Summary of
„Accounting Principles of IAS“
Course held by Friedrich Spandl
Winter Term 2003 / 2004
Summary written by Günther Füllerer
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1.1
2
2.1
3
INTRODUCTION ..........................................................................................................4
List of Standards ................................................................................................................................................ 4
DEVELOPMENT OF STANDARDS .............................................................................5
Enforcement........................................................................................................................................................ 6
IAS FRAMEWORK.......................................................................................................6
3.1
Contents............................................................................................................................................................... 7
3.2
Addressees of Financial Reports ....................................................................................................................... 7
3.3
Target .................................................................................................................................................................. 7
3.4
Capital Maintenance and Real Capital Maintenance ..................................................................................... 7
1
3.5
balance sheet ....................................................................................................................................................... 7
3.6
Consolidation ...................................................................................................................................................... 7
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ANNUAL REPORT 2002 – VIENNA AIRPORT ...........................................................8
4.1
Financial position ............................................................................................................................................... 8
4.2
Page 75................................................................................................................................................................. 8
4.3
Page 80................................................................................................................................................................. 8
4.4
Page 81................................................................................................................................................................. 8
4.5
Page 97................................................................................................................................................................. 8
5
PROPERTY, PLANT AND EQUIPMENT (IAS 16).......................................................8
5.1
Depreciation........................................................................................................................................................ 9
5.2
Derecognition.................................................................................................................................................... 10
5.3
Example............................................................................................................................................................. 10
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LEASES (IAS 17) .......................................................................................................10
7
IMPAIRMENT (IAS 36)...............................................................................................11
8
INTANGIBLE ASSETS (IAS 38) ................................................................................14
8.1
separate Acquisition ......................................................................................................................................... 14
8.2
business combination, exchange transactions and internally generated assets........................................... 15
8.3
Goodwill ............................................................................................................................................................ 16
8.4
Website Costs (SIC 32)..................................................................................................................................... 16
8.4.1
Intangible assets............................................................................................................................................. 17
8.4.2
Accounting treatment of the different stages ................................................................................................. 17
9
INVESTMENT PROPERTY (IAS 40)..........................................................................18
10 CASH FLOW STATEMENT .......................................................................................18
10.1
CF from Operating Activities.......................................................................................................................... 18
10.2
CF from Investing Activities............................................................................................................................ 19
10.3
CF from Financing Activities .......................................................................................................................... 19
11 FIRST TIME ADOPTION (IFRS 1) .............................................................................19
12 INCOME STATEMENT / BALANCE SHEET (IAS 1).................................................20
12.1
Minimum format of balance sheet .................................................................................................................. 20
12.2
Minimum format of P & L .............................................................................................................................. 20
13 EARNINGS PER SHARE (IAS 33).............................................................................20
13.1
Minority Interests............................................................................................................................................. 20
14 DEFERRED TAXES ...................................................................................................21
15 STATEMENT OF COMPREHENSIVE INCOME ........................................................21
16 NOTES .......................................................................................................................22
17 STATEMENT REPORTING (IAS 14) .........................................................................22
18 PENSION (IAS 19) .....................................................................................................22
19 FINANCIAL INSTRUMENTS .....................................................................................22
19.1
Disclosure and Presentation (IAS 32) ............................................................................................................. 22
19.1.1
Objective................................................................................................................................................... 22
19.1.2
Definitions ................................................................................................................................................ 22
2
19.1.3
19.1.4
19.1.5
Liabilities and equity ................................................................................................................................ 23
Offsetting .................................................................................................................................................. 23
The Disclosure .......................................................................................................................................... 23
19.2
Recognition and Measurment (IAS 39) .......................................................................................................... 24
19.2.1
Initial Measurement of Financial Assets and Financial Liabilities ........................................................... 24
19.2.2
Determination of the fair value ................................................................................................................. 24
19.2.3
Subsequent Measurement ......................................................................................................................... 25
19.2.4
Gains and Losses ...................................................................................................................................... 26
19.2.5
Impairment and Uncollectability of Financial Assets ............................................................................... 26
19.2.6
Financial Assets carried at cost................................................................................................................. 27
19.2.7
Available-for-Sale Financial Assets.......................................................................................................... 27
19.3
Hedging (IAS 39) .............................................................................................................................................. 28
19.3.1
Fair Value Hedging................................................................................................................................... 28
19.3.2
Macro Hedging ......................................................................................................................................... 29
19.3.3
Cash Flow Hedging .................................................................................................................................. 30
20 EXKURS: MEZZANIN-FINANZIERUNG....................................................................32
21 CHANGES IN IAS BY 17TH DECEMBER 2003..........................................................32
22 INSURANCE CONTRACTS .......................................................................................33
23 PROVISIONS (IAS 37) ...............................................................................................34
24 EVENTS AFTER THE BALANCE SHEET DATE (IAS 10)........................................34
25 EMISSION RIGHTS....................................................................................................36
26 SHARE BASED PAYMENT .......................................................................................37
26.1
TRANSFERS OF EQUITY INSTRUMENTS TO EMPLOYEES .............................................................. 37
26.2
RECOGNITION OF EXPENSES ARISING FROM EQUITY-SETTLED SHARE-BASED PAYMENT
TRANSACTIONS .......................................................................................................................................................... 38
26.2.1
MEASUREMENT OF SHARE-BASED PAYMENT TRANSACTIONS .............................................. 38
26.3
MEASUREMENT DATE ................................................................................................................................ 40
26.4
CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS .......................................................... 40
26.5
SHARE-BASED PAYMENT TRANSACTIONS WITH CASH ALTERNATIVES ................................. 41
26.6
SHARE-BASED PAYMENT TRANSACTIONS IN WHICH THE ENTITY HAS THE CHOICE OF
SETTLEMENT............................................................................................................................................................... 41
26.7
DISCLOSURES................................................................................................................................................ 41
26.8
Example............................................................................................................................................................. 42
27 WORDS AND PHRASES...........................................................................................44
27.1
English – German............................................................................................................................................. 44
27.2
German - English.............................................................................................................................................. 47
3
1 Introduction
There are two terms that are used in connection with IAS:
ƒ IFRS (new term): International Financial Reporting Standards:
These standards were developed by the IASC (International Accounting Standards
Committee), which changed to the IASB (International Accounting Standards Board) on 1st
of January 2002. The IASB is independent and is employing 14 people (12 full-time and 2
part-time)
ƒ IAS (old term): International Accounting Standards
The most obvious reason for the development of these standards is the idea of a harmonization of
the various different European national standards. The structure of the balance sheets across Europe
is similar but presentation and measurement are very different from country to country.
Therefore due to regulation 1606/2002 7000 (listed) companies have to set up consolidated balance
sheet according to this regulation from 01-01-2005. Listed companies are companies having bonds.
However the Austrian HGB is still important for non-listed companies. Furthermore it will be
possible for non-listed companies with international relationships to choose IFRS standards
voluntarily.
Apart from that the 4th and 7th directive have been changed and due to that group accounts have
been established (→ amendment has been made). A directive has to be confirmed by each local
government.
1.1
List of Standards
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IAS 1: Presentation of Financial Statements
IAS 2: Inventories
IAS 7: Cash Flow Statements
IAS 8: Net Profit or Loss for the Period, Fundamental Errors and Changes in Acco...
IAS 10: Events After the Balance Sheet Date
IAS 11: Construction Contracts
IAS 12: Income Taxes
IAS 14: Segment Reporting
IAS 15: Information Reflecting the Effects of Changing Prices
IAS 16: Property, Plant and Equipment
IAS 17: Leases
IAS 18: Revenue
IAS 19: Employee Benefits
IAS 20: Accounting for Government Grants and Disclosure of Government Assistance
IAS 21: The Effects of Changes in Foreign Exchange Rates
IAS 22: Business Combinations
IAS 23: Borrowing Costs
IAS 24: Related Party Disclosures
IAS 26: Accounting and Reporting by Retirement Benefit Plans
IAS 27: Consolidated Financial Statements
IAS 28: Investments in Associates
IAS 29: Financial Reporting in Hyperinflationary Economies
IAS 30: Disclosures in the Financial Statements of Banks and Similar Financial I...
IAS 31: Financial Reporting of Interests in Joint Ventures
IAS 32: Financial Instruments: Disclosure and Presentation
IAS 33: Earnings per Share
IAS 34: Interim Financial Reporting
IAS 35: Discontinuing Operations
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•
•
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IAS 36: Impairment of Assets
IAS 37: Provisions, Contingent Liabilities and Contingent Assets
IAS 38: Intangible Assets
IAS 39: Financial Instruments: Recognition and Measurement
IAS 40: Investment Property
IAS 41: Agriculture
2 Development of Standards
The IASB takes a topic matter (e.g.: share based payments) and tries to answer the question: How
have to be these stock options accounted?
IASB
14 members, who meet on a regular basis to decide on
accounting issues and form opinions
exposure draft (ED)
comment period
ISAB discusses received comments
and publishes standads
EU
Has to transform these standards in European
legislation and the way of implementing is
discussed in
EFRAG
ARC
(European Financial Reporting Advisory
Group)
(Accounting Regulation Committee)
technical level – no national agency
task: discussion of proposals (Is this an
appropriate standard in Europe?) and creation
of a draft comment letter for the ARC
political level
similar to:
ƒ FMA (Finanzmarktaufsicht)
ƒ Institut der Wirtschaftsprüfer
EFRAG
issues endorsement or not
The European Parliament is only needed, when the ARC does not come to a conclusion.
All IFRS are translated in all languages, but only the standard itself is translated – implementation,
guidance, conclusions, etc. are only available in English.
The standards are supranational law and therefore supersede local laws.
On 29-09-2003 all IAS standards except IAS 32 and 39 were endorsed and became part of the
European law. After 01-01-2007 no European company is allowed to use US-GAAP, Australia,
New Zealand, Hong Kong and Singapore will also use IAS:
US-GAAP
IAS/ IFRS
rule based
principle based
If conditions are met → do that and that
If that and that is material → then do
5
companies near to USA use it
companies near to Europe use it
process of converging is taking place
Apart from the standards there are interpretations that support understanding and interpretation of
the different standards:
SIC (old term – Standing Interpretations Committee) and IFRIC (new term – International Financial
Reporting Interpretations Committee) are issued by IASB.
The IFRS does not regulate how to present the P&L statement.
2.1
Enforcement
The CESR (Committee of European Security Regulators) guarantees that the European law is met
by the companies. It has 25 members, everything kept in English
3 IAS Framework
The IAS Framework stands above the different standards and interpretations:
ƒ Recognition: What is an asset? Is it recognized?
ƒ Matching
e. g:
Austrian law
revenue
100 € today
by selling 10 items
production cost
30 € today
R & D cost
500 € in the past
not capitalized in Austria
→ profit of 70 € today and losses in the past
profit
prudence: never know for sure, if it is possible to sell the
estimated 100 items
loss
IAS: estimated to sell 100 items → 5 € per item R & D cost →
revenue
100 €
- production cost
30 €
- R& D cost (5 times 10)
50 €
profit by IAS
20 €
→ R & D cost from the past are capitalized
Example: 100 CU consolidation IAS
balance sheet
machines
20 equity
30 •
building
20 liabilities
40
•
receivables
30
•
70
70 •
balance sheet
machines
25 equity
building
30 liabilities
receivables
25
building bought 40 years ago, there was no infrastructure → today
there is perfect infrastructure → measurement → worth 30
machinery can be used by 10 years → worth more
receivables: doubt on costumer → value reduced
liabilities are worth 38
42 goodwill is calculated by subtracting the equity of 42 from
38 100 → 58
6
80
US-GAAP:
balance sheet
machines
25 equity
building
30 liabilities
receivables
25
R
25
CL
10
115
80
67 R … Research Results
48 CL … Customer List
→ goodwill of 33
115
3.1
Contents
¾ Aim of financial reports
¾ Benefits of financial reports
¾ Definitions, ability of recognition and measurement
3.2
Addressees of Financial Reports
¾ Investors
¾ Employers
¾ Creditors
¾ Suppliers
¾ Customers
¾ Government
¾ Public
3.3
Target
¾ Information about financial situation, profitability and changes in equity
¾ Ability of company to generate cash and cash equivalence and determing when whey are going
to arise
¾ Financial status of entity is dependent on …
3.4
Capital Maintenance and Real Capital Maintenance
Real Capital Maintenance: includes inflation → representation o fair market prices
IFRS are in between those two concepts
3.5
balance sheet
P & L (ordinary P & L account and changes in equity)
cash flow statement
3.6
Consolidation
In the past US-GAAP used the pooling interest method, but since the fatal crash of EMRON USGAAP switched to the purchase accounting (same in IAS) → There is nearly no difference between
Austrian HGB and IAS:
• Everything has to be valued at fair value.
• Self-generated patents and R&D can be capitalized.
7
4 Annual Report 2002 – Vienna Airport
4.1
Financial position
An asset is a resource which is controlled by an entity resulting from the past and which is expected
to gain benefit for the enterprise. It needs control, not property. That’s the reason the reason why a
lessee will capitalize a rented building.
A liability is an obligation that exists now and is resulting from events in the past and is expected to
cause an outflow of resources.
Assets and liabilities have to be reliably measurable – otherwise no recognition.
4.2
Page 75
The Consolidated Statement of Capital and Reserves has to be included due to IFRS.
