Deloitte and IFRS

Deloitte brings an in-depth experience and capabilities for providing IFRS services. The organization has been serving a host of corporate majors, assisting them with the conversion and preparation of the IFRS compliant financial statements.

The breadth and depth of its network, state-of-the art tools and technologies, and its commitment for providing high-quality services to its clients place Deloitte as a leading IFRS services provider.

Deloitte professionals are actively involved with the top IFRS bodies around the world in the Standard setting process.

CCH Customized Training on IFRS

CCH India provides in-company training course in the area of IFRS keeping in forefront your organizational needs and delivered at a time and place of your choice. Such a course can be organized on-site within your office premises or off-site at any convenient location of choice, as mutually agreed upon. This is one of our specialized courses that can be delivered in-house, and is put together to fulfill your organization’s specific training requirements. We offer flexible scheduling at an excellent value and delivered by the best professionals or academia in the subject domain of IFRS. Our functional experts have developed the IFRS modules that fit to your organizational requirements. We provide the content in the format of presentations as well as a trainer’s manual.

The Course will offer:
IFRS technical literature – participant binder
IFRS trainers’ manual (PowerPoint)
Train the trainer program along with Faculty guide for each session
Case studies and solutions
Benefits of the course

Talent Creation – creating IFRS capability in-house
World class technical content
Experts – program contents designed and delivered by experts
Cost Effective – Low cost when compared to receiving a third party from outside the company
Self-sustaining IFRS Knowledge Management Process

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1. Credited to profit and loss account;
2. Credited directly to retained earnings; or
3. Showned as liability to the person providing the advance.

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IFRS List is proud to be supporting Infoline’s IFRS events in October 2009.

As a special offer to IFRSLIST members, here is an exclusive 10% discount.

Quote KM6308ILEM to secure the special deal.

IFRS Application for General Insurers
Including Case Studies & Worked Examples – http://www.infoline.org.uk/workshops/ifrs-application-for-general-insurers/379/
28 & 29 October 2009 • Central London
View Latest Agenda – http://www.infoline.org.uk/downloads/379/KM6309AX.pdf

IFRS Application for Life Insurers
Including Case Studies & Worked Examples – http://www.infoline.org.uk/workshops/ifrs-application-for-life-insurers/378/
14 & 15 October 2009 • Central London
View Latest Agenda – http://www.infoline.org.uk/downloads/378/KM6308AX.pdf

SAVE up to £600. Register by FRIDAY 25th September 2009

Attend this comprehensive training course to:
• Obtain an overview of Financial Reporting Requirements for Insurance Companies
• Gain a basic understanding of the Key IFRS Accounting Principles and Requirements applicable to life and general insurers
• Examine specific provisions for UK firms including those relating to:
– FRS27
– ABI SORP
– IFRS4
– IAS18 and IAS39
– IAS21
• Clarify the practical application of IFRS to:
– Investments (including derivatives)
– Underwriting and reserving
– Reinsurance
– Typical insurer assets and liabilities
• Identify the most significant issues and options that arise in Preparation of Financial Statements
• Highlight Additional Disclosures required arising from critical accounting judgements and sources of uncertainty

PLUS Case Studies and Examples to illustrate the Interpretation and Application of IFRS by with specific focus on the UK environment

Read More about the event – http://www.infoline.org.uk/downloads/379/KM6309AX.pdf

Book by 25th September and SAVE up to £600
Book your place for IFRS for General Insurers (28&29 October) – ttp://www.infoline.org.uk/booking/379/
Book your place for IFRS for Life Insurers (14 &15 October) – http://www.infoline.org.uk/booking/378/

Alternatively call 020 7017 7702 now, or simply email custserv@infoline.org.uk quoting your VIP code: KM6308ILEM for the 10% discount.

I hope you will be able to join us in the autumn.

Kind regards

Natalie Tangsakul
IFRS Events Team

PS. Other Events that could be of interest to you or your colleagues

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Helix Business Solutions

Energizing your organization….

ICAI has announced that all financial institutions have to report their financials in the IFRS format by 2011.  Are you prepared for it?

Helix Business Solutions is keeping a seminar on IFRS on 24th July 2009. It is a 2-day seminar in one of the best hotels in Mumbai with state-of-art facilities. The session will introduce you to the concepts of IFRS and how it impacts India Inc. Each accounting standard and its impact will be covered in detailed.

