIONS DISCLOSURE HEDGING EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES 10 US GAAP COMPARISON 24 FINANCIAL INSTRUMENTS INTRODUCTION DEFINITIONS OF TERMS RECOGNITION, MEASUREMENT AND DERECOGNITION OF FINANCIAL INSTRUMENTS FINANCIAL LIABILITIES SUBSEQUENT MEASUREMENT OF FINANCIAL LIABILITIES EMBEDDED DERIVATIVES FINANCIAL INSTRUMENTS MEASURED AT AMORTISED COST FAIR VALUATION GAINS AND LOSSES IMPAIRMENT OF FINANCIAL INSTRUMENTS 10 HEDGE ACCOUNTING 11 EFFECTIVE DATE AND TRANSITION REQUIREMENTS OF IFRS 12 PRESENTATION OF FINANCIAL INSTRUMENTS UNDER IAS 32 13 DISCLOSURES 14 FINANCIAL ASSETS SUBJECT TO OFFSETTING, ENFORCEABLE MASTER NETTING ARRANGEMENTS AND SIMILAR AGREEMENTS 15 FINANCIAL LIABILITIES SUBJECT TO OFFSETTING, ENFORCEABLE MASTER NETTING ARRANGEMENTS AND SIMILAR AGREEMENTS 16 NET FINANCIAL ASSETS SUBJECT TO ENFORCEABLE MASTER NETTING ARRANGEMENTS AND SIMILAR AGREEMENTS, BY COUNTERPARTY 17 FUTURE DEVELOPMENTS 18 US GAAP 25 FAIR VALUE INTRODUCTION SCOPE DEFINITIONS OF TERMS FAIR VALUE MEASUREMENT PRINCIPLES AND METHODOLOGIES FAIR VALUE DISCLOSURE US GAAP COMPARISON 26 INCOME TAXES INTRODUCTION SCOPE DEFINITIONS OF TERMS IDENTIFICATION RECOGNITION AND MEASUREMENT OF CURRENT TAX RECOGNITION AND MEASUREMENT OF DEFERRED TAX RECOGNITION IN PROFIT OR LOSS CALCULATION OF DEFERRED TAX ASSET OR LIABILITY EFFECT OF CHANGED CIRCUMSTANCES 10 SPECIFIC TRANSACTIONS 11 PRESENTATION AND DISCLOSURE 12 EXAMPLE OF FINANCIAL STATEMENT DISCLOSURES 13 FUTURE DEVELOPMENTS 14 US GAAP COMPARISON 27 EARNINGS PER SHARE INTRODUCTION SCOPE DEFINITIONS OF TERMS CONCEPTS, RULES AND EXAMPLES EXAMPLE OF FINANCIAL STATEMENT DISCLOSURES US GAAP COMPARISON 28 OPERATING SEGMENTS INTRODUCTION SCOPE DEFINITIONS OF TERMS IDENTIFICATION CONCEPTS AND REQUIREMENTS DISCLOSURE REQUIREMENTS EXAMPLE OF FINANCIAL STATEMENT DISCLOSURES UNDER IFRS US GAAP COMPARISON 29 RELATED PARTY DISCLOSURES INTRODUCTION DEFINITIONS OF TERMS IDENTIFICATION DISCLOSURES EXAMPLE OF FINANCIAL STATEMENT DISCLOSURES UNDER IFRS US GAAP COMPARISON 30 ACCOUNTING AND REPORTING BY RETIREMENT BENEFIT PLANS INTRODUCTION DEFINITIONS OF TERMS 35 36 37 38 39 40 41 42 DEFINITIONS OF TERMS SCOPE DEFINED CONTRIBUTION PLANS DEFINED BENEFIT PLANS DISCLOSURES US GAAP COMPARISON 31 AGRICULTURE INTRODUCTION SCOPE DEFINITIONS OF TERMS IDENTIFICATION RECOGNITION AND MEASUREMENT PRESENTATION AND DISCLOSURES EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES OTHER ISSUES US GAAP COMPARISON 32 EXTRACTIVE INDUSTRIES INTRODUCTION DEFINITIONS OF TERMS EXPLORATION AND EVALUATION OF MINERAL RESOURCES ASSETS SUBJECT TO IFRS EXAMPLE OF FINANCIAL STATEMENT DISCLOSURES IFRIC 20, STRIPPING COSTS IN THE PRODUCTION PHASE OF A SURFACE MINE EXAMPLE OF FINANCIAL STATEMENT DISCLOSURES FUTURE DEVELOPMENTS US GAAP COMPARISON 33 ACCOUNTING FOR INSURANCE CONTRACTS INTRODUCTION DEFINITIONS OF TERMS INSURANCE CONTRACTS RECOGNITION AND MEASUREMENT GUIDANCE DISCLOSURE FUTURE DEVELOPMENTS US GAAP COMPARISON 34 INTERIM FINANCIAL REPORTING INTRODUCTION SCOPE DEFINITIONS OF TERMS OBJECTIVES OF INTERIM FINANCIAL REPORTING APPLICATION OF ACCOUNTING POLICIES PRESENTATION RECOGNITION AND MEASUREMENT ISSUES US GAAP COMPARISON 35 HYPERINFLATION INTRODUCTION FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES US GAAP COMPARISON APPENDIX : MONETARY VS NON‐MONETARY ITEMS 36 FIRST ‐ TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS INTRODUCTION DEFINITIONS OF TERMS FIRST ‐ TIME ADOPTION GUIDANCE OPTIONAL EXEMPTIONS PRESENTATION AND DISCLOSURE INDEX End User License Agreement List of Illustrations Chapter 17 Figure 17.1 Fair value hierarchy Figure 17.2 Modifications and cancellations to the terms and conditions Guide Cover Page Table of Contents Begin Reading Pages ii iii iv vii 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 viii 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 63 64 65 66 67 68 69 70 71 72 73 74 75 76 obligating events definition 421 environmental damage 434–435 obligations constructive 420–421, 448 contractual, substance of 24 current liabilities 424–428, 