Sam en Vatting Topics Hoofdstukken 2011-2012 Definitief

8/3/2019 Sam en Vatting Topics Hoofdstukken 2011-2012 Definitief

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Topics

in

International

Financial

AccountingA

SummaryChapters

of

the

Book

2011

2012


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Content

Leasing IAS17 Chapter13 p.3 ImpairmentTesting IAS36 Chapter12 p.8 BusinessCombinations IFRS3 Chapter11 p.16 GroupReporting IFRS3/IAS27 Chapter21 p.20 Associates IAS28 Chapter27 p.26 JointVentures IAS31 Chapter28 p.31 DeferredTax IAS12 Chapter7 p.37


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Leasing IAS17 Chapter13

Agreementfortherighttouseanassetforaperiodoftime.

SpecificassetExclusiverightattheassetorAssetisimplicitlyspecifiedbythetransaction

Aspecific

asset

exists

iffulfilment

of

the

arrangement

is

economically

feasible

or

practicable

forthesupplieronlythroughtheuseofthisasset!

Rightofuse=righttocontrol

purchasercontrolstheoperationoftheasseto Purchaseroperatestheassetwithitsownpersonnelo Purchaserhastherighttodirectotherstooperatetheasseto Purchaserdeterminesthemannerofoperation

purchasercontrolsthephysicalaccesstotheasseto Assetislocatedatcompanypremiseso Supplierhasnorightofunrestrictedaccesstotheasset

purchasercontrolsthewhole/substantiallyalloutput(EconomicControl)Exception: Ifthecustomertakes100%oftheoutput,buthastopayeitherafixedprice

peroutputduringthecontractperiodorthecurrentmarketpriceperunitofoutputat

thetimeofdeliveryitisnolease

Differenttypesofleases

Financelease:

All,

or

practically

all,

advantages

and

disadvantages

related

to

the

ownership

of

theassetaretransferred.(Legal)ownershipcouldbetransferred,buttransferisnot

necessary.

Operatinglease:Allleaseagreementswhicharenotfinanceleases.

Stepsinclassification

1 Determinethebusinessrationalebehindtheleaseandtheeconomicimpactofthelease,togetherwitheconomicissuesattheendoftheleaseagreement.

2 Determinetheleaseterm(includingprolongationswhichareexpectedtotakeplace).3 Determinethenetpresentvalue(NPV)oftheminimalleasepayments(including

paymentswhichareexpectedtotakeplace).

4 Determinewhetherornotasignificantpartoftherightsandobligationsaretransferredfromlessortolessee.


4/41

Ingen

123456

Balan

Chan

eralthere

Attheend

Thelessee

theexpect

Thelease

Atincepti

fairvalue

Thelease

significant

TheLease

cesheet

esinLea

illbeafina

oftheleas

hastherigh

edfairvalu

eriodcover

nthedisco

fthe

lease

bjectissos

modificatio

isnoncanc

P&L

ing

celeasein

ownership

ttobuyth

;or

sthemain

ntedlease

bject;or

pecificthat

.

llable

thefollowin

istransferr

leaseobje

artofthee

paymentsa

itcannotb

gcases:

dtotheles

tforanam

conomiclif

reequalto,

usedbyan

see;or

untsignific

oftheleas

orpracticall

otherparty

antlylower

eobject;or

yequalto,

without

- 4 -

than

he


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- 5 -

SaleandLeasebackTransactionsForasaleandleasebacktransactionthatresultsinafinancelease,anyexcessofproceeds

overthecarryingamountisdeferredandamortizedovertheleaseterm.

Foratransactionthatresultsinanoperatinglease:

ifthetransactionisclearlycarriedoutatfairvalue theprofitorlossshouldberecognizedimmediately

if

the

sale

price

is

below

fair

value

profit

or

loss

should

be

recognized

immediately,

exceptifalossiscompensatedforbyfuturerentalsatbelowmarketprice,thelossit

shouldbeamortizedovertheperiodofuse

ifthesalepriceisabovefairvalue theexcessoverfairvalueshouldbedeferredandamortizedovertheperiodofuse

ifthefairvalueatthetimeofthetransactionislessthanthecarryingamount alossequaltothedifferenceshouldberecognizedimmediately

EXTRA

IAS17appliestoallleasesotherthanleaseagreementsforminerals,oil,naturalgas,andsimilar

regenerativeresourcesandlicensingagreementsforfilms,videos,plays,manuscripts,patents,

copyrights,andsimilaritems.[IAS17.2]

Disclosure:Lessees FinanceLease[IAS17.31]

carryingamountofasset reconciliationbetweentotalminimumleasepaymentsandtheirpresentvalue amountsofminimumleasepaymentsatbalancesheetdateandthepresentvaluethereof,for:

o thenextyearo years2through5combinedo

beyond

five

years

contingentrentrecognisedasanexpense totalfutureminimumsubleaseincomeundernoncancellablesubleases generaldescriptionofsignificantleasingarrangements,includingcontingentrentprovisions,

renewalorpurchaseoptions,andrestrictionsimposedondividends,borrowings,orfurther

leasing


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Disclosure:Lessees OperatingLease[IAS17.35]

amountsofminimumleasepaymentsatbalancesheetdateundernoncancellableoperatingleasesfor:

o thenextyearo years2through5combinedo beyondfiveyears

totalfutureminimumsubleaseincomeundernoncancellablesubleases leaseandsubleasepaymentsrecognisedinincomefortheperiod contingentrentrecognisedasanexpense generaldescriptionofsignificantleasingarrangements,includingcontingentrentprovisions,

renewalorpurchaseoptions,andrestrictionsimposedondividends,borrowings,orfurther

leasing

Disclosure:Lessors FinanceLease[IAS17.47]

reconciliationbetweengrossinvestmentintheleaseandthepresentvalueofminimumleasepayments;

grossinvestmentandpresentvalueofminimumleasepaymentsreceivablefor:o thenextyearo years2through5combinedo beyondfiveyears

unearnedfinanceincome unguaranteedresidualvalues accumulatedallowanceforuncollectibleleasepaymentsreceivable contingentrentrecognisedinincome generaldescriptionofsignificantleasingarrangements

Disclosure:Lessors OperatingLease[IAS17.56]

amountsofminimumleasepaymentsatbalancesheetdateundernoncancellableoperatingleasesintheaggregateandfor:

o thenextyearo years2through5combinedo beyondfiveyears

contingentrentrecognisedasinincome generaldescriptionofsignificantleasingarrangements


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Istheleasenoncancellable?

Isownershipexpectedtobetransferredat

theend

of

the

lease

term?

Isthereabargainpurchaseoption?

Aretheleasedassetsofaspecializednature?

Istheleasetermamajorpartofthe

economiclifeoftheleasedasset?

No

No

No

Yes

Yes

Yes

Isthepresentvalueoftheminimumlease

paymentssubstantiallyallofthefairvalueof

theleasedasset?

Dogains/lossesrelatingtoFVchangesaccruetothelessee?

Istheranoptiontocontinuetheleaseatarentlowerthanmarket?

Operatinglease

No

No

Isthesubstanceoftheleasing

arrangement

and

any

related

arrangementssuchthatsubstantiallyall

therisksandrewardsincidentto

ownershiparetransferredtothelessee?

Yes

Yes

Financelease


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Imp

What

The

Imp

Discl

perfor

12.1I

Anim

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excee

Notal

Wher

carryi

12.2

Theo

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intan

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Thei

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irment

aretheobje

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irmentloss

osuresare

mance

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airmentlo

tingunitex

rposeofth

theirreco

assetsare

assetsaregamount

hentound

lyassetsth

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xtassetsm

gableasset

gibleassets

willacquire

atlevelsho

Thestartin

therecove

impairme

individual

Wherean

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recoverablforthecas

towhicht

pairmentt

isnotafea

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edamount.

esting

ctivesofIA

esofnonfi

esarereco

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toIAS36

sistheam

ceedsitsre

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ubjecttoi

recordedatftheasset.

ertakeani

atneedtob

tionthatan

ustbeunde

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din

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uldanimpa

gpointfor

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ssets.

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e

amount

ishgeneratin

eassetbel

strelatest

ureofthed

onratherth

36:

nancialass

nisedand

ningtheim

untbywhi

overablea

ttestisto

untsor,mo

pairmentt

fairvalue,t

pairment

etestedat

assetmay

rtakenani

niteusefull

ilableforus

sscombina

irmenttest

etermining

tin

tthelevel

otgenerate

flows

determineunit(CGU)

ngs.

theassess

epreciation

anasavalu

IAS36

tsdonote

easuredon

pactofimp

hthecarryi

ount.

nsurethat

resimply,t

sting.(Ref

hereisnon

est

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pairmentt

ives

e

tion

beperform

f

entofrec

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irmenton

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assetsaren

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rtop.464)eedtotest

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verability

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ss,evenwh

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thosewher

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- 8 -

at

e

,

ata


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- 9 -

Identifyingindicatorsforimpairmenttesting:

External: Declineinasset'smarketvalue,entity'senvironment/market,increasesin

interestrates,Thecarryingamountoftheentity'snetassetsexceedsthe

entity'smarketcapitalization

Internal: Obsolescenceorphysicaldamage,changedusewithintheentity,economic

performanceoftheasset,management'sownforecasts

12.3Impairment

test

for

an

individual

asset

1. Therecoverableamountofanassetoracashgeneratingunitisthehigherofitsfairvaluelesscoststosellanditsvalueinuse.

2. Fairvaluelesscoststosellistheamountobtainablefromthesaleofanassetorcashgeneratingunitinanarm'slengthtransactionbetweenknowledgeable,willingparties,

lessthecosttsofdisposal.

3. Costsofdisposalareincrementalcostsdirectlyattributabletothedisposalofanassetorcashgeneratingunit,excludingfinancecostsandincometaxexpense.

