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  • IFRIC 15 — Agreements for the Construction of Real Estate
    across jurisdictions for the recognition of revenue by real estate developers for sales of units such as apartments or houses off plan that is before construction is complete Fundamental issue The fundamental issue is whether the developer is selling a product goods the completed apartment or house or is selling a service a construction service as a contractor engaged by the buyer Revenue from selling products is normally recognised at delivery Revenue from selling services is normally recognised on a percentage of completion basis as construction progresses IAS 11 or IAS 18 IFRIC 15 provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and accordingly when revenue from the construction should be recognised An agreement for the construction of real estate is a construction contract within the scope of IAS 11 only when the buyer is able to specify the major structural elements of the design of the real estate before construction begins and or specify major structural changes once construction is in progress whether it exercises that ability or not If the buyer has that ability IAS 11 applies If the buyer does not have that ability IAS 18 applies If IAS 11 applies what is the accounting If IAS 11 applies revenue is recognised on a percentage of completion basis provided that reliable estimates of construction progress and future costs can be made If IAS 18 applies service or goods Even if IAS 18 applies the agreement may be to provide construction services rather than goods This would likely be the case for instance if the entity is not required to acquire and supply construction materials If the entity is required to provide services together with construction materials in order to perform its contractual obligation to deliver real estate to the buyer the agreement is accounted for as the sale of goods under IAS 18 Impact of IFRIC 15 The main expected change in practice is a shift for some entities from recognising revenue as construction progresses to recognising revenue at a single time at completion upon or after delivery Agreements that will be affected will be mainly those currently accounted for in accordance with IAS 11 that do not meet the definition of a construction contract as interpreted by the IFRIC and do not transfer to the buyer control and the significant risks and rewards of ownership of the work in progress in its current state as construction progresses Effective date IFRIC 15 is effective for annual periods beginning on or after 1 January 2009 and must be applied retrospectively Earlier application is permitted Press release Click for the Press Release PDF 55k IAS Plus Newsletter Click for the IAS Plus Newsletter on IFRIC 15 PDF 133k Discussion at November 2008 IASB Meeting Transition and effective date of IFRIC 15 Agreements for the Construction of Real Estate The Board considered representations made by some participants at the September

    Original URL path: http://www.iasplus.com/en/standards/ifric/ifric15 (2016-02-10)
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  • IFRIC 16 — Hedges of a Net Investment in a Foreign Operation
    the functional currencies of the foreign operation and the parent entity or from b the foreign currency exposure to the functional currency of the foreign operation and the presentation currency of the parent entity s consolidated financial statements IFRIC 16 concludes that the presentation currency does not create an exposure to which an entity may apply hedge accounting Consequently a parent entity may designate as a hedged risk only the foreign exchange differences arising from a difference between its own functional currency and that of its foreign operation Which entity within a group can hold a hedging instrument in a hedge of a net investment in a foreign operation and in particular whether the parent entity holding the net investment in a foreign operation must also hold the hedging instrument IFRIC 16 concludes that the hedging instrument s may be held by any entity or entities within the group How an entity should determine the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item when the entity disposes of the investment IFRIC 16 concludes that while IAS 39 must be applied to determine the amount that needs to be reclassified to profit or loss from the foreign currency translation reserve in respect of the hedging instrument IAS 21 must be applied in respect of the hedged item Effective date IFRIC 16 is effective for annual periods beginning on or after 1 October 2008 An entity may choose to apply IFRIC 16 retrospectively or prospectively Earlier application is permitted Press release Click for the IASB Press Release PDF 59k IAS Plus Newsletter Click for the IAS Plus Newsletter on IFRIC 16 PDF 122k Amendment to IFRIC 16 proposed at January 2009 IASB meeting At its January 2009 Meeting the Board discussed an issue that had been submitted by a constituent subsequent to the publication of IFRIC 16 The staff had satisfied itself in consultation with Board members and an IFRIC member that the constituent s issue was valid and had not been contemplated by the IFRIC when IFRIC 16 was being developed The concern raised was that in some circumstances while the total amounts of foreign exchange differences are indeed the same with and without hedge accounting the split between the amounts included in profit or loss and foreign currency translation reserve would be different Without hedge accounting the foreign exchange difference arising from the hedging instrument would be included in profit or loss while the difference arising from the net investment would be included in the foreign currency translation reserve The Board agreed to amend IFRIC 16 paragraph 14 by deleting a parenthetical comment except the foreign operation that itself is being hedged So this amendment can be in place in time to be used for 30 June 2009 interim financial reporting the Board agreed that it should issue an exposure draft of the proposals for a 30 day comment period the minimum permitted by the IASB s Due Process