448 non‐current liabilities 73–74 present 427–428 short‐term expected to be refinanced 425–426 observable inputs 726, 739–741 occasional revenues 909 OCI see other comprehensive income offsetting current liabilities 423 decommissioning costs 161–163 financial assets and liabilities 687–688, 694–696 financial statements 48–49 profit or loss 92–93 statement of financial position 74 omitted topics, small and medium‐sized entities 10 onerous contracts 420, 421, 430–431, 435 opening statements of financial position 937–939 operating activities classification 103–105 definition 100, 809 operating cycle 421 operating expenses 88–89 websites 216–217 operating leases 538–539, 544–546, 556 operating profit or loss, definition 809 operating rights, business combinations 342 operating segments 807–825 aggregation 813–814 chief operating decision maker 809, 812 definition 82, 808–809 disclosure requirements 812–824 entity‐wide disclosure requirements 818–819 identification 809–815 major customers 824 net trade receivables 823–824 reportable segments 812–815 scope of IFRS 807–808 optional exemptions, first‐time adoption 941–949 option contracts, statement of cash flows 110 options 651 for additional goods or services 508 binomial model 414–418 Black‐Scholes‐Merton model 412–414 earnings per share 797–798 future issuance shares 368–369 presentation 678–679 recognition 511–512 time value 668–670 order backlogs, business combinations 341 orderly transactions definition 726 determination 728 ordinary shares contingent issuances 790, 800–801 definition 790–791 other assets, classification 72 other comprehensive income (OCI) 77–85, 93–95 concepts 84–85 definition 43, 81 financial instruments 698–699 presentation 93–95 US GAAP comparisons 96–97 see also statement of profit or loss and other comprehensive income other employee benefits IAS 19 principles 456–457 long‐term 453, 473–474 post‐retirement 473–474 short‐term 473 terminations 474 other long‐term employee benefits 453, 456, 474 other post‐retirement employee benefits 473–474 other revenues and expenses 89 output methods, contract revenue 497 overlay approach 888–891 own credit risk 622–623 owner‐occupied property 224, 225–226 owners, definition 44 ownership changes in interest 273–274, 298–301 consolidated financial statements 270–271, 273–274 disclosure requirements 305–307 equity method 298–301 intangible assets 198–199 inventory 142–147 principal versus agent considerations 507–508 share of losses exceeding interest 303 parent companies first‐time adoption 947 investment property leases 226 related party disclosures 835 partial‐year depreciation 167–168 par value per share 367 past due, definition 603 past events, provisions 427–428 past service costs 453, 461 patents 198–199, 212–213, 342 PCAOB see Public Company Accounting Oversight Board PCFRC see Private Company Financial Reporting Committee pension plans accounting objectives 455 business combinations 467 disclosure requirements 468–472 employee contributions 468 IAS 19 applicability 456 interim financial reports 908 multi‐employer 453, 465–468 multiple 465–466 third‐party contributions 468 types 452 see also defined benefit plans; defined contribution plans percentage‐of sales method 603 performance condition, definition 388 performance obligations contracts 484–486 customer acceptance 498–499 definition 479 input methods 497–498 output methods 497 reasonable measures 498 satisfaction of 493–499 periodic inventory systems 141, 147 periodic measurement defined benefit plans 458–461 defined contribution plans 457–458 period‐specific effects, accounting policy changes 126 perpetual inventory systems 141, 147 plan assets definition 453–454 expected return on 454, 460–461 plant see property, plant and equipment pledging, definition 603 policyholders, definition 877 post‐combination accounting and measurement 337–339 post‐employment benefit plans 457–472, 841–848 accrued obligations interest 460 actuarial gains and losses 452, 460, 461 business combinations 467 current service cost 458–461 