4. Valueinuseisthepresentvalueofthefuturecashflowsexpectedtobederivedfromanassetorcashgeneratingunit.

1.Fromthedefinitionofrecoverableamount,therearetwopossibleamountsagainstwhich

thecarryingamountcanbetestedforimpairment:1)fairvalueinuselesscoststosell2)value

inuse.

Ifeitheroneoftheseamountsisgreaterthancarryingamoun,theassetisnotimpaired.

2.Fairvaluelesscoststosell,part1=fairvalue,part2=costofdisposal.

Wherethereisanactivemarket,fairvalueisthemarketprice.Ifthemarketisnotactive,a

fairvaluemaybedeterminedbyobservingevidencesuchasamountspaidinrecentsales

transactions.

Whencan

the

fair

value

les

cost

to

sell

be

determined?

1.Bindingsaleagreement

2.Tradedinanactivemarket:

Theitemstradedonthemarketarehomogeneous. Willingbuyersandsellerscannormallybefoundatanytime. Pricesareavailabletothepublic.

3.Ifanasset'sfairvalueisequaltoitsmarketvalue,thedifferencebetweenfairvalueandfair

valuelesscoststosellisthedisposalcostsoftheasset.

4.Value

in

use

is

the

present

value

of

future

cash

flows

relating

to

the

asset

being

measured,

inotherwordsthepresentvalueofthefuturecashflowsexpectedtobederivedfromanasset

orcashgeneratingunit.


10/41

Calcul

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- 10 -

ange

able

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sted.

rate

in


11/41

12.4C

Some

result

Identi

Defini

The s

indep

Oneo

unitw

andth

Impai

Anim

recov

Indet

tothe

amou

There

aniim

CGU.

sectioprofit

ashGenera

assetsdon

ofacombin

iyingacas

tion of CG

allest ident

ndent of th

theproble

ithinanent

efactorsus

mentlossf

airmentlo

rableamou

rminingth

CGUandth

t,mustbei

ductionine

pairmentof

helossisa

12.3,

with

orloss.

ingUnits

tindividual

ationofsev

generatin

:

ifiable grou

cash inflo

mswithusi

ityisarbitra

edinthede

oracashge

soccurswh

nt.

carryinga

atcontribut

ncluded.

achcarryin

eachasset,

countedfo

lossesrelati

xcludingG

lygenerate

eralassets.

unit

of assets t

s from othe

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ountofth

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inthesam

ngto

an

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oodwill

cashflows

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neratinguni

tneedsjud

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it Excludin

ingamoun

assets,all

tingthecas

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mentityto

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cashflows

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ets.

identificati

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edimmedia

- 11 -

ethe

cular

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ble

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ofa

din

telyin


12/41

- 12 -

Corporateassets

Corporateassets,suchastheheadquartersbuilding,areintegraltoallCGUgeneratingcash

flowsbutdonotbythemselvesindependentlygeneratecashflows.Howtobedealtwithin

determiningimpairmentlosses:

Step1)IfanycorporateassetscanbeallocatedonareasonableandconsistentbasistoCGU,

thenthisshouldbedone.Eachunitisthentestedforanimpairmentloss.Wherealossoccurs

inaCGU,thelossisallocatedprorataacrosstheasstesincludingtheportionofthecorporate

assetallocated

to

the

unit.

Step2)Ifsomecorporateassetscannotbeallocatedacrossthecashgeneratingunits,the

entity:

Comparesthecarryingamountofeachunitbeingtestedwithitsrecoverableamountandrecognisesanyimpairmentlossbyallocatingthelosstheassetsoftheunit

IdentifiesthesmallestCGUthatincludestheunitunderreviewandtowhichaportionoftheunallocatedcorporateassetcanbeallocatedonareasonableandconsistent

basis

ComparsthecarryingamountofthelargerCGU,inclusingtheportionofthecorporateasset,withitsallocatedamount.Anyimpairmentlossisthenallocatedacrossthe

assetsof

the

larger

CGU.

Determiningthecarryingamount

Theelementofthecarryingamount:

AssetsthataredirectlyandexclusivelyattributabletotheCGU. Anallocationofassetsthatareindirectlyattributableonareasonableandconsistent

basistotheCGUincluding:corporateassetsandcapitalisedgoodwill

Recognisedliabilities,butonlytotheextentthattherecoverableamountoftheCGUcannotbedeterminedwithoutconsiderationofthoseliabilities

GOLDENRULES

1.Makesureyouarecomparingappleswithapples2.Donotallocatefinancingliabilitiesortax(astheyareexcludedfromVIUcashflows)3. Ifallocatecentralassetsexcludeintragroupchargesfortheassets

12.5CashGeneratingUnitsandGoodwill

Goodwillisrecognisedonlywhenitisacquiredinabusinesscombination.Asdiscussedin

chapter10,IAS38IntangableAssets,doesnotallowtherecognitionofinternallygenerated

goodwillortherevaluationofanyacquiredgoodwill.Further,itisnotpossibletodeterminea

fairvaluelesscoststosellforgoodwill,ortoidentifyasetofcashflowsthatrelates

specificallyto

goodwill.

Goodwillisnotsubjecttoamortisation.Instead,theacquirerteststhecarryingamountof

goodwillannuallyinaccordancewithIAS36.

Whichunitsshouldhavegoodwillallocatedtothem?Thegoodwillshouldbeallocatedtothe

lowestlevelatwhichmanagementmonitorsthegoodwill.


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- 13 -

Wheretheallocationofgoodwillcannotbecompletedbeforetheendoftheannualperiodin

whichthebusinesscombinationoccurred,theinitailallocationistobecompletedbeforethe

endofthefirstannualperiodbeginningaftertheacquisitiondate.

Impairmenttestingofgoodwill

ACGUthathasgoodwillallocatedtoitmustbetestedforimpairmentannuallyormore

frequentlyifthereisanindicationtheunitmaybeimpaired(IAS36).Thisinvolvescomparing

thecarrying

amount

of

the

unit's

assets,

including

goodwill,

with

the

recoverable

amount

amountoftheunit'sassets.

Recognitionofimpairmentloss

Writeofffirst:

GoodwillwriteoffcompletelybeforeimpairingotherassetsFixedassets/Intangibles Writedownprorataaftergoodwill Noassetwritedownbelowrecoverablevalue Revaluedassetsimpairmentagainstrevaluationreserve

Recoverableamount

exceeds

carrying

amount

Iftherecoverableamountexceedsthecarryingamount,thereisnoimpairmentloss.Under

thetest,thegoodwillisprotectedagainstimpairmentby:

Internallygeneratedgoodwill

Unrecognisedidentifiablenetassets

Excessvalueovercarryingamountofrecognisedassets

Carryingamountexceedsrecoverableamount

Ifthecarryingamountexceedstherecoverableamount,thereisanimpairmentloss.Par.104

ofIAS36statesthattheimpairmentlossmustbeallocatedtoreducethecarryingamountof

theassetsoftheunit,orgroupofunits,inthefollowingorder:1)Reducethecarryingamount

ofany

goodwill

allocated

to

the

CGU

2)

reduce

the

other

asstes

of

the

unit

pro

rata

on

the

basisofthecarryingamountofeachassetintheunit.

Restrictions:

Inallocatinganimpairmentloss,anentityshallnotreducethecarryingamountofanasset

belowthehighestof:a)itsfairvaluelesscoststosellb)itvalueinusec)zero.Theamountof

theimpairmentlossthatwouldotherwisehavebeenallocatedtotheassetshallbeallocated

proratatotheotherassetsoftheunit(groupofunits)(fig.12.11,page482).

Timingofimpairmenttests

Thetest

may

be

performed

at

any

time

during

the

year,

provided

it

is

performed

at

the

same

timeeveryyear.ItisalsonotnecessaryforallCGU'stobetestedforimpairmentatthesame

time.IfsizesoftheCGU'sdiffer,itisnecessarytotestthesmallestunitfirst.Itmustalsobe

rememberedthatannualtestingisnotasubstituteformanagementbeingawareofeventsor

changingcircumstancesthatmayindicatepossibleimpairmentandtheneedforadditional

testing.


14/41

- 14 -

12.6Reversalofanimpairmentloss

Subsequenttoanimpairmentlossoccurringbecauseofdoubtsabouttheperformanceof

asstes,itispossibleforcircumstancestochangesuchthat,thentherecoverableamountof

theassetsincreases,considerationcanbegiventoareversalofapastimpairmentloss.

Itispossiblethatareviewoftheevidencewillnotresultinareversalofapreviousimpairment

loss,butinsteadmayleadtochangesinthedepreciation/amortisationmeasureofanasset.

Thereview

may

lead

to

changes

in

expectations

of

useful

life,

residual

value,

and

the

pattern

ofbenefitstobereceived.Iftheevidenceissuchthatthereisachangeintheestimatesin

relationtoanasset,areversalofimpairmentlosscanberecognised.Thereversalprocess

requirestherecognitionofanincreaseinthecarryingamountoftheassettoitsrecoverable

amount.

Canimpairmentsbereversed?

Yes.forassetsotherthangoodwillreversewhenthereisachangeinassumptionsunderlyingthecashflows,suchasachangeineconomicconditions

Practically,lookingforsignificantchangesonly Shouldnotexceedwhattheamortisedcostwouldhavebeen.

Goodwillimpairmentscanneverbereversed!

Reversalofanimpairmentloss individualasset

Wheretherecoverableamountisgreaterthanthecarryingamountofanindividualasset

(otherthangoodwill),thereversalofapreviousimpairmentlossrequiresadjustingthe

carryingamountoftheassettorecoverableamount.Onelimitationisthatthecarrying

amountcannotbeincreasedtoanamountinexcessofthecarryingamountthatwouldhave

beendeterminedhadnoimapirmentlossbeenrecognised.