    Original URL path: http://www.iasplus.com/en/standards/ifric/ifric16 (2016-02-10)
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  • IFRIC 17 — Distributions of Non-cash Assets to Owners
    Owners IFRIC 18 Transfers of Assets from Customers IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine IFRIC 21 Levies Info IFRIC 17 Distributions of Non cash Assets to Owners Quick Article Links References IAS 1 Presentation of Financial Statements as revised in 2007 IAS 27 Consolidated and Separate Financial Statements IAS 37 Provisions Contingent Liabilities and Contingent Assets History Date Development Comments 17 January 2008 IFRIC D23 Distributions of Non cash Assets to Owners published Comment deadline 25 April 2008 27 November 2008 IFRIC 17 Distributions of Non cash Assets to Owners issued Effective for annual periods beginning on or after 1 July 2009 Summary of IFRIC 17 IFRIC 17 Distributions of Non cash Assets to Owners applies to the entity making the distribution not to the recipient It applies when non cash assets are distributed to owners or when the owner is given a choice of taking cash in lieu of the non cash assets IFRIC 17 clarifies that a dividend payable should be recognised when the dividend is appropriately authorised and is no longer at the discretion of the entity an entity should measure the dividend payable at the fair value of the net assets to be distributed an entity should remeasure the liability at each reporting date and at settlement with changes recognised directly in equity an entity should recognise the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss and should disclose it separately an entity should provide additional disclosures if the net assets being held for distribution to owners meet the definition of a discontinued operation IFRIC 17 applies to pro rata distributions of non cash assets all owners are treated equally but does

    Original URL path: http://www.iasplus.com/en/standards/ifric/ifric17 (2016-02-10)
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  • IFRIC 18 — Transfers of Assets from Customers
    Links Note IFRIC 18 will be superseded by IFRS 15 Revenue from Contracts with Customers as of 1 January 2018 References IAS 18 Revenue History Date Development Comments 17 January 2008 IFRIC D24 Customer Contributions published Comment deadline 25 April 2008 29 January 2009 IFRIC 18 Transfers of Assets from Customers issued Effective for transfers received on or after 1 July 2009 28 May 2014 Superseded by IFRS 15 Revenue from Contracts with Customers Effective for an entity s first annual IFRS financial statements for periods beginning on or after 1 January 2018 Summary of IFRIC 18 IFRIC 18 clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services such as a supply of electricity gas or water In some cases the entity receives cash from a customer that must be used only to acquire or construct the item of property plant and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services or to do both The basic principle of IFRIC 18 is that when the item of property plant and equipment transferred from a customer meets the definition of an asset under the IASB Framework from the perspective of the recipient the recipient must recognise the asset in its financial statements If the customer continues to control the transferred item the asset definition would not be met even if ownership of the asset is transferred to the utility or other recipient entity The deemed cost of that asset is its fair value on the date of the transfer If there are separately identifiable services received by the customer in exchange for the transfer then the recipient should split the transaction into separate components as required by IAS 18 If there is only one component identified revenue is recognised when the service is performed which could for example be as soon as access to a utility network is provided IFRIC 18 provides guidance on how to identify the entity s obligation to provide one or more separately identifiable services in exchange for the transferred asset and therefore how to recognise revenue If the entity has only one service obligation it would recognise revenue when the service is performed If the entity has more than one separately identifiable service obligation it should allocate the fair value of the total consideration received to each service and recognise revenue from each service separately in accordance with IAS 18 If the entity has an obligation to provide ongoing services the period over which revenue is recognised is generally determined by the terms of the agreement with the customer If the agreement does not specify a period the revenue shall be recognised over a period no longer than the