defined benefit plans 452, 454, 458–461, 462–465, 468–472, 844–847 defined contribution plans 453, 457–458, 468–470, 843, 846–847 definitions 454, 841–842 disclosure requirements 468–472, 846–847 employee contributions 468 employer's liability and assets 462 expected return on assets 460–461 interim financial reports 908 minimum funding requirements 462–465 multi‐employer 453, 465–468 multiple 465–466 past service costs 461 third‐party contributions 468 transition adjustments 462 US GAAP comparisons 474–475, 847–848 post‐retirement employee benefits 841–848 other 473–474 see also defined benefit plans; defined contribution plans; pension plans; post‐employment benefit plans potential ordinary shares, definition 791 power and returns 266–267 subsidiaries 263–267 Practice Statement 1–Management Commentary 37–39 preferences, shareholders' equity 367 preferred shares, convertible 377 premiums, provisions 438 prepaid expenses 71 presentation aggregation 35 classification 34–35 as communication tool 34 conceptual framework 34–36 discontinued operations 255–257 earnings per share 803–804 financial instruments 677–688 financial statements 41–61 first‐time adoption 950–953 government grants 524–525 income taxes 781 interim financial reports 903–907 investment property 232 management commentary 38 non‐current assets held‐for‐sale 255 objectives 34 other comprehensive income 93–95 profit or loss statement 86–93 revenue contracts 501 shareholders' equity 365–370 statement of cash flows 103–108 statement of changes in equity 95–96 presentation currency definition 563 from functional currency 571–573 to functional currency 573 Presentation of Items of Other Comprehensive Income 42 present obligations, provisions 427–428 present value, defined benefit obligations 454 previously recognised financial instruments, first‐time adoption 948 principal market, definition 726 principal‐to‐principal markets 729 principal versus agent considerations 507–508 principles, management commentary 37–38 prior period errors correction 117–121, 131–136 definition 120 prior periods accounting policy changes 124–126 retrospective application 120, 124–125 Private Company Financial Reporting Committee (PCFRC) 14 probabilities, expected credit losses 645–646 probable, definition 251 production backlogs, business combinations 341 product warranties, provisions 438–439, 506–507 profit, capital maintenance 36 profit or loss 77–95 aggregation 92 comparative information 87 concepts 84–85 cost of goods sold 88 definitions 44, 81–82 discontinued operations 88, 91 expenses classification 87–91 function of expense method 87–88 future developments 80 held‐for‐sale assets 89 income concepts 82–83 income taxes 782–783 income tax recognition 755 measurement 83–84 offsetting 92–93 operating expenses 88–89 other revenues and expenses 89 presentation 86–93 recognition 83–84 sales and other operating revenues 88 scope 80 separate disclosure items 89 US GAAP comparisons 96–97 see also statement of profit or loss and other comprehensive income projected unit credit 451 property, plant and equipment 157–185 decommissioning costs 161–163, 948 definitions 159 depreciation 165–171 derecognition 177–178 disclosures 178–184 exchanges of assets 164, 179–180 future developments 158–159 initial measurement 160–163 maintenance costs 164 measurement 159–176 recognition 159, 163 revaluations 171–176 US GAAP comparisons 184 see also investment property prospective application accounting estimate changes 130–131 definition 120 provisions 427–439 bonus payments 436 changes in 430 compensated absences 436–437 decommissioning costs 161–163, 430, 435–436 definition 422 disclosure requirements 432–433 discounting 429–430 disposal proceeds 430 dry docking costs 433–434 expected value 428–429 future events and operating losses 430 interim financial reports 908 leases 427, 430–431 levies 437–438 onerous contracts 430–431, 435 past events 427–428 premiums 438 present obligation 428 product warranties 438–439 recognition of use 430 reimbursements 430 restructuring 431–432 