Reversalof

an

impairment

loss

CGU

Thereversaloftheimpairmentlossisallocatedproratatotheassetsoftheunit,exceptfor

goodwill,withthecarryingamountofthoseassets.Thecarryingamountofanassetcannotbe

increasedabovethelowerofitsrecoverableamountandthecarryingamountthatwould

havebeendeterminedhadnoimpairmentlossbeenrecognisedfortheassetintheprevious

periods.Ifthelatteroccurs,thentheamountofimpairmentlossreversalthatcannotbe

allocatedtoanindividualassetisthenallocatedonaproratabasistotheotherasstesofthe

CGU,exceptforgoodwill.

Reversalofanimpairmentloss Goodwill

Impairmentloss

recognised

for

goodwill

is

not

to

be

reversed

in

aleter

period.

Becasue

of

the

natureofgoodwill,itisnotpossibletodeterminehowmuchofanygoodwillexistinginan

entityisremainingacquiredgoodwillorgoodwillinternallygeneratedsincetheacquisition.If

thereisanexcessofrecoverableamountovercarryingamountandtheexcesshasbeen

allocatedtoallasset's,howeverthereisstillanamounttobeallocated,thisamountwill

recognisedimmediatelyinP&Lasincome.


15/41

- 15 -

12.7Disclosure

IAS36requiresdisclosuresabouttheestimatesusedtomeasuretherecoverableamountofa

cashgeneratingunitwhengoodwilloranintangibleassetwithanindefinitelifeisincludedin

thecarryingamountoftheunit,andthecarryingamountofgoodwillorintangibleassetswith

indefiniteusefullivesallocatedtothatunitissignificantincomparisonwiththeentity'stotal

carryingamountofgoodwillorintangibleassetswithindefiniteusefullives.Wherethe

carryingamountofgoodwillorintangibleassetsisnotsignificantforaunit,par.135requires

thatfact

to

be

disclosed.

"Illustrativeexamples12.2and12.3(page492)arecomprehensiveexamplesthat

demonstratetheaccountingforimpairmentlosseswithandwithoutcorporateassets."


16/41

- 16 -

BusinessCombinations IFRS3 Chapter11

Scope/definitions

DefinitionofabusinesscombinationAbusinesscombinationisatransactionoreventinwhich

anacquirerobtainscontrolofoneormorebusinesses.Abusinessisdefinedasan

integratedsetofactivitiesandassetsthatiscapable(noneedforactualoutputsfrom

asset)ofbeingconductedandmanagedforthepurposeofprovidingareturndirectly

toinvestorsorotherowners,membersorparticipants.Italsoappliestocombinations

ofmutualentitiesandcombinations(notduallistedshares!)[IFRS3.AppendixA]

AcquirermustbeidentifiedUnderIFRS3,anacquirermustbeidentifiedforallbusiness

combinations.[IFRS3.6]

ScopeexclusionsIFRS3doesnotapplytotheformationofajointventure,combinationsof

entitiesorbusinessesundercommoncontrol.Also,IFRS3doesnotapplytothe

acquisitionofanassetoragroupofassetsthatdonotconstituteabusiness(theseare

accountedatcost,fairvalue).[IFRS3.2]

Fairvalueamountonwhichanassetcouldbeexchanged,betweenknowledgeableandwilling

partiesinarmlengthtransaction

Control

Powerovergreaterthan50%ofthevotingcontrol(whichcanbebycontract) Powertogovernthefinancialandoperatingpolicies Powertoappointorremovethemajorityofthedirectors Powertocastthemajorityofvotesatameeting

Thecostofthecombination

Recognizeatfairvalueofconsideration(thecash,shares,earnoutpaid),measuredatacquisitiondate.

Earnout>Theacquireewillreceiveaportionoffuturerevenues/profits fromacquireras

consideration.

Transactioncostsrelatedtothedealformerger/acquisitionisnotrecognized,butincurredascosts.

Acquisitionmethod

1. Identificationofthe'acquirer'thecombiningentitythatobtainscontroloftheacquiree[IFRS3.7]

2. Determinationofthe'acquisitiondate'thedateonwhichtheacquirerobtainscontroloftheacquiree[IFRS3.8]

3.Recognition

and

measurement

of

the

identifiable

assets

acquired,

the

liabilities

assumedandanynoncontrollinginterest(NCI,formerlycalledminorityinterest)inthe

acquiree

4. Recognitionandmeasurementofgoodwilloragainfromabargainpurchase


17/41

- 17 -

1. Identificationofthe'acquirer'Thecompanytakinginitiativeand/ortheoneobtainingcontrol.Thisisimportantbecauseall

assetsandliabilitiesofacquireemostbevaluedatfairvalue.

2. DeterminingtheacquisitiondateThedateonwhichtheacquirerobtainscontroloftheacquiree,thisdoesnotrequirea

transaction.As

the

transaction

can

be

spread

over

time

in

parts,

the

substance

of

the

transactiondeterminestheaccounting,ratherthantheformofthetransaction.

Otherdatesofimportance:

Datethecontractissigned Datethecontractispaid Datenominatedinthecontract Dateonwhichassetsaredelivered Datetheofferbecomeunconditional

3. RecognitionofAcquireebyacquirerRestateaccounts(makesurethesameaccountingmethodsareused)

Alloftheidentifiableassetsandliabilitiesandcontingentliabilitiesaretobeidentifiedand

valuedatfairvalue(allatacquisitiondate!),evenwhenthesewerenotpreviouslyonthe

purchasedcompanysbalancesheet.

Examples:Inventoryusedtobyrecognizedatcost,nowfairvalue

Non currentassetsmeetingtherequirementsofIFRS5,(assetsheldforresale)arerecognised

atfairvaluelesssellingcosts.

Recognise:

Assetsotherthenintangibleassetsrecognisewhenfutureeconomicbenefitwillaccruetotheacquireranditsfairvaluecanbemeasuredreliable;

Liabilitiesotherthencontingentliabilitieswhenitisprobablethattherewillbeanoutflowofrecoursestosettletheobligationanditsfairvaluecanbemeasured

reliable;and

Contingentliabilitiesandintangibleassetswhentheirfairvaluecanbemeasured.Theprofitandlossaccountshouldincludeprofitsandexpensesbasedonthefairvalueofthe

assetsacquired(i.e.chargedepreciationonthefairvaluenotthevalueperthepreacquisition

balancesheet).Minorityshareisstatedattheminoritiesshareofthenetfairvalueofthe

assetsacquired.


18/41

- 18 -

Intangibleassets

IntangibleassetsarerecognisedonlywhenitmeetstherequirementsofIAS38Intangible

Assets,anditsfairvaluecanbereliablemeasured.Tomeettherequirementstheintangible

assetmust:

Beseparate(itcanbesoldortransferredseparately) Arisesfromcontractualorlegalrights

Examples:orderportfolio,trademarks/tradenames (amountsavedfornotneedingroyalties),

R&D(onlywhenverylikelyR&Dwillyieldmoney).

Contingentliabilities

Contingentliabilitiesaremeasuredatfairvalueifthiscanbereliablemeasured.Ifyoucannot

measureitreliablethendiscloseinformationperIAS37.Aftertheirinitialrecognition,

contingenciesshouldbemeasuredatthehigherof:

TheamountthatshouldberecognisedunderIAS37 TheinitialamountlessamortisationperIAS18

ThissectionexcludesfinancialinstrumentsperIAS39butincludesloans.

Deferredtaxes

Shouldbecalculatedastaxauthoritiesdontaccepttherevaluation,ataxasset/liabilityshould

berecognized.

Taxescarriedforwardorbackwardcouldbesuddenlyberecognizedbyacquisition.

Indemnification

Legalclaimsthatareuncertainandwillbeaccountedforbytheseller.Theseclaimsare

specific,incontrarytowarranties.Shouldberecognizedasassetorliability.

Earnouts

Recognizeat

fair

value,

this

amount

will

not

be

amended

in

the

balance

sheet

in

the

future.

Subsequentchangesshouldberecognized(asestimation)asanadjustmentinP&L.

Withinayearthevalueofearnoutofearnoutatacquisitiondateshouldbedetermined.And

earnoutsaresignificanteventsthatshouldbedisclosed(whenbetweenclosingdateand

reportingdate).

Reacquiredrights

Example:boughtbackleasingrights.Onlyforthelengthoftheexistingcontracts.

4. RecognitionandmeasurementofgoodwillGoodwill

>unrecognized

intangible

assets

(synerchies

+future

costumers

+assembled

workforce)

AttheacquisitiondaterecognizegoodwillasanassetGoodwillshouldberecognisedatcost

beingtheamountpaidlessthefairvalueofassetsandliabilitiesacquired.Goodwillshouldbe

carriedasanassetlessanyimpairment.Goodwillshouldnotbeamortized(yearlyimpairment

testingisused).


19/41

- 19 -

Negativegoodwill

Whenitarises,reassesstheidentificationandmeasurementofassetsandliabilitiesandthe

measurementofcost.Youthenrecognisenegativegoodwillimmediatelyintheprofitandloss

account.IFRS3recognisesthatnegativegoodwillcanariseinthreecircumstances:

Errorsincalculation Therequirementofanaccountingstandardtomeasureanassetatotherthenfair

value(forexampleundiscountedtaxassets);or

Abargainpurchase.Otheraspects

Onlyinthestatementsoftheacquirerneedtheacquireetoberevalued.Thestatementsoftheacquireewillremainunamended.

InthecaseoftransactionAtheaccountingmethodchangesfromtheequitymethodtothefairvaluemethod.Soeverythingaccountedinthepreviousperiodisderecognized.

Andtheeverythinginthenewsituationisrecognizedwiththerightmethod.Thiscan

(willusually)leadtoaHoldinggain.

Example:Buy40%ofsharesfor40, ofcompanyyoualreadyown30%(boughtfor20,).

Fairvalueof70%is70, then:

Subsidiary 70,

@cash 40,

@associate 20,

@gain 10,

Nogoodwillisrecognizedwhentheacquirergoesfromcontrolto100%control,theeconomiscentitymethod.

