CTools Update June2015

7/25/2019 CTools Update June2015

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IFRS Update of standardsand interpretations in

issue at 30 June 2015


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IFRS Update of standards and interpretations in issue at 30 J une 2015 2

Introduction

Com panies reporting under International Financial Reporting

Standards (IFR S) continue to face a steady flow of new standards

and interpretations. The nature of the resulting changes ranges

from significant am endm ents of fundam ental principles to som e

m inor changes from the annual im provem ents process (A IP).

They w ill affect different areas of accounting, such as

recognition, m easurem ent, presentation and disclosure.

Som e of the changes have im plications that go beyond m atters of

accounting, potentially also im pacting the inform ation system s of

m any entities. Furtherm ore, the changes m ay im pact business

decisions, such as the creation of joint arrangem ents or the

structuring of particular transactions.

The challenge for preparers is to gain an understanding of w hat

lies ahead.

Purpose of this publicat ion

This publication provides an overview of the upcom ing changes in

standards and interpretations (pronouncem ents). It also provides

an update on selected active projects. It does not attem pt to

provide an in-depth analysis or discussion of the topics. Rather,

the objective is to highlight key aspects of these changes.

Reference should be m ade to the text of the pronouncem ents

before taking any decisions or actions.

This publication consists of three sections:

Sect ion 1 provides a high-level overview of the key requirem ents

of each pronouncem ent issued by the International A ccounting

Standards Board (IA SB or the Board) and the IFR S Interpretations

Com m ittee (IFR S IC) as at 30 June 2 015 that is applicable for the

first tim e for annual periods ended June 2015 and thereafter.

This overview provides a sum m ary of the transitional

requirem ents and a brief discussion of the potential im pact that

the changes m ay have on an entitys financial statem ents.

This section is presented in the num erical order of the

pronouncem ents, except for the A IP. A ll A IP am endm ents are

presented at the end of Section 1.

In addition, a table com paring m andatory application for different

year ends is presented at the beginning of Section 1. In the table,

the pronouncem ents are presented in order of their effective

dates. H ow ever, m any pronouncem ents contain provisions that

w ould allow entities to adopt in earlier periods.

W hen a standard or interpretation has been issued, but has yet to

be applied by an entity, IA S 8 Account ing Policies, Changes in

Accounting Estimates and Err orsrequires the entity to disclose

any know n (or reasonably estim able) inform ation relevant tounderstanding the possible im pact that the new pronouncem ent

w ill have on the financial statem ents, or indicate the reason for

not doing so. The table at the beginning of Section 1 is helpful in

identifying the pronouncem ents that fall w ithin the scope of this

disclosure requirem ent.

Section 2 provides a sum m ary of the agenda rejection notices

published in the IFRIC Updat e1since 1 April 2015. For agenda

rejection notices published before 1 A pril 2015, please refer to

previous editions of IFRS Updat e. In som e rejection notices, the

IFR S IC refers to the existing pronouncem ents that provide

adequate guidance. These rejection notices provide a view on the

application of the pronouncem ents and fall w ithin other

accounting literature and accepted industry practicesin

paragraph 1 2 of IA S 8 .

Section 3 sum m arises the key features of selected active

projects of the IA SB. The Key projectsaddressed are those

initiated w ith the objective of issuing new standards and those

involving overarching considerations across a num ber of

standards. O ther projectsinclude proposed am endm ents w ith

narrow er applicability. Generally, only those projects that have

reached the exposure draft stage are included, but, in selected

cases, significant projects that have not yet reached the

exposure draft stage are also highlighted.

1

The IFRIC Updat eis available on the IASBs w ebsite at

http://w w w.ifrs.org/Updates/IFR IC+Updates/IFR IC+Updates.htm


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3 IFRS Update of standards and interpretations in issue at 30 J une 2015

IFRS Core Tools

This publication provides an overview of new pronouncem ents

issued as at 30 June 2 015. Frequent changes to IFR S add to the

com plexity entities face w hen approaching the financial reporting

cycle.

EYs IFRS Core Tools2provide the starting point for assessing the

im pact of these changes to IFR S. O ur IFRS Core Tool sinclude

a num ber of practical building blocks that can help the user to

navigate the changing landscape of IFR S. In addition to this

publication, EYs IFRS Core Toolsinclude the publications

described below .

International GAAPDisclosure Checklist

O ur 2015 edition of Internat ional GAAPDisclosure Checklist

captures disclosure requirem ents applicable to periods ended

30 June 2015 or thereafter, and disclosures that are perm itted

to be adopted early. These disclosure requirem ents are for all

pronouncem ents issued as at 28 February 2015. This tool assists

preparers to com ply w ith the presentation and disclosure

requirem ents of IFR S in their interim and year-end IFR S financial

statem ents. Previous editions of this tool for earlier period-ends

are available on our EYs IFRS Core Tool sw ebpage.

Good Group (International) Limited

Good Group (Inter national) Limit edfor the year ended

31 D ecem ber 2014 is a set of illustrative financial statem ents,

incorporating presentation and disclosure requirem ents that are

in issue as at 31 A ugust 2014 and effective for the year ended

31 D ecem ber 201 4 . Good Group (International) Limited

Illustr ative interim condensed financial statementsfor the period

ended 3 0 June 2 015, based on IFR S in issue at 28 February

20 15 ,supplem entsGood Group (Internat ional) Limit ed

Illustr ative financial statements. A m ong other things, these

illustrative financial statem ents can assist in understanding the

im pact accounting changes m ay have on the financial

statem ents.

2EYs core tools are available on

http://w w w .ey.com /GL /en/Issues/IFR S/Issues_G L_IFR S_N A V _Core-tools-library

Good Group (Inter national) Limit edis supplem ented by illustrative

financial statem ents that are aim ed at specific sectors, industries

and circum stances. These include:

Good G roup (Internation al) Lim ited A n A lternative Form at

Good Investm ent Fund Lim ited (Equity)

G ood Investm ent Fund Lim ited (Liabilities)

G ood M ining (International) Lim ited

Good Petroleum (International) Lim ited

G ood R eal Estate G roup (International) Lim ited

Also available from EY:

Other EY publications

References to other EY publications that contain further details

and discussion on these topics are included throughout the IFRS

Update, all of w hich can be dow nloaded from our w ebsite3.

International GAAP20154

O ur Internat ional GAAP 2015is a com prehensive guide to

interpreting and im plem enting IFR S.5It includes pronouncem ents

m entioned in this publication that w ere issued prior to Septem ber

2014, and it provides exam ples that illustrate how the

requirem ents are applied.

3 These publication s are available on http://w w w .ey.com /ifrs4 International GA A P is a registered tradem ark of Ernst & Young LLP (U K).5 Internation al GA AP is available on http://w w w .igaap.info.


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Table of mandatory application

New pronouncement Page Effective Date* J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec

IFRS 10, IFRS 1 2 and IAS 27 Investment Ent ities - Amendments to IFRS 10, IFRS 12 and IAS 27 6 1 Jan 201 4 20 15 2 01 5 2 01 5 20 15 2 01 5 2 01 5 2 01 5 20 15 20 15 2 01 5 20 15

IAS 32 Offset ting Financial Assets and Financial Liabil ities - Amendment s to IAS 32 13 1 Jan 2 01 4 20 15 2 01 5 2 01 5 20 15 2 01 5 2 01 5 2 0 15 20 15 20 15 2 01 5 20 15

IAS 36 Recoverable Amount Disclosures for Non-Financial Assets - Amendments t o IAS 36 13 1 Jan 2 01 4 20 15 2 01 5 2 01 5 20 15 2 01 5 2 01 5 2 0 15 20 15 20 15 2 01 5 20 15

IAS 39 Novation of Derivat ives and Continuation of Hedge Account ing - Amendments to IAS 39 14 1 Jan 2 01 4 20 15 2 01 5 2 01 5 20 15 2 01 5 2 01 5 2 0 15 20 15 20 15 2 01 5 20 15

IFR IC 2 1 Levies 14 1 Jan 2 01 4 20 15 2 01 5 2 01 5 20 15 2 01 5 2 01 5 2 0 15 20 15 20 15 2 01 5 20 15

IAS 19 Defined Benefit Plans: Employee Contribu tions - Amendments t o IAS 19 12 1 J uly 201 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IFRS 2 Share-based Payment-Definitions of vesting conditions 15 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IFR S 3 Business Combinations-Accounting for cont ingent consideration in a business combination 15 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IFR S 8 Operating Segments-Aggregation of operating segments 15 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IFR S 8 Operating Segments-Reconcil iation of the total of the report able segments assets to the entity 's assets 15 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IAS 16 Property , Plant and Equipmentand IAS 3 8 Intangible Assets-Revaluation method - proport ionate resta tement of

accumulated deprecia t ion/amort isa t ion16 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IAS 24 Related Party Disclosures-Key management personnel 16 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IFR S 3 Business Combinations-Scope exceptions for joint ventures 16 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IFR S 13 Fair Value Measurement-Scope of paragraph 52 (port folio exception) 16 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

