IFRS Q&A by Silvia
Ask questions because it's better to look stupid but understand than look intelligent and not have a clue!
036: Contract asset vs. account receivable
What is the difference between contract asset and receivable? When to book a contract asset and when a receivable? Learn here (with example)!
035: How to determine the fair value of a machine?
Market prices of most non-financial assets are usually not available, because these assets might be outdated or highly customized or simply not traded on the market. How do you set the fair value of these assets in this case? Learn here!
034: How to account for financial guarantees under IFRS 9?
What is a financial guarantee? What is it NOT? And, how to account for financial guarantees under IFRS 9? Learn here!
033: How to account for settlement discounts under IFRS 15?
Should you recognize settlement discount as a cost at the time when the payment is received? Or, should you adjust revenue? How? Learn here!
032: How to determine the discount rate for lessees under IFRS 16?
Can you use the same incremental borrowing rate for all your leases under IFRS 16? Why can’t you use your own implicit rate in the lease if you are a lessee? Learn here!
031: We rent apartments and supply utilities with rent. Are we agent or principal?
If you are using third-party supplies within your product or service, are you an agent or a principal? How should you recognize revenue in this case? Learn here!
030: How to deal with capex threshold for property, plant and equipment?
What happens when you buy lots of assets below your capex threshold, but still high expense? And, should you revise your capex threshold retrospectively? Learn here!
029: How to classify expenses in profit or loss statement under IFRS?
How to classify depreciation of warehouse? Is it cost of sales or administrative expense? What to do when the classification changes? Learn here!
028: How to determine the functional currency when a company deals with more currencies?
Imagine you sell in EUR, make purchases in INR and your loans are denominated in USD… what is your functional currency in this case? Learn here!
027: Examples: How to allocate cost of conversion to inventories at abnormal levels of production?
How to allocate fixed overheads to the cost of inventories? What if your production is abnormally high or abnormally low? Find out here with examples included!
026: Accounting for transfer of owner-occupied property under revaluation model to investment property
What to do with revaluation surplus when transferring your PPE to investment property? How to account for it at the date of transfer and subsequently? Learn here!
025: Is a hotel an investment property under IAS 40?
How to classify any property (not just a hotel) if you use it for more purposes? And, what to do if you provide some additional services on top of rental? Find out here!
024: How to capitalize exchange differences on loan as borrowing costs?
Can you capitalize exchange differences on foreign currency loans as borrowing costs? If yes, then how? Please find out here!
023: How to match a government grant with costs for which the grant compensates?
How should you match the government grant with expenses for which it compensates? Sometimes, it’s not very straightforward and we need to apply our judgement and experience. Learn how to account for the grant revenue here!
022: Can you capitalize assets placed in customer’s premises?
How to account for assets which you gave for free to your clients for promotion purposes? Branded refridgerators, stands, displays, lights, signs – can you capitalize them? Find out here!
021: How to account for warranties under IFRS 15?
Should you book a provision for warranties under IFRS? Or, is it a separate performance obligation and you should allocate some revenue to it? Find out here!
020: How to account for gift cards?
How to account for sale of gift cards? What do to when the customers don’t redeem them? Find out here!
019: Can you capitalize rental expenses of land?
Can you capitalize rental expenses of land under IFRS? And what about the rental of the temporary offices? Find out here!
018: How to account for income from loan application fees?
How to account for the loan origination fees or the loan servicing fees? In profit or loss? Amortize? Find out here!
017: Subsequent expenditures in agriculture
How to account for veterinary costs, animal food, fertilizers, pesticides and other operating expenses in agriculture under IAS 41? Learn here!
016: How to calculate impairment on intercompany loans?
How to determine the impairment on intercompany loans under IFRS 9? What are the special considerations in relation to groups and internal loans? Learn here!
015: How to prepare financial statements when going concern does not apply?
IFRS do not specify any rules for presenting the financial statements when the going concern basis does not apply. So, what to do? How to present the financial statements? What should we take care of? Find out here!
014: How to present a loan with breached covenants?
So, you have a long-term loan, you breached the covenants and it became repayable on demand. Is it current or non-current? Learn here!
013: How to account for rentals depending on inflation and future sales?
What if your lease payments depend on future sales, inflation, use of the asset, interest rate or other things – what should you do? How should you account for them under IFRS 16? Find out here!
012: How to account for barter transactions?
How to account for exchanges of inventories or long-term assets under IFRS? Or other barter transactions? Learn here!
011: Should we create a provision for major overhauling?
How to deal with anticipated major repairs, maintenance, overhauling, regular replacement of small parts and similar items under IFRS? Find out here!
010: How to test hedge effectiveness under IFRS 9?
How to assess hedge effectiveness prospectively under IFRS 9? Do we need to calculate the hedge effectiveness retrospectively?
009: Can we capitalize a customer list under IFRS?
If you purchase a customer list from someone else, can you actually capitalize it (recognize it as an asset)? Isn’t is just the same as the advertising expense? When can you capitalize a customer list under IFRS? Learn here!
008: What is the lease term of cancellable property rental contracts under IFRS 16?
What is the lease term under IFRS 16? How to account for definite or indefinite lease term with 2-months notice period? Learn here.
007: How to present restricted cash under IFRS?
Advances from your clients received in cash… but you can’t use that cash. That’s just one example of restricted cash. How should you present it under IFRS?
006: How to account for contracts to buy commodities with future delivery (own use)?
When you purchase a commodity with future delivery for fixed price, should you account for it as for derivative under IFRS 9? Or as a purchase of inventories (“own-use” contract)? Find out here with example included.
005: How to account for dividends paid to employees?
The accounting for the dividends paid to employees depends on whether the employee is a shareholder or not; and whether the dividend was paid out to employees in their capacity of shareholders. Learn more here.
004: Can we classify loans with variable interest at amortized cost?
Variable interest with cap/floor, full recourse, inflation-linked interest, collaterals – can you still classify these loans as at amortized cost?
003: Can you capitalize demolition cost under IFRS?
If you acquired land with some old building and you plan to demolish that building, how should you treat the demolition cost and the carrying amount of old building? Can you capitalize it to the new asset? Or expense it? It depends…
002: How to deal with different useful lives of PPE within the group?
How to handle the situation when the parent requires subsidiary to apply different depreciation rates or useful lives than in the local legislation.
001: What closing rate to apply when more rates are available?
What closing rate shall you select under IFRS when more rates are available at the reporting date (mid rate, sell rate, buy rate)? Find out here…