PostDealimplicationsareimportanttoforecastinadvance.Becauseofrevaluationthedepreciationandamortizationwillprobablybehigher,pressingprofitmargins.This

shouldbecommunicatedtostakeholderstopreventthemgettingfalseexpectationsof

performanceafteracquisition.


20/41

- 20 -

GroupReporting IFRS3/IAS27 Chapter21

IFRS3:BusinessCombinations

IAS27:Consolidatedandseparatefinancialstatements

Thepreparationofconsolidatedfinancialstatementsinvolvescombiningthefinancial

statementsof

the

individual

entities

so

that

they

show

the

financial

position

and

performance

ofthegroupofentities,presentediftheywereasingleeconomicactivity.

IFRS3:Businesscombination=atransactionorothereventinwhichanacquirerobtains

controlofoneormorebusinesses:separateentitiesthattogetherformacombinedentity.

Anentitymayacquireallorpartoftheissuedsharesofanotherentity.Whenthereisthe

abilitytocontrol,theentitiesoperateasacombinedentityandthisresultsinaparent

subsidiaryrelationship.Consolidatedfinancialstatementsarethenrequired.

Twoentitiescouldagreetotheformationofanewentity,thenewentityacquiresallthe

sharesoftheothertwoentities.Thenewentitycontrolstheothertwoentitiesandconsolidatedfinancialstatementsarerequired.

Aduallistedstructureinvolvestheformationofacontractualarrangementbetweentwo

entitiesunderwhichtheactivitiesofbothentitiesarebroughttogether,managedand

operatedonaunifiedbasisasiftheywereasingleentitywhileretainingtheirseparatelegal

entities,taxresidenciesandstockexchangelistings.Thereisasharingofrightsbetweenthe

shareholdergroupssuchthattheshareholdershaveaneconomicinterestinthecombined

assetsofbothentities.Consolidatedfinancialstatementsarerequiredbecauseoftheinterest

ofusersoffinancialstatementsinthefinancialperformanceandpositionofthecombined

entitiesrather

than

the

individual

entities.

Consolidationmethod

IAS27:

- Consolidatedfinancialstatementsarefinancialstatementsofagrouppresentedasthoseofasingleeconomicactivity

- Agroupisaparentandallitssubsidiaries- Aparentisanentitythathasoneormoresubsidiaries- Asubsidiaryisanentity,includinganunincorporatedentitysuchasapartnership,that

iscontrolledbyanotherentity

-

In

preparing

the

consolidated

financial

statements,

the

financial

statements

of

the

parentanditssubsidiariesarecombinedlinebylinebyaddingtogetherlikeitemsof

assets,liabilities,equity,incomeandexpenses

- Theconsolidatedfinancialstatementsarerequiredinadditionoftheindividualfinancialstatements:itdoesnotnecessarilymeanthattheentityshouldpreparean

individualfinancialstatementtoo


21/41

- 21 -

Control

- IAS27:Controlisthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Therearetwopartstothisdefinition:

1. theabilitytodirectthefinancialandoperatingpoliciesofanotherentity(thepowercriterion)

2. theabilitytoobtainbenefitsfromtheotherentity(thebenefitcriterion)- thedefinitionofcontrolincludesthreecomponents:power,returnsandthelink

betweenpower

and

returns

- distinctioncapacitytocontrolandactualcontrol.Capacitytocontroldoesnotrequiretheholdertoactuallyexercisecontrolandanentitythatisactuallycontrollinganother

maynothavethecapacitytocontrol.

- Existencecapacityofcontrol:1. Itmusthavetheabilitytochangeormodifypolicydecisionsiftheneedforchange

isseentoexist.Aentitymaybepassive.

2. Theabilitytocontrolisanexclusionarypower,butitispossiblethatoneentitymaydelegatecontroltoanotherentity,butthefirstentityhasthecapacitytocontrol

evenifitisthedelegatedpartythatactuallycontrolsthesubsidiary.(nonshared

control)3. IAS27:controlispresumedtoexistwhentheparentowns,directlyorindirectly

throughsubsidiaries,morethanhalfofthevotingpowerofanentity(unilateral

control).Whentheownerownshalforlessofthevotingpowercontrolexists

when:

Thereisthepowertoremovethemajorityofthemembersoftheboard Thereisthepowertocastthemajorityofvotesatmeetingoftheboard

- UnderIAS27controlisnonshared.Nonsharedcontroliscontrolthatisachievedbothbecauseofitsownactionsandbecauseoftheactionsofotherparties(effective

control)

- Determineexistenceofeffectivecontrol: Theexistenceofcontracts Sizeofthevotinginterest Dispersionofothershareholders Levelofdisorganizationorapathyoftheremainingshareholders

- Problemsarisingineffectivecontrol: Temporarycontrol:whentheidentificationoftheparentisbasedonfactors

thatmaychangeovertime

Theabilityofanentitytocontrolanothermaybeaffectedbyrelationshipswithotherparties

Aminorityholderthatdidnothavecontrolmay,duetochangingcircumstancesfind

itself

with

the

capacity

to

control

- Potentialvotingrightsareinstruments,ifexercisedorconverted,givetheentityvotingpoweroverthefinancialandoperatingpoliciesofanotherentity


22/41

- 22 -

Benefits

- Thereasonforincludingtheabilitytobenefit,ratherthansimplydefiningcontrolasasynonymofpoweristoexcludesituationsinwhichanentitymighthavepowerover

anotherentitybutonlyasatrusteeoragent

- Thereturnsaccruingtoacontrollingentitymustvaryaccordingtotheactivitiesofthecontrolledentity:theentitythatreceivesthegreatestreturnsislikelytohavethe

greatestpoweroverthatentity

- PowerandreturnsmustbelinkedIAS27:Asubsidiaryisnotexcludedfromconsolidationbecauseitsbusinessactivitiesare

dissimilarfromthoseoftheotherentitieswithinthegroup.

Informationinconsolidatedfinancialstatements:

- Mustrepresentasfaithfullyaspossiblethefinancialposition,financialperformanceandcashflowsofaparentanditssubsidiaries

- Mustprovidetheinformationthatisrelevanttotheusersofthestatements- Theinformationmustbeunderstandabletotheusers,providinginformationexceeding

thatprovided

in

the

separate

financial

statements

of

the

entities

in

the

group

- Theinformationmustincreasetheabilityoftheuserstocomparethepositionandperformanceofthegroupwithotherentitiesthatareorganizeddifferently

Identifydependentusers:(seeexampleinbook)

- Separationofmanagementfromeconomicinterest:thefurthertheownersareremovedfromthemanagementoftheentity,themorelikelyitisthattheownerswill

bedependentonthesupplyofinformationabouttheentity

- Economicofpoliticalimportance/influence:entitiesthathavedominantpositionsorprivilegeswillalwaysattractinterestedpartiesandpotentiallydependentusers

- Financialcharacteristics:userswillbeattractedtoparticularcharacteristicsbasedontheir

interest

in

the

entity

Presentationconsolidatedfinancialstatements

IAS27:Aparentshallpresentconsolidatedfinancialstatementsinwhichitconsolidatesits

investmentsinsubsidiaries.Aparentneednotpresentitif:

- Theparentisitselfawhollyownedsubsidiary,orisapartiallyownedsubsidiaryofanotherentityanditsotherowners

- Theparentsdebtorequityinstrumentsarenottradedinapublicmarket- Theparentdidnotfile,norisitintheprocessoffiling,itsfinancialstatementswitha

securitiescommissionorotherregulatoryorganizationforthepurposeofissuingany

classof

instruments

in

apublic

market

- TheultimateoranyintermediateparentoftheparentproducesconsolidatedfinancialstatementsavailableforpublicusethatcomplywithIFRS

Foranexampleseebookpp.823


23/41

- 23 -

Separatefinancialstatementsarethosepresentedbyaparent,aninvestorinanassociateora

ventureinajointlycontrolledentity,inwhichtheinvestmentsareaccountedforonthebasis

ofthedirectequityinterestratherthanonthebasisofthereportedresultsandnetassetsof

theinvestees.

Theconsolidatedfinancialstatementsincludeallthesubsidiariesoftheparent.

Identificationof

an

acquirer

Theacquireristhecombiningentitythatobtainscontroloftheothercombiningentitiesor

businesses.Theparentwillbeidentifiesastheacquirer.

IFRS3:theparententityisusuallythelegalacquirerasitissuesitsequityinterestsas

considerationinthecombinationtransaction,withthesubsidiariesbeingthelegalacquirees.

Theaccountingacquirerisdeterminedbasedonwhichentityinthesubsequentbusiness

combinationisthecontrollingentity.

Ifanewentityisformedtoissueequityintereststoeffectabusinesscombination,oneofthe

combiningentitiesthatexistedbeforethecombinationshallbeidentifiedastheacquirerby

applyingthe

guidance

in

B13

B17:

the

entity

likely

to

be

the

acquirer

is

the

one:

- Thathasasignificantlygreaterfairvalue- Thatgivesupthecashorotherassets,inthecasewhereequityinstrumentsare

exchangedforcashorotherassets

- WhosemanagementisabletodominatethebusinesscombinationReverseacquisition:EntityAacquiresallthesharesinentityB,buttheformershareholdersof

Bhold60%ofthesharesofAsoBhasreallytakenoverAbecausetheformershareholdersof

Bareincontrol.Theproblemisthattheanalysisreliesofwhichshareholderscontrolthe

decisionmaking.

Conceptsof

consolidation

Conceptsofconsolidation:theparententityconceptandtheentityconcept.Differencesin

consolidationariseundertheseconceptsonlyoftheparentdoesnotownalltheequityina

subsidiary,inotherwordsifanoncontrollinginterest(NCI)exists.