risks and uncertainties 429 unlawful environmental damage 434–435 warranties 506–507 prudence, insurance contracts 881 Public Company Accounting Oversight Board (PCAOB) 14 purchases consignment sales 144–146 financial assets 607–608 right to return 146–147 in transit 142–144 see also inventories purpose of conceptual framework 16 of financial statements 44–45 put options definition 603, 791 earnings per share 802 presentation 678–679 recognition 512 puttable shares 365, 371–372, 388 qualifying assets, definition 186 qualifying criteria, hedge accounting 654 qualitative characteristics financial instrument risk disclosures 709 management commentary 38 measurement 31 of useful financial information 18–19 quantitative disclosures, financial instrument risk 709 raw materials, definition 141 reacquired rights, business combinations 326–327 realisation, definition 82 reasonable additional compensation 613 rebalancing, hedges 662–665 receivables, statement of financial position 71, 501 reclassification dates 603 financial assets 615–616, 675–676, 694 financial liabilities 623 reclassification adjustments definition 44, 81 first‐time adoption 938–939 other comprehensive income 94–95 recognition accounting estimate changes 130–131 accounting policy changes 123–129 agriculture 853–858 borrowing costs 186–191 business combinations 319–326, 339–358 call options 511–512 compensated absences 473 conceptual framework 24–26 contract costs 499–501 current assets 70–72 current liabilities 72–73, 422–432 current tax 754 customer options for additional goods or services 508 customers' unexercised rights 509 deferred tax 754, 762–767 definition 82 employee benefits costs 457 error correction 131–136 exceptions, business combinations 325–326 expenses 83–84 exploration and evaluation assets 869 financial instruments 604–620 small and medium‐sized entities 11–12 first‐time adoption 938 forward options 511–512 gains and losses 84 goodwill 331–334 government grants 520–524 IAS 19 principles 457 income 83 insurance contracts 878–883 intangible assets 196–199, 203–208 interim financial reports 907–916 inventories 141–150 investment property 226–232 leases 540–554 licensing revenues 509–511 non‐current assets 72 noncurrent liabilities 73–74 non‐refundable upfront fees 509 options contracts 511–512 other assets 72 other long‐term employee benefits 474 other post‐retirement benefits 473–474 principal vs agent considerations 507–508 property, plant and equipment 159, 163 put options 512 reinsurance asset impairment 882 retirement benefit plans 844–847 revenue contracts 493–499 sales with a right of return 506 share‐based payment 391–392 shareholders' equity 365 small and medium‐sized entities 11–12 termination benefits 474 warranties 506–507 see also measurement reconciliation method see indirect method reconciliations, first‐time adoption 950–951 recourse, definition 603 recoverable amounts definition 159, 196, 238, 251 impairment of assets 240 recovery, previously recognised losses 154 refinancing current liabilities 73, 425–426 short‐term obligations 425–426 refunds, defined benefit plans 463–464 regular‐way purchase or sale definition 603 financial assets 607–608 reimbursements, provisions 430 reinsurance assets definition 877 impairment 880 reinsurance contracts, definition 877 reinsurers, definition 877 related parties 827–840 aggregation of disclosures 836–837 arm's length transaction price assertions 836 comparatives 837–838 compensation 837 definitions 828–829 disclosure requirements 833–839 government‐related entities 838 identification 829–833 need for disclosures 829–830 parent–subsidiary relationships 835 scope of IAS 24 831 significant influence 832–833 substance over form 831–832 transactions 829 US GAAP comparisons 839–840 relevance concept 18 measurement 30 reload features 388 reload options 388 remeasurement net defined benefit liabilities 454 presentation currency 573 remote contingent losses 440 renewable licence rights 213 repayment, government grants 525–526 replacement awards, business