A IP IAS 40 Investment Property- Interrelation ship between IFRS 3 and IAS 40 (ancil lary serv ices) 16 1 Jul 20 1 4 20 16 2 01 6 2 01 6 20 16 2 01 6 20 15 20 1 5 2 01 5 20 15 2 01 5 20 15 2 01 5

, an A Investment Ent ities: Applying the Consolidation Exception - Amendments t o IFRS 10, IFRS 12

and IAS 287 1 Jan 201 6 20 17 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 2 01 7 20 17 2 01 6

IFRS 1 0 and IAS 28 Sale or Contribut ion of Assets between an Investor and its Associate or Joint Venture - A mendments to

IFRS 10 and IAS 287 1 Jan 201 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

IFRS 1 1 Accounting for A cquisitions of Interests in Joint Operations - Amendments to IFRS 11 8 1 Jan 201 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

IFRS 1 4 Regulatory Deferral Accounts 8 1 Jan 201 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

IAS 1 Disclosure Initiative - Amendments to IAS 1 1 0 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 8

IAS 1 6 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation - Amendment s to IAS 16 and IAS 38 11 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

IAS 16 an d IAS 41 Agricu l ture-Bearer Plants - Amendm ents to IAS 16 and IAS 41 11 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

IAS 2 7 -Equity Method in Separate Financial Statements - Amendment s to IAS 27 12 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

A IP IFR S 5 Non-current A ssets Held for Sale and Discontinued Operations - Changes in methods of disposal 17 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

A IP IFRS 7 Financial Instrum ents: Disclosures - Servicing contracts 17 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

A IP IFRS 7 Financial Instrument s: Disclosures - Applicabil ity of the offsett ing disclosures to condensed interim financial

sta tements17 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

A IP IAS 19 Employee Benefits - Discount rate: regional market issue 17 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

A IP IAS 34 Interim Financial Reporting - Disclosure of inform ation 'elsewhere in the interim financial report ' 17 1 Jan 2 01 6 20 17 2 01 7 2 01 7 20 17 2 01 7 20 17 20 1 7 2 01 7 20 17 2 01 7 20 17 2 01 6

IFRS 1 5 Revenue from Contr acts with Customer s 9 1 Jan 201 7 20 18 2 01 8 2 01 8 20 18 2 01 8 20 18 20 1 8 2 01 8 20 18 2 01 8 20 18 2 01 7

IFRS 9 Financial Instrum ents 5 1 Jan 201 8 20 19 2 01 9 2 01 9 20 19 2 01 9 20 19 20 1 9 2 01 9 20 19 2 01 9 20 19 2 01 8

First time applied in annual periods ending on the last day of these months**

A IP: Ann ual IFR S Im provem ents Process*Effective for ann ual period s beg inn ing o n or after this date. ** A ssum ing that an en tity has no t early ad op ted the pro no un cem en t according to specific provision s in the stan dard .Stan dards already effective for entities w ith these yea r-en ds.

Sect ion 1: New pronouncements issued as at 30 June 2015


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IFRS 9 Financial Instr ument s

Effective for annual periods beginning on or after 1 January 2018.

Key requirements

Classification and measurement of f inancial assets

A ll financial assets are m easured at fair value on initial

recognition, adjusted for transaction costs if the instrum ent is

not accounted for at fair value through profit or loss (FVTPL).

Debt instrum ents are subsequently m easured at FV TP L,

am ortised cost or fair value through other com prehensive incom e

(FV O CI), on the basis of their contractual cash flow s and the

business m odel under w hich the debt instrum ents are held.

There is a fair value option (FV O ) that allow s financial assets on

initial recognition to be designated as FV TPL if that elim inates or

significantly reduces an accounting m ism atch.

Equity instrum ents are generally m easured at FV TPL. H ow ever,

entities have an irrevocable option on an instrum ent-by-

instrum ent basis to present changes in the fair value of non-

trading instrum ents in other com prehensive incom e (O CI)

(w ithout subsequent reclassification to profit or loss).

Classification and measurement of f inancial liabilities

For financial liabilities designated as FV TPL using the FV O , the

am ount of change in the fair value of such financial liabilities that

is attributable to changes in credit risk m ust be presented in O CI.

The rem ainder of the change in fair value is presented in profit or

loss, unless presentation of the fair value change in respect of

the liabilitys credit risk in O CI w ould create or enlarge an

accounting m ism atch in profit or loss.

A ll other IA S 39 Financial Instr ument s: Recognition and

Measurementclassification and m easurem ent requirem ents for

financial liabilities have been carried forw ard into IFR S 9,

including the em bedded derivative separation rules and the

criteria for using the FV O .

Impairment

The im pairm ent requirem ents are based on an expected credit

loss (ECL) m odel that replaces the IAS 39 incurred loss m odel.

The ECL m odel applies to: debt instrum ents accounted for at

am ortised cost or at FVO CI; m ost loan com m itm ents; financial

guarantee contracts; contract assets under IFR S 15; and lease

receivables under IA S 1 7 Leases.

Entities are generally required to recognise either 1 2-m onthsor

lifetim e ECL, depending on w hether there has been a significant

increase in credit risk since initial recognition (or w hen the

com m itm ent or guarantee w as entered into). For som e trade

receivables, the sim plified approach m ay be applied w hereby the

lifetim e expected credit losses are alw ays recognised.

Hedge account ing

H edge effectiveness testing is prospective, w ithout the 8 0% to

125% bright line test in IA S 3 9, and, depending on the hedge

com plexity, can be qualitative.

A risk com ponent of a financial or non-financial instrum ent m ay

be designated as the hedged item if the risk com ponent isseparately identifiable and reliably m easureable.

The tim e value of an option, any forw ard elem ent of a forw ard

contract and any foreign currency basis spread, can be excluded

from the designation as the hedging instrum ent and accounted

for as costs of hedging.

M ore designations of groups of item s as the hedged item are

possible, including layer designations and som e net positions.

Transition

Early application is perm itted for reporting periods beginningafter 24 July 2014. The transition to IFR S 9 differs by

requirem ents and is partly retrospective and partly prospective.

Despite the requirem en t to apply IFR S 9 in its entirety, entities

m ay elect to early apply only the requirem ents for the

presentation of gains and losses on financial liabilities designated

as FV TPL w ithout applying the other requirem ents in the

standard.

Impact

The application of IFR S 9 m ay change the m easurem ent and

presentation of m any financial instrum ents, depending on their

contractual cash flow s and the business m odel under w hich they

are held. The im pairm ent requirem ents w ill generally result in

earlier recognition of credit losses. The new hedging m odel m ay

lead to m ore econom ic hedging strategies m eeting the

requirem ents for hedge accounting. It w ill be im portant for

entities to m onitor the discussions of the IFRS Transition

Resource G roup for Im pairm ent of Financial Instrum ents (ITG).


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Apply ing IFRS: Classificat ion of f inancial instr uments under IFRS 9

(M ay 2015 ) EYG no. A U 31 34

Applying IFRS: Impairment of financial instruments under IFRS 9

(Decem ber 20 14 ) EY G no. A U 28 27

Apply ing IFRS: Hedge account ing under IFRS 9(February 201 4)

EYG no. A U 2185

IFRS Development s Issue 109: Next steps for t he accounting f or

dynamic risk management pr oject(M ay 20 15) EY G no. A U 31 87

IFRS Developments Issue 10 5 : The ITG discusses IFRS 9

impairment implementat ion issues(A pril 201 5) EY G no. A U 3106

IFRS Development s Issue 100: Basel Comm itt ee proposes

guidance on accounting for expected credit losses(February

201 5) EYG no. A U 289 1

IFRS Development s Issue 87: IASB issues IFRS 9 Financial

Instr uments expected cr edit losses(July 2014 ) EYG no. A U 25 37

IFRS Development s Issue 86: IASB issues IFRS 9 Financial

Instr ument s classificat ion and measurement(July 2014)

EYG no. AU 2536

IFRS 10, IFRS 12 and IAS 27 Investment Entit ies

Amendment s to IFRS 10 , IFRS 12 and IAS 27

Effective for annual periods beginning on or after 1 January 2 014.

Key requirements

The investm ent entities am endm ents provide an exception to the

consolidation requirem ent for entities that m eet the definition of

an investm ent entity.