Choiceconceptofconsolidation:

- Theassetsandliabilitiesofasubsidiaryincludedintheconsolidatedfinancialstatements

- TheclassificationoftheNCIasequityorliability,andthemeasurementofNCI- Theadjustmentsfortheeffectsoftransactionswithinthegroup

Entityconcept

- Thegroupconsistsoftheassetsandliabilitiesoftheparentaswellasalltheassetsandliabilitiesofthesubsidiaries

- TheNCIisclassifiesasanequityholderorcontributorofcapitaltothegroupinthesamecapacityastheequityholders/ownersoftheparent

- Wheretherearetransactionsbetweenmembersofthegroup,theeffectsofthesetransactionsareadjustedinfull


24/41

- 24 -

- NCIisdisclosedinthequitysectionoftheconsolidatedfinancialstatementsanditsmeasurementisbasedonashareofconsolidatedequityandnotonashareofthe

recordedequityofthesubsidiaryinwhichtheNCIownershipinterestisheld

Parententityconcept

- Theconsolidatedgroupconsistsoftheassetsandliabilitiesoftheparentandalltheassetsandliabilitiesofthesubsidiaries

- TheNCIisclassifiesasaliability- Adjustmentsfortransactionswithinthegroupinvolvebothpartialandtotal

eliminationprocedures.Onlytheparentsshareoftheintragroupprofitiseliminated

wherethesubsidiaryisthesellingentity,butalltheprofitiseliminatedwherethe

parentistheseller.

- TheNCIisreportedintheliabilitysectionoftheconsolidatedstatementoffinancialpositionandiscalculatedasitsproportionateshareoftherecordedequityofthe

subsidiary,withnoadjustmentsfortransactionswithinthegroup.

Proprietaryconceptofconsolidation

- Thegroupconsistsoftheassetsandliabilitiesoftheparentandtheparentsproportionalshareoftheassetsandliabilitiesofthesubsidiary.Theconsolidatedfinancialstatementsdonotincludeallthenetassetsofasubsidiary;onlytheparents

share

- AstheNCIisoutsidethegroup,theNCIshareofsubsidiaryequityisnotdisclosed,andneitheristheNCIshareofthenetassetsofthesubsidiary

- Transactionsbetweentheparentandthesubsidiaryareadjustedproportionally- NCIisnotdisclosed

TheaccountingtreatmentsadoptedinIAS27areconsistentwiththeadoptionoftheentity

concept:

- Theconsolidatedfinancialstatementsincludealltheassetsandliabilitiesofthegroup- TheNCIdoesnotfitintothedefinitionofaliability

Formatofconsolidatedfinancialstatements

Thesameasforsingleentities,theonlyadditionalrequirementsareinrelationshiptothe

disclosureoftheNCI:NCIshallbepresentedintheconsolidatedstatementoffinancial

positionwithinequity,separatelyfromtheequityoftheownersoftheparent

IAS1:anentityshalldisclosethefollowingitemsinthestatementofcomprehensiveincome

as allocationsofprofititlossfortheperiod:

- Profitorlossfortheperiodattributabletononcontrollinginterestandownersoftheparent

- Totalcomprehensiveincomefortheperiodattributabletononcontrollinginterestandownersoftheparent

Intheconsolidatedstatementofchangesinequitydisclosetotalcomprehensiveincomefor

theperios,showingseparatelythetotalamountsattributabletoownersoftheparentandto

noncontrollinginterests

Forexamplesoftheformatseebookpp.831


25/41

- 25 -

Onlytheconsolidatedfiguresarerequired,butitisexpectedthatmostentitieswilldisclose

bothaconsolidatedandaparentcolumn.

Theminimumdisclosureinthestatementoffinancialpositionaretheamountsofnon

controllinginterests,presentedwithinequityandissuedcapitalandreservesattributableto

ownersofaparent.

Otherdisclosuresintheconsolidatedfinancialstatements:

- Thenatureoftherelationshipbetweentheparentandasubsidiarywhentheparentdoesnotown,directlyorindirectly,morethanhalfofthevotingpower

- Thereasonswhytheownershipofmorethanhalfofthevotingorpotentialvotingpowerofaninvesteedoesnotconstitutecontrol

- Theendofthereportingperiodofthefinancialstatementsofasubsidiarywhensuchfinancialstatementsareusedtoprepareconsolidatedfinancialstatementsandareas

ofadateorforaperiodthatisdifferentfromthatoftheparentsfinancialstatements,

andthereasonforusingadifferentdateorperiod

- ThenatureandextentofanysignificantrestrictionsontheabilityofsubsidiariestotransferfundstotheparentintheformofcashdividendsortorepayloansofadvancesWhenanentityelectsnottoprepareconsolidatedfinancialstatements,thefollowing

disclosuresintheseparatefinancialstatementsoftheparentareneeded:

- Thefactthatthefinancialstatementsareseparate,thattheexcemptionfromconsolidationhasbeenused,thenameandcountryofincorporationorresidenceof

theentitywhoseconsolidatedfinancialstatementsthatcomplywithIFRShavebeen

producedforpublicuseandtheaddresswherethoseconsolidatedfinancial

statementsareobtainable

- Alistofsignificantinvestmentsinsubsidiaries,jointlycontrolledentitiesandassociates,

including

the

name,

country

and

incorporation

or

residence,

proportion

of

ownershipinterestand,ifdifferent,proportionofvotingpowerheld

- Adescriptionofthemethodusedtoaccountfortheinvestments


26/41

- 26 -

Associates IAS28 Chapter27

Anassociateisanentity,includinganunincorporatedentitysuchasapartnership,overwhich

theinvestorhassignificantinfluenceandthatisneitherasubsidiarynoraninterestinajoint

venture.

Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisions

oftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.

Threetypesorlevelsofcontrolthatoneentitycanexerciseoveranother:controlor

dominance(subsidiary),significantinfluence(associates)andjointcontrol(jointventures).

Factorsthatmayprovideevidenceoftheexistenceofsignificantinfluence:

1. Representationontheboardofdirectorsorequivalentgoverningbodyoftheinvestee

2. Participationinpolicymakingprocesses,includingparticipationindecisionsaboutdividendsorotherdistributions

3. Materialtransactionsbetweentheinvestorandtheinvestee4. Interchangemanagerialpersonnel5. Provisionofessentialtechnicalinformation

Associatesareaccountedforusingtheequitymethodintheinvestorsconsolidatedfinancial

statements.(Goodexampleoftheequitymethod:page1110)

1.Whatistheequitymethod?

Undertheequitymethod,theinvestmentisinitiallyrecognizedatcost(Goodwillincluded).

Theinvestmentisincreasedordecreasedtorecognizetheinvestorsshareoftheprofitorloss

oftheassociateafterthedateofacquisition.Theinvestor'sshareoftheassociate'sprofitor

lossisadjustedfortheeffectofanyfairvaluedifferencesrecognizedonacquisitionofthe

associateandanyotherrequiredadjustments.

Keysteps:o Recognizetheinitialinvestmentintheassociateatcosto Increaseordecreasethecarryingamountoftheinvestmentbytheinvestorshareof

theprofitorlossoftheinvesteeafterthedateofacquisition

o Reducethecarryingamountoftheinvestmentbydistributionsreceivedfromtheassociate

o Increaseordecreasethecarryingamountoftheinvestmentforchangesintheinvestorsshareofthechangesintheinvesteestheircomprehensiveincome.This

appliestoreserveswherechangesinassociatesequityhavenotalreadybeenincluded

inprofitorloss.Hence,changesinassetrevaluationandforeigncurrencytranslation

reservesare

recognized;

but

movements

in

general

reserve,

which

are

an

appropriationfromretainedearnings,arenotrecognized.


27/41

- 27 -

Adjustmentssimilartothoserequiredforthepurposesofincludingsubsidiariesinthe

consolidatedfinancialstatementsshouldbemadewhentheassociatesareincorporatedinto

thegroup'sconsolidatedfinancialstatementsortheeconomicinterestfinancialstatements

ofacompanythathasassociatesbutdoesnothaveanysubsidiaries.Thetypeofadjustments

thatmaybenecessarycoverthefollowingmatters:

Toachieveconsistencyofaccountingpolicies;

Toincludeanyimpactsofdifferencesbetweenfairvaluesandbookvaluesoftheassociate

onacquisition

date

(for

example

depreciation

of

the

depreciable

assets

based

on

their

fair

valuesatacquisitiondate)outofwhichgoodwillwillbecalculatedalso;and

Toeliminatetheeffectsofintragrouptransactions;

2.Whenshouldtheequitymethodstart?

Aninvestmentshouldberecordedundertheequitymethodfromthedateonwhichitfalls

withinthedefinitionofassociate,thatis,thedatethattheinvestorgainssignificantinfluence.

3.Whenshouldtheequitymethodstop?

Theuseoftheequitymethodshouldbestoppedfromthedatethat:

1.theinvestorceasestohavesignificantinfluence(althoughitmaystillholdtheinvestment)

2.theinvestmentinassociateisreclassifiedas'heldforsale'inaccordancewithIFRS5(seemoduleNoncurrentAssetsHeldforSaleandDiscontinuedOperations)

4.Mechanicsoftheequitymethod

Acquiredassociatesareinitiallyrecordedatthecostoftheinvestment.Anydifference

betweenthecostoftheinvestmentandtheinvestor'sshareinthenetfairvaluesofthe

associate'sidentifiableassetsandliabilitiesisgoodwill.Thesefairvaluesshouldbeascertained

inaccordancewiththeprinciplesofIFRS3(revised),Businesscombinations'.Thegoodwillis

includedwithinthecarryingamountoftheassociateandnotshownasaseparateasset.

5.Whathappenswhentheinvestorsandtheassociatesreportingdatesaredifferent?

ReportingdatesandsignificantinfluenceWhenthereportingdatesoftheinvestorand

associatearedifferent,theassociateprepares,unlessimpracticable,fortheuseofthe

investor,statementsasatthesamedateasthefinancialstatementsoftheinvestor.Ifthe

reportingdateoftheassociatesfinancialstatementsaredifferentfromtheinvestor'sandas

longasthedifferencedoesn'texceedthreemonths,adjustmentsshouldbemadeforthe

effectsofanysignificanteventsortransactionsbetweentheinvestorandtheassociatethat

occurbetweenthereportingdates.

