Professional Documents
Culture Documents
Moving ahead in
an IFRS world
• Q1 “Final” reminders
• Quarterly “specials”
• Moving ahead – what‟s next?
• Q&A
1 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Important Caveats
Keep in mind: This webcast does not provide official Deloitte & Touche
interpretive accounting guidance. Check with your advisor before taking
any action
2 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Q1 “Final” reminders
3 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Q1 – Final reminders
What if a
What reconciliations business
are required in the combination
first IFRS financial occurs in the year
statements? of transition?
Do I need to worry about to
new standards recently
released by the IASB?
When do I need
to test for
impairment?
Can I change my
IFRS policies and
elections?
Should my first interim
statements under IFRS
contain a complete set
of accounting policies?
Why do I need to
consider financial
What instruments when
exemptions CGAAP standards were
should I use? based on IFRS?
4 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Q1 – “Final” reminders (cont’d)
• First-time adoption
• Defined benefit plans
• Subsidiaries, associates and joint ventures
• Stock-based compensation
• Financial instruments
• Impairment
• Disclosures
5 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
First-time adoption
6 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Did you know...?
• IFRS becomes the basis for the “new” accounting policies of an entity
on IFRS changeover.
• The rules of IFRS 1 require that the same policies are used for all
periods presented and that those policies comply with IFRSs in effect at
the end of the first IFRS annual reporting period.
• The general rule is retrospective application unless one of the
exemptions or exceptions is applied.
• As we have said before, IFRS is not a stable platform which triggers the
need to:
– Consider how to address the impact of new IFRSs issued in 2011
– Disclose the impact of future accounting pronouncements on
the entity
7 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Did you know...? (cont’d)
8 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Don’t forget!
Elective exemptions
• There are 18 exemptions in IFRS 1 today compared to 10 in 2005.
• Some of these added 8 are “double” or “triple” exemptions – e.g.
deemed cost, leases…
• Some less “publicized” exemptions may be worth a second look:
– Borrowing costs
– Share-based payment transactions
– Cumulative translation differences
– Decommissioning liabilities
– Compound financial instruments
9 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Don’t Forget! (cont’d)
Elective exemptions
10 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Did you know…?
11 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Did you know…? (cont’d)
Date of transition or
designated date before
transition date
13 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Don’t forget!
14 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IFRS 1 – Did you know…? (cont’d)
Guidance:
• Unsettled contingent consideration at the date of transition to IFRS and
this is not covered by the IFRS 1 election
• The contingent consideration is required to be measured at fair value at
the date of transition.
• Opening retained earnings and liabilities will impacted upon
measurement at transition
– (NB – The adjustment does not go through goodwill).
• Subsequent to transition contingent consideration continues to be
remeasured with changes in fair value being recognized through profit
or loss.
– [NB – If the consideration was equity, this would not be subject to
remeasurement]
15 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Defined benefit plans
16 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Did you know…?
17 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Subsidiaries, associates
and joint ventures
18 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget!
19 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget! (cont’d)
20 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget! (cont’d)
21 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget! (cont’d)
22 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Stock-based
compensation
23 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Did you know...?
24 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget!
Measurement: Equity-settled
With Non-employees With Employees
How? How?
• Fair value of the goods/services • Fair value of the equity instruments
received granted
– UNLESS fair value cannot be – At grant date only
reliably estimated – No changes to FV after grant
– THEN use fair value of equity date
instruments granted.
Rebuttable presumption:
FV of goods/services can be
estimated reliably
When? When?
• Record expense upon receipt of • Record expense over vesting period
goods/services
25 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget! (cont’d)
26 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget! (cont’d)
Does the entity have a present obligation to settle the award in cash?
27 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Don’t forget! (cont’d)
Canadian GAAP:
• Recognize as separate arrangements; or
• As a single pool
28 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Financial instruments
29 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Hedging – Don’t forget!
30 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Convertible debt – Did you know…?
Convertible debt
Feature Comments
Strike price of the conversion option is IAS 32.16(b)(ii) indicates that this will
not in the functional currency of the not comply with the fixed cash for
issuer fixed number of shares criterion
Multiple settlement options: Issuer or IAS 32.26 and .27 settlement options
holder can choose to settle the will prevent equity treatment
conversion option, once exercised, in
cash or shares
31 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Convertible debt – Did you know…? (cont’d)
32 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Impairment
33 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Impairments – Did you know…?
Impairment overview – PP&E and intangibles that amortize
CGAAP IFRS Similar/different?