The key am endm ents include:

Investm ent entityis defined in IFR S 10 ConsolidatedFinancial Statement s

A n entity m ust m eet all three elem ents of the definition andconsider w hether it has four typical characteristics, in order

to qualify as an investm ent entity

A n entity m ust consider all facts and circum stances,including its purpose and design, in m aking its assessm ent

A n investm ent entity accoun ts for its investm ents insubsidiaries at fair value through profit or loss in

accordance w ith IFR S 9 (or IA S 39, as applicable), except

for investm ents in subsidiaries that provide services that

relate to the investm ent entitys investm ent activities,

w hich m ust be consolidated

A n investm ent entity m ust m easure its investm ent inanother controlled investm ent entity at fair value

A non-investm ent entity parent of an investm ent entity isnot perm itted to retain the fair value accounting that the

investm ent entity subsidiary applies to its controlled

investees

For venture capital organisations, m utual funds, unit trustsand others that do notqualify as investm ent entities, the

existing option in IA S 28 Investments in Associates and

Joint Ventures, to m easure investm ents in associates and

joint ventures at fairvalue through profit or loss, is retained

Transition

The am endm ents m ust be applied retrospectively, subject to

certain transition reliefs.

Impact

The concept of an investm ent entity is new in IFR S. The

am endm ents represent a significant change for investm ent

entities, which w ere required to consolidate investees that they

control. Significant judgem ent of facts and circum stances m ay be

required to assess w hether an entity m eets the definition of

investm ent entity.


IFRS Developments Issue 44 : Investment entit ies final

amendment excepti on to consolidati on(O ctober 201 2)

EYG no. AU 1330.


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IFRS 10, IFRS 12 and IAS 28 Investment Ent it ies:

Apply ing the Consolidation Exception -

Amendments t o IFRS 10 , IFRS 12 and IAS 28


Key requirements

The am endm ents address issues that have arisen in applying the

investm ent entities exception under IFR S 10 .

The am endm ents to IFR S 10 clarify that the exem ption (in

IFR S 10.4) from presenting consolidated financial statem ents

applies to a parent entity that is a subsidiary of an investm ent

entity, w hen the investm ent entity m easures all of its subsidiariesat fair value.

Furtherm ore, the am endm ents to IFR S 10 clarify that only a

subsidiary of an investm ent entity that is not an investm ent

entity itself and that provides support services to the investm ent

entity is consolidated. A ll other subsidiaries of an investm ent

entity are m easured at fair value.

The am endm ents to IA S 2 8 allow the investor, w hen applying the

equity m ethod, to retain the fair value m easurem ent applied by

the investm ent entity associate or joint venture to its interests

in subsidiaries.

Transition

The am endm ents m ust be applied retrospectively. Early

application is perm itted and m ust be disclosed.

Impact

The am endm ents to IFRS 1 0 and IA S 2 8 provide helpful

clarifications that w ill assist preparers in applying the standards

m ore consistently. How ever, it m ay still be difficult to identify

investm ent entities in practice w hen they are part of a m ulti-

layered group structure.


IFRS Development s Issue 97 : IASB issues amendment s to t he

investment ent ities consolidation exception(Decem ber 20 14 )

EYG no. AU 2833.

IFRS 10 and IAS 28 Sale or Contr ibution of A sset s

between an Invest or and its Associat e or J oint

Vent ure Amendment s to IFRS 10 and IAS 28

Effective for annual periods beginning on or after 1 January 2 016.

Key requirements

The am endm ents address the conflict betw een IFR S 1 0 and

IA S 28 in dealing w ith the loss of control of a subsidiary that is

sold or contributed to an associate or joint venture.

The am endm ents clarify that the gain or loss resulting from the

sale or contribution of assets that constitute a business, as

defined in IFR S 3 Business Combinat ions, betw een an investorand its associate or joint venture, is recognised in full. A ny gain

or loss resulting from the sale or contribution of assets that does

not constitute a business, how ever, is recognised only to the

extent of unrelated investorsinterests in the associate or joint

venture.

Transition

The am endm ents m ust be applied prospectively. Early application

is perm itted and m ust be disclosed.

Impact

The am endm ents w ill effectively elim inate diversity in practiceand give preparers a consistent set of principles to apply for such

transactions. H ow ever, the application of the definition of a

business is judgem ental and entities need to consider the

definition carefully in such transactions.


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IFRS 11 Accounting for A cquisit ions of Interests in

J oint Operat ions Amendment s to IFRS 11


Key requirements

The am endm ents require an entity acquiring an interest in a joint

operation, in w hich the activity of the joint operation constitutes

a business, to apply, to the extent of its share, all of the principles

in IFR S 3 and other IFR Ss that do not conflict w ith the

requirem ents of IFR S 1 1. Furtherm ore, entities are required to

disclose the inform ation required in those IFR Ss in relation to

business com binations.

The am endm ents also apply to an entity on the form ation of a

joint operation if, and only if, an existing business is contributed

by the entity to the joint operation on its form ation.

Furtherm ore, the am endm ents clarify that, for the acquisition of

an additional interest in a joint operation in w hich the activity of

the joint operation constitutes a business, previously held

interests in the joint operation m ust not be rem easured if the

joint operator retains joint control.

Transition

The am endm ents are applied prospectively. Early application isperm itted and m ust be disclosed.

Impact

The am endm ents to IFR S 11 increase the scope of transactions

that would need to be assessed to determ ine w hether they

represent the acquisition of a business or an asset, w hich w ould

be highly judgem ental. Entities need to consider the definition

carefully and select the appropriate accounting m ethod based on

the specific facts and circum stances of the transaction .


Applying IFRS in t he Oil & Gas Sector: Potent ial implications ofthe amendments to IFRS 11 J oint Arr angements(N ovem ber

201 4) EYG no. AU 274 9.

Apply ing IFRS: Challenges in adopt ing and apply ing IFRS 11

(June 201 4) EYG no. A U 25 12 .

IFRS 14 Regulat ory Deferral Account s


Key requirements

IFR S 14 allow s an entity, w hose activities are subject to rate-

regulation, to continue applying m ost of its existing accounting

policies for regulatory deferral account balances upon its first-

tim e adoption of IFR S. The standard does not apply to existing

IFR S preparers. A lso, an entity w hose current GA A P does not

allow the recognition of rate-regulated assets and liabilities,

or that has not adopted such policy under its current GA A P,

w ould not be allow ed to recognise them on first-tim e application

of IFR S.

Entities that adopt IFR S 14 m ust present the regulatory deferral

accounts as separate line item s on the statem ent of financial

position and present m ovem ents in these account balances as

separate line item s in the statem ent of profit or loss and other

com prehensive incom e.

The standard requires disclosure of the nature of, and risks

associated w ith, the entitys rate regulation and the effects of

that rate regulation on its financial statem ents.

Transition

Early application is perm itted and m ust be disclosed.

Impact

IFR S 14 provides first-tim e adopters of IFR S w ith relief from

derecognising rate-regulated assets and liabilities until a

com prehensive project on accounting for such assets and

liabilities is com pleted by the IA SB. The com prehensive rate-

regulated activities project is on the IA SBs active agenda.


Applying IFRS for IFRS 14 Regulator y Deferral Account s

(N ovem ber 20 14 ) EYG no. A U 264 0.

IFRS Development s Issue 72 : The IASB issues IFRS 14 int erim

standard on r egulator y deferral accounts(February 2 014)

EYG no. A U2 146.


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IFRS 15 Revenue fr om Cont ract s with Cust omers

Effective for annual periods beginning on or after 1 January

2017.6

Key requirements

IFR S 15 replaces all existing revenue requirem ents in IFR S

(IA S 11 Constr uction Cont racts, IA S 18 Revenue,

IFR IC 13 Customer Loyalty Programmes, IFR IC 15 Agreements

for t he Construct ion of Real Estat e, IFRIC 18 Transfers of Assets

from Customersand SIC 31 Revenue Bart er Tr ansactions

Involving Advert ising Services) and applies to all revenue arising

from contracts w ith custom ers. Its requirem ents also provide a

m odel for the recognition and m easurem ent of gains and losseson disposal of certain non-financial assets, including property,

equipm ent and intangible assets.

The standard outlines the principles an entity m ust apply to

m easure and recognise revenue. The core principle is that an

entity w ill recognise revenue at an am ount that reflects the

consideration to w hich the entity expects to be entitled in

exchange for transferring goods or services to a custom er.

The principles in IFR S 15 w ill be applied using a five-step m odel:

1. Identify the contract(s) w ith a custom er

2. Identify the perform ance obligations in the contract

3. Determ ine the transaction price

4. A llocate the transaction price to the perform ance obligations

in the contract

5. Recognise revenue w hen (or as) the entity satisfies a

perform ance obligation

The standard requires entities to exercise judgem ent, taking

into consideration all of the relevant facts and circum stances

w hen applying each step of the m odel to contracts w ith their

custom ers.