2005: CESAR: present 2003/2004 due to local GAAP → 2004 new GAAP (IAS) additionally →
2005 only new GAAP (IAS)
Page 80
4.3
IAS 18 does not rule revenue recognition very detailed, therefore the 4th and 7th directive have to be
considered which means: If you find a regulation in IAS 18 for your problem, you have to apply it,
if there is no regulation for your problem in IAS 18 you have to take your local GAAP in
consideration.
4.4
Page 81
permanent differences
permanent tax savings
e.g.: former IFB
Taxes on income
timing differences
subsidy
e.g.: accelerated depreciation
quasi tangent differences
does not exist in Austria
Germany: Sonderposten mit
Rücklagenanteil
4.5
Page 97
Audit opinion: Apart from IAS the International Audit Standards (ISA) and International Valuation
Standards.
5 Property, Plant and Equipment (IAS 16)
Tangible fixed assets other than biological assets (IAS 41 Agriculture), mineral Rights. The term
PPE includes property in construction or development for future use as Investment property.
•
•
Tangible fixed assets are held by an entity for use in the production or supply of goods or
services, for rental to others, or for administrative purposes and are expected to be used during
more than one period.
Cost is the amount of cash or cash equivalents paid or the fair value other consideration give to
acquire an asset at the time of its acquisition or construction (if payment is deferred cash price
equivalent except alternative treatment IAS 23 –capitalisation of directly attributable) and
includes:
o Purchase price, including import duties and non-refundable purchase taxes, after deducting
any trade discounts and rebates (in case of exchange: fair value of asset given up, only if
more clearly than fair value of asset received; if non reliably than of asset given up) and
o directly attributable cost to bring the asset to the location and working condition necessary
for it to be capable of operating in the manner intended by management, including testing
(after deducting the net proceeds from selling any items produced –like eg. samples)
o cost of employee benefits, site preparation, delivery and handling costs, installation and
assembly costs, professional fees and costs to dismantle and remove an asset and restore its
8
•
•
•
site (with corresponding provision under IAS 37), see also IFRIC 2 (capitalisedat inception
or later, in this case also depreciation of land!))
o Capitalisation ceases when PPE is in the location and working condition necessary; costs
incurred in using or redeploying assets are excluded (distinct from improving the assets’
standard of performance.
o Costs not a component of PPE are costs of opening a new facility, introducing a new
product, conducting business in a new location, SGA
o Government grants may either be deferred income are deducted from the carrying amount of
the asset (IAS 20)
o income and expenses of incidental operations are part of P&L (use of car park until
construction)
o in case of finance leases fair value of if lower PV of future lease payments (finance leases –
IAS 17)
o Recognition when it is probable that future economic benefits associated with the asset will
flow to the entity and cost or fair value can be measured reliably
Replacing and renewing of a component–capitalised, replaced item written off (including air
craft maintenance)
Subsequent expenditure shall be added to the carrying amount when, and only when, it is
probable that the expenditure increases the future economic benefits, embodied in the asset in
excess of its performance assessed immediately before expenditure is incurred (e.g. extension of
remaining useful lifetime, increase capacity, upgrade in quality or reduction of cost) –if asset
was written down for impairment expenditure is capitalised to the extent impairment can be
reversed. Immaterial expenditure in P&L
Subsequent measurement at cost (benchmark treatment) or fair value (alternative treatment), in
both cases less accumulated depreciation –market value according to appraisals, in absence of
market replacement cost; revaluations annually in volatile markets, otherwise all 3 to 5 years; all
assets of a class shall be revalued simultaneously; Result shall be credited to equity as
revaluation surplus (except it reverses a revaluation expense of the same asset recognised as
expense, than it is income); when carrying amount is decreased as result of revaluation
deduction from revaluation surplus, if it exceeds the credit balance –rest expense. When
revalued asset is disposed of, balance of revaluation surplus directly into retained earnings (not
via P&L)
IFRS 1 FTA–carrying amount of asset of PPE before FTA (carrying amount according to local
GAAP including revaluation is regarded as deemed cost provided that close to fair value or
according to price index); same is true for event driven revaluations like IPO or privatisation
5.1
•
•
•
•
Depreciation
allocation of the depreciable amount (cost / fair value less residual value) on a systematic basis,
method used shall reflect the pattern entity expects future economic benefits to be
consumed(factors to be considered include usage, wear and tear, technical or commercial
obsolescence, legal or similar limits
Residual value is amount currently expected from disposal less related cost at end of useful life
–to be determined if material –amendments of residual value are accounted prospectively as an
adjustment to future depreciation
depreciation is recognised even if the fair value exceeds the carrying amount –depreciation
charge is an expense (except when it constitutes part of the cost of another asset –e.g.
depreciation of manufacturing plant and equipment is included in cost of conversion of
inventories (IAS 2, depreciation does not stop when asset becomes temporarily idle.
useful life should be reconsidered annually –change leads to adjustments of current and future
periods only, the same is true if depreciation method has to changed (reviewed annually) –
9
change of an accounting estimate. If recoverable amount is below carrying amount –
impairment (IAS 36)
5.2
on
•
•
•
Derecognition
disposal or
when NO future economic benefits expected from its use or disposal (included in P&L);
if payment of consideration is deferred, consideration received (less carrying amount = gain or
loss on disposal) is recognised at cash price equivalent. Difference between nominal amount and
cash price equivalent is recognised as interest income
According to ED 4 an entity shall classify a non-current asset (like PPE) as available for sale
• if its carrying amount will be recovered principally through a sale transaction rather than trough
continuing use.
• Measurement at the lower of its carrying amount and fair value less costs to sell –difference:
impairment loss.
• Asset can be part of a group of assets to be disposed of (disposal group). No depreciation while
asset is classified as held for sale; interest and other expenses continue to be recognised
• if asset is reclassified than expense in all periods presented)
• sale must be highly probable, expected to qualify for recognition within 1 year (at the latest at
balance sheet date!), except a delay is caused by reasons beyond management's control
• other criteria see B1 (management must have authority to approve the action, has to commit
itself to a plan to sell, asset is available for immediate sale its present condition, active
programme to locate a buyer has been launched, asset is being actively marketed unlikely that
there will be significant changes
• assets held for sale are shown in a separate line item–related liabilities of a disposal group
too(details of assets classified as available for sale
Several items of disclosure
Example
5.3
An entity bought a machine at 100. Now the fair value of this machine is 200.
The first measurement is at cost → 100.
Subsequent measurement is also at cost minus depreciation (usual way). Apart from that, IAS 16
gives the possibility (just an option) to measure at FV. The difference between cost and fair value is
presented on the liability (might be part of equity).
6 Leases (IAS 17)
operating lease
financing lease
leased asset is capitalized with the lessor and the needs capitalization of leased asset with the
lessee has an periodically expense
lessee:
→ lessor has a receivable
→ lessee capitalizes an asset and depreciates it
The value that is recognised is the PV of the
future lease payments calculated at the interest
rate in the lease = “internal rate of return”
direct financing lease
sales type lease
New IFRIC 3 contains additional forms of contracts that would then qualify for leasing such as
outsourcing, etc.
difference: never rent a building, always lease it
accounting for “Miete”: 2 models (distinction comes from tax law)
10
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operating leases
financing leases (property is transferred to lessee where the asset is capitalized; the
lessor only shows a receivable)
distinguish between land (= operating lease) and building (might be a financing lease)
rent: you don’t rent an apartment if it’s your major apartment – you rent land!
apartments are shown as shares not as tangible asset ⇒ IAS 32 + 39 (not lease)
entry: building at cost (=Minimum Lease Payments) / liability
at inception they have the same value
a car of 30.000€; 15.000 km /year; ND 5y
how does the leasing company calculate the lease?
a car of 5y and 75.000km has a residual value of 12.000€ (sell)
down payment 10.000€
20.000
principal
interest
first lease instalment 100
-2
98
-2,5
97,5
interest rate
PV of the total of minimum lease payments + residual value: you calculate it by using the implicit
interest rate in the lease ( 0 = PV )
the first lease payment of 100 includes interest + principal:
98, 5 interest expense
1.5 liability
bank 100
the leasing company has the PV of accounts receivable
other entries: bank
unearned income (accrual matching principle)
Finanzierungseffekt: UST erhalte ich, aber VST erst später
7 Impairment (IAS 36)
•
•
•
•
An impairment loss is the amount by which the carrying amount of an asset or a cash-generating
unit exceeds its recoverable amount. Therefore an asset is impaired when the carrying amount
of the asset exceeds its recoverable amount.
Recoverable amount is the higher of its net selling price and value in use. Value in use is the PV
of the future CFs expected to be derived from an asset or a cash-generating unit.Net selling
price is amount obtainable from the sale of an asset or cash-generating unit in an arm‘s length
transaction between knowledgeable willing parties less cost of disposal.
A cash-generating unit is the smallest identifiable group of assets that generates cash inflows
from continuing use that are largely independent from other assets or groups of assets.
At each balance sheet date an entity shall assess whether there is any indication that an asset my
be impaired. Irrespective of indications an entity shall annually:-estimate the recoverable
amount of an intangible asset with an indefinite useful life or not yet available for use and-test
goodwill acquired in a business combination for impairment
11
•
Indications shall be considered from external and internal sources of information.
Measurement of the Recoverable Amount:
How to determine the net selling price and the value in use?
• From an individual asset, if individual asset does not generate independent CFs, then from cash
generating unit
• Best basis for net selling price is binding sale agreement, in absence net selling price is based on
the best information available to reflect the amount that an entity could obtain at the balance
sheet date for the disposal of an asset.
Value in use
• Estimate of the future CFs the entity expects to derive from the asset (management forecast –
best estimate taking into account both past actual CFs and management’s ability to forecast CFs
reliably, based on the most recent budgets and forecasts fora maximum of five years, beyond
that period extrapolating the projections using steady or declining growth rates) –shall include
CFs from the continuing use of the asset at its current condition (no future restructuring as long
as company does notbecome committed to such a restructuring or CAPEX to improve
condition),cash outflows necessary to generate such CFs and net CF to be received for the
disposal)
• Expectations about possible variations and timing of CFs
• Time value of money –represented by risk free rate of respective currency (pre-tax)
• The price for bearing the uncertainty (risk premium in discount rate)
• Other factors such as illiquidity, but CFs shall not include financing and taxes
Recognition of an impairment loss:
In the P&L, unless asset is carried at revalued amounts, then treated as revaluation decrease
(reduction of revaluation reserve)
• After recognition of impairment loss, depreciation/amortisation charged adjusted in future
periods to allocate the asset’s revised carry amount less residual value on a systematic basis
Cash-Generating Units:
• If market exists, than output that is used entirely internally is sufficient for creation of cashgenerating unit
• The carrying amount of a CGU includes the carrying amount of only those assets that can be
attributed directly or allocated on a reasonable an consistent basis and does not include any
liabilities, unless the recoverable amount of the CGU unit cannot be determined without
• Goodwill acquired in a business combination is allocated to one or more CGUs. (always the
smallest CGU to which portion of the carrying amount of goodwill can be allocated on a
reasonable and consistent basis = lowest level of monitoring by management but shall not be
larger than a segment in IAS 14);such CGU might include several smaller CGU
• Goodwill tested on lowest level management is monitoring –allocation to CGU at the latest
before the end of the first annual reporting period beginning after business combination
Goodwill so allocated is also part of carrying amount when determining the gain or
loss on disposal
If CGU is impaired than determine whether goodwill is impaired (implied value = excess
of recoverable amount of CGU over net fair value of the identifiable assets, liabilities,
contingent liabilities the entity would recognise if it acquired that CGU)
Impairment Test can be performed at any time provided that test is performed at the same
time every year. Corporate assets to be allocated to CGU, if impossible test for impairment
on a higher level necessary too
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Allocation of impairment:
• First to goodwill (until carrying amount = implied value)
• Then on a pro-rata basis to all assets in a CGU
• Carrying amount shall not be reduced below zero.
Disclosures!
Reversal of impairment
• shall be recognised in P&L except for revalued amounts (including CGU except goodwill) with
depreciation adjusted for future periods.
• Reversal of impairment of goodwill is prohibited.
Balance Sheet
Equity IAS 1
Fixed assets
- tangible IAS 16 + IAS 40
Participation
Investment in Subsidiaries
Consolidation IAS 27
At equity IAS 28
Joint Ventures IAS 31
Business Combinations IAS 22 (ED 3)
- intangible IAS 38 (valuation, presentation +
measurement)
- impairment IAS 36
Current assets
- inventories IAS 2
IAS 23 (borrowing costs, POC)
IAS 11 (long term contracts)
- receivables + available for sale IAS 32, 39
ED 6 (hedging)
Leasing IAS 17
Provisions IAS 37
Liabilities IAS 32, 39
fixed assets: tangible – what should be capitalized?
depreciation
intangible – only amortized if useful life is definite
if indefinite: no amortization, no amortization in good will
net selling price is lower than book value ⇒ problem: Wertberichtigungsbedart = impairment!!
IAS 36: find out, if there is impairment or not
we are a purchaser of a company
we get:
house
200 equity
(carrying amount)
liabilities
receivables
300
200
300
we pay 1000 –why??
because we don’t buy assets of company, we buy future CF!