Date: Friday, 24th July 2009 and Saturday,25th July 2009

Time:10:00 am to 05:00 pm

Arrangements: Breakfast, lunch and high tea.

Contact us for more details:

Helix Business Solutions

2nd Floor, Jupiter Building, Behind McDonalds
Naupada
Thane – 400601
Maharashtra
India

Website: www.helixbizsolutions.com

Email Id: helixservies@gmail.com

Contact No.: +91 9322267594

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My company has a 50% shareholding in a joint venture company, A. A has a wholly owned subsidiary (B) and is going to transfer its interest in this subsidiary to its shareholders (i.e. 50% to my company and 50% to the other joint venturer).

How shall my company account for such purchase of 50% shareholding in B? Shall I use purchase accounting (i.e. to fair value the net assets of B)?

Thanks

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Stephen Cooper, Member of the Board, Hilary Eastman, Project Manager and Henri Venter, Assistant Project Manager, will be introducing the exposure draft in a live web presentation on 30 June 2009 followed by a question and answer session. The exposure draft is open for comment until 28 September 2009.

The web presentation and the question and answer sessions will be recorded and made available on the project website soon after the presentation.

Register to participate

Each presentation, including the question and answer session, is expected to last around one hour. There’s no charge to attend the web presentation, but you need to register to participate. You can do this now or any time before the presentation. If you register now, the provider will automatically remind you of the presentation nearer the time. For the convenience of participants in different time zones we have scheduled two slots for the webcast:

30 June 2009 at 9.30am (London time
Web registration - Register here
Dialling in - Register here

30 June 2009 at 3.30pm (London time)
Web registration - Register here
Dialling in - Register here

Want to know more? For a quick plain-English introduction to the exposure draft, read the Snapshot

Technical information

Your computer must allow pop-ups. In case of doubt, please contact your technical department for information.
To access the presentation your computer must have Windows Media Player or Real Player installed.
For technical questions, please contact Chris Samarakkody on +44 (0)20 7246 6444.

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Please find attached a selection of IASeminars IFRS courses scheduled by May, June, July and August.

Remember: As IFRSLIST.com member you save 10% on total order for any public seminars booked through IASeminars website (within June 30th 2009). In order to benefit from this offer, please remember to use the IFRSList promotional code (“LIST10“) when prompted to do so whilst placing an order IASeminars website. Discover in detail the benefit and IASeminars worldwide courses. Click here - http://www.iaseminars.com/en/ifrslist.html?utm_source=ifrslist0509&utm_medium=email&utm_campaign=ifrslistmay

· Visit IASeminars website and discover all scheduled courses in your country

25 May 09 2 days 1660 IFRS for the Telecommunication Sector – Canada – Calgary – http://www.iaseminars.com/en/event/?Code=1660&VenueID=31&EventTopicID=&EventSubTopicID=

Course Summary
This two-day course examines international financial reporting issues in detail and their effect on telecommunication entities (telecoms). The programme includes case studies and financial statements that illustrate the real-world application of financial reporting requirements.

· June international courses

8 Jun 09 8 days 1000 IFRS Immersion Workshop – London – http://www.iaseminars.com/en/event/?Code=1000&VenueID=4&EventTopicID=&EventSubTopicID=

Course Summary
This eight-day IFRS immersion workshop focuses on all significant IFRS requirements, with detailed explanations and examples presented by two expert instructors. The programme includes the latest pronouncements, and participants will be brought up-to-date on all IFRS topics. Important Note: This course is officially accredited for Continuing Professional Development (CPD) purposes by CIMA, the Chartered Institute of Management Accountants, which is the voice of over 158,000 students and members in 161 countries.

9 Jun 09 4 days 1010 IFRS Overview – San Francisco – http://www.iaseminars.com/en/event/?Code=1010&VenueID=45&EventTopicID=&EventSubTopicID=

Course Summary
This four-day course provides a detailed overview of the technical issues faced in producing IFRS financial statements. Delegates may also wish to consider the more expanded Course 1000: IFRS Immersion Workshop (8-day course)

15 Jun 09 4 days 1010 IFRS Overview – Montreal – http://www.iaseminars.com/en/event/?Code=1010&VenueID=24&EventTopicID=&EventSubTopicID=

Course Summary
This four-day course provides a detailed overview of the technical issues faced in producing IFRS financial statements. Delegates may also wish to consider the more expanded Course 1000: IFRS Immersion Workshop (8-day course).