The standard also specifies how to account for the increm entalcosts of obtaining a contract and the costs directly related to

fulfilling a contract.

A pplication guidance is provided in IFRS 15 to assist entities in

applying its requirem ents to certain com m on arrangem ents,

including licences of intellectual property, w arranties, rights of

return, principal-versus-agent considerations, options for

additional goods or services and breakage.

6 The IA SB issued an exposure draft in M ay 2 015 proposing a one-year deferral in

the effective date to 1 J anu ary 20 18.

Transition

Entities can choose to apply the standard using either a full

retrospective approach, w ith som e lim ited relief provided, or a

m odified retrospective approach. Early application is perm itted

and m ust be disclosed.

Impact

IFR S 15 is m ore prescriptive than current IFR S and provides

m ore application guidance. The disclosure requirem ents are also

m ore extensive. The standard w ill affect entities across all

industries. A doption w ill be a significant undertaking for m ost

entities w ith potential changes to their current accounting,

system s and processes. Therefore, it is im portant for entities to

start assessing the im pact early. In addition, as the IA SB and

FA SB and the Joint Transition Resource Group for Revenue

Recognition (TRG) continue to discuss im plem entation issues, it

w ill be im portant for entities to m onitor their discussions. See

Section 3 Active IASB projectsfor m ore details.


Apply ing IFRS: Joint Transitio n Resour ce Group discusses

additional revenue implement ation issues(July 20 15 ) EY G no.

AU3355

Applyin g IFRS: Joint Transit ion Resour ce Group f or Revenue

Recognition it ems of general agreement(M ay 2015 ) EY G no.AU3116.

Applyin g IFRS: Joint Transit ion Resour ce Group f or Revenue

Recognition discusses more implementat ion issues(A pril 2015)

EYG no. AU 3075.

Applying IFRS: The new revenue standard aff ects mor e than just

revenue(February 20 15 ) EY G no. A U 28 81 .

Applyin g IFRS: The new revenue r ecognit ion standard Jo int

Transit ion Resour ce Group(January 20 15 ) EY G no. A U 28 88 .

Applying IFRS: A closer look at the new revenue recognition

standard(June 201 4)EY G no. A U 251 6.IFRS Development s Issue 108: Pr incipal versus agent: IASB to

propose amendments t o IFRS 15(M ay 201 5) EYG no. A U3 186 .

IFRS Development s Issue 10 7: IASB issues an exposure dr aft

proposing a one-year deferr al of its new revenue standard

(M ay 201 5) EYG no. A U3 184 .

IFRS Development s Issue 10 4 : IASB and FASB decide to make

more changes to their new revenue standards(M arch 2 01 5)

EYG no. AU 3019.

IFRS Developments Issue 10 2: Boards reach diff erent decisions

on some of t he proposed changes to t he new revenue standards

(February 20 15 ) EY G no. A U 29 18 .


11/27


IFRS Development s Issue 95 : Joint Transit ion Resour ce Group

tackles new revenue topics(N ovem ber 201 4) EYG no. A U 273 1.

IFRS Developments Issue 92 : Audit commit tee considerations

for t he new revenue standard(O ctober 20 14 ) EY G no. A U 26 61

IFRS Development s Issue 85 : Joint Transit ion Resour ce Group

for Revenue Recognition debates implementat ion issues

(July 2014)EYG no. A U2 535

IFRS Development s Issue 80 : IASB and FASB issue new r evenue

recogn itio n standard IFRS 15(M ay 2014)EYG no. AU 2427.

Sector publications Applying IFRS: The new revenue recognition

standard

A sset M anagem ent (January 20 15 ) EY G no. A U 28 74 .

A utom otive Industry (Decem ber 20 14) EY G no. A U 27 86.

Insurance (February 201 5) EY G no. A U 292 1.

Life Sciences (N ovem ber 201 4) EY G n o. A U 257 3.

M ining and M etals (June 20 15 ) EY G no. A U 32 92 .

R eal Estate (M arch 20 15) EY G no. A U 2978 .

R etail and Consum er Products (M ay 2 015 )EYG no. AU 2923.

Softw are and Cloud Services (January 20 15)EY G no. 282 8.

Technology (January 20 15 ) EY G no. A U 28 29 .

Telecom m unications (M arch 201 5) EY G no. A U 29 22 .

Sector publications - IFRS Development s: The new revenue

recognition standard.

O il and G as (O ctober 20 14 ) EY G no. A U 26 51 .

O il and G as O ilfield Services (October 2014)EYG no. AU 2665.

Pow er and U tilities (Septem ber 2014 ) EY G no. A U 2618.

IAS 1 Disclosure Init iat ive Amendment s t o IAS 1


Key requirements

The am endm ents to IA S 1 Presentation of Financial Stat ements

clarify, rather than significantly change, existing IA S 1

requirem ents.

The am endm ents clarify:

The m ateriality requirem ents in IA S 1

That specific line item s in the statem ent(s) of profit or lossand O CI and the statem ent of financial position m ay be

disaggregated

That entities have flexibility as to the order in w hich theypresent the notes to financial statem ents

That the share of O CI of associates and joint ven turesaccounted for using the equity m ethod m ust be presented

in aggregate as a single line item , and classified betw een

those item s that w ill or w ill not be subsequently reclassified

to profit or loss

Furtherm ore, the am endm ents clarify the requirem ents that

apply w hen additional subtotals are presented in the statem ent of

financial position and the statem ent(s) of profit or loss and O CI.

Transition

Early application is perm itted and entities do not need to disclose

that fact because the B oard considers these am endm ents to be

clarifications that do not affect an entitys accounting policies or

accounting estim ates.

Impact

These am endm ents are intended to assist entities in applying

judgem ent w hen m eeting the presentation and disclosure

requirem ents in IFR S, and do not affect recognition and

m easurem ent. A lthough these am endm ents clarify existing

requirem ents of IA S 1, the clarifications m ay facilitate enhanced

disclosure effectiveness.


IFRS Developments Issue 98 : IASB makes progress on the

Disclosure Initiat ive(Decem ber 20 14 ) EY G no. A U 28 36


12/27


IAS 16 and IAS 38 Clarif ication of Acceptable

Methods of Depreciation and Amort isat ion

Amendments t o IAS 16 and IAS 38


Key requirements

The am endm ents clarify the principle in IA S 16 Propert y, Plant

and Equipmentand IA S 38 Intangible Assetsthat revenue reflects

a pattern of econom ic benefits that are generated from operating

a business (of w hich the asset is part) rather than the econom ic

benefits that are consum ed through use of the asset. A s a result,

the ratio of revenue generated to total revenue expected to be

generated cannot be used to depreciate property, plant andequipm ent and m ay only be used in very lim ited circum stances to

am ortise intangible assets.

Transition

The am endm ents are effective prospectively. Early application is

perm itted and m ust be disclosed.

Impact

Entities currently using revenue-based am ortisation m ethods for

property, plant and equipm ent w ill need to change their current

am ortisation approach to an acceptable m ethod, such as the

dim inishing balance m ethod, w hich w ould recognise increasedam ortisation in the early part of the assets useful life. Revenue

generated m ay be used to am ortise an intangible asset only in

very lim ited circum stances.


IFRS Development s Issue 78 : IASB pr ohibit s revenue-based

depreciation(M ay 20 14) EYG no. AU 235 3.

IAS 16 and IAS 41 Agr icultur e: Bearer Plants

Amendments t o IAS 16 and IAS 41


Key requirements

The am endm ents to IA S 1 6 and IA S 4 1 Agriculturechange the

scope of IA S 16 to include biological assets that m eet the

definition of bearer plants (e.g., fruit trees). A gricultural

produce grow ing on bearer plants (e.g., fruit grow ing on a

tree) w ill rem ain w ithin the scope of IA S 41. A s a result of the

am endm ents, bearer plants w ill be subject to all the recognition

and m easurem ent requirem ents in IA S 16 including the choice

between the cost m odel and revaluation m odel for subsequentm easurem ent.

In addition, governm ent grants relating to bearer plants w ill be

accounted for in accordance w ith IA S 20 Accounting for

Government Grant s and Disclosure of Government Assistance,

instead of IA S 41.

Transition

Entities m ay apply the am endm ents on a fully retrospective basis.

Alternatively, an entity m ay choose to m easure a bearer plant at

its fair value at the beginning of the earliest period presented.

Earlier application is perm itted and m ust be disclosed.

Impact

The requirem ents will not entirely elim inate the volatility in profit

or loss as produce grow ing on bearer plants w ill still be m easured

at fair value. Furtherm ore, entities w ill need to determ ine

appropriate m ethodologies to m easure the fair value of these

assets separately from the bearer plants on w hich they are

grow ing, w hich m ay increase the com plexity and subjectivity of

the m easurem ent.