combinations 348 reportable segments 812–815 reporting, operating cash flows 105–110 reporting dates consolidated financial statements 270 equity method 302 first‐time adoption 933–934 foreign operations 582 reporting entities definition 563 financial statements 19–20 reporting frequency, financial statements 49 reporting periods, disclosure 86 repurchase agreements 511 definition 604 research definition 196 intangibles 201–202 research and development assets in business combinations 343 small and medium‐sized entities 13 reserves, shareholders' equity 369 residual value 159, 169 definition 196 intangibles 213–214 restatement hyperinflationary economies 925 retrospective 120, 131–136 restrictions equity instrument sales 734, 738 liability transfers 738 shareholders' equity 367 restructuring business combinations 322 definition 422 provisions 431–432 retail method 141, 154 retained earnings shareholders' equity 370, 377–379 statement of financial position 75 retirement, investment property 232 retirement benefit plans 841–848 defined benefit plans 844–847 defined contribution plans 843, 846–847 definitions 841–842 disclosure requirements 846–847 US GAAP comparisons 847–848 see also post‐employment benefit plans retrospective application 120, 124–125 first‐time adoption exceptions 939–941 retrospective restatement 131–136 definition 120 returnable deposits 424 returns on plan assets 454 and power 266–267 revaluation model, impairment reversals 246 revaluation reserves 369 revaluations accumulated depreciation 174–176 adjustments 173 asset classes 173 deferred tax effects 176 exploration and evaluation assets 869 fair value 171–172 foreign currency 569–570 initial 173–174 intangible assets 208–211 property, plant and equipment 171–176 revenue bill‐and‐hold arrangements 513 consignment sales 513 contract costs 499–501 from contracts with customers 477–516 contract costs 499–501 definitions 478–479 disclosure requirements 501–505 model 479–499 presentation 501 recognition 493–499 specific transactions 506–513 US GAAP comparison 515–516 customer options for additional goods or services 508 customers' unexercised rights 509 definitions 478–479 disclosure requirements 501–505 forward or call options 511–512 government assistance 518, 527 government grants 517–529 input methods 497–498 licensing 509–511 model 479–499 non‐refundable upfront fees 509 operating segments 809 output methods 497 presentation 501 principal versus agent considerations 507–508 put options 512 repurchase agreements 511 sales with a right of return 506 scope of IFRS 15 479 seasonal, cyclic and occasional 909 service concession arrangements 513–514, 527–529 services or assets obtained for no consideration 514–515 time value of money 488–489 unearned 424 US GAAP comparison 515–516 warranties 506–507 revenue‐based amortisation 207 reversals goodwill impairments 353–354 impairment of assets 244–246 revised expectations, deferred taxes 767 rights contractual, substance of 24 reacquired, business combinations 326–327 shareholders' equity 367 right to return purchases 146–147, 506 risk assumptions, liabilities 727, 735–736 risk management strategy disclosure 701–702, 710 risk premiums, definition 726 risks estimates 429 financial 876 financial instrument disclosures 701–702, 709–719 foreign currency disclosures 718–719 royalties business combinations 341–342 licence agreements 511 sales consignment 144–146 financial assets 607–608 intersegment 808 intrasegment 808 with a right of return 506 sales‐based royalties 511 sales contracts, future issuance shares 368–369 sales and other operating revenues 88 sales‐type leases 539–540, 546–550 satisfaction, performance obligations 493–499 seasonal revenues 909 SEC see Sec urities and Exchange Commission Securities and Exchange Commission (SEC) securitisation, definition 604 segment accounting policies 809 segment assets 809 segment expenses 809 segment revenue 809 self‐constructed assets 163–164 sensitivity analysis 716–717 separate disclosure items, profit and loss statements 89 separate