    Original URL path: http://www.iasplus.com/en/standards/ifric/ifric18 (2016-02-10)
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  • IFRIC 19 — Extinguishing Financial Liabilities with Equity Instruments
    Hedges of a Net Investment in a Foreign Operation IFRIC 17 Distributions of Non cash Assets to Owners IFRIC 18 Transfers of Assets from Customers IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine IFRIC 21 Levies Info IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments Quick Article Links References IFRS 2 Share based Payment IFRS 3 Business Combinations IAS 1 Presentation of Financial Statements IAS 32 Financial Instruments Presentation IAS 39 Financial Instruments Recognition and Measurement History Date Development Comments 6 August 2009 IFRIC D25 Extinguishing Financial Liabilities with Equity Instruments published Comment deadline 5 October 2009 26 November 2009 IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments issued Effective for annual periods beginning on or after 1 July 2010 Summary of IFRIC 19 If a debtor issues equity instruments to a creditor to extinguish all or part of a financial liability those equity instruments are consideration paid in accordance with IAS 39 41 Accordingly the debtor should derecognise the financial liability fully or partly The debtor should measure the equity instruments issued to the creditor at fair value unless fair value is not reliably determinable in which case the equity instruments issued are measured at the fair value of the liability extinguished If only part of a liability is extinguished the debtor must determine whether any part of the consideration paid relates to modification of the terms of the remaining liability If it does the debtor must allocate the fair value of the consideration paid between the liability extinguished and the liability retained The debtor recognises in profit or loss the difference between the carrying amount of the financial liability or part extinguished and the measurement of the equity instruments issued When only part of the liability is extinguished the debtor must determine whether the terms of the remaining debt have been substantially modified taking into account any portion of the consideration paid that was allocated to the remaining debt If there has been a substantial modification the debtor should account for an extinguishment of the old remaining liability and the recognition of a new liability see IAS 39 40 IFRIC 19 addresses only the accounting by the entity that issues equity instruments in order to settle in full or in part a financial liability It does not address the accounting by the creditor lender The following situations are explicitly excluded from the scope of IFRIC 19 the creditor is also a direct or indirect shareholder and is acting in its capacity as direct or indirect shareholder the creditor and the entity are controlled by the same party or parties before and after the transaction and the substance of the transaction includes an equity distribution from or contribution to the entity or extinguishing the financial liability by issuing equity shares is in accordance with the original terms of the financial liability IFRIC 19 must be applied in annual periods beginning on or after 1 July 2010 Earlier

    Original URL path: http://www.iasplus.com/en/standards/ifric/ifric19 (2016-02-10)
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  • IFRIC 20 — Stripping Costs in the Production Phase of a Surface Mine
    1 Presentation of Financial Statements IAS 2 Inventories IAS 16 Property Plant and Equipment IAS 38 Intangible Assets History Date Development Comments 26 August 2010 IFRIC DI 2010 1 Stripping Costs in the Production Phase of a Surface Mine published Comment deadline 30 November 2010 19 October 2011 IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine issued Effective for annual periods beginning on or after 1 January 2013 Resources IFRS in Focus Newsletter IFRS Interpretations Committee issues Final Interpretation on Stripping Costs in the Production Phase of a Surface Mine Deloitte Comment Letter on Draft IFRIC Interpretation DI 2010 1 Stripping Costs in the Production Phase of a Surface Mine Summary of IFRIC 20 Background In surface mining operations entities may find it necessary to remove mine waste materials overburden to gain access to mineral ore deposits This waste removal activity is known as stripping There can be two benefits accruing to the entity from the stripping activity usable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods IFRIC 20 considers when and how to account separately for these two benefits arising from the stripping activity as well as how to measure these benefits both initially and subsequently IFRIC 20 only deals with waste removal costs that are incurred in surface mining activity during the production phase of the mine production stripping costs Overview of requirements IFRIC 20 requires The costs of stripping activity to be accounted for in accordance with the principles of IAS 2 Inventories to the extent that the benefit from the stripping activity is realised in the form of inventory produced The costs of stripping activity which provides a benefit in the form of improved access to ore is recognised as a non current stripping activity asset where the following criteria are met it is probable that the future economic benefit improved access to the ore body associated with the stripping activity will flow to the entity the entity can identify the component of the ore body for which access has been improved the costs relating to the stripping activity associated with that component can be measured reliably When the costs of the stripping activity asset and the inventory produced are not separately identifiable production stripping costs are allocated between the inventory produced and the stripping activity asset by using an allocation basis that is based on a relevant production measure A stripping activity asset is accounted for as an addition to or as an enhancement of an existing asset and classified as tangible or intangible according to the nature of the existing asset of which it forms part A stripping activity asset is initially measured at cost and subsequently carried at cost or its revalued amount less depreciation or amortisation and impairment losses A stripping activity asset is depreciated or amortised on a systematic basis over the expected useful life of the identified component of the ore