IFRS Development s Issue 84 : Bearer plant s the newrequirements(July 20 14 ) EY G no. A U 25 18 .


13/27


IAS 19 Defined Benefit Plans: Employee

Cont ribu t ions Amendment s t o IAS 19

Effective for annual periods beginning on or after 1 July 2 014.

Key requirements

IA S 19 requires an entity to consider contributions from

em ployees or third parties w hen accounting for defined benefit

plans. IA S 1 9 requires such contributions that are linked to

service to be attributed to periods of service as a negative

benefit.

The am endm ents clarify that, if the am oun t of the contribution s

is independent of the n um ber of years of service, an entity isperm itted to recognise such contributions as a reduction in

the service cost in the period in w hich the service is rendered,

instead of allocating the contributions to the periods of service.

Exam ples of such contributions include those that are a fixed

percentage of the em ployees salary, a fixed am ount of

contributions throughout the service period, or contributions

that depend on the em ployees age.

Transition

The am endm ents m ust be applied retrospectively.

ImpactThese changes provide a practical expedient for sim plifying the

accounting for contributions from em ployees or third parties in

certain situations.

IAS 27 Equity Met hod in Separat e Financial

Stat ement s Amendment s to IAS 27


Key requirements

The am endm ents to IA S 2 7 Separate Financial Stat ementsallow

an entity to use the equity m ethod as described in IA S 2 8 to

account for its investm ents in subsidiaries, joint ventures and

associates in its separate financial statem ents. Therefore, an

entity m ust account for these investm ents either:

A t cost

In accordance w ith IFR S 9 (or IA S 3 9)

O r

U sing the equity m ethod

The entity m ust apply the sam e accounting for each category

of investm ent.

A consequential am endm ent w as also m ade to IFR S 1 First-time

Adopt ion of Inter national Financial Report ing Standards. The

am endm ent to IFR S 1 allow s a first-tim e adopter accounting for

investm ents in the separate financial statem ents using the equity

m ethod, to apply the IFR S 1 exem ption for past business

com binations to the acquisition of the investm ent.

Transition

The am endm ents m ust be applied retrospectively. Early

application is perm itted and m ust be disclosed.

Impact

The am endm ents elim inate a GA A P difference for countries

w here regulations require entities to present separate financial

statem ents using the equity m ethod to account for investm ents

in subsidiaries, associates and joint ventures.


14/27


IAS 32 Offsett ing Financial Assets and Financial

Liabi lit ies Amendments to IAS 32


Key requirements

The am endm ents to IA S 32 Financial Instruments: Presentation

clarify the m eaning of currently has a legally enforceable right to

set-off. The am endm ents also clarify the application of the

IA S 32 offsetting criteria to settlem ent system s (such as central

clearing house system s), w hich apply gross settlem ent

m echanism s that are not sim ultaneous.

The am endm ents clarify that rights of set-off m ust not only belegally enforceable in the norm al course of business, but m ust

also be enforceable in the event of default and the event of

bankruptcy or insolvency of all of the counterparties to the

contract, including the reporting entity itself. The am endm ents

also clarify that rights of set-off m ust not be contingent on a

future event.

The am endm ents clarify that only gross settlem ent m echanism s

w ith features that elim inate or result in insignificant credit and

liquidity risk and that process receivables and payables in a single

settlem ent process or cycle w ould be, in effect, equivalent to net

settlem ent and, therefore, m eet the net settlem ent criterion.

Transition


Impact

Entities w ill need to review legal docum entation and settlem ent

procedures, including those applied by the central clearing

houses they deal w ith to ensure that offsetting of financial

instrum ents is still possible under the new criteria. Changes in

offsetting m ay have a significant im pact on financial statem ent

presentation. The effect on leverage ratios, regulatory capital

requirem ents, etc., w ill need to be considered.


Applying IFRS: Off setting f inancial instrument s: clarify ing the

amendments (May 201 2)EYG no. A U1 182.

IFRS Developments Issue 22 : Offsett ing of f inancial instruments

(Decem ber 20 11) EY G no. A U 10 53.

IAS 36 Recoverable Amount Disclosures for Non-

Financial Assets Amendment s t o IAS 36


Key requirements

The am endm ents to IA S 3 6 Impairment of Assetsclarify the

disclosure requirem ents in respect of fair value less costs of

disposal. The am endm ents rem ove the requirem ent to disclose

the recoverable am ount for each cash-generating unit for w hich

the carrying am ount of goodw ill or intangible assets with

indefinite useful lives allocated to that unit is significant.

In addition, the IA SB added tw o disclosure requirem ents: A dditional inform ation about the fair value m easurem ent

of im paired assets w hen the recoverable am ount is based

on fair value less costs of disposal.

Inform ation about the discoun t rates that have been usedw hen the recoverable am ount is based on fair value less

costs of disposal using a present value technique. The

am endm ents harm onise disclosure requirem ents betw een

value in use and fair value less costs of disposal.

Transition


Impact

A s a result of the am endm ents, entities are no longer required to

disclose inform ation that w as regarded as com m ercially sensitive

by preparers. N evertheless, additional inform ation needs to be

provided. In general, it is likely that the inform ation required to

be disclosed w ill be readily available.


15/27


IAS 39 Novation of Derivat ives and Continuat ion of

Hedge Account ing Amendments to IAS 39


Key requirements

The am endm ents provide an exception to the requirem ent to

discontinue hedge accounting in certain circum stances in w hich

there is a change in counterparty to a hedging instrum ent in

order to achieve clearing for that instrum ent. The am endm ents

cover novations:

That arise as a consequence of law s or regulations, or theintroduction of law s or regu lations

In w hich the parties to the hedging instrum ent agree thatone or m ore clearing counterparties replace the original

counterparty to becom e the new counterparty to each of

the parties

That did not result in changes to the term s of the originalderivative other than changes directly attributable to the

change in counterparty to achieve clearing

A ll of the above criteria m ust be m et to continue hedge accounting

under this exception.

The am endm ents cover novations to central counterparties, as

w ell as to interm ediaries such as clearing m em bers, or clients ofthe latter that are them selves interm ediaries.

For novations that do not m eet the criteria for the exception,

entities have to assess the changes to the hedging instrum ent

against the derecognition criteria for financial instrum ents and

the general conditions for continuation of hedge accounting.

Transition

The am endm ents m ust be applied retrospectively. H ow ever,

entities that discontinued hedge accounting in the past, because

of a novation that w ould be in the scope of the am endm ents, m ay

not reinstate that previous hedging relationship.

Impact

The am endm ents are, in effect, a relief from the hedge

accounting requirem ents, and w ill allow entities to better reflect

hedge relationships in the circum stances in w hich the novation

exception applies.


IFRS Development s Issue 62: Amendment s to IAS 39 : Continuing

hedge accounting aft er novation(June 20 13 ) EYG no. A U 17 00 .

IFRIC 21 Levies


Key requirements

IFR IC 21 is applicable to all levies other than outflow s that are

w ithin the scope of other standards (e.g., IA S 12 Income Taxes)

and fines or other penalties for breaches of legislation. Levies are

defined in the interpretation as outflow s of resources em bodying

econom ic benefits im posed by governm ent on entities in

accordance w ith legislation.

The interpretation clarifies that an entity recognises a liability for

a levy w hen the activity that triggers paym ent, as identified bythe relevant legislation, occurs. It also clarifies that a levy liability

is accrued progressively only if the activity that triggers paym ent

occurs over a period of tim e, in accordance w ith the relevant

legislation. For a levy that is triggered upon reaching a m inim um

threshold, the interpretation clarifies that no liability is

recognised before the specified m inim um threshold is reached.

The interpretation does not address the accounting for the debit

side of the transaction that arises from recognising a liability to

pay a levy. Entities look to other standards to decide w hether the

recognition of a liability to pay a levy w ould give rise to an asset

or an expense under the relevant standards.

Transition

The interpretation m ust be applied retrospectively.

Impact

The interpretation is intended to elim inate diversity in practice on

the treatm ent of the obligation to pay levies. The scope of this

interpretation is very broad and captures various obligations,

w hich are im posed by governm ents in accordance w ith legislation

and m ay not alw ays be described as levies. Therefore, entities

need to carefully consider the nature of paym ents to

governm ents w hen determ ining if they are in the scope of IFR IC

21.


Applying IFRS: Accounting f or Levies(June 20 14) EYG no.

AU2514.

IFRS Development s Issue 59: IASB issues IFRIC Interpr etat ion 2 1

Levies(M ay 2013 ) EYG no. A U 15 81 .