6.Transactionswithassociates

Themethodusedtoeliminateintragrouptransactionswithassociatesisdifferentfromthat

adoptedfor

subsidiaries.

The

normal

method

of

adjustment

for

asubsidiary

company

would

betoeliminateprofitsandlossesfully.However,thestandardstatesthatprofitsandlosses

resultingfrom'upstream'and'downstream'transactionsbetweenaninvestor(includingits

consolidatedsubsidiaries)andanassociateareeliminatedtotheextentoftheinvestor's

interestintheassociate.


28/41

- 28 -

7.Goodwill

Positivegoodwillrelatingtotheacquisitionofanassociateisincludedinthecarryingamount

oftheinvestment.Goodwillmaynotbeamortized,asthisisnolongerpermittedbyIFRS3

(revised),Businesscombinations.Separatedisclosureofgoodwillarisingonacquisitionofan

associateisnotrequired.Itisincludedinthecarryingamountoftheassociateandnotshown

asaseparateasset.Negativegoodwill(nowtermedexcessoftheinvestor'sshareofthenet

fairvalueoftheassociate'sidentifiableassets,liabilitiesoverthecostoftheinvestment')is

requiredto

be

taken

to

profit

or

loss

in

the

period

the

associate

was

acquired

and

included

in

theinvestor'sshareoftheassociate'spostacquisitionaftertaxresult.

8.Impairment

Oftenwhereanassociateismakinglosses,theremaybeasignificantdiminutioninthe

associate'svalue.However,asmentionedlater,undertheequitymethodaninvestor

recognizesanassociate'slosses.IAS28requiresthataftertheapplicationoftheequity

method,includingtherecognitionoflosses,therequirementsofIAS39,'Financial

instruments:Recognitionandmeasurement',shouldbeappliedtodeterminewhetheritis

necessarytorecognizeanyadditionalimpairmentloss.

9.Distributionsfromassociates

Consolidatedbalancesheet:

Undertheequitymethod,distributionsreceivedfromanassociatereducethecarrying

amountoftheinvestmentrecordedbytheinvestor.

Consolidatedstatementofcomprehensiveincome:

Thebasicprincipleisthattheinvestortakesaccountofitsshareoftheposttaxprofitsofthe

associatewhetherornottheassociatedistributesitsprofitsasdividends.Theassociates

revenues,costofsalesetc.arenotcombinedwiththoseoftheinvestorgroup.Insteadthe

investorsgroupsshareoftheassociatesnetprofitisdisclosedononelineinthestatement

ofcomprehensiveincome.Thereforethedividendsreceivedfromtheassociatehaveno

impacton

the

groups

statement

of

comprehensive

income.

Under

the

equity

method

the

full

amountoftheinvestorsshareoftheinvesteesprofitaftertaxisrecognizedinthestatement

ofcomprehensiveincome.

10.Recognitionoflosses

Wouldtheassociateslossescontinuetoberecognized,iftheinvestorsshareoflosses

equalsorexceedsthecarryingamountoftheirinvestment?Oncetheinvestorsshareof

lossesofanassociateequalsorexceedsthecarryingamountoftheinvestment(includingany

longtermintereststhatinsubstanceformpartoftheinvestorsnetinvestmentinthe

associate,suchaspreferencesharesand(unsecured)longtermreceivablesorloanstothe

associate),theinvestorshoulddiscontinuerecognizingitsshareoffurtherlossesinthe

statementofcomprehensiveincome.

11.Acquisitions

Investmentbecomesanassociate

Aninvestormayachievesignificantinfluenceoveranexistinginvestmentinanentitysuch

thatitbecomesanassociate,mostcommonlyviaacquisitionoffurthersharesbutpotentially

viaachangeinrelationshipwithoutarelatedchangeinstake.


29/41

- 29 -

IAS28notesthattheconceptsunderlyingtheproceduresusedintheacquisitionofa

subsidiaryarealsoadoptedontheacquisitionofaninvestmentinanassociate.

IAS28requiresthatontheacquisitionofanassociate,anydifferencebetweenthecostof

theinvestmentandtheinvestor'sshareofthefairvaluesoftheassociate'sidentifiable

assets,andliabilitiesacquiredisaccountedforinaccordancewithIFRS3(revised),'Business

combinations'.Hence,ontheacquisitionofaninvestmentinanassociateafairvalue

exerciseneedstobeundertaken.

12.Howshouldtheinvestmentintheassociateberecordedintheseparatefinancial

statementsoftheinvestor?

Aninvestmentinanassociateshouldbeincludedintheseparatefinancialstatementsofthe

investoreither:

1)atcost,or

2)asafinancialassetaccordingtoIAS39

Investinginanassociateinstages

Inabusinesscombinationachievedinstages,theacquirershallremeasureitspreviouslyheld

equityinterestintheacquireeatitsacquisitiondatefairvaluesandrecognizetheresulting

gainorloss,ifany,inprofitorloss.Inpriorreportingperiods,theacquirermayhave

recognizedchangesinthevalueofitsequityinterestintheacquireeinothercomprehensive

income.Ifso,theamountthatwasrecognizedinothercomprehensiveincomeshallbe

recognizedonthesamebasisaswouldberequirediftheacquirerhaddisposeddirectlyofthe

previouslyheldequityinterest.

o Thepreviouslyheldinvestmentisrevaluedtofairvaluewithanygain/lossbeingtakingtoprofitorloss.

o Thepreviouslyheldinvestmenthadbeenmeasuredatfairvaluewithchangesinfairvalue

being

recognized

directly

in

equity,

those

amounts

are

transferred

to

current

periodprofitandloss.

Becominganassociateafteracquiringanownershipinterest

Aninvestormayacquireanownershipinterestinaninvesteeonacertaindate,butthe

investeemaynotbeclassifiedasanassociateuntilalaterdate.Theinvestorinitially

recognizesitsinvestmentintheinvesteeatitscostofinvestment,basedonthefairvalueof

whatwasgivenuptoacquiretheinvestment.

Theequitymethodisappliedatthedatetheinvestorobtainssignificantinfluenceoverthe

investee.

Step1:remeasuretheinvestmenttofairvalue,takinganychangetoprofitandlossforthe

period

Step2:measuresthefairvaluesoftheidentifiableassetsandliabilitiesoftheinvestee

Step3:measuresanygoodwillorincomeexcessasthedifferencebetweenthecostofthe

investmentandtheinvestorsshareofthenetfairvalueoftheidentifiableassetsand

liabilitiesacquired.


30/41

Share

Thein

reach

equal

ofthe

IAS28

a)

b)

Disclo

Invest

curre

accou

statesucha

o

o

o

oflossesof

estorreco

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orexceeds

investment

33indete

itsshareo

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associate

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sure

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Wherean

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Wherean

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Wherean

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ociatesacc

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iate,includ

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eparatelyd

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20%ofthe

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eequityac

gresumes.

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separateit

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otentialvoti

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sumptionth

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theunrecog

ly.

ftheinvest

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ountedbal

mates:

ctedtobe

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- 30 -

ment

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ave

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ethe

of


31/41

- 31 -

JointVentures IAS31 Chapter28

Ajointventureisacontractualarrangementwherebytwoormorepartiesundertakean

economicactivitythatissubjecttojointcontrol.Aventurerispartytoajointventureandhas

jointcontroloverthatjointventure.Aninvestorinajointventureisapartytoajointventure

anddoesnothavejointcontroloverthatjointventure.Controlisthepowertogovernthe

financialand

operating

policies

of

an

entity

so

as

to

obtain

benefits

from

its

activities.

Therearetwomajorcharacteristicsofajointventure:

1. ContractualarrangementItistheexistenceofacontractualarrangementthatdistinguishescertaininvestmentsin

associatesfrominvestmentsinjointventures.Theventuresareboundbyacontractual

arrangementthatdetailstheoperationandmanagementofthejointventure.

a) theactivity,durationandreportingobligationsofthejointventureb) theappointmentoftheboardofdirectorsorequivalentgoverningbodyofthejoint

ventureandthevotingrightsoftheventures

c) capitalcontributionsbytheventuresd) thesharingbytheventuresoftheoutput,income,expenseorresultsofthejoint

venture

2. JointcontrolAsinglejointventurecannotcontrolthejointventure,otherwisethatventurerwouldbea

parententity.Joint controlisdefinedas: Thecontractuallyagreedsharingofcontrolover

aneconomicactivity.

IAS3111and12providethefollowingguidanceindeterminingtheexistenceofjoint

control

nosingleventurerisinapositiontocontroltheactivityunilaterally thedecisionsinareasessentialtothegoalsofthejointventurerequiretheconsent

oftheventures

oneventurermaybeappointedasthemangeroroperatorofthejointventure;however,thispartyactswithinthefinancialandoperatingpoliciesdetailedinthe

contractualarrangementandconsentedtobytheventures

Formsofjointventures

IAS31identifiesthreeformsofjointventure:

jointlycontrolledoperation.Thereisnocorporation,partnershiporfinancialstructureestablishedseparatefromtheventuresthemselves.Eachjointventureusesitsown

assetsandincursitsownexpensestocreateajointproduct.

Jointlycontrolledassets.Thejointventuremayrelatetotheshareduseofasingleassetsuchasanoilorgaspipeline,acommunicationnetworkorapropertysuchas

farmland.Thecontractualarrangementprovidesforeachventurertousetheassetat

particularperiodoftimeorforparticularnumberofhours.Aswiththejointlyowned

operation,thereisnospecificstructurecreatedforthejointventure;theventures

simplyshareanasset.


32/41

- 32 -

Jointlycontrolledentities:24statesthatajointlycontrolledentityisajointventurethatinvolvestheestablishmentofcorporation,partnershiporotherentityinwhich

eachventurerhasaninterest.