16 Jun 09 2 days 1629 Deloitte IFRS Workshop for Canadian Oil & Gas – Calgary – http://www.iaseminars.com/en/event/?Code=1629&VenueID=31&EventTopicID=&EventSubTopicID=

Course Summary
Led by Deloitte IFRS oil and gas experts, this two-day immersion workshop is specifically designed for Canadian oil and gas entities transitioning to IFRS. Over the 16 hours spent in intensive professional training, delegates will gain an in-depth understanding of the critical issues involved in IFRS implementation. This will be achieved by undertaking mini case studies, by group discussions on real-world issues, and from the in-depth interactive sessions facilitated by Deloitte experts and designed to illustrate the most important conceptual and pragmatic issues.

22 Jun 09 5 days 1021 IFRS Overview, with US GAAP Comparison – Miami – http://www.iaseminars.com/en/event/?Code=1021&VenueID=7&EventTopicID=&EventSubTopicID=

Course Summary
This five-day interactive workshop is a detailed overview of the technical issues involved in IFRS and a summary of the critical differences between IFRS and US GAAP. The programme is presented using financial statements, case studies, and extensive examples.

· July International Courses

2 Jul 09 2 days 1400 Meeting IFRS Disclosure and Presentation Requirements – London – http://www.iaseminars.com/en/event/?Code=1400&VenueID=4&EventTopicID=&EventSubTopicID=

Course Summary
This two-day course focuses on developing the skills to effectively comply with both current and upcoming IFRS disclosure requirements. Participants will learn about IFRS presentation and disclosure requirements in detail, including those most recently issued, as well as new rules that are anticipated in the near future. Illustrations and exercises are used throughout the programme to enhance and reinforce learning.

28 Jul 09 4 days 1010 IFRS Overview – Sao Paulo – http://www.iaseminars.com/en/event/?Code=1010&VenueID=42&EventTopicID=&EventSubTopicID=

Course Summary
This four-day course provides a detailed overview of the technical issues faced in producing IFRS financial statements. Delegates may also wish to consider the more expanded Course 1000: IFRS Immersion Workshop (8-day course)

· August international courses

3 Aug 09 2 days 1210 IFRS and US GAAP Accounting for Derivatives and – Sao Paulo – http://www.iaseminars.com/en/event/?Code=1210&VenueID=42&EventTopicID=&EventSubTopicID=

Course Summary
This two-day course provides a comprehensive view of the most important accounting and reporting requirements for derivatives and hedging activities under US GAAP (FAS 133) and IFRS (IAS 39 and IFRS 7).

5 Aug 09 3 days 1248 IFRS Business Combinations and Consolidations – Sao Paulo – http://www.iaseminars.com/en/event/?Code=1248&VenueID=42&EventTopicID=&EventSubTopicID=

Course Summary
This three-day interactive course provides delegates with a comprehensive understanding of IFRS 3 Business Combinations (including the January 2008 revisions) and IAS 27 Consolidated and Separate Financial Statements. In addition, the programme addresses the relevant aspects of IAS 28 Investments in Associates, IAS 31 Interests in Joint Ventures, and IAS 21 The Effects of Changes in Foreign Exchange Rates.

10 Aug 09 3 days 1741 IFRS Accounting for Banks and Other Financial I – Sao Paulo – http://www.iaseminars.com/en/event/?Code=1741&VenueID=42&EventTopicID=&EventSubTopicID=

Course Summary
This highly interactive three-day course explores international financial reporting practices for banks and other financial institutions through the use of case studies, exercises, model financial statements and break-out sessions.

17 Aug 09 5 days 1021 IFRS Overview, with US GAAP Comparison – Chicago – http://www.iaseminars.com/en/event/?Code=1021&VenueID=12&EventTopicID=&EventSubTopicID=

Course Summary
This five-day interactive workshop is a detailed overview of the technical issues involved in IFRS and a summary of the critical differences between IFRS and US GAAP. The programme is presented using financial statements, case studies, and extensive examples.