13
first we only offer the current value
prospect: rental income will increase
⇒ we are ready to pay more than just the present value of current surplus!
1000 = present value of future CF
perhaps we are not able to increase income, but a third party finds possibilities; the third party will
only buy it if he can generate value: it is ready to pay 1300
the valuation is done on a daily basis
difference between current value and actual price = good will
we find out that the house is worth 300 (=FV); the price is 1000
good will
real estate
receivables
700 equity
300 payable
300
1000
300
you don’t make an impairment test, but an allowance bei UV (Ford.); but you still say: receivable is
impaired
when we talk about impairment test, we talk about assets!
allowance depends on: held for trading, available for sale, held to maturity, loan or receivable
originated
each balance sheet date there is a CF test:
recoverable amount:
- net selling price
- value in use
real estate appraisal (=Liegenschaftsbewertung)
⇒ problem in calculating value in use:
take the original cash generated unit but 2 years later
the company now has a new financial plan; the results are influenced by current management
⇒it isn’t the original company anymore
IAS 36 is not accepted by IASB for good will: good w. isn’t amortized anymore; it is only subject
for impairment test (because sometimes good w. is 50% of balance sheet!)
8 Intangible Assets (IAS 38)
8.1
•
•
separate Acquisition
An intangible asset is an identifiable non-monetary asset without physical substance. •An asset
is a resource controlled by an entity as a result of past events from which future economic
benefits are expected to flow to the entity
Identifiability –to distinguish from goodwill (if acquired represents a payment made by the
acquirer in anticipation of future economic benefits from assets that are not capable of being
individually identified and separately recognised.
14
•
•
•
Identifiable –means separable, capable of being separated or divided from the entity and sold,
transferred, licensed, rented, exchanged individually or together with a related contract OR –
arises from contractual or other legal rights, regardless of transferability and separability
Recognition: it is probable that the future economic benefits attributable to the asset will flow to
the company (always satisfied for separately acquired intangible assets) and the cost of the asset
can be measured reliably
Measurement: initially at cost (purchase price and directly attributable expenses); capitalisation
ceases when an intangible asset is in the working condition necessary for it to be capable of
operating in the manner intended by management
8.2
business combination, exchange transactions and internally generated assets
• Cost is its fair value at acquisition date (recognition criterion always satisfied, value reflects
probability that CF will flow into the company
• Identifiable –separable or legal/contractual right
• In a business combination all acquiree’s intangible assets, excluding assembled workforce
irrespective of whether those assets had been recognised in the acquiree`s financial statements
before the business combination!!!
• Therefore all of the acquiree`s in-process research and development projects that meet the
definition of an intangible asset (if meets the asset definition, is identifiable)!!!
• Measurement: quoted market prices, otherwise what would I have to pay?
In exchange transactions: Cost of the intangible asset given up!
Internally generated assets
• Internally generated goodwill shall no be recognised.
• Internally generated brands, mastheads, publishing titles, customer lists etc. shall not be
recognised
• Research -no recognition as asset, cost expensed in P&L
development cost -shall be recognised
• if technical feasible –available for use or sale AND
• it is intended to complete the intangible asset AND
• ability to use or sell can be demonstrated AND
• generation of probable future CF can be demonstrated AND
• technical, financial resources are available for completion AND
• demonstration of ability to measure the expenditure attributable to the intangible asset during
development
Total R&D cost expensed to be disclosed in the notes!
Cost –no reinstatement of expenditure recognised as expenses in prior years
Directly attributed and necessary to creating, producing and preparing the asset for it to be capable
of operating in the manner intended by management
Subsequent expenditure on an intangible asset
• To be expensed unless probable increase of future economic benefits in excess of original
assessed standard of performance and expenditure can be measured and attributed reliably
• In process R&D acquired separately or in a business combination shall be treated like R&D
Subsequent measurement
• •Benchmark treatment: at cost less accumulated amortisation and accumulated impairment
losses
15
•
Alternative treatment: fair value determined by reference to an active market; revaluation shall
be made with sufficient regularity –if fair value than whole class of assets at fair value
(revaluation reserve in equity, decrease in value to be expensed unless cannot be charged to
revaluation surplus; if expensed than reversal shall be recognised as income to the same extent
Useful life
• Finite (consequence: amortisation from date when asset is available for use, residual value = 0
except active market or commitment by third party to acquire) or
• indefinite (not infinite!) (consequence: no amortisation, impairment only)
indefinite when based on an analysis of all of the relevant factors there is no foreseeable limit on the
period over which the asset is expected to generate net CF for the entity
Contractual or legal rights: maximal period of this rights or shorter; if renewal option than useful
life shall include the renewal period only if there is evidence to support renewal without significant
cost
8.3
Goodwill
Goodwill is part of this standard and including the results of the current ED goodwill is recognised.
The value that is recognised is calculated by subtracting the purchase price from the fair value of
net asset.
It is measured at inception and as under Austrian HGB it is only allowed to recognise a derivative
goodwill. There is no amortization possible due to the fact that the lifetime is indefinite but the
entity has to perform an annually impairment test according to IAS 36. This impairment test is
based on so-called cash generating units (CGU) and there are two different methods, namely the
bottom-up or bottom-down test.
8.4
Website Costs (SIC 32)
SIC-32 concludes that an internally developed Web site is subject to the requirements of IAS 38,
Intangibles, and prescribes the accounting treatment for various stages of Web site development and
operation.
An enterprise may develop and operate its own web site for either internal or external use.
for external access eg. to promote/advertise an enterprise’s own products and services, provide
electronic services, and sell products and services
for internal access eg store company policies / customer details, and search relevant information
The stages of a web site’s development can be described as follows:
Planning – includes undertaking feasibility studies, defining specifications, evaluating alternative
products and suppliers, and selecting preferences.
Application and Infrastructure Development - includes obtaining a domain name, purchasing
and developing hardware and operating software, installing applications on the web site and stress
testing.
Graphical Design Development - includes designing the appearance of web pages
Content Development – all information on the web site, either textual or graphical in nature,
uploaded before the completion of the web site’s development. eg. Information about an enterprise,
products;
Once development of a web site has been completed, the Operating stage begins. During this
stage, an enterprise maintains and enhances the applications, infrastructure, graphical design and
16
content of the web site. eg. updating graphics, revising content, registering with search engines,
backing up data;
SIC 32 does not apply to expenditure on purchasing, developing, and operating hardware of a web
site. Such expenditure is accounted for under IAS 16, Property, Plant and Equipment.
Expenditure on an Internet service provider hosting the web site, the expenditure is recognised as an
expense when incurred (under IAS 8.7) and the Framework when the services are received.
Expenditure on the development or operation of a web site for sale to another enterprise.
Leases (IAS 17) - when a web site is leased under an operating lease, the lessor applies this
Interpretation. When a web site is leased under a finance lease, the lessee applies this Interpretation
after initial recognition of the leased asset.
Expenditures incurred for development of a web-site primarily for promoting and advertising its
own products and services should be recognised as an expense when incurred.
8.4.1 Intangible assets
IAS 38.7: intangible asset is an identifiable non-monetary asset without physical substance held for
use in the production or supply of goods and services, for rental to others, or for administrative
purposes (eg. Software -> web site).
Expenditure on an intangible item have to be recognized as an expense when incurred (IAS 38.56),
unless it forms part of the cost of an intangible asset that meets the recognition criteria in IAS
38.18: “The recognition of an item as an intangible asset requires an enterprise to demonstrate that
the item meets the:
a) definition of an intangible asset (paragraph 7-17)
b) recognition criteria set out in this standard (paragraph 19-55).
Web site cost recognized as an internally generated intangible asset comprises all expenditure
that can be directly attributed, or allocated on a reasonable and consistent basis, to creating,
producing and preparing the asset for its intended use.
An intangible asset always has a finite useful life (IAS 38.84), so a web site that is recognised as an
asset is amortised over the best estimate of its useful life (IAS 38.79). The useful life of web sites
will be short (IAS 38.81).
8.4.2 Accounting treatment of the different stages
Planning
Expenditure on research has to be recognized as an expense when incurred. This implements that
expenditure incurred in the Planning stage of a web site’s development are recognised as an
expense when incurred.(IAS 38.42 and IAS 38.44)
Application and Infrastructure Development stage, the Graphical Design stage and the Content
Development are treated in the same way. They are similar in nature to the development phase in
IAS 38.45 - .52:
Intangible asset arising from the development phase can only be recognised if they fulfil certain
criteria (6 criteria). One is to demonstrate how a web site (intangible asset) will generate probable
future economic benefits (IAS 38.45(d)). These benefits may include revenue from the sale of
products or services, cost savings, or other benefits resulting from the use of the asset by the
enterprise. (IAS 38.17) Therefore, future economic benefits from a web site may be assessed when
the web site is capable of generating revenues.
Expenditure incurred in these stages should be included in the cost of a website. They should be
recognised as an intangible asset in accordance with SIC 32 when the expenditure can be directly
attributed to preparing the website for its intended use.
17
Content Development
A web site that is only developed for advertising and promoting an enterprise’s own products and
services is not an intangible asset because the enterprise cannot demonstrate their future economic
benefits. This expenditure is recognised as an expense when incurred (IAS 38.57(c))
Operating
In the operating stage expenditure to enhance or maintain an enterprise’s own web site is recognised
as an expense when incurred (unless it meets the recognition criteria in IAS 38.60:” …unless a) it is
probable that this expenditure will enable the asset to generate future economic benefits in excess
of its originally assessed standard of performance, and
b) this expenditure can be measured and attributed to the asset reliably.
If these conditions are met, the subsequent expenditure should be added to the cost of the intangible
asset (web site)
Other expenses incurred such as training of employees to operate the web site and other general
overhead expenditure that can not be directly attributed to preparing the website should be
recognised as an expense when incurred under IAS 38.53 - .58
9 Investment property (IAS 40)
•
•
•
•
•
Is property (land or a building or part of) held to earn rentals or for capital appreciation or both
(insignificant own use allowed)
Creates cash-flow largely independently of the other assets held by an entity–this distinguishes
it from owner-occupied property (IAS 16 applies)
ownership or finance lease (both always) or operating lease (if fair value model is used)
not held for sale
If property houses subsidiaries it can be investment property on the individual company level
and an owner-occupied property in the consolidated statement
For some situations there are no standards → take a look into US-GAAP
10 Cash flow Statement
The CF-Statement has to be presented by all companies.
FASB95
operating CF
IAS 7
financing CF
HFA1/95
investing CF
10.1
CF from Operating Activities
Jahresüberschuss/ Jahresfehlbetrag
+ Abschreibung
+ Dotierung / Auflösung langfristiger Rückstellungen
Cash Earnings
+ / - Veränderungen im Working Capital
building
inventory
A/R
receivables
cash
1
31.12.2001
350 equity
120 provisions
200 bank loan
50 A/P
30
200
50
350
150
1
building
inventory
A/R
receivables
cash
31.12.2002
380 equity
100 provisions
280 bank loan
50 A/P
20
250
60
320
200
new windows → capitalization of 50 and 20 depreciation → + 30
18
750
100
+ 20
+ 10
130
- 80
+ 20
+ 50
120
750
830
830
profit ( but A/R went up → 80 in cash)
depreciation
long-term provision
cash earnings
A/R
Inventory (reduced from 120 to 20)
A/P
CF from operating activities
10.2
CF from Investing Activities
building – 50 (no investment in A/P) → CF from investing activities = - 50
10.3
CF from Financing Activities
- 30
instalments
- 50
dividend
-80
CF from financing Activities
The total CF is – 10 → cash has been reduced by 10.
The term cash equivalent includes investments with an expiration of less than 90 days.
Exchange: hingegebener Wert, not asset received like in Austrian HGB or EStG
Incidental income: income from testing machines, etc. is not relevant for the P & L but is reducing
the cost of the machines
Another example:buying real estate and build up car park. The construction of the planned
skyscraper will last about 5 years → if the construction of the skyscraper has started the car park
generates incidental income and reduces the construction cost of the skyscraper, if the construction
has not yet started the profit of the car park is presented in the P & L
Error correction: A company builds a nuclear power plant in a third world country on the
technological level of 2003.The environmental legislation in this country is very liberal and
therefore no further technological improvement is considered to be implemented. However after 5
years the government of this country introduces a very strict legislation concerning use and disposal
of nuclear power plants.
11 First Time Adoption (IFRS 1)
Austria and Germany will adopt this standard in 2004, whereas other countries that are now under
US-GAAP have two years longer for adoption. IFRS 1 FTA replaced SIC 8 (very restrictive) and is
much more liberal and therefore makes adoption easier: Measurements can be continued under local
GAAP which means that comparability between the European Countries will only be reached over
time.
Due to the date of transition regulation in IFRS 1 listed companies that are obligated to use IAS at
1st January 2005, they have to set up IAS-conform comparability values from 1st January 2004 on.
In principle estimations such as useful lifetime, … that were made under local GAAP can also be
used under IAS, if this estimations do not suffer from drastic errors. The book values of the last
balance sheet are regarded as deemed cost which is regarded to be equal to the measurement under
IFRS.