financial statements 303–305 disclosure requirements 305 equity method 302 investment entities 304–305 joint arrangements 289 sequencing of dilutions 802 service concession arrangements 513–514, 527–529, 949 service conditions 388 equity‐settled share‐based payments 393–394, 399–400 service contracts business combinations 342 equity‐settled share‐based payments 393 share issuances 373 service costs definition 454 post‐employment benefit plans 458–461 service marks, business combinations 340–341 services customer options for additional 508 obtained for no consideration 514–515 servicing contracts, business combinations 342 settlements contingent provisions 685–686 definition 454 in entity's own equity instruments 679 equity‐settled share‐based payments 399–400 severe hyperinflation, definition 920–921 shadow accounting 881–882 share‐based payment 385–418 among group entities 405–406 arrangements 388 binomial model 414–418 Black‐Scholes‐Merton model 412–414 business combinations 327 with cash alternatives 404–405 cash‐settled 386, 400–403 definitions 386–389 disclosure requirements 407–409 employee share options 393, 400–403, 409–418 equity‐settled 387, 393–400 income taxes 781 measurement 391–392 overview 389–391 recognition 391–392 small and medium‐sized entities 13 transactions 389 US GAAP comparisons 409 vesting conditions 389, 392–393, 393–394, 400–401, 402 share capital disclosure requirements 75–76 statement of financial position 74–75 shareholders' equity 363–384 additional contributed capital 369–370, 375–376 classification 74–76, 365–366, 370–372 convertible instruments 377 definitions 364–365 disclosures 365–370, 382–384 dividends 367, 379–381 donated capital 376–377 fair value 738 future developments 382 future reserved issuances 368–369 issuances 372–377 measurement 365 members' shares 381–382, 680 movements during year 367 par value per share 367 presentation 365–370 puttable shares 371–372 recognition 365 reserves 369 retained earnings 370, 377–379 revaluation reserves 369 subscriptions 374–375 treasury shares 368, 381, 686 unit issuances 373–374 unpaid capital 366–367 US GAAP comparisons 384 share of losses exceeding the interest 303 share options binomial model 414–418 Black‐Scholes‐Merton model 412–414 definition 389 valuation 409–418 shares capital presentation and disclosure 366–369 cash flow per 109 issuances 372–377 par value 367 treasury 686 types of 365–366 see also earnings per share; share‐based payment share subscriptions 374–375 share unit issuances 373–374 short‐term employee benefits definition 454 IAS 19 applicability 456 other 473 short‐term investments, definition 604 short‐term obligations expected to be refinanced 425–426 SIC 29 527–529 see also service concession arrangements SIC‐31 478 significant financing components, contracts 488–489 significant increases, credit risk 636–642 significant influence 289–290, 298, 832–833 simple capital structures, earnings per share 791–795 small and medium‐sized entities (SMEs) application of IFRS 14 associates and joint ventures 13 deferred taxes 13 definition 8–9 derecognition 12 disclosure requirements 13 finance leases 13 goodwill impairment 12–13 hedge accounting 12 implications of IFRS 13–14 measurement 11–13 modifications 9–13 omitted topics 10 overview 8–14 recognition 11–12 research and development 13 share‐based payment 13 specific borrowings 188 specific costs, government grants 521–522 specific identification 141, 150–151 spot exchange rates, definition 563 staged acquisitions 300 stand‐alone selling price contract modifications 483–484 definition 479 transaction pricing 491 standard costs 141, 154 standards current, list of 6–8 hierarchy of 36–37 inventories 139–140 setting, process of 4–5 small and medium‐sized entities 8–14 standstill agreements 341–342 statement of cash flows 99–116 acquisitions and disposals 110 background 100–103 benefits of 100–102 cash and cash equivalents 102–103, 110 cash flow per share 109 classification 103–105 consolidated 115–116 definitions 100 direct method 105–106, 108 