16/27


Improvement s t o Inter national Financial Report ing Standards

Key requirements

The IA SBs annual im provem ents process deals w ith non-urgent, but necessary, clarifications and am endm ents to IFR S.

2010-2012 cycle (issued in December 2013)

Follow ing is a sum m ary of the am endm ents (other than those affecting only the standardsBasis for Conclusions) from the 2010

2012 annual im provem ents cycle. The changes sum m arised below are effective for annual reporting periods beginning on 1 July 2014.


IFR S 2 Share-based Payment Definitions of vesting conditions

The am endm ent defines perform an ce conditionand service conditionto clarify variousissues, including the follow ing:

A perform ance condition m ust contain a service condition

A perform ance target m ust be m et w hile the counterparty is rendering service

A perform ance target m ay relate to the operations or activities of an entity, or to thoseof another entity in the sam e group

A perform ance condition m ay be a m arket or non-m arket condition

If the counterparty, regardless of the reason, ceases to provide service during thevesting period, the service condition is not satisfied

The am endm ent m ust be applied prospectively.

IFR S 3 Business Combinat ions Accounting for contingent consideration in a business combination

The am endm ent clarifies that all contingent consideration arrangem ents classified asliabilities or assets arising from a business com bination m ust be subsequently m easured at

fair value through profit or loss w hether or not they fall w ithin the scope of IFRS 9 (or

IA S 39, as applicable).


IFR S 8 Operating Segment s Aggregation of operating segments

The am endm ent clarifies that an entity m ust disclose the judgem ents m ade bym anagem ent in applying the aggregation criteria in IFR S 8.12, including a brief description

of operating segm ents that have been aggregated and the econom ic characteristics (e.g.,

sales and gross m argins) used to assess w hether the segm ents are sim ilar.

The am endm ent m ust be applied retrospectively.

Reconciliation of the total of the reportable segments assets to the entitys assets

The am endm ent clarifies that the reconciliation of segm ent assets to total assets isrequired to be disclosed only if the reconciliation is reported to the chief operating decision

m aker, sim ilar to the required disclosure for segm ent liabilities.



17/27


IA S 1 6 Propert y, Plant andEquipmentand

IA S 3 8 Intangible Assets

Revaluation method proportionate restatement of accumulated depreciation/amortisation The am endm ents to IA S 16 and IA S 3 8 clarify that the revaluation can be perform ed, as

follow s:

A djust the gross carrying am ount of the asset to m arket value

O R

D eterm ine the m arket value of the carrying am ount and adjust the gross carryingam ount proportionately so that the resulting carrying am ount equals the m arket value

The am endm ents also clarify that accum ulated depreciation/am ortisation is the differencebetw een the gross and carrying am ounts of the asset.


IA S 24 Related Part y

Disclosures

Key management personnel

The am endm ent clarifies that a m anagem ent entity an entity that provides keym anagem ent personnel services is a related party subject to the related party disclosures.

In addition, an entity that uses a m anagem ent entity is required to disclose the expenses

incurred for m anagem ent services.


2011-2013 cycle (issued in December 2013)

Follow ing is a sum m ary of the am endm ents (other than those affecting only the standardsBasis for Conclusions) from the 2011-2013

annual im provem ents cycle The changes sum m arised below are effective for annual reporting periods beginning on 1 July 2014.


IFR S 3 Business Combinat ions Scope exceptions for joint ventures

The am endm ent clarifies that:

Joint arrangem ents, not just joint ventures, are outside the scope of IFR S 3.

The scope exception applies only to the accounting in the financial statem ents of thejoint arrangem ent itself.


IFRS 13 Fair Value

Measurement

Scope of paragraph 52 (portfolio exception)

The am endm ent clarifies thatthe portfolio exception in IFR S 13 can be applied not onlyto financial assets and financial liabilities, but also to other contracts w ithin the scope of

IFR S 9 (or IA S 39, as applicable).


IA S 4 0 Investment Property Interrelationship between IFRS 3 and IAS 40 (ancillary services)

The description of ancillary services in IA S 40 differentiates betw een investm ent propertyand ow ner-occupied property (i.e., property, plant and equipm ent). The am endm ent

clarifies that IFRS 3, not the description of ancillary services in IA S 40, is used to determ ine

w hether the transaction is the purchase of an asset or business com bination.



18/27


2012-2014 cycle (issued in September 2014)

Follow ing is a sum m ary of the am endm ents (other than those affecting only the standardsBasis for Conclusions) from the 2012-2014

annual im provem ents cycle. The changes sum m arised below are effective for annual reporting periods beginning on 1 January 2016.


IFR S 5 Non-Current Assets

Held for Sale and Discont inued

Operations

Changes in methods of disposal

A ssets (or disposal groups) are generally disposed of either through sale or distribution toow ners. The am endm ent clarifies that changing from one of these disposal m ethods to the

other w ou ld not be con sidered a new plan of disposal, rather it is a continuation of the

original plan. There is, therefore, no interruption of the application of the requirem ents in

IFR S 5 .


IFR S 7 Financial Instruments:

Disclosures

Servicing contracts

The am endm ent clarifies that a servicing contract that includes a fee can constitutecontinu ing involvem ent in a financial asset. A n entity m ust assess the n ature of the fee and

the arrangem ent against the guidance for continuing involvem ent in IFR S 7 .B30 and

IFR S 7.42C in order to assess w hether the disclosures are required.

The assessm ent of w hich servicing contracts constitute continu ing involvem ent m ust bedone retrospectively. H ow ever, the required disclosures w ould not need to be provided

for any period beginning before the annual period in w hich the entity first applies the

am endm ent.

Applicability of the offsetting disclosures to condensed interim financial statements

The am endm ent clarifies that the offsetting disclosure requirem ents do not apply to

condensed interim financial statem ents, unless such disclosures provide a significantupdate to the inform ation reported in the m ost recent annual report.


IA S 1 9 Employee Benefit s Discount rate: regional market issue

The am endm ent clarifies that m arket depth of high quality corporate bonds is assessedbased on the currency in w hich the obligation is denom inated, rather than the country

w here the obligation is located. W hen there is no deep m arket for high quality corporate

bonds in that currency, governm ent bond rates m ust be used.


IA S 3 4 Interim Financial

Reporting

Disclosure of information elsewhere in the interim financial report

The am endm ent clarifies that the required interim disclosures m ust be either in the interimfinancial statem ents or incorporated by cross-reference betw een the interim financial

statem ents and w herever they are included w ithin the interim financial report (e.g., in the

m anagem ent com m entary or risk report).

The other inform ation w ithin the interim financial report m ust be available to users on thesam e term s as the interim financial statem ents and at the sam e tim e.



IFRS Developments Issue 71 : The IASB issues two cycles of annual improvements to IFRS(Decem ber 2013) EYG no. A U2068.

IFRS Developments Issue 91 : IASB concludes the 201 2-201 4 Annual Improvement s Cycle(Septem ber 2014 ) EYG no. A U26 45.


19/27


Certain item s deliberated by the IFRS IC are published w ithin the Interpretations Com m ittee agenda decisionssection of the IA SBs

IFRIC Updat e. A genda decisions (also referred to as rejection notices) are issues that the IFR S IC decides not to add to its agenda and

include the reasons for not doing so. For som e of these item s, the IFR S IC includes further inform ation about how the standards should

be applied. This guidance does not constitute an interpretation, but rather, provides additional inform ation on the issues raised and the

IFR S ICs view s on how the standards and current interpretations are to be applied.

The table below sum m arises topics that the IFR S IC decided not to take onto its agenda at its M ay 2 015 m eeting and contains highlights

from the agenda decisions. For agenda decisions published before 1 A pril 2015, please refer to previous editions of IFRS Updat e. All

item s considered by the IFR S IC during its m eetings, as w ell as the full text of its conclusions, can be found in the IFRIC Updateon the

IA SBs w ebsite.7

Final dateconsidered

Issue Summary of reasons given for not addingtheissue to theIFRS ICs agenda

M ay 2015 IFRS 10 Consolidated

Financial Stat ementsand

IA S 1 7LeasesSingle-asset,

single-lessee lease vehicles

The IFR S IC received tw o requests to clarify the treatm ent of a structured entity

that is created to lease a single asset to a single lessee.

The IFR S IC w as of the view that the lessees right to use the leased asset for a

period of tim e w ould not, in isolation, typically give the lessee decision-m aking

rights over the relevant activities of the structured entity (SE) and, therefore,

w ould not typically be a relevant activity of the SE. H ow ever, the IFR S IC noted

that this conclusion does not m ean that a lessee can never control the lessor. It

also noted that, in assessing control, an entity w ould consider all of the rights

that it has in relation to the investee to determ ine w hether it has pow er over the

investee.