The use of IAS basically means that these standards have to be applied retrospectively and there is
no time limit for this “look back period”. However there are some exemptions of this retrospective
19
regulation and therefore prospective: (consolidation IAS 22, defined benefit plans IAS 19, hedge
accounting…)
Furthermore it is worth mentioning, that IFRS does not want to replace the local GAAPs so far,
because this step now is nearly possible because killing the local GAAPs by replacing them by IAS
automatically kills the tax regime in most European countries.
12 Income Statement / Balance Sheet (IAS 1)
12.1
Minimum format of balance sheet
Intangible assets
PPE
Equity method investments
Financial assets
Inventories
Trade receivables
Cash & cash equivalents
Deferred tax asset
Issued capital
Reserves
Minority Interest
Provisions
Trade Payables
Noncurrent liabilities
Deferred lax liability
12.2
Minimum format of P & L
IAS one does not contain any strict scheme how the P & L has to look like, it only gives some basic
requirements:
The P & L has to be set up either in
• Total cost format, or
• Cost of goods sold (COGS) format:
Sales
- COGS
Margin
SGA
Profit
13 Earnings per Share (IAS 33)
EPS (earnings per share)
no calculation of earnings
13.1
fully diluted EPS
potential shares included (e. g.: convertible
bonds)
Minority Interests
Parent
company
3rd party
10 %
90 %
Subsidiary
participation
fixed assets
current assets
Parent
50 equity
10
40
100
100
100
fixed assets
current assets
Subsidiary
30 equity
50 liabilities
80
20
60
80
20
Business combination (IAS 22), which will be replaced by IFRS 3:
• Goodwill of 30 (due to 50 – 20)
• Revaluation of all assets and liabilities of Subsidiary with fair value
Subsidiary
fixed assets
40 equity
current assets
50 liabilities
in process R&D
10
100
40
60
100
In a business combination it is possible to capitalize some additional intangible assets (patents or
own R&D projects.
Consolidation
goodwill
10 equity
100
fixed assets
50 liabilities 60 This would mean that the Subsidiary is owned by Parent by 100%, which is
current assets
90
not true → minority interest has to be included
in process R&D
10
160
160
goodwill
fixed assets
current assets
in process R&D
Consolidation
10 equity
50 minority interest
90 liabilities
10
160
96
4 10 % of the equity of the Subsidiary belong to the minority → 10%
60 times 40 = 4
160
What is minority? – Only participation is presented at equity. If the distribution of shares is equal
50% to 50% → pro rata consolidation
Due to the concept of substance over form it is possible to do not own 1 share but have a minority
interest of 90% due to control of the company (e.g. being responsible for procurement, …)
14 Deferred Taxes
An entity has bought 100 shares of company A at 10€ each. → investment of 1000€. Shares are
financial instruments according to IAS 39 and if they are held for trading they are measured at fair
value and therefore fair value changes are shown in the P&L.
At the end of the year the entity’s shares are worth 16€ each → whole package is 1600 € worth.
investment 1600
equity
1000
profit
600
Assuming of having a tax rate of 20% and a profit tax base of 500, there is a tax liability of 100€.
However the profit due to IFRS is 1100 € and therefore we have a fictious tax liability of 220. The
difference between 220 and 100 are a deferred tax liability of 120.
15 Statement of Comprehensive Income
Includes change in equity
CF-Hedge → equity
Fair value Hedge → P&L
Securities → P&L
Securities held to maturity → equity
The revaluation can be up (revaluation reserve → equity) or down (P&L)
Banks:
21
•
•
deposits (Spareinlage): measured at cost → only CF hedges → fluctuation in equity
investments: measured at FV → FV hedges → stable equity → fluctuation of profit
16 Notes
There is no IFRS standard for the notes, there exists only the 4th and 7th directive. The MD&A
(Management discussion and analysis) will probably become part of the financial statement.
17 Statement Reporting (IAS 14)
There are primary (geographical or business) and secondary (geographical or business) segments.
Apart from that the total annual of assets (IAS 34 obligatory from 01-01-2006) has to be disclosed.
The following points need not to be disclosed:
• Segment liabilities
• Capital expenditure
• Segment revenue/ expenses
18 Pension (IAS 19)
A pension is a future obligation for the company and it is calculated until the employee retires:
defined benefit plan
defined contribution plan
Contains the pension and severance payment the certain percentage employee has to pay in
employee receives.
pension fund and the company is in charge of
allocation of the fund’s money
is not considered in the balance sheet
19 Financial Instruments
19.1
Disclosure and Presentation (IAS 32)
19.1.1 Objective
This Standard prescribes requirements for presentation of financial instruments and identifies the
information that should be disclosed about them.
IAS 32 addresses the objective in essentially three ways:
1) Clarifying the classification of a financial instrument, from the perspective of the issuer, into
liabilities and equity.
2) Prescribing conditions under which financial assets and liabilities should be offset in the balance
sheet.
3) Requiring a broad range of disclosures about factors that affect the amount, timing and certainty
of an entity’s future cash flows relating to financial instruments and the accounting policies
applied to the instruments.
19.1.2 Definitions
A financial instrument is a contract that results in a financial asset of one entity and a financial
liability or equity instrument of another entity.
A financial asset is
8 cash,
8 a contractual right to receive cash or another financial asset from another entity,
8 a contractual right to exchange financial instruments with another entity under conditions that are
potentially favourable, or
8 an equity instrument of another entity.
22
e.g.: cash, accounts receivable, all securities, part B of balance sheet
A financial liability is
8 a contractual obligation to deliver cash (A/P / bank X) or another financial asset (A/P / B/E) to
another entity, or
8 a contractual obligation to exchange financial instruments with another entity under conditions
that are potentially unfavourable.
e.g.: all accounts payable, all bonds issued, other payables (taxes, …), loans
19.1.3 Liabilities and equity
The fundamental principle of IAS 32 is that an instrument should be classified as either a liability or
an equity instrument according to its substance, not its legal form.
The key distinguishing feature is that a financial liability involves a contractual obligation either to
deliver cash or another financial asset or to exchange another financial instrument with the holder
under conditions that are potentially unfavourable to the issuer.
An instrument that does not give rise to such a contractual obligation is an equity instrument.
19.1.4 Offsetting
A financial asset and a financial liability shall be offset and the net amount reported in the balance
sheet when an entity:
8 has a legally enforceable right to set off the amounts; and
8 intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
19.1.5 The Disclosure
The disclosure of IAS 32 is regulated in the paragraphs 42 till 94 and it is divided into seven main
parts:
1. Format and Location
2. Risk Management Policies and Hedging Activities
3. Terms, Conditions, and Accounting Policies
4. Interest Rate Risk
5. Credit Risk
6. Fair Value
7. Other Disclosures
Stated objective:
• provide information to improve the understanding of the significance of financial
instruments to an entity’s financial position, performance, and cash flows
• assist in assessing the amounts, timing, and certainty of future cash flows
• assist users of financial statements in assessing the extent of risk related to financial
instruments
19.1.5.1 Format and Location [IAS 32.44]
Neither the format of the information required to be disclosed nor its location within the financial
statements are prescribed in this Standard.
19.1.5.2 Risk Management Policies and Hedging Policies [IAS 32.46A]
An entity shall describe its financial risk management objectives and policies, including hedging
policies.
23
19.1.5.3 Terms, Conditions, and Accounting Policies [IAS 32.47]
For each class of financial asset, financial liability, and equity instrument IAS 32 requires disclosure
of:
• the extend and nature of the financial instruments, including significant terms and conditions
that may affect amount, timing and certainty of future cash flows;
• accounting policies and methods adopted, including the criteria for recognition and the basis
of measurement applied
19.1.5.4 Interest Rate Risk [IAS 32.56]
For each class of financial assets and financial liabilities an entity shall disclose:
• specific information about exposure to interest rate risk (including repricing dates, maturity
dates and effective interest rates);
19.1.5.5 Credit risk [IAS 32.66]
Each financial asset or other financial exposures an entity shall disclose information:
o Maximum credit risk exposure (without taking account of FV)
o Significant concentrations of risk
• P 67: 66 does not require entities to disclose assessment of probability of losses arising in
the future.
• P70:
o Entity discloses existence and effect of legal right of set off against a financial
liability.
• P73 (new): an entity may be exposed to credit risk, as result of transaction (with no financial
asset recognition), such as a financial guarantee. Guaranteeing an obligation of another party
creates liability Î disclosure of credit risk
19.1.5.6 Fair Value [IAS 32.77]
For each class of financial asset/liability an entity shall disclose information about fair value.
If Fair Value of sold assets could not be reliably measured Î carrying amount + amount of
gain/loss recognised shall be disclosed
•
•
19.2
P77B: entity shall disclose:
o Method and assumptions applied in determining Fair Values, separately for different
classes of financial assets
o Extent to which Fair Values are determined directly
o Extent to which Fair Values are determined in full or in part
o Total amount of change in fair value
P85: if unquoted equity instruments are measured at cost under IAS39, because Fair Value
could not be measured reliably Î information is required to disclose to assist users in
making their own judgements of difference carrying amount – Fair Value.
Recognition and Measurment (IAS 39)
19.2.1 Initial Measurement of Financial Assets and Financial Liabilities
At initial recognition a financial asset or liability shall be measured at its cost, which is the fair
value of the consideration given (in the case of an asset) or received (in the case of a liability).
Additionally transaction costs that are directly attributable to the acquisition or issue are included.
(§ 66)
19.2.2 Determination of the fair value
a) Active Market: Quoted price
24
The existence of published price quotations in an active market is the best evidence of fair
value and if they exist they shall be used by an entity for measurement of its financial assets
and financial liabilities. (§ 99)
b) No Active Market: Recent Market Transaction
If the market for a financial instrument is not active, the best evidence of fair value is
obtained by reference to recent market transactions between knowledgeable, willing parties
in arm’s length transaction. If conditions have changed since the most recent market
transaction adaptation based on current prices or rates is obligatory. (§ 100)
c) No Active Market: Valuation Technique
If a) and b) do not lead to a clear determination of fair value, an entity has to apply a
valuation technique that on the one hand includes all factors that market participants would
consider in setting a price and on the other hand is consistent with accepted economic
methodologies (§ 100A-100D).
d) No Active Market: Equity Instruments
The fair value of investments in equity instruments that do not have a quoted market price in
an active market is reliably measurable if the variability in the range of reasonable fair value
estimates is not significant for that instrument or if the probabilities of the various estimates
within the range can be reasonably assessed and used in estimating fair value (§101-102).
19.2.3 Subsequent Measurement
19.2.3.1 Subsequent Measurement of Financial Assets
For the purpose of measuring a financial asset subsequent to initial recognition we have to
determine in which category the asset to be valued falls (further definitions to follow):
a)
b)
c)
d)
loans and receivables originated by the entity
held-to-maturity investments
available-for-sale financial assets
financial assets held for trading
After initial recognition, financial assets (including derivatives that are assets) are measured at fair
values without any deduction for transaction costs that may occur on sale or other disposal! The
following exceptions to fair value measurement have to be considered:
ƒ
ƒ
ƒ
Loans and receivables which shall be measured at amortised cost using the effective
interest method
held-to-maturity investments which shall be measured at amortised cost using the effective
interest method
investments in equity instruments that do not have a quoted market price and whose fair
value cannot be reliably measured and derivatives that are linked to these assets and must be
settled by delivery of such unquoted instruments, which both shall be measured at cost
All financial assets other than those measured at fair value with changes in fair value recognized in
profit or loss are subject to review for impairment. (paragraphs 109-119).
Loans and receivables originated by an entity are measured at amortised cost without regard to the
entity’s intention to hold them to maturity (example 1 and 2).
25
19.2.3.2 Held-to-Maturity Investments
The criteria for a financial asset to be classified as held to maturity are:
ƒ fixed or determinable payments
ƒ fixed maturity
ƒ ability to hold the asset until maturity (financial resources, no legal constraints) § 87
However, assets are not considered to be held to maturity in the following cases:
ƒ
ƒ
ƒ
the asset is hold for an undefined period
the asset is hold ready for sale (except: the sale occurs for not anticipated reasons – e.g.
liquidity needs)
the asset can be settled by its issuer significantly below its amortised cost
According to this Standard, risk of non-payment does not affect the classification of an asset as
“held to maturity” as long as the above stated criteria are met.
Generally, an entity shall not classify any financial assets as held to maturity, if it has during the
current or the two preceding financial years, sold or reclassified a significant amount of held to
maturity investments before maturity (exceptions § 83 lit a-c). In this case, assets to be classified at
present shall be categorized as available for sale.
19.2.3.3 Subsequent measurement of Financial Liabilities
After initial recognition, an entity shall measure all financial liabilities at amortised cost using the
effective interest method. However, derivatives and liabilities that are held for trading are measured
at fair value, if the fair value can be clearly determined.
19.2.4 Gains and Losses
A recognized gain or loss arising from a change in the fair value of a financial asset or financial
liability shall be recognized as follows:
a) a gain or a loss on a financial asset or financial liability held for trading shall be recognized
in profit or loss for the period in which it arises. If not held for hedging, derivatives are
regarded as held for trading.
b) a gain or loss on an available-for-sale financial asset shall be recognized directly in equity
through the statement of changes in equity (except for impairment losses) until the financial
asset is derecognized. Then the cumulative gain or loss shall be recognized in profit or loss
for the period.
For financial assets and financial liabilities carried at amortised cost, a gain or loss is recognized in
profit or loss when the financial asset or financial liability is derecognized or impaired, as well as
through the amortization process.