ProposedchangesunderED9

Thenamesofthethreetypesofjointarrangementsbechangeasfollows:

Jointlycontrolledoperationbecomesjointoperation Jointlycontrolledassetbecomesjointasset Jointlycontrolledentitybecomesjointventure

Jointlycontrolledoperations

Inrespectofitsinterestsinjointlycontrolledoperations,aventurershallrecognizeinits

financialstatements:

a)Theassetsthatitcontrolsandtheliabilitiesthatitincurs

b)Theexpensesthatitincursanditsshareoftheincomethatitearnsfromthesaleofgoods

orservicebythejointventure.

Jointly

controlled

assets

IAS3121detailstheaccountingforinterestsinjointlycontrolledassets:

Inrespectofitsinterestinjointlycontrolledassets,aventurershallrecognizeinitsfinancial

statements:

a) itshareofthejointlycontrolledassets,classifiedaccordingtothenatureoftheassetb) anyliabilitiesthatithasincurredc) itsshareofanyliabilitiesincurredjointlywiththeotherventuresinrelationtothejoint

venture

d) anyincomefromthesaleoruseofitsshareoftheoutputofthejointventure,togetherwithitsshareofanyexpenseincurredythejointventure

e) anyexpensesthatithasincurredinrespectofitinterestinthejointventureJointlyControlledEntity

Forexample,theMobilePhoneJointVenturesbetweenUSTandtheotherventures,where

underacontractualarrangement,aseparateentityiscreatedandjointlycontrolledbythe

ventures.

Aventurershouldaccountforitsinvestmentbasedonthetypeofjointventure.

Themostcommontypeofjointventureisajointlycontrolledentity.Forthis,theventurer

reportsitsinterestinitsconsolidatedfinancialstatementsusingeitherproportionate

consolidationortheequitymethod.Thisoptionisexpectedtobeeliminatedwiththe

finalizationofExposureDraft9'Jointarrangements'scheduledformid2009,whichwill

requireonlytheuseoftheequitymethod.

WhatdoesIAS31applyto?

AllinvestorsthathaveinvestmentsinjointventuresapplytherequirementsofIAS31tothose

investments.


33/41

Contr

Thec

andre

ventu

ando

prede

dates.

Recor

1.Con

Aven

report

consol

'Joint

meth

2.Pro

Thea

theve

liabilit

incom

entity.

3.Equ

IAS31

when

ctualAgre

ntractuala

portingobl

ehasbeen

erations,e.

erminedde

Inthissitua

ingjointv

solidateda

urershould

ingformats

idationmet

rrangemen

d.

ortionate

plicationof

nturerinclu

iesforwhic

eoftheven

itymethod

currentlyr

usingthee

ment

rangement

igationsoft

createdDur

g.theaircra

adline.Rep

tionitisass

ntures

counts

reportitsin

forproporti

hodisexpe

ts'schedule

onsolidatio

proportion

desitsshar

itisjointly

turerinclud

ferstoIAS

uitymetho

usuallydeal

hejointven

ation:This

ftmanufac

rtingoblig

umedthat

terestinaj

onatecons

tedtobee

dformid2

n

teconsolid

oftheasse

responsible

eitsshareo

8Investm

.(seeasso

swiththef

ture.Activi

ouldnorm

ure,where

tions:This

STanditsj

ointlycontr

lidationor

liminatedw

09,which

ationmean

tsthatitco

.Theconso

ftheincom

ntsinasso

iates)

llowingma

y:Thisisth

allyonlyap

theactivity

concernsb

ointventur

olledentity

theequity

iththefinal

illrequire

sthatthec

ntrolsjointl

lidatedstat

eandexpe

iatesfort

tters.Thea

epurposef

lytojointl

iscarriedo

threportin

sallreport

usingeither

ethod.The

isationofEx

nlytheuse

nsolidated

anditssha

mentofco

sesofthej

eaccountin

ctivity,dura

rwhichth

controlled

twitha

standards

underIFRS.

oneofthe

proportion

posureDraf

oftheequi

balanceshe

reofthe

mprehensiv

intlycontr

gtreatmen

- 33 -

tion

joint

assets

and

two

ate

t9

y

etof

e

lled

t


34/41

6.Sep

IAS31

avent

theIA

A)atc

B)ina

Thesa

entiti

7.Exc

There

equity

The

'Non

ofIFR

The

comp

compThe

inpar

Trans

There

trans

cont

How

Thefo

capita

arateaccou

doesnots

urer.Howe

27require

ost

ccordance

memethod

s.

ptionstop

arethreee

methodun

investment

urrentasse

5applyto

entityisonl

nylegislati

ny;or

entureris

graph2(c)

actionsbet

canbetran

actionsint

ibutionsby

houldave

llowinggui

lcontributi

nts

ecifythetr

er,whenp

ments,and

ithIAS39.

shallbeap

roportionat

ceptionsfr

derIAS31.

inthejoint

tsheldfors

suchinvest

requiredt

nwilldicta

whollyow

fIAS31.

eenavent

actionsbet

enormalc

aventurer

tureracco

elinesappl

nsmade

du

atmentof

eparingsep

accountfor

liedconsis

econsolida

mtherequ

heyare:

entureiscl

leanddisc

ents;or

prepares

ethetype

edsubsidia

urerandaj

weenaven

urseofop

oajointve

ntforcont

tononmo

ringboth

th

jointventu

aratefinan

itsinvestm

entlytorep

tionandeq

irementsof

assifiedash

ntinuedop

paratefina

ffinancials

ryandcert

ointventur

urerandaj

rations

ture

ibutionsto

netarycont

eformatio

reinthese

ialstateme

ntsinjointl

ortinvestm

uitymetho

proportion

eldforsale

erations'.T

cialstatem

tatements

inotherco

e

ointventur

ajointven

ibutions,s

and

the

or

paratefinan

nts,aninve

ycontrolle

entsinalljo

teconsolid

inaccordan

eaccounti

entsunder

obeprepa

nditionsare

inthefoll

ure?

chasanas

inarycours

cialstatem

torshallfol

entities,ei

intlycontro

ationorthe

cewithIFR

grequirem

IAS27.Loca

edbyapar

metasdes

wingsituat

et,andto

eof

busine

- 34 -

ntsof

low

her:

lled

5,

ents

l

icular

ribed

ions:

s.


35/41

- 35 -

Ventureraccountfortransactionswithajointventure:

Venturerssaleoftheassettothejointventureforanamountinexcessoftheventurerscarryingvalue.

Venturerssaleoftheassettothejointventureforanamountlessthantheventurerscarryingvalue

Venturerspurchaseoftheassetfromthejointventurewitharesultinggaintothejoint

venture

VenturerspurchaseoftheassetfromthejointventureatalosstothejointventureHowshouldcontributionsonformationofajointventureberecordedinthejointventure

itself?

ThereisnospecificguidanceinIAS31(orelsewhereinIFRS)onhowajointventureitself

recordscontributionsreceivedonitsformation.

Commonpracticeistorecordthenetassetscontributedinthejointventuresfinancial

statementsattheircarryingvaluesrecordedintheventurersfinancialstatements

immediatelybeforethecontribution.

Disclosuresrequired

by

IAS

31

Aventurerisrequiredtodisclosetheaggregateamountofvariouscontingentliabilities,unlesstheprobabilityoflossisremote,separatelyfortheamountofother

contingentliabilities

Aventurerisrequiredtodisclosetheaggregateamountofvariouscapitalcommitment Aventurershalldisclosealistinganddescriptionofinterestsinsignificantjoint

venturesandtheproportionofownershipinterestheldinjointlycontrolledentities

Forjointlycontrolledentitiesdisclosureisrequiredoftheaggregateamountsofeachofcurrentassets,longtermassets,currentliabilities,longtermliabilities,incomeand

expensesrelatingtointerestsinjointventure

Aventurershalldisclosethemethoditusestorecognizeitsinterestinjointlycontrolledentities

Disclosuresrequiredbyed9

Anentityisrequiredtoprovideadescriptionofthenatureandextentofitsoperationsconductedthrougheachofthethreetypesofjointarrangementjointoperations,

jointassetsandjointventures

Disclosureisrequiredinrelationtocapitalcommitments Disclosureisrequiredconcerningcontingentliabilities Disclosureisrequiredresultingfromtheneedtoapplytheequitymethodratherthan

the

proportionate

consolidation

method.

In

addition

to

providing

a

list

and

description

ofinterestinsignificantjointventuresandtheproportionofownershipinterestheld,

foreachindividuallymaterialjointventure,andintotalforotherjointventures,

summarizedfinancialinformationisrequired,includingtheventurersinterestinthe

amountofeachof:

Currentassets Noncurrentassets Currentliabilities


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- 36 -

Noncurrentliabilities Revenues Profitorloss

Aventurerisrequiredtodiscloseseparatelytheventurersshareoftheprofitorlossofjointventuresaccountedforusingtheequitymethodandthecarryingamountof

thoseinterests.Thesedisclosuresarerequiredtorepresentintotalforalljoint

ventures.

Aventurerisrequiredtorecogniseinothercomprehensiveincomeitsshareofchangesrecognizedinothercomprehensiveincomebyjointventures.


37/41

- 37 -

DeferredTax IAS12 Chapter7

Thenatureofincometax

Incometaxesareleviedbygovernmentsonincomeearnedbyindividualsandentitiesinorder

toraisemoneytofundtheprovisionofgovernmentservicesandinfrastructure.The

percentagepayableandthedeterminationoftaxableincomearegovernedbyincometax

legislationadministered

by

adedicated

government

body.

Differencesbetweenaccountingprofitandtaxableprofit

Accountingprofit:profitorlossforaperiodbeforedeductingtaxexpense. Taxableprofit:theexcessoftaxableincomeovertaxationdeductionsallowableagainst

thatincome

Becauseaccountingprofitandtaxableincomearedeterminedbydifferentprinciples,theyareunlikelytobethesameinoneperiod

Permanentdifferences:arisewhenthetreatmentofatransactionbytaxationlegislationandaccountingstandardsissuchthatamountsrecognizedaspartof

accountingprofitareneverrecognizedaspartoftaxableprofit,orviceversa.