17 Aug 09 5 days 1021 IFRS Overview, with US GAAP Comparison – Prague – http://www.iaseminars.com/en/event/?Code=1021&VenueID=55&EventTopicID=&EventSubTopicID=

Course Summary
This five-day interactive workshop is a detailed overview of the technical issues involved in IFRS and a summary of the critical differences between IFRS and US GAAP. The programme is presented using financial statements, case studies, and extensive examples.

· Feedback

Comments and feedback are welcome: salvi.simone@gmail.com

Best Regards
Simone Salvi

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This is just to inform you about an interesting IASC Foundation IFRS Conference in Milan (Italy) next June.

A special offer in case you register by 22nd May 2009.

Kind Regards
Simone Salvi

—————————————————————————————————————–

VIP Code: KM2186IFRS
IASC Foundation IFRS Conference
Wednesday 24th June 2009 and Thursday 25th June 2009
Milan Marriott hotel (Italy)

Download program: http://www.iascfconference.org/IFRSList_com_Email_Milan_Brochure
Visit the website: http://www.iascfconference.org/IFRSList_com_Email_Milan_Homepage

Register by 22nd May & SAVE up to 300 Euros.

—————————————————————————————————————–

Dear Members

You might remember the priority notification about the IASC Foundation IFRS Conference in Milan that I sent you a few weeks ago.

The early registration fee expires at the end of this week so register now to take advantage of the saving available; this is your last chance to SAVE up to Euro 300 per delegate.

The IASC Foundation IFRS Conference will take place on the 24th & 25th June at the Milan Marriott hotel, Milan.

Furthermore, half-day separate special interest sessions will be held immediately before the conference on:

1. Regulatory update
2. IFRS for non‑publicly accountable entities
3. IFRS for extractive activities
4. IFRS teaching & research
5. IFRS measurements

Download program: http://www.iascfconference.org/IFRSList_com_Email_Milan_Brochure
Visit the website: http://www.iascfconference.org/IFRSList_com_Email_Milan_Homepage

Places for this conference are filling up fast so please ensure you register as soon as possible to guarantee your place.

Yours sincerely
Spencer Keyworth

(IIR event managing for the IASC Foundation under contract)

P.S You can also SAVE up to 450 US$ by booking your place on IASC Foundation IFRS Conference: Seoul – Please visit the website to see more details

Download program: http://www.iascfconference.org/IFRSList_com_Email_Seoul_Brochure
Visit the website: http://www.iascfconference.org/IFRSList_com_Email_Seoul_Homepage

VIP Code: KM2186IFRS
Register by 22nd May & SAVE up to 300 Euros
Tel: +44 (0)20 7017 5509
Fax: +44 (0)20 7017 7824
Email registration@iascfconference.org

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Please let me know the treatment of Existing negative goodwill incase of first time adoption of IFRS

Regards

Chirag

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Effective corporate financial reporting remains one of the most crucial functions within a company.In today’s constantly changing global business environment with new regulations and a harsh macro economic environment, it is becoming more of a challenge to report corporate financial performance accurately and timely while constantly staying on-top of changes in regulations from the SEC and FASB.

This event will bring together top corporate leaders and government regulators to discuss honestly the future of financial reporting.Leave this conference with an understanding on how real companies are preparing for IFRS, implementing XBRL, integrating processes into the business, and reporting during mergers and acquisitions.

This year’sFinancial Reporting Excellence conference has been specifically co-located with ourindustry specific Leveraging SOX Compliance in Financial Services conference and also 15^th Edition of the SOX Compliance Evolution conference, the premier venue for VPs, SVPs, Directors and Senior Management from leading Fortune 500 companies from various industries with responsibilities or involvement in the following areas:SOX Compliance,Corporate Governance,Internal Audit,Risk, Financial Reporting and Controls. The three conferences, combined into a uniqueGRC Leadership Forum, willbe held at the same venue inBoston and will be bridged together by networking sessions and shared breaks that involve participants from both conferences. Joint participation in the conferences is highly recommended and will be facilitated upon request/interest.

