IFRS Amendments Effective from 1 January 2014

Keywords: Mazars, Thailand, Accounting, IFRS, IASB

 4 February 2014

• IAS 32 ‘Financial Instruments: Presentation’”, on offsetting financial assets and financial liabilities.

This amendment updates the application guidance in IAS 32, ‘Financial Instruments: Presentation’, to clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet.

• IFRS 10 ‘Consolidated financial statements’, IFRS 12 and IAS 27 for investment entities.

These amendments mean that many funds and similar entities will be exempt from consolidating most of their subsidiaries. Instead, they will measure them at fair value through profit or loss. The amendments give an exception to entities that meet an ‘investment entity’ definition and which display particular characteristics. Changes have also been made IFRS 12 to introduce disclosures that an investment entity needs to make.

• IAS 36 ‘Impairment of assets’.

These amendments address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

• IAS 39 ‘Financial instruments: Recognition and measurement’, on novation of derivatives and hedge accounting.

These narrow-scope amendments allow hedge accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met (in this context, a novation indicates that parties to a contract agree to replace their original counter party with a new one). This relief has been introduced in response to legislative changes across many jurisdictions that would lead to the widespread novation of over-the-counter derivatives. These legislative changes were prompted by a G20 commitment to improve transparency and regulatory oversight of over-the-counter derivatives in an internationally consistent and non-discriminatory way. Similar relief will be included in, ‘Financial instruments’.

• IFRIC 21, ‘Levies’ (issued 2013)

This interpretation is on IAS 37, ‘Provisions, contingent liabilities and contingent assets’. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.