Any foreign exchange gains and losses on monetary assets and monetary liabilities are reported in
profit or loss according to IAS 21.
19.2.5 Impairment and Uncollectability of Financial Assets
An entity shall assess at each balance sheet date whether there is any objective evidence that a
financial asset or group of assets is impaired. Objective evidence is given in the following cases:
a)
b)
c)
d)
significant financial difficulty of the issuer
breach of contract
forced exceptional concessions to the borrower (financial difficulties of the borrower)
high probability of bankruptcy of the issuer
26
e) recognition of an impairment loss on that asset in a prior financial reporting period
f) disappearance of an active market because of financial difficulties
g) a historical pattern of collections of a group of financial assets that indicates the entity will
not be able to collect all amounts due
A significant and prolonged decline in the fair value of an investment in an equity instrument below
its cost is also objective evidence of impairment.
19.2.5.1 Financial Assets carried at Amortised Cost
If there is objective evidence of impairment and it is probable that an entity will not be able to
collect all amounts due (principal and interest) an impairment or bad debt loss has occurred. The
carrying amount of the asset shall be reduced to its estimated recoverable amount either directly or
through use of an allowance account (example 3). The amount of the loss shall be included
recognised in net profit or loss for the period. (§ 111)?
The amount of the loss is the difference between the asset’s carrying amount and the present value
of expected future cash flows discounted at the financial instrument’s original effective interest rate
(recoverable amount). Cash flows related to short-term receivables generally are not discounted.
The reason why the original (historical) effective interest rate is used is caused by the circumstance
that this measurement is at amortised cost and not at fair value!
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis
of similar credit risk characteristics that are indicative of the debtor’s ability to pay all amounts due
according to the contractual terms (for example, on the basis of a credit risk evaluation or grading
process that considers asset type, industry, geographical location, collateral type, past-due status,
and other relevant factors).
19.2.6 Financial Assets carried at cost
If there is objective evidence of impairment, an investment in an unquoted equity instrument that is
not carried at fair value because its fair value cannot be reliably measured or a derivative asset that
is linked to and must be settled by delivery of such an unquoted equity instrument, an impairment
loss has occurred.
The amount of the impairment loss of such a financial asset is the difference between the carrying
amount of the financial asset and the present value of expected future cash flows discounted at the
current market rate of interest for a similar financial asset (ie recoverable amount). Such impairment
losses shall not be reversed as long as the instrument is recognised.
19.2.7 Available-for-Sale Financial Assets
When a decline in the fair value of an available-for-sale financial asset has been recognised directly
in equity and there is objective evidence that the asset is impaired the cumulative net loss shall be
removed in equity and recognised in profit or loss for the period.
The amount of the cumulative net loss is the difference between the acquisition cost (net of any
principal repayment and amortisation) and current fair value (for equity instruments) or recoverable
amount (for debt instruments), less any impairment loss on that financial asset previously
recognised in profit or loss.
The recoverable amount of a debt instrument remeasured to fair value is the present value of
expected future cash flows discounted at the current market rate of interest for a similar financial
asset.
Impairment losses recognised in profit or loss for a financial instrument classified as available for
sale shall not be reversed through profit or loss as long as the instrument is recognised.
27
19.3
Hedging (IAS 39)
Hedging is the minimization of risk.
balance sheet
deposits
loans
variable interest rate
fixed interest rates
7%
5%
rd
pay 7% and only receive 5% → hedging by 3 party
19.3.1 Fair Value Hedging
…is a hedge of the exposure to changes in fair value of a recognised asset or liability or a
previously unrecognised firm commitment to buy or sell an asset at a fixed price, or an identified
portion of such an asset or firm commitment, that is attributable to a particular risk and could affect
reported profit or loss.
Examples for a fair value hedge:
•
•
•
a hedge of exposure to changes in the fair value of fixed debt rate as a result of changes in
interest rates. Such a hedge could be entered either by the issuer or by the holder.
a hedge of the foreign currency risk in an unrecognised contractual commitment by an
airline to purchase an aircraft for a fixed amount of a foreign currency or
a hedge of the change in fuel price relating to an unrecognised contractual commitment by
an electric utility to purchase fuel at a fixed price.
§153: If a fair value hedge meets the conditions in §142 during the financial reporting period, it
shall be accounted for as follows:
•
•
the gain or loss from remeasuring the hedging instrument at fair value (for a derivative
hedging instrument) or the foreign currency component of its carrying amount (for a nonderivative hedging instrument) shall be recognised immediately in profit or loss, and
the gain or loss on the hedged item attributable to the hedged risk shall adjust the carrying
amount of the hedged item and be recognised immediately in profit or loss. This applies
even if a hedged item is otherwise measured at fair value with changes in fair value
recognised directly in equity under §103 (b). It also applies if the hedged item is otherwise
measured at cost.
19.3.1.1 Example 1:
The following example illustrates how §153 applies to a hedge of stock with a long put:
Stock
Fair Value 120
Book Value 100
Derivative
20
40
with Hedge Accounting:
Valuation stock:
Valuation derivative:
stock / gain
loss / derivative
20
20
stock / changes in FV (Equity)
20
without Hedge Accounting:
Valuation stock:
28
Valuation derivative:
gain from trading / derivative
20
Fact is that in case of hedge accounting the hedging instrument and the hedged item are both
recognised in the gain or loss account and not recognised seperately in equity and in the gain or loss
account.
§156: An entity shall discontinue prospectively the hedge accounting specified in §153 if any one of
the following occurs:
•
the hedging instrument expires or is sold, terminated, or exercised (for this purpose, the
replacement or a rollover of a hedging instrument into another hedging instrument is not
regarded as an expiration or termination if such replacement or rollover is part of the entity’s
documented hedging strategy); or
•
the hege no longer meets the criteria for hedge accounting in §142.
19.3.1.2 Example 2:
The derivative, which was used for hedging the fair value of stock before, is sold on 15/5/02.
Stock
Fair Value 110
Book Value 120
Derivative
60
50
15.05.02 Valuation stock:
loss / stock
15.05.02 Valuation derivative:
derivative / gain in hedge accounting
15.05.02 Accounting of derivative sold:
bank / derivative
10
10
60
The fair value of the stock increases after the sale of the derivative from 110 to 150.
30.06.02: Valuation stock:
stock / changes in fair value (equity)
40
§157: An adjustment to the carrying amount of a hedged interest-bearing financial instrument shall
be amortised to profit or loss. Amortisation may begin as soon as an adjustment exists an shall
begin non later than when the hedged item ceases to be adjusted for changes in its fair value
attributable to the risk being hedged. The adjustment is based on a recalculated effective interest
rate at the date amortisation begins and shall be amortised fully by maturity.
19.3.2 Macro Hedging
Macro Hedging is also called asset/liability hedging. In that case the net position of assets and
liabilities is hedged.
We have for example assets of 300 and a liabilities of 100 and therefor a net position of 200, which
is hedged with a forward or an interest rate swap.
Marcor Hedging is only allowed under the following circumstances:
Assest and liabilities have fixed interest rates with equal time to maturity and risk in case of a fair
value hedge and variable interest rates in case of a cash flow hedge.
So you can hedge the difference between the obligation of purchasing a foreign currency at 120 and
the obligation of a sale at 90.
29
19.3.3 Cash Flow Hedging
…§137 (b) is a hedge of the exposure to variability in cash flows that
• is attributable to a particular risk associated with a recognised asset or liability
(such as all or some future interest payments on variable rate debt) or a forecast transaction
(such as an anticipated purchase or sale) and
• could affect reported profit or loss
19.3.3.1 Example 3
The cash flow of a bearing interest obligaton should be hedged with a swap
Conditions of the obligation:
time to maturity of 3 years, nominal value 1000, LIBOR at issuing 3.5 % (per 31.12.)
swap: 3 years, fixed interests of 3.5 % are received, variable rate also 3.5 % is paid
Overview
cash flows
obligation cash in
swap cash in
swap cash out
total cash in
year 1
35
35
35
35
year 2
35
35
35
35
01.01.02
obligations / bank
01.01.02
swap / bank
In which cases Hedge is applied?
hedge – efficiency
1.000,-0,--
∆ FV of expected cash flow
∆ FV derivative
80 – 125 %
year 3
35
35
35
35
(we don’t pay expenses for the swap)
The cumulative gain and losses on the hedging instrument = change in fair value of the derivative
The cumulative change in fair value of the expected future cash flow = change in fair value of the
hedged cash flow
19.3.3.2 Case 1
Hedge efficiency: 100 %
we assume that the variable interest rate decreases from 3.5 % fo 3.0 % at the date of purchase
cash flows
obligation cash in
swap cash in
swap cash out
total cash in
01.01.02
year 1
30
35
30
35
derivative (debitor) / equity
year 2
30
35
30
35
15,--
year 3
30
35
30
35
(measurment at fair value swap 5
x 3 year, no profit or loss)
30
this follows
§160;: if the hedge of a forecast transaction results in the recognition of an asset or liability then the
associated gains or losses that were recognised directly in equity in accordance with §158 shall be
reclassified into profit or loss in the same periods during which the asset acquired or liability
incurred affects profit or loss.
However, if an entity expects at any time that all or a portion of a net loss recognised directly in
equity will not be recovered in one or more future periods, it shall reclassify immediately into profit
or loss the amount that is not expected to be recovered.
31.12.02
bank / interest income
30,--
(from obligation)
equity / bank
30,--
(interest expense - swap)
bank / equitiy
35,--
equity / interest income obligation
5,--
equity / derivative
5,--
(interest income - swap)
(value of swaps decrease)
Conclusion: if we have a hedge of 100 % the hedged interest income flows into the profit and loss
account in time.
19.3.3.3 Case 2
Hedge efficiency ≠ 100 % but between 80 - 125 %
If the hedging instrument is measured in this case, we get a loss or gain, which is only partly
efficient.
§158 (if §142 is met)
(a) the portion of the gain or loss on the hedging instrument that is determined to be an effictive
hedge (§142) shall be recongnised directly in equity through the statement of changes in
equity and
(b) the ineffective portion of the gain or loss on the hedging instrument shall be recogniesed
- immediately in profit or loss if the hedging instrument is a derivative; or
- in accordance with §103 in the limited circumstances in which the hedging instrument is not
a derivative.
19.3.3.4 Example 4
Booked efficient gains in derivative: 10
Fair value of derivative increases by 10
Fair value of cumulative Cash Flows on hedged item decrease by 11 (since issue decrease
alltogether by 18)
The separate component of equity associated with the hedged item is adjusted to the lesser of the
following (in absolute amounts):
-
the cumulative gain or loss on the hedging instrument for inception of the hedge and
31
-
the cumulative change in fair value of the expected future cash flows on the hedged item
from inception of the hedge
Efficient gain in derivative:
Change fair value of expected future cash flows:
Efficient part
Inefficient part
Æ
Æ
derivative / equitiy
derivative / realized gain
20 (10 + 10)
18
8,-2,--
19.3.3.5 Case 3
If the rule of 80 – 125 % is not met, the hedge must be discontinued immediately.
Also, if any one of the following occurs
-
if the hedging instrument expires or is sold, terminated or exercised (for this purpose, the
replacement or a rollover of a hedging instrument into another instrument is not regarded as
an expiration or termination if such rollover is part of the entity’s documented hedging
strategy)
Æ
cumulative gain or loss on hedging instrument which had been reported directly in
equity (§158 a) shall remain separately in equity until forecast transaction occurs Æ
§160, 162
-
The hedge no longer meets the criteria for hedge accountig in §142
Æ
same
-
The forcast transaction is no longer expected to occur, in which case any related cumulative
gain or los has been recognised directly in equity shall be recognised in profit or loss
account for the period. (A forecast transaction that is no longer highly probable – §149 may
still be expected to occur)
§162 for all cash flow hedges other than those covered by § 160, amounts that had been recognised
directly in equity shall be included in profit or loss in the same period or periods during which the
hedged forecast transaction affects proit or loss (e.g. when a forecasted sale actually occurs)
20 EXKURS: Mezzanin-Finanzierung
Unternehmen befinden sich oft in der Lage, dass ihre Eigenkapitalquote unter 30 % liegt und
deswegen Banken nicht bereit sind Geld zur Verfügung zu stellen. So wählen diese Unternehmen
eine Finanzierungstrategie, die zwischen Eigenkapital und Bankschulden (senior debt) liegen, also
nicht so risikolos wie Eigenkapital sind: Preferred Shares (aktienähnlich) werden später als senior
debt zurückbezahlt. Diese Schuld wird nur soweit beglichen, als sie im Cash Flow Platz hat (wird
behandelt wie Ausschüttung). Reicht die Ausschüttung nicht aus, so bekommen jene Personen, die
nicht bedien werden können Mitspracherechte in Form von so genannten B-shares (0,5 %
Mitsprache in Summe) [Die A-Shares sind die common shares mit 99,5%)]. SO werden quasi die
Mezzanin-Darlehensgeber von den common shares bezahlt, da je länger sie warten müssen, desto
höher wird ihrer Mitsprache bewertet.