extraordinary items 110 financial institutions 109–110 financing activities liabilities 111 foreign currencies 109 futures, forward contracts, options and swaps 110 government grants 524–525 gross vs net 109 illustration 112–115 indirect method 106–108 net reporting 109 non‐cash transactions 102 other disclosures 110–115 other requirements 109–110 presentation 103–108 reporting basis 105–108 scope of IAS 100 US GAAP comparisons 116 statement of changes in equity 95–96 definition 81 financial instruments 698–699 US GAAP comparisons 96–97 statement of financial position 63–76 agriculture 858 concepts 67 definitions 65–66 elements 65–66 first‐time adoption 937–939 foreign currency financial assets 633 future developments 76 government grants 524 income taxes 782 inventories 70 offsetting 74 opening 937–939 receivables 71 revenue contracts 501 shareholders' equity 74–76 structure and content 67–69 US GAAP comparison 76 statement of profit or loss and other comprehensive income 77–95 agriculture 858–859 definitions 81–82 financial instruments 698–699 future developments 80 income concepts 82–83 income taxes 782–783 measurement 83–84 other comprehensive income 93–95 overview 84–86 profit or loss section 86–93 recognition 83–84 US GAAP comparisons 96–97 statements of compliance, financial statements 52–53 status, of conceptual framework 16 step acquisitions, business combinations 356–357 straight‐line depreciation 166 stripping costs, surface mining 870–872 structures business combinations 319 conceptual framework 15–16 financial statements 51–54 of IFRS 3–4 statement of financial position 67–69 subscriptions, share issuances 374–375 subsequent measurement financial assets 614 financial liabilities 621–623 subsidiaries acquisitions and disposals, statement of cash flows 110 control 263–267 disclosure requirements 306–307 disposals 272–274 first‐time adoption 947 identification 262–263 indirect interest 271–272 intercompany transactions and balances 268 investment entities 274–282 investment property leases 226 investments and income taxes 778–779 measurement 270 non‐controlling interests 268–269 ownership interest 270–271, 273–274 power 263–267 related party disclosures 835 reporting dates 270 share‐based payments 405–406 uniformity of accounting 270 US GAAP comparisons 308–309 voting rights 264–266 voting rights 264–266 substance over form, related parties 831–832 sum‐of‐the years digits (SYD) depreciation 167 supply contracts, business combinations 342 surface mining, stripping costs 870–872 surplus, definition 452 suspension of borrowing cost capitalisation 190–191 swaps 110, 649–650, 651 SYD see sum‐of‐the years digits tangible assets business combinations 325 decommissioning costs 161–163 definition 158 depreciation 165–171 qualifying 186 research and development 343 revaluations 171–176 tax dividend impacts 381 foreign currency 574 see also income taxes tax credits deferred income taxes 760 interim financial reports 910–911 tax loss/credit carrybacks/carryforwards 911 tax methods, depreciation 170 tax obligations withheld, cash‐settled share‐based payments 402–403 tax‐planning 765–766 tax status changes 771–772 technological feasibility 203 technology‐based intangible assets 203–205, 342–343 temporary differences consolidated financial statements 777 deferred income taxes 756–758, 765 future 765 term, of lease 537–538 termination benefits 474 definition 454 IAS 19 applicability 457 third‐party contributions, post‐employment benefit plans 468 third‐party credit agreements, liabilities inseparable 738 timeliness, concept 19 time value of money 488–489 of options 668–670 total comprehensive income, definition 44, 82 trade date 604 trade dress, business combinations 341 trademarks, business combinations 340–341 trade names, business combinations 340–341 trade payables 73 trade receivables, loss allowances 643–644 trade secrets 342 trading financial assets 71 transaction costs definition 726 fair vale 746 financial instruments 605 transaction dates, foreign currency 563, 567 transaction price