Financial Reporting Excellence – SOX Compliance Evolution – Leveraging SOX Compliance in Financial Services 
 

marcus evans is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National Registry of CPE Sponsors.State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417.Web site: www.nasba.org

• Understanding Ipact of US GAAP and IFRS Convergence
• Ensuring Timeliness and Accuracy in Financial Reports
• Adding Value Through Effective Financial Reporting
• Leveraging Technology to Add Value (XBRL)
• Effective Forecasting and Budgeting and Maximizing on the Best Structure and Processes

• Understand key business implications of transitioning from US GAAP to IFRS
• Identify best organizational structure around financial reporting
• Utilize new tools for financial reporting
• Benchmark XBRL implementation and how to recover return on investment 

   

“Understand the latest guidance on financial reporting and how it impacts your business in 2009 and beyond.”

Leverage effective financial reporting in your business

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Have a good joining.

Simone Salvi

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can anyone please guide me if there are any guidelines as to establish
date of commercial production in a manufacturing concern in IFRS.

thanks and regards

deepak

Hi Deepak,

I assume you are inferring to either intangible assets.

There is no specific guidance as to this date.

However, it is not unusual to assume the date of commercial production
to be the date (month) in which the first commercial orders are
processed in relation to the intangible.

Hi Alan

My query is regarding trial run expenditures in a manufactuing
concern. Till when can the trial run expenditures be capitalised in a
manufacturing concern. Are there any specific guidelines for same
under ifrs ?

deepak

Hi Deepak,The operative term used under IAS 16 is “capable of operating in the
manner intended by management”.Under cost recognition IAS 16 states the following:16 The cost of an item of property, plant and equipment comprises:(a) its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade discounts and
rebates.(b) any costs directly attributable to bringing the asset to
the location and condition necessary for it to be capable of operating
in the manner intended by management.(c) the initial estimate of the costs of dismantling and
removing the item and restoring the site on which it is located, the
obligation for which an entity incurs either when the item is acquired
or as a consequence of having used the item during a particular period
for purposes other than to produce inventories during that period.17 Examples of directly attributable costs are:(a) costs of employee benefits (as defined in IAS 19 Employee
Benefits) arising directly from the construction or acquisition of the
item of property, plant and equipment;(b) costs of site preparation;(c) initial delivery and handling costs;(d) installation and assembly costs;(e) costs of testing whether the asset is functioning
properly, after deducting the net proceeds from selling any items
produced while bringing the asset to that location and condition (such
as samples produced when testing equipment); and(f) professional fees.20 Recognition of costs in the carrying amount of an item of
property, plant and equipment ceases when the item is in the location
and condition necessary for it to be capable of operating in the
manner intended by management. Therefore, costs incurred in using or
redeploying an item are not included in the carrying amount of that
item. For example, the following costs are not included in the
carrying amount of an item of property, plant and equipment:(a) costs incurred while an item capable of operating in the
manner intended by management has yet to be brought into use or is
operated at less than full capacity;(b) initial operating losses, such as those incurred while
demand for the item’s output builds up; and(c) costs of relocating or reorganising part or all of an
entity’s operations.There is no strict definition, but a guidance per se. So, justify your
insistence on capitalization by documenting how it fits under para 16
and 17, and not para 20.Usually, if your IQA department says that the machine is good to go,
that’s when you cease capitalizing costs into the machine and begin
depreciation.Also note that trial runs should refer to testing on the P&M and not
product trial runs, which do not qualify for capitalization under IAS
16, but may qualify under IAS 38 as development cost.Neither are customer qualification expenses since the P&M should
theoretically be “capable of operating in the manner intended by
management” before you accept a project (unless you are mad).Regards,Alan

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Can any one clarify whether it is necessary for provision for
commission to agents to be made for the premiums not yet received, at
the end of every month.

jay

For any provision, I think you’d first need to look at IAS 37 paragraph 14.
Is there a present obligation as a result of a past event?
Is it probable that there will be an outflow of resources to settle
the obligation?
Can the amount be reasonably estimated?

Whether or not the premiums have been received is not relevant.

Craig

If you recognise an income in the Profit & Loss statement you have
always to make provisions for related expenses if :
it is probable that any future economic benefit associated with the
item will flow to or from the entity and the item has a cost or value
that can be measured with reliabilityJeppe

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We provide for early retirement or termination charges. Would it be
right in making the provision for the whole liability
(which could be for 5-10 years) that we know about in the year which
we make that commitment, or should this cost just hit the P&L as and
when it occurs?