Preferred shares sind financial liabilities, nicht equity
21 Changes in IAS by 17th December 2003
On December 17th the several IFRS where “improved” → improvement project
IAS 16, 17, 24, 28, 31, 32, 39, 33, 40 were updated
32
These improvement only partly covered what was stated in the ED (exposure drafts) → drastical
changes only in
• Fixed assets
• Leasing
• IAS 32
• IAS 39
In IAS 32 and 39 definitions of equity and debt was changed: These new rules lead to the fact:
Shares of co-operatives will not be equity any more (because they are putable). A shareholder is
able to return his shares to the co-operative and will be reimbursed → shareholder can decide when
and how he wants to return his shares → that’s a put → Raiffeisen Bank has no equity due to IFRS.
Im Sinne der Bankcontrolloren hat die Bank natürlich noch Eigenkapital.
The nominal value of the shares will not be presented as equity but as e.g. part of liability → only
returned earnings.
The Rado Bank in the Netherlands is also a co-op, but the bank decides if it wants to pay back.
In IAS 39 the continuing involvement approach was abandoned. Now you can derecognize the
whole asset but have to recognize provisions for the bared risk.
Macro-hedging: opportunity for banks and insurance companies not to hedge individual assets and
liabilities but a whole bundle. Difference between CF-hedge (presented in equity) and Fair value
hedge (presented in the P&L).
Core deposits (Primäreinlagen) may not be hedged as fair value hedges but only as CF-hedges. →
all fluctuations are presented in equity (volatility within equity) → investments banks will present
the volatility in the P&L and equity will be stable
The Board issued several interpretations (several thousand pages) and an ED on Extractive
Industries. They have to account for exploration (finding resources, estimate their amount, …). This
standard allows the firms to follow US-GAAP)
IAS 30 Banks: New standard that deals with financial liability and its named will be changed.
22 Insurance contracts
Consider the balance sheet and the P&L of an insurance company:
P&L
premium income
all income received from policy holders
saving component
insurance component
no longer part of P& L
keeps being part of
P&L
→ becomes liability
balance
Financial Assets IAS 39 held for trading to gain catastrophe provision
profit and measured at fair value
equalisation provision
liabilities (deposit) measured at cost
partly for company
partly for policy holder
discretionary
participation feature
33
Das discretionary participation feature wird nicht voll asugeschüttet, damit man zum Bsp. bei einer
Lebensversicherung auch in Jahren, wo die Versicherung eigentlich keinen Gewinn macht einen
Gewinn erhält.
What happens to the nature of financial assets, when the interest rate rises? – The nominal value
decreases because the Rendite of financial assets consists of two terms: nominal value plus interest
→ if interest goes up, the nominal value has to go down → On the left hand side of the balance
sheet capital is terminated, whereas on the right hand side everything stays the same due to
measurement at cost.
e.g.: interest at buying date: i=3%
now: i=8% → loss created
now: i=2% → profit created
The benefit of the insurance contract standard is the differentiation between a saving and insurance
component but the problem according to different measurement on the credit and deposit side of the
balance causes problem. (In US-GAAP these problems are solved via shadow accounting, which
means the mismatch between deposit and credit side is compensated by creation of prepaid
expenses or unearned revenues).
23 Provisions (IAS 37)
Liabilities are present obligations resulting from an event in the past. The difference between
liabilities and provisions is that provisions are uncertain in time or in amount. Provisions are a
subgroup of liabilities.
Contingent liabilities are presented under the balance sheet total under Austrian HGB and under
IFRS they do not exist because they are uncertain in time and amount – they cn only be shown in
the notes.
Provisions are measured at the PV of future payments → calculate the expectation value and
discount it to the PV → provisions are some kind of exemption because liabilities are usually not
discounted.
24 Events After the Balance Sheet Date (IAS 10)
IAS 10 was approved by the IASC Board in March 1999 and became effective for annual financial
statements covering periods beginning on or after 1st January 2000.
Key Definitions
Event after the balance sheet date: An event, which could be favourable or unfavourable, that
occurs between the balance sheet date and the date that the financial statements are authorised for
issue. [IAS 10.3]
Adjusting event: An event after the balance sheet date that provides further evidence of conditions
that existed at the balance sheet, including an event that indicates that the going concern assumption
in relation to the whole or part of the enterprise is not appropriate. [IAS 10.3]
Non-adjusting event: An event after the balance sheet date that is indicative of a condition that arose
after the balance sheet date. [IAS 10.3]
Accounting
•
Adjust financial statements for adjusting events – events after the balance sheet date that
provide further evidence of conditions that existed at the balance sheet, including events that
34
•
•
indicate that the going concern assumption in relation to the whole or part of the enterprise
is not appropriate. [IAS 10.8]
Do not adjust for non-adjusting events – events or conditions that arose after the balance
sheet date. [IAS 10.10]
If an entity declares dividends after the balance sheet date, the entity shall not recognise
those dividends as a liability at the balance sheet date. That is a non-adjusting event. [IAS
10.12]
Going Concern Issues Arising After Balance Sheet Date
An entity shall not prepare its financial statements on a going concern basis if management
determines after the balance sheet date either that it intends to liquidate the entity or to cease
trading, or that it has no realistic alternative but to do so. [IAS 10.14]
Disclosure
Non-adjusting events should be disclosed if they are of such importance that non-disclosure would
affect the ability of users to make proper evaluations and decisions. The required disclosure is
a) the nature of the event and
b) an estimate of its financial effect or a statement that a reasonable estimate of the effect cannot
be made. [IAS 10.21]
A company should update disclosures that relate to conditions that existed at the balance sheet date
to reflect any new information that it receives after the balance sheet date about those conditions.
[IAS 10.19]
Companies must disclose the date when the financial statements were authorised for issue and who
gave that authorisation. If the enterprise's owners or others have the power to amend the financial
statements after issuance, the enterprise must disclose that fact. [IAS 10.17]
Summary of IAS 10
•
•
•
•
•
•
•
an enterprise should adjust its financial statements for events after the balance sheet date that
provide further evidence of conditions that existed at the balance sheet;
an enterprise should not adjust its financial statements for events after the balance sheet date
that are indicative of conditions that arose after the balance sheet date;
if dividends to holders of equity instruments are proposed or declared after the balance sheet
date, an enterprise should not recognise those dividends as a liability;
an enterprise may give the disclosure of proposed dividends (required by IAS 1:
Presentation of Financial Statements) either on the face of the balance sheet as an
appropriation within equity or in the notes to the financial statements;
an enterprise should not prepare its financial statements on a going concern basis if
management determines after the balance sheet date either that it intends to liquidate the
enterprise or to cease trading, or that it has no realistic alternative but to do so;
there should no longer be a requirement to adjust the financial statements where an event
after the balance sheet date indicates that the going concern assumption is not appropriate
for part of an enterprise;
an enterprise should disclose the date when the financial statements were authorised for
issue and who gave that authorisation. If the enterprise's owners or others have the power to
amend the financial statements after issuance, the enterprise should disclose that fact; and
35
•
an enterprise should update disclosures that relate to conditions that existed at the balance
sheet date in the light of any new information that it receives after the balance sheet date
about those conditions.
25 Emission Rights
IFRIC draft interpretation, dealing with accounting of emission rights, referring to:
- IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
- IAS 36 Impairment of Assets
- IAS 37 Provisions, Contingent Liabilities and Contingent Assets
- IAS 38 Intangible Assets
IFRIC draft interpretation, that arises from a “cap and trade” scheme, having the following features:
- Rights (allowances) to emit pollutant at a specified level are allocated to participants of the
scheme by the government or government agency. Allowances are allocated free of charge
or the participants pay for them.
- Allowances for a compliance period are issued to each participant at the beginning of a
period, actual emissions are verified at the end of the period in question.
- Participants can
→ emit pollutants equal to the level allocated;
→ emit a lower level of pollutants and sell the excess allowances;
→ emit a higher level of pollutants, buy additional allowances for the excess
emissions or pay a penalty;
- At the end of the compliance period, a participant is required to deliver allowances equal to
its actual emissions, if not → pay a penalty (in form of cash payment, reductions in the
allowances allocated for subsequent periods and restrictions on its operations)
- Unused allowances can be carried forward to be used against future emissions.
- Arising of a liquid market, brokers buy allowances from and sell them to participants in the
scheme.
a) An emission rights scheme gives rise to an asset (for allowances held) and a liability,
deferred income and/or income.
An allowance is seen as an asset and a liability in the sense of the Framework.
→ a resource controlled by the enterprise as a result of past events and from which future
economic benefits are expected to flow to the enterprise
→ a present obligation arising from past events, the settlement of which is expected to result in
an outflow from the enterprise of resources embodying economic benefits
The allowance and the obligation have independent existences.
b) Allowances, whether allocated by government or purchased, are intangible assets.
→
an identifiable non-monetary asset without physical substance held for use in
the production or supply of goods or services, for rental to others, or for administrative purposes
Measurement:
-
Allowances that are allocated for less than their fair value shall be measured initially at their
fair value. Allowances shall not be amortized but may be impaired.
36
-
Where allowances are allocated for less than fair value, the difference between the amount
paid and fair value is a government grant which is initially recognized as deferred income in
the balance sheet and subsequently recognized as income on a systematic basis over the
compliance period for which the allowances were allocated.
c) As emissions are made, a liability is recognized for the obligation to deliver allowances equal to
emissions that have been made or to pay a penalty. The liability for the obligation arises with
the emission not with the receipt of allowances.
Measurement:
-
-
The liability is a provision and according to IAS 37.36 it shall be measured at the best
estimate of the expenditure required to settle the present obligation at the balance sheet date.
This will normally be the present market price of the number of allowances required to
cover emissions made up to the balance sheet date.
If the participant’s best estimate is that some or all of the obligation will be settled by
incurring a cash penalty, it shall measure that part of its obligation at the cost of the penalty
rather than the market price of the relevant number of allowances.
26 Share based payment
The meaning of share based payment is that someone gets shares/ options in return for services
rendered. Due to IAS SBP is an expense, whereas US-GAAP it is not.
The primary objective of financial statements is to provide high quality, transparent and comparable
information to help users make economic decisions.
Entities often issue shares or share options to pay employees or other parties. Share and share
option plans are a common feature of employee pay, not only for directors and senior executives.
Some entities issue shares or share options to pay suppliers, such as suppliers of professional
services.Few countries have standards on the topic. This is of particular concern in Europe, where
the use of share-based payment has increased in recent years and continues to spread. The Board
has therefore issued this Exposure Draft as part of its due process in developing a new IFRS on
share-based payment.
Much of the complexity surrounding accounting for share-based payments relates to employee
share options. However the scope of the proposed IFRS is broader than that. It covers transactions
in which shares or other equity instruments, which are granted to employees. It also covers
transactions with parties, other than employees, in which goods or services are received as
consideration for the issue of shares, options or other equity instruments. It also covers payments in
cash (or other assets) that are „share-based“, because the amount of the payment is based on the
price of the entity’s shares or other entity instruments, eg cash share appreciation rights.
Typically, employee share purchase plans provide employees with an opportunity to buy a specific
number of shares at a discounted price, ie at an amount that is less than the fair value of the shares.
The employee’s entitlement to discounted shares is usually conditional. Specific conditions can be
such as remaining in the service of the entity for a specific period.
26.1
TRANSFERS OF EQUITY INSTRUMENTS TO EMPLOYEESIn some situations, an
entity might not issue shares or options to the employees (or other parties) direct. Instead, a
shareholder might transfer equity instruments to the employees (or other parties). Two transactions
can be observed:
• one transaction in which the entity has reacquired equity instruments for nil consideration
• second transaction in which the entity has received services (or goods) as consideration for
equity instruments issued for employees
The second transaction is a share-based payment transaction. A transfer is not a share-based
payment transaction if the transfer of equity instruments to an employee or other party is clearly for
37
purpose other than payment for goods or services supplied to the entity. For example, if the transfer
is to settle a shareholder’s personal obligation that is unrelated to employment by the entity. Or in
case of a personal gift of shareholder to an employee.
26.2
RECOGNITION OF EXPENSES ARISING FROM EQUITY-SETTLED SHAREBASED PAYMENT TRANSACTIONS
The following arguments commonly made against expense recognition:
1. The entity is not a party to the transactionSome argue that the transaction is between the
shareholders and the employees, not the entity and the employees. The Board did not accept this
argument. Entities, not share-holders, set up employee share plans and entities, not shareholders,
issue options to their employees.
The equity instruments are issued in return for services rendered by the employees and the
entity, not the shareholders, receives those services. Therefore the Board concluded that the
entity should account for the services received in return for the equity instruments issued.
2. The employees do not provide services for the options because the employees are paid in cash
(or other assets) for their services. If it were true that employees do not provide services for their
options, this would mean that entities are issuing valuable share options and getting nothing in
return. Typically, shares or options granted to employees form one part of their pay package.
For example, an employee might have a pay package consisting of: a basic cash salary, a
company car, pension, healthcare benefits and other benefits including shares and options. So,
the employee provides services for the entire pay package. In summary, options or other equity
instruments are granted to employees because they are employees.
3. There is no cost to the entity, therefore there is no expense.Some argue that because share-based
payments do not require the entity to sacrifice any cash or other assets, there is no cost to the
entity, and therefore no expenses should be recognized.