allocation 490–493 changes in 490 consideration payable to customer 490 definition 479 determination 486–490 discounts 491–493 non‐cash 489 significant financing components 488–489 stand‐alone selling 491 variable consideration 486–488, 493 transactions derivative 648–653 foreign currencies 562, 566–570, 588–590 hedging 588–590 not orderly 731–733 orderly 728 transfer pricing, definition 809 transfers customer assets 181 financial assets 617–619 investment property 230–231 non‐reciprocal 180–181 see also exchange transactions transiting goods 140, 142–144 transition adjustments, post‐employment benefit plans 462 transitional provisions, insurance contracts 891 transition dates 933–934 transition to IFRS financial instruments 673–677 hedge accounting 677 key dates 933–934 steps in 934 see also first‐time adoption translation 562, 564–566, 571–581 consolidation of operations 574 first‐time adoption 946 functional into presentation currency 571–573 interim financial reports 915 net investment in a foreign operation 574 presentation into functional currency 573 taxation effects 574 transport costs, fair vale 746 treasury shares 368, 381, 686 treasury stock 75 types of shares 365–366 unbundling 877, 882 uncertainty accounting policy changes 126–129 estimates 429 of measurement 31 tax treatments 768–769 unconsolidated structured entities 307 understandability concept 19 measurement 31 unearned revenues or advances 424 unevenly incurred annual costs 909 unexercised rights of customers 509 uniformity, consolidated financial statements 270 unit of account definition 23, 726 fair value 728 units of production depreciation 168–169 unlawful environmental damage 434–435 unobservable inputs 726, 739, 741–742 unorderly transactions 731–733 unpaid capital 366–367 unpatented technology, business combinations 342 unquoted equity instruments 677 unrelated investors 279 unused losses, deferred income taxes 760 upfront fees, non‐refundable 509 usage‐based royalties 511 useful financial information, qualitative characteristics 18–19 useful life 170 definition 159, 196, 238 intangible assets 214 use of provisions recognised 430 use rights, business combinations 342 valuation binomial model 414–418 Black‐Scholes‐Merton model 412–414 fair value techniques 728, 742–745 inventories 147–150 premises, fair value 727, 733–735 share options 410–417 see also measurement valuation allowances, business combinations 339 value in use (of assets) 29, 32 definition 196, 238, 251 impairment of assets 240–241 variable consideration constraining estimates 487–488 contracts 486–488, 493 variable costing 140, 150 variable returns, exposure 266 verifiability concept 19 measurement 31 vest, definition 389 vested benefits, definition 842 vesting conditions cash‐settled share‐based payments 402 definition 389 equity‐settled share‐based payments 393–394, 400–401 share‐based payment 392–393 vesting periods 389 volume rebates, interim financial reports 911–912 voting rights 264–266 warranties, provisions 438–439, 506–507 warrants, earnings per share 797–798 website development and operating costs 216–217 weighted‐average (WA) costing 141, 142, 152–153 weighted‐average (WA) inventory costing 123, 127–128 weighted‐average (WA) number of ordinary share outstanding 792–795 work in progress, definition 141 write‐offs, financial assets 630 year‐end bonuses, interim financial reports 908 WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA ... Reporting Standards (IAS /IFRS) and Interpretations (SIC/IFRIC) IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS 10 IFRS 11 IFRS 12 IFRS 13 IFRS 14 IFRS 15 IFRS 16 IFRS 17 IAS IAS IAS IAS IAS 10... activities of the standard‐setting activities of the IASB; reviewing, and proposing updates to, the Due Process Handbook that relates to the development and review of Standards, Interpretations and. .. Maintenance of the IFRS for SMEs Implications of the IFRS for SMEs Application of the IFRS for SMEs INTRODUCTION The mission of the IFRS Foundation and the International Accounting Standards Board