Many thanks for your help,

Sheetal

Hi Sheetal

Termination benefits are recognized only when the employer has
demonstrated its commitment to provide the benefits with a formal
detail plan for the dismissal of group of employees, when the employer
has contractually agreed to pay a termination benefit to its employees
or when there is a constructive obligation resulting from a previous
experience or required by laws.

Long-term obligations in accordance with IAS 19 “Employee benefits”
must be recognized as the present value of the obligation less, if
any, the fair value of any asset set aside to settle the liability.
The present value of the long-term obligation is computed with the
discount future payments using preferably a long-term corporate bond
having the same terms. The charge in the income statement shall be
recorded within the personnel expenses with an additional disclosure,
where applicable, under the Related Party Transactions (ref. IAS 24)
for long-term benefits pertaining to key management personnel.

Reference to IAS 19 on long-term obligations are the paragraphs 132 – 143.

Regards

Antonello

Many thanks Antonello,

When do you recognise the whole expenditure? For example, if the total
amount of liability till 2013 was for £200k and this year was £50k,
would I charge only £50k this year or would I make a provision of the
whole £200k?

Kind regards,
Sheetal

Hi Sheetal,

Here are the following items you need to know:

Opening Present Value of Obligation xxx

Unwinding of interest xx

Payments from the plan xx

Actuarial gain/(loss) xx

Closing Present Value of Obligation xxx

Present Value of Obligation is computed based on many factors, an
example is as follows:

- salary used to compute future compensation

- basis at which liability is calculated

- expected retirement age

- estimated salary increment

- current age

Example:

FY2007:

Mr A –

Age employed 25

Current age 25

Current gross salary 8,000

Expected salary increment 5% pa

Expected retirement age 50

Discount rate 10%

Mortality rate 1%

Payout = Final gross salary x number of years worked.

Liability for Mr A is 8,000 x (1.05^25) x (50-25) x (100% – 1%) = 670K

PV of liability = (1.10)^(-25) x 670K = 62K

FY2008:

Mr A –

Age employed 25

Current age 26

Current gross salary 8,800

Expected salary increment 6% pa

Expected retirement age 50

Discount rate 12%

Mortality rate 2%

Payout = Final gross salary x number of years worked.

Liability for Mr A is 8,800 x (1.06^24) x (50-25) x (100%-2%) = 873K

PV of liability = (1.12)^(-24) x 873K = 58K

Here’s what the liability would look like in FY2008 (assuming not on
corridor approach):

Opening Present Value of Obligation 62 [FY2007 liability]

Unwinding of interest 6
[63K x 10%]

Payments from the plan -
[Didn't pay anything this year]

Actuarial gain/(loss) (10)
[Balancing figure]

Closing Present Value of Obligation 58 [FY2008 liability]

This computation is for 1 person… extend to full population.

You can assume averages for certain demographic information for
classes of workers.

I hope this helps. I think you need to rework the figures.

Alan Wong,

Great example, just one questions

The Unwinding of interest (6) & Actual loss (10) would be charged to
the P&L, right

Or just the Actual loss of 10, I am confused with the term of
unwinding of interest.

The reason I ask, in a market like this where high returns are hard to
get, a 10% interest income if assumed , would be difficult to achieve.
Thus putting burden on the companies P&L. Have I got the logic or is
it wrong

Krishnendu

Hi Krish,

Sorry, I used the wrong term for Interest Cost and forgot to put in
the Current Service Cost.

Let me rework the example in excel… I did it on the fly yesterday.
Noticed a whole bunch of errors in calc.

Attached is the workings for the first 2 years and the final 2 years
of the plan for Mr A.

Yeah, the unwinding and actuarial loss/(gain) is charged/(credited) to the P&L.

However, there is a provision in IAS 19 that allows 2 other methods,
the corridor method and the “via statement of gains and losses”
method.

The corridor method allows the amortization of actuarial gains/losses
over the remaining service period of the employee.

The statement of gains and losses method brings the actuarial
gain/loss to a statement which is outside the P&L.

These 2 methods reduce the impact to the P&L.

Also, do not forget that although interest rates affects the next
year’s interest, it also reduces the total liability due to
discounting.