The Board regards this argument unsound, because it overlooks that:
every time an entity receives resources, there is no outflow of cash or other assets,
and on every occasion the resources received as consideration for the issue of equity
instruments are recognized in the financial statements
the expenses arises from the consumption of those resources, not from outflow of
assets
The only difference in the case of employee services (or other services) received as
consideration for the issue of shares or options is that usually the resources received are
consumed immediately upon receipt. But the Board concluded that the timing of consumption
does not change the principle, the financial statements should recognise the consumption of
resources.
26.2.1 MEASUREMENT OF SHARE-BASED PAYMENT TRANSACTIONSTo recognise
equity-settled share-based payment transactions, it is necessary to decide how the transactions
should be measured.
In terms of accounting principles, there are 2 basic questions:
–which measurement basis should be applied?
–when should that measurement basis be applied?
The Board discussed the following measurement bases, to decide which should be applied in
principle:
historical cost, intrinsic value, minimum value, fair valuehistorical cost: entities commonly
repurchase their own shares, either directly or through a vehicle such as trust, which are used to
fulfil promised grants of shares to employees or the exercise of employee options. A possible
38
basis for measuring a grant of options should be the historical cost (purchase price) of its own
shares that an entity holds, even they were acquired before the award was made. If the cash
flows related to anything other than the entity’s own shares this approach would be appropriate.
For example:
ABC LTD bought shares in another entity, DEF LTD for a total cost of CU (currency units)
500.000,00
And later sold the shares to employees for a total of CU 400.000,000
The entity would recognise an expense for the CU 100.000,00
But when the analysis is applied to the entity’s own shares, the logic breaks down. The entity’s
own shares are not an asset of the entity. Board concluded that historical cost is not appropriate.
•
•
•
intrinsic value: is the difference between the market price of the underlying shares and the
exercise price of the option. The intrinsic value of an option does not fully reflect its value.
minimum value: is based on the premise that someone who wants to buy a call option on a
share would be willing to pay at least (and the option writer would demand at least) the value of
the right to defer payment of the exercise price until the end of the option’s term.
Board concluded that minimum value is not an appropriate measurement basis, because
ignoring the effects of volatility ignores a potentially large part of an options value.
fair value: is the amount at which an equity instrument granted could be exchanged between
knowledgeable, willing parties. It captures both intrinsic value and time value and therefore
provides a measure of the option’s total value.
Measuring share-based payment transactions at fair value ensures that those transactions are
represented faithfully in the financial statements, and consistently with other transaction in
which the entity receives resources as consideration for the issue of equity instruments.
For transactions with employees, the entity shall measure the fair value of the employee services
received by reference to the fair value of the equity instruments granted, because the latter fair value
is more readily 'determinable than the fair value of the employee services received.
If the equity instruments granted vest immediately, the counterparty is not required to
complete a specified period of service before becoming unconditionally entitled to those
equity instruments.
If the equity instruments granted do not vest until the counterparty completes a specified
period of service, the entity shall presume that the services to be rendered by the counterparty
as consideration for those equity Instruments will be received in the future, during the vesting
period.
The entity shall measure the services received in each period by multiplying the number of units of
service received from the counterparty (or counterparties) during that period by the deemed fair
value per unit of service. If a counterparty ceases to render service during the period (eg an
employee leaves), the entity shall include the services received from that counterparty before
cessation of service in determining the number of units of service received during the period, but
shall not recognise any further amounts in respect of that counterparty.
An entity shall measure the fair value of equity instruments granted, based an market prices if
available, taking into account the terms and conditions upon which those equity instruments were
granted.
The fair value of options granted shall be measured at the market price of traded options with similar
terms and conditions. However, in many cases such traded options do not exist, because the options
granted are subject to terms and conditions that do not apply to traded options.
If traded options with similar terms and conditions do not exist, the fair value of the options
granted shall be estimated by applying an option pricing model, such as the Black-Scholes
model or a binomial model. The model applied shall take into account all of the following
factors:
39
If a grant of shares or options is conditional upon satisfying specified vesting conditions, those
conditions shall be taken into account when an entity measures the fair value of the shares or options
granted. For example, a grant of shares or options to an employee is typically conditional an the
employee's remaining in the entity's employ for a specified period of time. There might also be
performance conditions that must be satisfied, such as the entity's achieving a specified growth
in profit or a specified increase in the entity's share price. Vesting conditions shall be taken into
account either by incorporating them into the application of an option pricing model or by
making an appropriate adjustment to the value produced by such a model.
If the entity cancels a grant of shares or options during the vesting period (other than a grant
cancelled by forfeiture when the vesting conditions are not satisfied):
a) the entity shall continue to account for services rendered by the counterparty during the
remainder of the vesting period, as if that grant had not been cancelled.
b) any payment made to the counterparty an the cancellation of the grant shall be accounted for as
the repurchase of an equity interest, I ie as a deduction from equity, except to the extent that the
payment exceeds the fair value of the shares or options granted, measured at the repurchase date.
Any such excess shall be recognised as an expense.
c) if new options are granted to the counterparty and, an the date when those new options are
granted, the entity identifies the new options granted as replacement options for the cancelled
options, the entity shall account for the granting of replacement options in the same way as a
repricing of options. The incremental value granted is the difference between the fair value of
the replacement options and the net fair value of the cancelled options, at the date the
replacement options are granted. The net fair value of the cancelled options is their fair value
less the amount of any payment made to the counterparty an cancellation of the options that is
accounted for as a deduction from equity in accordance with (b) above. If the entity does not
identify new options granted as replacement options for the cancelled options, the entity shall
account for those new options as a new option grant. If an entity repurchases vested equity
instruments, the payment made to the counterparty shall be accounted for as a deduction from
equity, except to the extent that the payment exceeds the fair value of the equity instruments
repurchased at the repurchase date. Any such excess shall be recognised as an expense.
26.3
MEASUREMENT DATE
grant date is the date when the entity and the employee enter into agreement, whereby the
employee is granted rights to the share option, provided that specific conditions are met, such as the
employee’s remaining in the entity’s employ for a specific period.
service date is the date when the employee renders the services necessary to become
unconditionally entitled to the option-vesting date is the date when the employee has satisfied all
the conditions necessary to become entitled to the option. For example, if the employee is required
to remain in the entity’s employ for 3 years, vesting date is at the end of that 3-year period.
exercise date is when the option is exercised
The Board concluded that grant date is the appropriate measurement date.
26.4
CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS
For cash-settled share-based payment transactions, the entity shall measure the goods or
services acquired and the liability incurred at the fair value of the liability. Until the liability is
settled, the entity shall remeasure the fair value of the liability at each reporting date, with any
changes in fair value recognised in profit or loss.
For example, an entity might grant share appreciation rights to employees as part of their pay
package, whereby the employees will become entitled to a future cash payment (rather than an equity
instrument), based an the increase in the entity's share price from a specified level over a specified
period of time.
The liability shall be measured, initially and at each reporting date until settled, at the fair value of the
share appreciation rights, by applying an option pricing model, taking into account the terms and
40
conditions an which the share appreciation rights were granted,-and the extent to which the employees
have rendered service to date.
26.5
SHARE-BASED PAYMENT TRANSACTIONS WITH CASH ALTERNATIVES
For share-based payment transactions in which either the entity or the counterparty may choose
whether the entity settles the transaction in cash or by issuing equity instruments, the entity shall
account for that transaction, or the components of that transaction, as a cash-settled share-based
payment transaction if the entity has incurred a liability to settle in cash or other assets, or as an
equity-settled share-based payment transaction if no such liability has been incurred.
The entity shall first measure the fair value of the debt component, and then measure the fair value of
the equity component-taking into account that the counterparty must forfeit the rght to receive cash to
receive the equity instrument. Fair value of one settlement alternative is the same as the other.
26.6
SHARE-BASED PAYMENT TRANSACTIONS IN WHICH THE ENTITY HAS THE
CHOICE OF SETTLEMENT
For a share-based payment transaction in which an entity may choose whether to settle in cash or by
issuing equity instruments, the entity shall determine whether it has a present obligation to settle in
cash and account for the share-based payment transaction accordingly. The entity has a present
obligation to settle in cash if the choice of settlement in equity instruments is not substantive, or if
the entity has a past practice or a stated policy of settling in cash.
If no such obligation exists, the entity shall account for the transaction in accordance with the
requirements applying to equity-settled transactions. Upon settlement:
a) if the entity elects to settle in cash, the cash payment shall be accounted for as the
repurchase of an equity interest, ie as a deduction from equity, except as noted in (c) below.
b) (b) if the entity elects to settle by issuing equity instruments, no further accounting is
required (other than a transfer from one component of equity to another, if necessary),
except as noted in (c) below.
c) (c) if the entity elects the settlement alternative with the higher fair value, as at the date of
settlement, the entity shall recognise an additional expense for the excess value given, ie the
difference between the cash paid (the fair value of the equity instruments issued) and the fair
value of the equity instruments that would otherwise have been issued (the amount of cash
that would otherwise have been paid).
26.7
DISCLOSURES
An entity shall disclose information that enables users of the financial statements to understand the
nature and extent of share-based payment arrangements that existed during the period. To give
effect to the principle in paragraph 45, the entity shall disclose at least the following:
a) A description of each type of share-based payment arrangement that existed at any time during
the period, including details of:
whether the rights granted by the entity to employees or other parties pursuant to the
arrangement consisted of rights to shares, share options, other equity instruments, cash or other
assets;
i) when those rights were granted;
ii) Chose to whom the rights were granted (eg a description of the number and class of
employees participating in a group employee share plan);
iii) the contractual life of options granted;
iv) whether the exercise price is fixed or variable (and, if variable, how the exercise price is
determined); and
v) A description of the vesting requirements, including service conditions and performance
conditions.
41
b) the number and weighted average exercise prices of options for each of the following groups of
options:
(i) outstanding at the beginning of the period;
(ii) granted during the period;
(iii)forfeited during the period;
(iv) exercised during the period; (v) expired during the period;
(v) outstanding at the end of the period; and (vii) exercisable at the end of the period.
c) for options exercised during the period, the weighted average share price at the date of exercise.
An entity shall disclose information to enable users of the financial statements to understand how
the fair value of the goods or services received, or the fair value of the equity instruments granted,
during the period was determined.
An entity shall disclose information that enables users of the financial statements to understand the
effect of expenses arising from share-based payment transactions and the entity's profit or loss for
the period.
26.8
Example
An entity grants 100 options to each of its 500 employees. Each grant is conditional upon the
employee working for the entity over the next years. The entity estimates that the fair value of each
option is CU15,* before adjusting for the possibility of forfeiture due to failure of the employee to
complete the required three-year period of service. On the basis of a weighted average probability,
the entity estimates that 20 per cent of employees will leave during the three-year period and
therefore forfeit their rights to the options. Therefore, the total fair value of the options granted =
500 employees x 100 options x CU15 x 80% = CU600,000.
The entity also estimates, on the basis of a weighted average probability, that the employee
departures will be spread evenly over the three years.Therefore, the entity expects to receive 3
years' service from 400 employees (500 x 80%), and it also expects to receive services from the
other 20% of employees before they leave. Because their departures are expected to occur evenly
over the three years, the entity expects to receive, on average, 1.5 years of service from each of the
100 employees who are expected to leave before vesting date. Therefore, the entity expects to
receive in total (3 years' service * 400 ernployees) + (1 .5 years' service x 100 employees) = 1,350
'years' (units) of service from the employees.
To determine the fair value of each unit of service expected to be received, the fair value of the
options granted (CU600,000) is divided by the number of units of service expected to be received
during the vesting period (1,350), which gives a deemed fair value of CU444.44 per unit of
employee service.
If everything turns out exactly as expected, the entity recognises the following amounts during the
vesting period, for services received as consideration for the options.
CU
Year 1
(467 + (33 x 0.5)) units of service x CU444.44 =
Year 2
(433 + (34 x 0.5)) units of service x CU444.44 =
Year 3
(400+ (33 x 0.5» units of service x CU444.44 =
214,889
Total over three years
600.000
200,000
185,111
42
If fewer employees leave than originally estimated, or those that leave stay longer before leaving,
the total amount will be higher than in Scenario 1, because more services would be received than
expected. For example, suppose that only 50 employees leave, and they all leave at the end of year
2:
Year 1
500 units of service x CU444.44 =
222,222
500 units of service x CU444.44 =
222,222
450 units of service x CU444.44 =
Total over three years
200.000
644.444
Year 2
Year 3
If more employees leave than originally estimated, or they leave earlier than expected, the total
amounts recognised will be lower than earlier, because fewer services would be received than
expected. Suppose 75 employees leave halfway through year 1, another 75 leave three months from
the start of year 2 and 40 leave halfway through year 3, so there are 310 employees at the end of
year 3.