M ay 2015 IA S 24 Related Part yDisclosuresDefinition of

close m em bers of the fam ily

of a person

The IFRS IC received a request to clarify the definition of close m em bers of thefam ily of a person.

The IFR S IC observed that the definition of close m em bers of the fam ily of a

person in IA S 24.9 is expressed in a principle-based m anner, includes a list of

fam ily m em bers that are alw ays considered close m em bers of the fam ily of a

person, and the list in the paragraph is not exhaustive.

7 The IFRIC Updateis available at http://w w w.ifrs.org/Updates/IFR IC+U pdates/IFR IC+Updates.htm

Sect ion 2: Items not taken onto the IFRS

Interpretations Commit tees agenda in Q2 2015


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Section 3: Act ive IASB projects

The ability to stay current on the IA SBs standard-setting activities is critical in a sea of change. The follow ing sum m arises key features

of selected active projects of the IA SB, along w ith potential im plications of the proposed standards. The Key projectsare those

initiated w ith the objective of issuing new standards or that involve overarching considerations across a num ber of standards. O ther

projectsinclude proposed am endm ents w ith narrow er applicability. Generally, only those projects that have reached the exposure

draft stage are included, but in selected cases, projects that have not yet reached the exposure draft stage are also com m ented on.7

Key projects

Leases

Key developments to date

Background

The IA SB has substantially com pleted redeliberations on its 2013

exposure draft (ED) on leases. The redeliberations focused on

w ays to sim plify and reduce the cost of applying a revised lease

accounting standard in a num ber of areas, including: definition and

scope; lessee and lessor accounting m odels; m easurem ent

provisions; and disclosure requirem ents. W e expect the B oard to

issue the new standard in Q 4 of 2015.

Scope

The scope of the new standard w ould include leases of all assets,

w ith certain exem ptions. A lease w ould be defined as a contractthat conveys the right to use an asset (the underlying asset) for a

period of tim e in exchange for consideration.

Key features

The new standard w ould require lessees to account for allleases (subject to certain exem ptions) under a single on -

balance sheet m odel (i.e., in a m anner com parable to

finance leases under IA S 17).

Lessees w ould recogn ise a liability to pay rentals w ith acorresponding asset. The lease accounting m odel w ould

result in an accelerated expense recognition pattern as

com pared to todays operating leases. The standard w ould include tw o recognition and

m easurem ent exem ptions for lessees leases of sm all

assets(e.g., sm all printer) an d short-term leases (i.e.,

leases w ith a lease term of 12 m onths or less).

R eassessm ent of certain key considerations (e.g., leaseterm , variable rents based on an index or rate, discount

rate) by the lessee w ould be required upon certain events.

Lessor accounting w ould be essentially the sam e as todayslessor accounting, using IA S 17s dual classification

approach.

8 Th e latest IA SB w ork plan and further inform ation on the projects is available at

http://w w w .ifrs.org/Current-Projects/IA SB -Projects/Pages/IA SB-W ork-Plan.aspx

Transition and effective date

The effective date has not been determ ined, but is not expected

to be before 2018 for calendar-year com panies.

The standard w ould perm it a lessee to choose either a full

retrospective or a m odified retrospective transition approach, to

be applied consistently across its entire portfolio of form er

operating leases. Lessees w ould not change their accounting for

finance leases existing at the date of initial application of the new

standard. Lessors w ould continue to apply their existing

accounting for any leases that are ongoing at the date of initial

application, except for interm ediate lessors in a sublease. The

standards transition provisions w ould perm it certain reliefs.

Impact

For todays operating leases, the lease expense recognitionpattern for lessees w ould generally be accelerated as com pared

to today.

Key balance-sheet m etrics such as leverage and finance ratios,

debt covenants and incom e statem ent m etrics, such as EB ITDA ,

could be im pacted. A lso the cash flow statem ent for lessees

w ould be affected as paym ents for the principal portion of m ost

of todays operating leases w ould be presented w ithin financing

activities.

Lessor accounting w ould result in few , if any, changes com pared

to todays lessor accounting.

The new standard w ould require lessees and lessors to m ake

m ore extensive disclosures than under IA S 17.

Given the significant accounting im plications, lessees w ill have to

pay m ore attention to their contracts to identify any that are, or

contain, leases. Such evaluation w ill also be im portant for lessors

to determ ine w hich contracts (or portions of contracts) are

subject to the new revenue recognition standard.


Apply ing IFRS: New standard on leases is taking shape(A pril

2015 ) EYG no. A U 3072 .
http://www.ifrs.org/Current-Projects/IASB-Projects/Pages/IASB-Work-Plan.aspxhttp://www.ifrs.org/Current-Projects/IASB-Projects/Pages/IASB-Work-Plan.aspx


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Insurance Contracts


Background

The IA SB is redeliberating its second ED on a com prehensive

m ethod of accounting for insurance contracts, w hich w as issued

in June 20 13 .

The FA SB published its proposals in June 2013; subsequently,

the FA SB decided not to issue a new insurance contract standard,

but to m ake enhancem ents to its current accounting for

insurance com panies instead.

Scope

The standard w ould apply to all types of insurance contracts (i.e.,

life, non-life, direct insurance and re-insurance), regardless of the

type of entity that issued them , as w ell as certain guarantee and

financial instrum ent contracts w ith discretionary participation

features. A few scope exceptions w ould apply.

Key features

The proposed approach for the m easurem ent of the insurance

contract liability is based on the follow ing building blocks

approach (also called the general m easurem ent m odel):

Expected present value of future cash flow s A risk adjustm ent related to the expected present value of

cash flow s

A contractual service m argin (CSM ) that w ould elim inateany gain at inception of the contract; the CSM w ould be

adjusted subsequently for changes in estim ates of future

cash flow s and the risk adjustm ent to the extent these

changes relate to future coverage or other future services

A discount rate that w ould be updated at the end of eachreporting period (i.e., the liability discount rate w ould not

be locked-inat inception of the contract)

Rather than prescribing a rate for discounting insurance

contracts, the proposed approach w ould be based on the

principle that the rate m ust reflect the characteristics of the

liability.

The objective of the insurance contracts standard w ould be to

provide principles on the accounting for individual contracts, but

contracts could be aggregated as long as this objective is m et.

A n accounting policy choice w ould be perm itted at a portfolio

level to recognise the effect of changes in discount rates in either

O CI or profit or loss.

Entities w ith contracts w ith participating features that m eetcertain criteria w ould be required to follow the variable fee

approach. The variable fee approach is a m odification of the

proposed general m easurem ent m odel (i.e., the building block

m odel that applies to all other insurance contracts).

U nder this variable fee approach, changes in the estim ate of the

variable fee, w hich includes the entitys share in the investm ent

perform ance of specified item s, are adjusted to the contractual

service m argin. The IA SB w ill hold further discussions on

participating contracts including discussion of the critical issue of

level of aggregation.

Revenue w ould be reported in the incom e statem ent through

earned prem ium s representing the insurers perform ance under

the contracts in the period for all types of insurance contracts.

A n entity w ould recognise the contractual service m argin in profit

or loss on the basis of the passage of tim e.

A sim plified approach based on a prem ium allocation could be

applied to the liability for rem aining coverage if contracts m eet

certain eligibility criteria (e.g., contracts w ith a coverage period

of one year or less).

Transition and effective date

The IA SB has not yet concluded on the effective date, but it is

expected to be approxim ately three years from the issuance of

the standard. D uring redeliberations, the Board decided on a

retrospective approach to transition for non-participating

contracts, subject to certain practical reliefs, if applicable. The

Board w ill m ake decisions on the transition approach forparticipating contracts at a future m eeting.

Impact

The Boards tentative decision to m ake the use of O CI optional is

a com prom ise necessary to com plete the insurance contracts

project. H aving an option allow s entities to reflect the differences

that exist in how they run their businesses to fulfil their

obligations under their insurance contracts.

Even though the IA SB m ade O CI optional and introduced a

variable fee m odel, the proposed m odel is expected to have a

significant im pact on key perform ance indicators and m ay stillresult in increased volatility in equity and profit or loss com pared

to todays accounting m odel.


O ur Insurance Accounting Alert sprovide tim ely updates on the

IA SBs discussion of the project.8

9 The Insurance Accounting Alert scan be accessed at

http://ww w .ey.com /GL/en/Industries/Financial-Services/Insurance/IFR S-insurance.insights


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Disclosure Initiative


Background

The IA SB is undertaking a broad-based initiative to explore how

disclosures in IFR S financial reporting can be im proved. The

Disclosure Initiative is m ade up of a num ber of im plem entation

and research projects. In D ecem ber 20 14, am endm ents to

IA S 1 Presentation of Financial Stat ementsw ere issued. The

am endm ents are sum m arised in Section 1 of this publication.