Regards and apologies for the bad first example,

Alan

Thanks Alan

Your detailed explanation does clear a lot of doubts about IAS 19, &
would help me a lot in my assumptions.

I would probably write to you again about some other doubts, relating
to other standards.

Thanks again & take care

Hi,

Please note that the mortality rate in the examples seems to refer to
the probability that Mr A dies between now and his pension date (50).

The example states:

Mortality rate between 25 en 50: 1%
Mortality rate one year later, i.e. between 26 en 50: 2%

This is strange as you would expect the mortality rate to decrease as
the period of time Mr A can has decreased from 25 years to 24 years.

Met vriendelijke groet / best regards,

Pieter

Hi,

Yes, the mortality rate does refer to such.

The example was to demonstrate the impact of changes in assumptions to
Actuarial Gains/(Losses).

I’m not saying that 1% or 2% or 0% used in the example is
representative of any demographics.

Mortality rates are affected by factors other than age itself (war,
famine, epidemic).

It may not seem as strange if you look at such.

Regards,

Alan

As i read your palaver over breakfast I can not but add to you discussion:Mr A’s mortality rates in this example are annual rates of 1% and 2%
and not a prob of 1% to die between 25 and 50 and a prob of 2% to die
between 26 and 50.For the valuation when A is 25 it is presumed to be 1% annualy and at
the next valuation when A is 26 the mortality assumption is increased
to 2% per annum.I resume to audience your discourse with this humble interruption.Regards,Boris

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But I think if it is possible to reverse wirtdown made in 2007 to be
reversed in 2008, it may distort results over accounting periods.

Thanks in advance for your prompt reply.

Hesham,
The writedown to inventory in 2007 impact is ultimately on the
retained earnings brought forward to 2008. Therefore the reversal
should be a credit to R/earnings.

Hope this help.

William

Hi Hesham,

As I am sure you are aware that IAS 2 requires inventories to be
carried at lower of cost(original cost) and net realisable value(NRV).
According to para 34 of IAS 2, ” The amount of any reversal of any
write-down of inventories, arising from the increase in net realisable
value, shall be recognised as a reduction in the amount of inventories
recognised as an expense in the period in which the reversal occurs” .

This means that the reversal is limited to the previous write down. For example:

In 2007 the cost of inventories was 100 and the NRV was 80 resulting
in a 20 write down. Then, in 2008 circumstances changes and some how
the NRV was 150. The reversal of the write down will be limited to 20.

In this case the journal entry will be made in 2008 as follows:

Dr Inventories 20

Cr Reversal of write down ( Income Statement) 20

Shivan

Hi,

Do you mean that you are attempting to reverse a previously recognized
write down on inventories?

IAS 2 clearly states as follows.

IAS 2

Recognition as an Expense

34 When inventories are sold, the carrying amount of those
inventories shall be recognised as an expense in the period in which
the related revenue is recognised. The amount of any write-down of
inventories to net realisable value and all losses of inventories
shall be recognised as an expense in the period the write-down or loss
occurs. The amount of any reversal of any write-down of inventories,
arising from an increase in net realisable value, shall be recognised
as a reduction in the amount of inventories recognised as an expense
in the period in which the reversal occurs.

It is reversed to cost of sales (income statement).

It doesn’t distort the results per se, unless the write down has been
fraudulently performed or is an error.

Also, you are required to state down the reasons behind the reversal
of the written down amounts.

Also, if in doubt, follow the rules under IAS 8:

This is a “change in accounting estimate” and is therefore reversed to
the 2008 financial performance (Income Statement).

Note that retrospective adjustments (credits/debits to retained
earnings) are limited only to 3 situations:

- Changes in accounting policy

- Error

I hope this helps.

Regards,

Alan

The value of Stock should be increased and the balance in Profit &
Loss Account will also increase. This can be shown as prior period
items.

Thanks

B K

As per IFRS, this is not tobe shown as prior period items.
In fact, under IFRS there is no concept of prior period.

Dear all,

Can you send me all IAS documents so that I can print and have for
future reference.

Thanks

Hi Setota,

Please login to iasplus.com (by Deloitte), you will find wealth of
information about IFRS/IAS.