Year 1:
(425 + (75 * 0,5)) * 444,44 = 205.554
Year 2:
(350 + (75 *0,25)) * 444,44 = 163.887
Year 3:
(310 + (40 * 0,5)) * 444,44 = 146.667
Total over 3 years
= 516.108
43
27 Words and Phrases
27.1
English – German
allocation
allocation to (long-term) reserves
allowance account
amortize
amortized cost
application
appraisal
arm’s length transaction
audit opinion
bad debt loss
bill of exchange
bill of exchange (B/E)
building society
business combination
carrying amount
cash & cash equivalents
catastrophe provision
collateral (security) (e.g.: reservation of
ownership
commodity-based contract
compliance period
compound instruments
cost equity method
cost of goods sold (COGS)
credit and funding risk
deferred income
deferred income
deferred lax liability
deferred tax asset
defined benefit plan
defined contribution plan
derivative financial instruments
derivatives
disclosure
earnings per share (EPS)
effective interest
endorsement
enforcement
enterprises
entity
equalisation provision
equity instrument
equity instruments
equity method investments
Zuteilung, Kontingent
Dotierung von (langfristigen) Rücklagen
Abschreibungskonto
abschrieben, amortisieren, tilgen
fortgeschriebene Anschaffungskosten
Applikation, Anwendung, Programm,
Software
Bewertungsgutachten
Abschluss auf rein geschäftlicher Grundlage
(z.B.: zu Marktpreisen)
Bestätigungsvermerk
Forderungsausfall
Wechsel
Wechsel
Bausparkassa
Unternehmenszusammenschluss
Buchwert
Zahlungsmittel
Katastrophenrückstellung
Sicherheit (z.B.: Eigentumsvorbehalt)
Warentermingeschäfte
Erfüllungszeitraum
zusammengesetzte Finanzinstrument
(beinhalten beides, Schuld und Eigenkapital)
Kostenarten
Ausfalls- und Liquiditätsrisiko
Bewertungsreserve
Bewertungsreserve
latente Steuerschuld
latente Steuerforderungen
leistungsorientierte Betriebspension
beitragsorientiertes Betriebspension
derivative Finanzinstrumente z.B. Optionen,
Termingeschäfte, Swaps
Derivate
Angaben
Gewinn pro Aktie
Effektiver Zinssatz
zum Gesetz machen
die Einhaltung des Gesetzes überprüfen
Unternehmen
Rechtspersönlichkeit, Unternehmen
Schwankungsrückstellung
Eigenkapitalinstrument
Dividendenpapiere
Equity-Beteiligungen
44
equity securities
expenditure
expense
exposure
fair value
fair value
Eigenkapitaltitel
Ausgaben
Aufwand
Aussetzung, Aufdeckung
beizulegender Zeitwert
Tageswert,
Marktwert,
Verkehrswert,
beizulegender Wert
feasibility
Durchführbarkeit
finance lease
Leasing über überwiegenden Teil der
wirtschaftlichen ND und Eigentumsübergang
am Ende der Vertragszeit.
financial asset
finanzieller Vermögenswert
financial asset
Finanzanlagen, Forderung als Vermögenswert
financial assets
Wertpapiere und Finanzanlagen
financial instrument
Finanzinstrument
financial liability
finanzielle Verbindlichkeit
fixed asset movement schedule
Anlagenspiegel
fully diluted EPS
voll verwässerte Aktien
future economic benefit
Zukünftiger wirtschaftlicher Nutzen
government agencies
öffentliche Institutionen
hedging
Absicherung zukünftiger Geschäfte
historical cost concept
Anschaffungskostenprinzip
impairment
Neubewertung
incorporated bodies
Kapitalgesellschaften
individuals
Personen
infrastructure (Web Sites)
Infrastruktur: Hard- und Software in einem
einzelnen Computer oder einem
Computernetz, die die Grundlagen für
Datenverarbeitung und Datenaustausch
darstellen.
initial recognition
Erstaktivierung
intangible asset
inmaterielles Anlagevermögen
immaterielle Vermögenswerte Intangible asset - an identifiable nonidentifizierbare nicht monetäre
monetary asset without physical substance
Vermögenswerte, ohne physische Substanz,
held for use in the production or supply of
goods and services, for rental to others, or for die für den Gebrauch in der Produktion, in der
Güter- und Dienstleistungsversorgung, für die
administrative purposes
Vermietung an Dritte oder für
Verwaltungszwecke gehalten werden.
intangible assets
immaterielle Vermögenswerte
Internally generated intangible assets
Selbsterstellte immaterielle Vermögenswerte
internet service provider
„Internet-Dienstbereitsteller Firma/Institution, die meist gegen Gebühren
über eigene Teilnetze Zugang zum Internet
bietet.
inventories
Vorräte
issued capital
Nennkapital
mandatory redemption
vorgeschriebene Abzahlung
matching
periodengerechter Erfolgsausweis
minority Interest
Minderheitenanteile
minority interests
Minderheitenanteile am Ergebnis
monetary financial assets/liabilities
monetäre Finanzinstrumente (haben einen
45
net loss of the year
noncurrent liabilities
offset
operating lease
overhead expenditure
partnerships
pollutant
pooling interest method
preferred share
prepaid expenses
presentation
primary financial instruments
pro rata consolidation
profit of the year
property, plant & equipment (PPE)
provision
provisions
prudence
quoted price
recent market transaction
recognition
recognize
reservation of ownership
reserves
residual interest
retransfer of (long-term) reserves
revaluations surplus
security
severance payment
share (much wider range of meaning in
English language)
split accounting
stewardship
strike-price
tangible asset
to amortize intangible asset
to capitalize sth
to consolidate
to depreciate tangible asset
to expense
total cost format
trade payables
trade receivables
unearned revenues
useful life
valuation technique
festen oder bestimmbaren Geldbetrag)
Jahresüberschuss
langfristige Verbindlichkeiten
Ausgleich
„kurzfristiges“ Leasing
gewöhnliche Betriebsausgaben
Personengesellschaften
Schadstoff
Interessenszusammenführungsmethode
Vorzugsaktie
aktive Rechnungsabgrenzungsposten
Darstellung
originäre (klassische) Finanzinstrumente z.B.
Forderungen, Verbindlichkeiten, Eigenkapital
Quotenkonsolidierung
Jahresüberschuss
Sachanlagen
Rückstellung
Rückstellungen
Vorsichtigkeitsprinzip
Gelisteter Preis (Börse)
Markttransaktion vor kurzer Zeit (Kauf /
Verkauf)
Aktivierung
Vermögensgegenstand oder Verbindlichkeit
im Jahresabschluss dem Grunde nach
berücksichtigen
Eigentumsvorbehalt
Rücklagen
Residualanspruch
Auflösung (langfristiger) Rücklagen
Neubewerbungsrücklage
Wertpapier
Abfertigung
Aktie
getrenntes ausweisen von Schulden und
Eigenkapital
Verwaltung
Ausübungspreis
materielles Anlagevermögen
abschreiben
aktivieren
voll konsolidieren
abschreiben
als Aufwand buchen
Kostenstellen
Verbindlichkeiten aus L+L
Forderungen aus L+L
passive Rechnungsabgrenzungsposten
Nutzungsdauer
Bewertungsmethode
46
27.2
German - English
allocation
cost equity method
internet service provider
operating lease
severance payment
arm’s length transaction
to amortize intangible asset
to depreciate tangible asset
allowance account
amortize
hedging
share (much wider range of meaning in
English language)
prepaid expenses
to capitalize sth
recognition
to expense
disclosure
fixed asset movement schedule
historical cost concept
application
retransfer of (long-term) reserves
expense
credit and funding risk
expenditure
offset
exposure
strike-price
building society
defined contribution plan
fair value
audit opinion
appraisal
valuation technique
deferred income
deferred income
carrying amount
presentation
derivatives
derivative financial instruments
enforcement
equity instruments
allocation to (long-term) reserves
feasibility
effective interest
Zuteilung, Kontingent
„Internet-Dienstbereitsteller Firma/Institution, die meist gegen Gebühren
über eigene Teilnetze Zugang zum Internet
bietet.
„kurzfristiges“ Leasing
Abfertigung
Abschluss auf rein geschäftlicher Grundlage
(z.B.: zu Marktpreisen)
abschreiben
abschreiben
Abschreibungskonto
abschrieben, amortisieren, tilgen
Absicherung zukünftiger Geschäfte
Aktie
aktive Rechnungsabgrenzungsposten
aktivieren
Aktivierung
als Aufwand buchen
Angaben
Anlagenspiegel
Anschaffungskostenprinzip
Applikation, Anwendung, Programm,
Software
Auflösung (langfristiger) Rücklagen
Aufwand
Ausfalls- und Liquiditätsrisiko
Ausgaben
Ausgleich
Aussetzung, Aufdeckung
Ausübungspreis
Bausparkassa
beitragsorientiertes Betriebspension
beizulegender Zeitwert
Bestätigungsvermerk
Bewertungsgutachten
Bewertungsmethode
Bewertungsreserve
Bewertungsreserve
Buchwert
Darstellung
Derivate
derivative Finanzinstrumente z.B. Optionen,
Termingeschäfte, Swaps
die Einhaltung des Gesetzes überprüfen
Dividendenpapiere
Dotierung von (langfristigen) Rücklagen
Durchführbarkeit
Effektiver Zinssatz
47
equity instrument
equity securities
reservation of ownership
equity method investments
compliance period
initial recognition
financial asset
financial liability
financial asset
financial instrument
trade receivables
bad debt loss
amortized cost
quoted price
Eigenkapitalinstrument
Eigenkapitaltitel
Eigentumsvorbehalt
Equity-Beteiligungen
Erfüllungszeitraum
Erstaktivierung
Finanzanlagen, Forderung als Vermögenswert
finanzielle Verbindlichkeit
finanzieller Vermögenswert
Finanzinstrument
Forderungen aus L+L
Forderungsausfall
fortgeschriebene Anschaffungskosten
Gelisteter Preis (Börse)
getrenntes ausweisen von Schulden und
split accounting
Eigenkapital
earnings per share (EPS)
Gewinn pro Aktie
overhead expenditure
gewöhnliche Betriebsausgaben
intangible assets
immaterielle Vermögenswerte
immaterielle Vermögenswerte Intangible asset - an identifiable nonidentifizierbare nicht monetäre
monetary asset without physical substance
Vermögenswerte, ohne physische Substanz,
held for use in the production or supply of
goods and services, for rental to others, or for die für den Gebrauch in der Produktion, in der
Güter- und Dienstleistungsversorgung, für die
administrative purposes
Vermietung an Dritte oder für
Verwaltungszwecke gehalten werden.
infrastructure (Web Sites)
Infrastruktur: Hard- und Software in einem
einzelnen Computer oder einem
Computernetz, die die Grundlagen für
Datenverarbeitung und Datenaustausch
darstellen.
intangible asset
inmaterielles Anlagevermögen
pooling interest method
Interessenszusammenführungsmethode
net loss of the year
Jahresüberschuss
profit of the year
Jahresüberschuss
incorporated bodies
Kapitalgesellschaften
catastrophe provision
Katastrophenrückstellung
cost of goods sold (COGS)
Kostenarten
total cost format
Kostenstellen
noncurrent liabilities
langfristige Verbindlichkeiten
deferred tax asset
latente Steuerforderungen
deferred lax liability
latente Steuerschuld
finance lease
Leasing über überwiegenden Teil der
wirtschaftlichen ND und Eigentumsübergang
am Ende der Vertragszeit.
defined benefit plan
leistungsorientierte Betriebspension
recent market transaction
Markttransaktion vor kurzer Zeit (Kauf /
Verkauf)
tangible asset
materielles Anlagevermögen
minority Interest
Minderheitenanteile
minority interests
Minderheitenanteile am Ergebnis
monetary financial assets/liabilities
monetäre Finanzinstrumente (haben einen
48
issued capital
revaluations surplus
impairment
useful life
government agencies
primary financial instruments
unearned revenues
matching
individuals
partnerships
pro rata consolidation
entity
residual interest
reserves
provision
provisions
property, plant & equipment (PPE)
pollutant
equalisation provision
Internally generated intangible assets
collateral (security) (e.g.: reservation of
ownership
fair value
enterprises
business combination
trade payables
recognize
stewardship
to consolidate
fully diluted EPS
mandatory redemption
inventories
prudence
preferred share
commodity-based contract
bill of exchange
bill of exchange (B/E)
security
financial assets
cash & cash equivalents
future economic benefit
endorsement
compound instruments
festen oder bestimmbaren Geldbetrag)
Nennkapital
Neubewerbungsrücklage
Neubewertung
Nutzungsdauer
öffentliche Institutionen
originäre (klassische) Finanzinstrumente z.B.
Forderungen, Verbindlichkeiten, Eigenkapital
passive Rechnungsabgrenzungsposten
periodengerechter Erfolgsausweis
Personen
Personengesellschaften
Quotenkonsolidierung
Rechtspersönlichkeit, Unternehmen
Residualanspruch
Rücklagen
Rückstellung
Rückstellungen
Sachanlagen
Schadstoff
Schwankungsrückstellung
Selbsterstellte immaterielle Vermögenswerte
Sicherheit (z.B.: Eigentumsvorbehalt)
Tageswert,
Marktwert,
Verkehrswert,
beizulegender Wert
Unternehmen
Unternehmenszusammenschluss
Verbindlichkeiten aus L+L
Vermögensgegenstand oder Verbindlichkeit
im Jahresabschluss dem Grunde nach
berücksichtigen
Verwaltung
voll konsolidieren
voll verwässerte Aktien
vorgeschriebene Abzahlung
Vorräte
Vorsichtigkeitsprinzip
Vorzugsaktie
Warentermingeschäfte
Wechsel
Wechsel
Wertpapier
Wertpapiere und Finanzanlagen
Zahlungsmittel
Zukünftiger wirtschaftlicher Nutzen
zum Gesetz machen
zusammengesetzte Finanzinstrument
(beinhalten beides, Schuld und Eigenkapital)
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