Temporarydifferences:arisewhentheperiodinwhichrevenuesandexpensesarerecognizedforaccountingpurposesisdifferentfromtheperiodinwhichsuch

revenuesandexpensesaretreatedastaxableincomeandallowabledeductionsfor

taxpurposes.

Taxabletemporarydifferences:differencesthatresultintheentitypayingmoretaxinthefuture

Deductibletemporarydifferences:differencesthatresultintheentityrecoveringtaxviaadditionaldeductibleexpensesinthefuture

Accountingforincometaxes

IAS12requiresthetaxconsequencesoftransactionsandothereventstobeaccountedforin

thesamemannerandthesameperiodasthetransactionsthemselves.(examplep.231)

Calculationofcurrenttax(forexampleseepp.232236)

Currenttaxistherecognitionoftaxespayabletothetaxationauthoritiesinrespectofa

particularperiod. IAS12:Currenttaxliabilities(assets)forthecurrentandpriorperiodsshall

bemeasuredattheamountexpectedtobepaid(recoveredfrom)thetaxationauthorities,

usingthe

tax

rates

(and

tax

laws)

that

have

been

enacted

or

substantively

enacted

by

the

end

ofthereportingperiod.Soifataxratehaschanged(orifachangeisannounced)therate

applicabletothetaxableprofitfortheperiodmustbeapplied.


38/41

- 38 -

Figure1:calculationofcurrenttax

Recognitionofcurrenttax

Currenttaxforthecurrentandpriorperiodsshall,totheextentunpaid,berecognizedasa

liability.Iftheamountsalreadypaidinrespectofcurrentandpriorperiodsexceedsthe

amountdueforthoseperiods,theexcessshallberecognizedasanasset.

Paymentof

tax

(for

example

see

p.237)

Taxationlegislationmayrequiretaxationdebtstobepaidannuallyuponlodgementofa

taxationreturnoratsomespecifiedtimeafterlodgement(suchasonreceiptofan

assessmentnotice,oratasetdateortime).Alternatively,thetaxationdebtmaybepaidby

instalmentthroughoutthetaxationyear.

Taxlosses

Taxlossesarecreatedwhenallowabledeductionsexceedtaxableincome.IAS12envisages

threepossibletreatmentsfortaxlosses:

1) Theymaybecarriedforward:createadeductibletemporarydifferenceandthereforeadeferred

tax

asset

in

that

the

company

will

pay

less

tax

on

future

taxable

profits.

(example

p.

238)

2) Theymaybecarriedback:thebenefitrelatingtoataxlossthatcanbecarriedbacktorecovercurrenttaxofapreviousperiodshallberecognizedasanasset

3) TheymaybesimplylostCalculationofdeferredtax

Asalreadyexplained,IAS12adoptsthephilosophythatthetaxconsequencesoftransactions

thatoccurduringaperiodshouldberecognizedinincometaxexpenseforthatperiod.

Temporarydifferenceswerediscussedaswell.Temporarydifferencesresultinthecarrying

amountsofanentitysassetsandliabilitiesbeingdifferentfromtheamountsthatwouldarise

ifastatement

of

financial

position

was

prepared

for

the

taxation

authority.

The

amounts

for

theassetsandliabilitiesthatwerereportedtothetaxationauthorityarecalledtheentitystax

base.Attheendofthereportingperiod,acomparisonofanentityscarryingamountsof

assetsandliabilitiesandtheirtaxbasesrevealthetemporarydifferencesthatexist,and

adjustmentswillthenbemadetodeferredassetsandliabilities.

Accounting profit (loss)

+ (-) accounting expenses not deductible for tax

+ (-) accounting expenses where the amount differs from deductible amounts

+ (-) taxable income where the amount differs from accounting revenue

- (+)accounting revenues not subject to taxation

- (+) accounting revenue where the amount differs from taxable income

- (+) deductible amounts where the amount differs from accounting expense

= taxable profitThe current tax rate is then applied to taxable profit to derive the current tax

payable


39/41

- 39 -

Thefollowingstepshavetobemadeinordertocalculatethedeferredtax;

1) Determinethecarryingamounts(CA)ofitemsrecognizedinthestatementoffinancialpositionandtheirtaxbases

a. Determiningcarryingamounts:CAareassetandliabilitybalancesnetofvaluationallowances,accumulateddepreciation,amortizationandimpairment

losses(e.g.accountsreceivableallowancefordoubtfuldebts)

b. Determiningtaxbases: taxbasesneedtobecalculatedforassetsandliabilities.i. Taxbasesofassets: carryingamountfuturetaxableamounts+future

deductibleamounts

ii. Taxbasesofliabilities:carryingamount+futuretaxableamountsfuturedeductibleamounts

2) Determinetheassessableanddeductibletemporarydifferencesrelatingtothefuturetaxconsequencesofitemsrecognizedattheendofthecurrentperiod

a. Ataxabletemporarydifferenceexistswhenthefutureamountofanassetorliability

exceeds

any

future

deductible

amounts.

(illustrative

example

7.4,

p.242)

b. Adeductibletemporarydifferenceexistswhenthefuturetaxableamountofanassetorliabilityislessthanthefuturedeductibleamounts(illustrativeexample

7.5,p.242)

3) Calculateandrecognizethedeferredtaxassetsandliabilitiesarisingfromthesetemporarydifferencesaftertakingintoaccountanyrelevantrecognitionexceptions

andoffsetconsiderations.

Deferredtax

assets

and

liabilities

shall

be

measured

at

the

tax

rates

that

are

expected

toapplytotheperiodwhentheassetisrealizedortheliabilitysettled,basedontax

rates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedbytheendofthe

reportingperiod.Thus,ifthetaxrateiscurrently30%butwillriseto32%inthenext

reportingperiod,deferredamountsshouldbemeasuredat32%.

Excludeddifferences: IAS12mandatesthefollowingexceptionstotherequirement

thatadeferredtaxliabilityandadeferredtaxassetberecognizedforalltaxableand

deductibletemporarydifferences

Theinitialrecognitionofgoodwill Goodwillforwhichamortisationisnotdeductiblefortaxpurposes Theinitialrecognitionofanassetorliabilityinatransactionwhich;

o Isnotabusinesscombinationo Atthetimeofthetransaction,affectsneitheraccountingprofitnortaxable

profit(taxloss)


40/41

- 40 -

4) Recognisethenetmovementindeferredtaxassetsandliabilitiesduringtheperiodasdeferredtaxexpenseorincomeinprofitorloss(unlessanaccountingstandard

requiresrecognitiondirectlyinequityoraspartofabusinesscombination).

a. Deferredtaxliabilitiesmustberecognizedforalltaxabletemporarydifferences.Innormalcircumstancesaliabilityisrecognizedwhen,andonly

when,itisprobablethatanoutflowofresources embodyingeconomic

benefitswill

result

from

the

settlement

of

apresent

obligation

and

the

amount

atwhichthesettlementwilltakeplacecanbemeasuredreliably.However,

thesecriteriaarealwaystrueincaseofadeferredtaxliability.

b. Deferredtaxassetsmustberecognizedforalldeductibletemporarydifferencesandfromthecarryforwardoftaxlosses,butonlytotheextentthat

itisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthe

temporarydifferencescanbeutilized.Normally,anassetisrecognizedwhenit

isprobablethatthefutureeconomicbenefitsfillflowtotheentity,andthe

assethasacostorvaluethatcanbemeasuredreliably.

c. Recognitionofdeferredamountsarisingfrominvestments:Therecognitionofadeferredtaxliabilityinrelationtoinvestments(insubsidiaries,branchesand

associates,andwithinterestsinjointventures),isrequired,exceptwhereboth

ofthefollowingconditionsaresatisfied;

i. Theparent,investororventureisabletocontrolthetimingofthereversalofthetemporarydifference,and

ii. Itisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture

Deferredtaxassetsassociatedwithinvestmentswouldnormallyarisewhenthe

investmenthasbeenwrittendowntotherecoverableamount,orwhenthe

applicationoffairvalueorequityaccountinghasbeenwrittenitdownbelowits

taxbase.Therecognitionofsuchadeferredtaxassetisallowedonlytothe

extentthatthetemporarydifferencewillreverseintheforeseeablefutureand

taxableprofitwillbeavailableagainstwhichthetemporarydifferencecanbe

utilized.

Changeoftaxrates(seeillustrativeexample7.8,p.251)

Whenanewtaxrateisenacted(orsubstantivelyenacted),thenewrateshouldbeappliedin

calculatingthecurrenttaxliabilityandadjustmentstodeferredtaxaccountsduringtheyear.

Itshould

also

be

applied

to

the

deferred

amounts

recognized

in

prior

years.

A

journal

adjustmentmustbepassedtoincreaseorreducethecarryingamountsofdeferredtaxassets

andliabilities.


41/41

Amendedprioryeartaxfigures

Intaxationjurisdictionswhereentitiesselfassesstheirtaxableprofit,itispossiblethatthe

taxationauthoritywillamendthatassessmentbychangingtheamountoftaxableor

deductibleitems.Thisamendmentcouldresultintheentitybeingliabletopayextrataxor

becomingeligibleforataxationrefund.Uponreceiptofanamendedassessment,theentity

shouldanalysethereasonfortheadjustmentandconsiderwhetherbothcurrentanddeferred

taxareaffected.

Deferredtaxarisingfromabusinesscombination

Theamountofdeferredtaxarisinginrelationtotheacquisitionofanentityorbusinessis

recognizedandincludedaspartofnetassetsacquiredwhendeterminingthegoodwillor

excessarisingonacquisition.

Fordisclosuresseep.253 257

(forthefirstthreestepsaboveseeillustrativeexample7.6,p.244)

Sam en Vatting Topics Hoofdstukken 2011-2012 Definitief

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Transcript of Sam en Vatting Topics Hoofdstukken 2011-2012 Definitief