The other projects form ing part of the D isclosure Initiative are

described below .

Reconciliation of components of financing activities

The objective of this project is to identify the inform ation

requirem ents of users regarding the reporting of debt. A n ED

proposing am endm ents to IA S 7 w as issued in D ecem ber 2014.

The IA SB proposed to require a reconciliation of the am ounts in

the opening and closing statem ents of financial position for each

item classified as financing in the statem ent of cash flow s.

The ED also includes a proposal to require extended disclosures

about the restrictions on cash and cash equivalent balances to

provide the users w ith additional inform ation about the entitysliquidity.

The IA SB has started discussions based on feedback received on

the ED and w ill continue w ith its deliberations through the second

half of 2015.

Materiality

The objective of this project is to consider w ays to im prove the

application of the m ateriality concept. The IA SB plans to:

Change the current definition of m ateriality w ithin IFR S toalign it across different standards and the Conceptual

Framework fo r Financial Reporting, and to add a paragraphto IA S 1 clarifying the key characteristics of m ateriality

Provide guidance on the application of m ateriality, w hichw ill take the form of a Practice Statem ent

W ait until further work has been perform ed on the generaldisclosure review of other standards before considering

possible changes to address the use of inconsistent or

excessively prescriptive language in standards

A n ED is expected in the third quarter of 2015.

Principles of disclosure

The objective of this project is to identify and develop a possible

set of principles for disclosure in IFRS that could form the basis

of a standard-level project. The research phase w ill focus on a

review of the general requirem ents in IA S 1, IA S 7 and IA S 8, and

consider how they m ight be replaced w ith a single standard, in

essence, creating a disclosure fram ew ork. The m ain focus w ill be

on recom m endations for im provem ents expressed by

constituents in the Financial Reporting D isclosure Discussion

Forum . In addition, the Board plans to consider feedback

received in the Conceptual Fram ew ork project.

The IA SB plans to research the follow ing:

Principles of disclosure for the notes, including disclosureof alternative perform ance m easures and non-IFR S

inform ation

Inform ation in a com plete set of IFR S financial statem ents,including:

D ifferential disclosures and proportionality

Cash flow reporting

D isclosure of interim financial inform ation

A Discussion Paper (DP) is expected in the fourth quarter of

2015.

General disclosure review

The IA SB is planning to carry out a review of existing standards to

identify and elim inate redundancies, conflicts, and duplications.

Impact

A t this stage of the Disclosure Initiative, the im pact of the

different projects is unknow n. H ow ever, the objective is to

im prove disclosure effectiveness by providing guidance on how

to enhance the structure of financial statem ents, m ake

disclosures entity-specific, and apply the m ateriality concept.

The am endm ents to IA S 1 issued in D ecem ber 2014 generallyonly clarify existing requirem ents. H ow ever, these clarifications

can be effective in steering practice aw ay from m aking

disclosures that contribute to the observed disclosure

ineffectiveness. Sim ilarly, the other projects have the potential to

contribute to m ore tailored and effective disclosures.


Applying IFRS: Impr oving disclosure eff ectiveness(July 2014)

EYG no. AU 2513 .


23/27


Conceptual Framework


Background

The IA SB issued an ED ,Conceptual Framework for Financial

Reporting,in M ay 2015. The objective of the C onceptual

Fram ew ork project is to im prove financial reporting by providing

a m ore com plete, clear and updated set of concepts.

To achieve this, the IA SB is building on the existing Conceptual

Fram ew ork, w hile updating it, im proving it and filling in the gaps,

instead of fundam entally reconsidering all aspects of the

Conceptual Fram ew ork.

Scope and key features

The ED includes proposals to:

Revise the definitions of elem ents in the financialstatem ents

Include new guidance on the recogn ition criteria andderecognition principles

D escribe the various m easurem ent bases and factors toconsider w hen selecting an appropriate m easurem ent basis

Include the principles for w hen item s of incom e an d

expense are reported in O CI or profit or loss D escribe high-level concepts for presentation and

disclosure of inform ation.

The com m ent period of the ED closes on 2 6 O ctober 2015.

Impact

The proposed changes to the C onceptual Fram ew ork m ay im pact

the application of IFR S in situations in w hich no standard applies

to a particular transaction or event, or when a standard allow s a

choice of accounting policy.

Other EY publicationsApply ing IFRS: IASB issues the Concept ual Framework exposur e

draft(June 201 5) EY G no. A U 324 2.


24/27


Other project sTh e IA SB has a n um ber of projects on its work plan to am end existing stan dards an d interpretations for specific m atters. Follow ing is a brief sum m ary of selected projects. R efer to the IA SBs

w ebsite for its work plan , w hich includes the current status o f all projects.

Other projects Status/next steps

Clarifications to IFRS 15 Revenue from Contracts wit h Customers (issues emerging fr om TRG

discussions)

Th e objective of this project is to clarify the requirem ents in IFR S 15 in respect of theim plem entation issues arising from the discussions of the TR G.

The IA SB issued an E D proposing to defer the effective date of IFR S 15 from 1 Jan uary20 17 to 1 January 201 8.

ED on clarifying am endm ents expected in Q 3 20 15

ED on effective da te pu blished in M ay 2 01 5

Financial Instr ument s Account ing for Dynamic Risk Management: A Por tfo lio Revaluation

Approach to Macro Hedging

Th e objective of this project is to add ress the specific accounting for risk m an agem en tstrategies relating to o pen portfolios rather than individu al con tracts. Th e h ed ge

accou nting requirem ents in IAS 39 and IFR S 9 do no t provide specific solutions to the issues

associated w ith m acro hed ging.

Th e IA SB is expected to focu s initially on the inform ation con stitue nts believe shou ld berequ ired to better reflect entitiesdynam ic risk m an agem ent activities.

Th e IA SB then is expected to consider how constituentsinform ation needs could beaddressed throug h disclosures before considering the areas that need to be addressed

through recogn ition and m easurem ent. Th e objective is no t to b e a disclosure-only p roject.

DP pu blished in A pril 2014 ; redeliberations continu ing in Q 3 20 15


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Clarification of Classification and Measurement of Share-based Payment Tr ansactions (Proposed

amendm ents to IFRS 2)

The IA SB proposed am endm ents to IFR S 2 to address:

Th e effects of vesting condition s on a cash-settled share-based p aym ent

A share-based paym ent transaction in w hich the en tity has an obligation un der tax law sor regu lation s to settle the a rran gem en t net by w ithho lding a specified portion of equ ity

instrum ents to m eet its m inim um statutory w ithholding tax obligation s

A m odification to the term s an d cond itions of a share-based paym ent that chan ges the

classification of the transaction from cash-settled to equity-settled

ED issued in Q 4 201 4; redeliberations continu ing in Q 3 2 015

Classification of Liabilit ies (Proposed amendments t o IAS 1)

The proposed am end m ents to IA S 1 aim to im prove presentation in financial statem ents byclarifying the criteria for the classification of a liability as either current or n on -current. The

ED proposes to:

Clarify that the classification of a liab ility as either cu rrent or no n-current is based onthe en titys righ ts at the en d of the reporting period

u C larify the link betw een the settlem ent of the liability an d the outflow of resou rces from

the en tity

ED issued in Q 1 201 5; redeliberations expected in Q 3 2015

Measuring Quoted Investment s in Subsidiaries, Joint V entures and Associates at Fair Value

(Proposed amendment s to IFRS 10, IFRS 12 , IAS 27, IAS 28 and IAS 36 and Illustrative Examples

for IFRS 13)

The IA SB proposed am endm ents to IFR S 1 0, IFR S 1 2, IA S 2 7, IA S 2 8 and IA S 3 6, whichw ou ld provide the follow ing clarification s:

Th e u nit of account for investm en ts in sub sidiaries, joint ven tures and associates is theinvestm ent as a w hole

W hen a qu oted price in a n a ctive m arket is available for the individual fina ncialinstrum ents that com prise the en tire investm ent, the fair value m easurem ent is the

produ ct of the qu oted price of the finan cial instrum en t (P) m ultiplied by the qua ntity (Q )

of instrum ents held (i.e., P Q )

W hen testing cash generating un its for im pairm ent, if they correspo nd to an entityw hose financial instrum ents are qu oted in a n active m arket, the fair value (w hen

de term ining fair value less costs of disposal) is the prod uct of P Q

ED issued in Q 3 201 4; redeliberations continu ing in Q 3 2 015


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The E D also p roposes to include an exam ple in IFR S 13 to illustrate application of theportfolio approach to portfolios that are solely com prised of investm ents for w hich quo ted

prices in an a ctive m arket are available.

Recognition of Deferr

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