Timing of quantitative • When impairment • When impairment • Similar
impairment tests? indicators exist indicators exist
Unit of testing and • Individual asset if • Individual asset if • Often similar but can
grouping assets possible; otherwise possible; otherwise be different – when
together? “asset group” “cash generating unit” small units are tested,
impairment may be
more likely
Mechanics: what is the • First estimate • Estimate fair value • Very different – other
trigger for recording undiscounted cash and/or value in use things being equal,
impairment? flow; if greater than (using discounting); if impairment is more
accounting value both of these are lower likely to be recorded
STOP – no impairment than accounting value, under IFRS
needed record impairment
How is write down • Fair value • Greater of fair value • Similar amount of write
calculated? less selling costs and down (although
value in use mechanics of test may
result in more
instances of write
down)
Reverse impairment? • Never • Yes, if conditions met • Different
34 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Impairments – Did you know…? (cont’d)
Impairment overview – Goodwill
CGAAP IFRS Similar/different?
Timing? • Annual • Annual and at end of year of • Similar
acquisition
Unit of testing and • “Reporting unit” – operating • “Cash generating unit” – level • May be similar but
grouping assets segment for f/s purposes or at which goodwill is often can be
together? one level below monitored for internal different – when
management purposes, not smaller units are
bigger than an operating tested, impairment
segment may be more likely
Mechanics: what is • Compare reporting unit‟s • Compare CGU‟s accounting • May be similar if
the trigger for accounting value and fair value to greater of fair value CGU‟s are similar
recording value, if FV is less than and value in use, if
impairment? accounting value, calculate accounting value is greater,
write down calculate write down
How is write down • Complex calculation whereby • Take the excess of CGU • Different and could
calculated? fair value of reporting unit is value over CGU accounting result in different
allocated to all assets and value and write off goodwill write down amounts
liabilities of RU to derive the first until excess is absorbed; and/or allocation of
fair value of goodwill; if FV of further excess is allocated to write down to
GW is less than accounting other assets of CGU different assets
value, write down
35 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Impairments – Don’t forget!
36 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Disclosures
37 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IAS 1 – Don’t forget!
• IAS 1.122 states that “an entity shall disclose, in the summary of
significant accounting policies or other notes, the judgments, apart from
those involving estimations, that management has made in the process
of applying the entity's accounting policies and that have the most
significant effect on the amounts recognized in the financial statements.”
• Examples
– Accounting policy for investment properties and property, plant and
equipment
– Classification of financial instruments
– Classification of leases
– Determination of control for purpose of consolidation
– Degree of componentization
– Determination of whether particular arrangements are sales or financing
– Determination of development costs eligible for capitalization
– Identification of Cash Generating Units
38 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
IAS 1 – Don’t forget! (cont’d)
• IAS 1.125 states “An entity shall disclose information about the
assumptions it makes about the future, and other major sources of
estimation uncertainty at the end of the reporting period, that have a
significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
• Examples
– Determination of allowance for doubtful accounts
– Determination of discount rates, expected return on assets and other
assumptions applicable to employee future benefits
– Determination of useful lives of property, plant and equipment and finite life
intangible assets
– Impairment of goodwill and valuation of intangible assets
– Recoverability of deferred tax assets
– Uncertain tax positions
– Valuation of financial instruments
– Valuation of investment properties, property, plant and equipment
39 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Quarterly “Specials”
40 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Use of estimates – Did you know…?
http://www.corpgov.deloitte.com/binary/com.epicentric.contentmanagement.servlet
.ContentDeliveryServlet/CanEng/Documents/Financial%20Reporting/IFRS/IAS_34
_EN_071210.pdf
41 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Regulatory – Don’t forget!
http://www.osc.gov.on.ca/documents/en/Companies/ifrs_20101124_issuer-
guide.pdf
42 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Regulatory – Did you know…?
43 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Moving ahead
44 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Standards effective 2011
http://www.iasplus.com/iasplus/1012closingout2010.pdf
45 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Staying up to date – IASB work plan
Investment companies ED
46 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Staying up to date – IASB work plan (cont’d)
Other Projects
http://www.ifrs.org/Current+Projects/IASB+Projects/IASB+Work+Plan.htm
47 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Resources – Don’t forget!
• www.iasplus.com
– Presentation and disclosure checklists
– Model financial statements
– IFRS compliance questionnaire
– IFRIC review
– IFRS in Focus Newsletter
– http://www.ifrs.org/Current+Projects/IASB+Projects/IASB+Work+Plan.
htm
• iGAAP: IFRS for Canada (includes examples and interpretations)
• Deloitte's IFRS Global Office is hosting „IFRSs: Important
developments‟ webcast
– Update on global financial reporting being held March 30, 2011
48 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.
Q&A
49 IFRS quarterly technical update – Moving ahead in an IFRS world © Deloitte & Touche LLP and affiliated entities.