    Original URL path: http://www.iasplus.com/en/standards/ifric/ifric20 (2016-02-10)
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  • IFRIC 21 — Levies
    21 Date Development Comments 31 May 2012 Draft Interpretation DI 2012 1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market published Comment deadline 5 September 2012 20 May 2013 IFRIC 21 Levies issued Effective for annual periods beginning on or after 1 January 2014 Summary of IFRIC 21 Background IFRIC 21 provides guidance on when to recognise a liability for a levy imposed by a government both for levies that are accounted for in accordance with IAS 37 Provisions Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain The Interpretation covers the accounting for outflows imposed on entities by governments including government agencies and similar bodies in accordance with laws and or regulations However it does not include income taxes see IAS 12 Income Taxes fines and other penalties liabilities arising from emissions trading schemes and outflows within the scope of other Standards The Interpretation does not supersede IFRIC 6 Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment which remains in force and is consistent with IFRIC 21 Obligating event IFRIC 21 identifies the obligating event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation The Interpretation clarifies that economic compulsion and the going concern principle do not create or imply that an obligating event has occurred Recognition IFRIC 21 provides the following guidance on recognition of a liability to pay levies The liability is recognised progressively if the obligating event occurs over a period of time If an obligation is triggered on reaching a minimum threshold the liability is recognised when that minimum threshold is reached The same recognition principles are applied in interim financial reports IFRIC 21 does not deal with how to account with costs arising from the recognition of a liability to pay a levy and instead other standards are applied in determining whether the recognition of a liability gives rise to an asset or expense The Illustrative Examples accompanying IFRIC 21 provide the following examples of how to account for various types of levies These are briefly summarised below Type Obligating event Interim reports Levy triggered progressively as revenue is generated in current period Generation of revenue recognise progressively Recognise progressively based on revenue generated Levy triggered in full as soon as revenue is generated in one period based on revenues from a previous period Generation of revenue in the subsequent period full recognition at that time Recognise if revenue generated in interim period Levy triggered in full if entity operates as a bank at the end of the reporting period Operating as a bank at the end of the reporting period full recognition at that time Only recognise in an interim period that includes the last day of the annual reporting period Levy triggered if revenues are above a minimum threshold Reaching the minimum threshold recognise an amount consistent with the obligation at

    Original URL path: http://www.iasplus.com/en/standards/ifric/ifric21 (2016-02-10)
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  • SIC-1 — Consistency – Different Cost Formulas for Inventories
    Application of IASs as the Primary Basis of Accounting SIC 9 Business Combinations Classification either as Acquisitions or Unitings of Interests SIC 10 Government Assistance No Specific Relation to Operating Activities SIC 11 Foreign Exchange Capitalisation of Losses Resulting from Severe Currency Devaluations SIC 12 Consolidation Special Purpose Entities SIC 13 Jointly Controlled Entities Non Monetary Contributions by Venturers SIC 14 Property Plant and Equipment Compensation for the Impairment or Loss of Items SIC 15 Operating Leases Incentives SIC 16 Share Capital Reacquired Own Equity Instruments Treasury Shares SIC 17 Equity Costs of an Equity Transaction SIC 18 Consistency Alternative Methods SIC 19 Reporting Currency Measurement and Presentation of Financial Statements Under IAS 21 and IAS 29 SIC 20 Equity Accounting Method Recognition of Losses SIC 21 Income Taxes Recovery of Revalued Non Depreciable Assets SIC 22 Business Combinations Subsequent Adjustment of Fair Values and Goodwill Initially Reported SIC 23 Property Plant and Equipment Major Inspection or Overhaul Costs SIC 24 Earnings Per Share Financial Instruments and Other Contracts that May Be Settled in Shares SIC 25 Income Taxes Changes in the Tax Status of an Enterprise or its Shareholders SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease SIC 28 Business Combinations Date of Exchange and Fair Value of Equity Instruments SIC 29 Service Concession Arrangements Disclosures SIC 30 Reporting Currency Translation from Measurement Currency to Presentation Currency SIC 31 Revenue Barter Transactions Involving Advertising Services SIC 32 Intangible Assets Web Site Costs SIC 33 Consolidation and Equity Method Potential Voting Rights and Allocation of Ownership Interests SIC Interpretations Info SIC 1 Consistency Different Cost Formulas for Inventories Quick Article Links References IAS 2 Inventories History Issued December 1997 Effective date Periods beginning on or after 1 January 1999 Superseded by and incorporated into

    Original URL path: http://www.iasplus.com/en/standards/sic/sic-1 (2016-02-10)
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