Thanks,

KK

Thanks for your reply, but if we acted by adjusting the retained
earnings balance, we would treate it either as a change in accounting
principleas or as a prior period errors, wich is not the case. As all
amounts debited or credited dirctly to the RE (other than the
shareholders transactions) are either change in policies or prior
errors.

Lets decide first if it is possible to reverse a previuos inventory
write down or not
then we should decide to what account should the credit amount be
recorded. I think that if it is possible to reverse it, the credit
should be made to the same account (loss due to decline in the market
value of inventor),
Kindly feed me back.

Respected all,

I think it cannot be a prior period adjustment as the reversal took
this year, the increase-in-realisable-value event happened this year
due to which the reversal happened, so effect should be in current
year p/L account and inventory balance of balance sheet.

JATINDER

Write off to the inventory made last year cannot be reversed this year
until there is a proper justification to do so as it would affect the
P&L of LY as well as True and Fair Presentation of Financial
Statements, however if reversal is resorted that can be done thru
Prior Period Adjustment/Exps. account.

Regards
CMA

Dear All
A lot of thanks for your support. I can conclude that the reversal
should be recognizedin the crrent year P&L not as a prior period
adjustment.The enrty may be
Allowance due to decline in inventory value
Gain/loss due to decline in the inventory valueThanks

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Can someone tell me how do you define normal capacity of IAS 2?

In IAS 2, it said that normal capacity is the production expected to
be achieved on average over a number of periods or seasons under
normal circumstances.

I am wondering how to caculate the normail capacity?

ex: one machine can produce 10 finish good in 8 hours, then, the
factory works 8 hours per days and five days per week, so the normal
capacity will be

10 *8*4=320 ?

or the enterprise estimate that they can sell 250 finish goods per
months in normal circumstances. so, the enterprise estimate that they
need to produce 300 finish goods per month. then, 300 should be the
normal capacity?

In addition, under this terrible financial crisis, can we use the same
capacity to allocate overhead expense. In this financial crisis , many
companys just work 2 or 3 days to less their loss. Under IAS 2, these
companys will need to record a lot of expense if they still use the
same capacity to allocate they expense. can some one tell me will u
just use the same capacity to do it? or you will use new capacity to
allocate these expense?

I really confused about it

please send me some information?

Thank in advance.

Hello,

Your question is about fixed overheads only as variable overheads goes
in line with production output volumes.

To my understanding of IAS 2 the normal capacity results from average
expected production output over a number of months (full cycle of
seasons, 12 months year, ect.). Just to underline this is not a sales
volume. First of all you need to take into account maintenance period
with no output. Furtheremore normal capacity can be based on
historical output if close to normal capacity. So if you work now just
2 days/week (and 7 days/week before) the normal production capacity
should be based on 7 days production. Unallocated fixed overheads
should be recognised in P&L in the period when incurred. In the result
amount of unallocated fixed overheads should not increase stock value
becasue of idle plant.

I would also like to draw your attention to other part of IAS 2, where
we need to write down stock value to NRV. You may find even you
allocate all fixed overheads to stock in times of low production you
need to write it down becase of NRV requriments. This is especially
true in industries with low margins.

Please also note the IAS 36 and need for impairment review of your
asset when idle. I may be applicable to some of your plant when
working just 2 days/week. Depreciation is a fixed overhead, so it also
concerns your stock valuation.

Regards,
Jakub

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Can any one give their opinion on the below:

The organization is charging license cancellation fee for each
customer’s license cancellation. What if customer ran away without
canceling license. Now the Organization wants to cancel on their own
and charge license fee and recognize revenue and provide against
doubtful debts. In my opinion no need of license cancellation charged
to customer.

Best Regards,

Hemant

Hi Hemant,The revenue should not be recognized because it is NOT probable that
the economic benefits associated with the transaction will flow to the
entity.License cancellation fee should be classified as a service type
revenue, governed under IAS 18. As at the point of recognition (ie
cancellation of licenses), we assess the if it is probable that the
economic benefits associated with the transaction will flow to the
entity. If the customer “ran away”, there is no such probability.As such, I think it imperative that revenue should not be recognized.Regards

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Thank you

I am a USA based accountant and wamt to learn more. Curious how much
implemetation has taken place in other countries?

Try this:http://www.iasplus.com/index.htmIt has a substantial database of IFRS information.

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