AN OFFERING FROM BDO S NATIONAL ASSURANCE PRACTICE EFFECTIVE DATES OF NEW IFRS S Significant Accounting & Reporting Matters Second Quarter 2011 1 APRIL 2013 Issued since December 2010
Effective Dates of New IFRS Pronouncements Issued since December 2010 2 EFFECTIVE DATES OF NEW IFRS S ISSUED SINCE DECEMBER 2010 New IFRS accounting standards, amendments and interpretations issued since December 2010 and which may not yet be effective for entities, are summarized by their first period of required adoption below. A more detailed analysis of these items is also available at: http://www.bdointernational.com/services/audit/ifrs/ifr-bulletins-2011/ifr%20bulletins/ifrb-2011-17.pdf; and http://www.bdointernational.com/services/audit/ifrs/ifr-bulletins-2011/ifrb%202013/ifrb-2013-04.pdf The below lists all standards issued since December 2010 and their date for adoption: Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters Amendments to IFRS 7 Financial Instruments: Disclosures Transfers of Financial Assets Amendment to IAS 12 Income Taxes Deferred Tax: Recovery of Underlying Assets Amendments to IAS 1 Presentation of Financial Statements IFRS 10 Consolidated Financial Statements* IFRS 11 Joint Arrangements* IFRS 12 Disclosure of Interests in Other Entities* IAS 27 Separate Financial Statements* IAS 28 Investments in Associates and Joint Ventures* IFRS 13 Fair Value Measurement Amendments to IAS 19 Employee Benefits IFRIC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards - Government Loans Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities IFRS Improvements 2009-2011 Amendments to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities - Transition Guidance Amendments to IAS 32 Financial Instruments: Presentation Amendments to IFRS 10 Investment Entities IFRS 9 Financial Instruments Amendments to IFRS 7 Financial Instruments: Disclosures Transition Disclosures
Effective Dates of New IFRS Pronouncements Issued since December 2010 3 JULY 1, 2011 Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters Publish date: December 20, 2010 Two amendments were published at this time as a result of proposals in two exposure drafts: a. Removal of Fixed Dates for First-time Adopters (Proposed amendments to IFRS 1) published in August 2010, and b. Severe Hyperinflation (Proposed amendment to IFRS 1) published in September 2010. In respect of the removal of the fixed dates for certain transition requirements as at January 1, 2004, the amendments will provide relief for first-time adopters of IFRSs from having to reconstruct transactions that occurred before their date of transition to IFRSs. The amendments in respect of severe hyperinflation provide guidance for entities emerging from severe hyperinflation either to resume presenting IFRS financial statements or to present IFRS financial statements for the first time. Entities are required to apply the amendments for annual periods beginning on or after July 1, 2011. Earlier application is permitted. Amendments to IFRS 7 Financial Instruments: Disclosures Transfers of Financial Assets Publish date: October 7, 2010 The amendment published at this time requires the disclosure of information in respect of all transferred financial assets that are not derecognized and for any continuing involvement in a transferred asset, existing at the reporting date. Entities are required to apply the amendments for annual periods beginning on or after July 1, 2011. In the first year of application, an entity need not provide comparative information for the disclosures required by the amendments for periods beginning before July 1, 2011. Earlier application is permitted.
Effective Dates of New IFRS Pronouncements Issued since December 2010 4 JANUARY 1, 2012 Amendment to IAS 12 Income Taxes - Deferred Tax: Recovery of Underlying Assets Publish date: December 20, 2010 The amendment published at this time provides a practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model in IAS 40 Investment Property. Under IAS 12, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. However, it is often difficult and subjective to determine the expected manner of recovery when the investment property is measured using the fair value model in IAS 40. To provide a practical approach in such cases, the amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. SIC-21 Income Taxes Recovery of Revalued Non-Depreciable Assets addresses similar issues involving non-depreciable assets measured using the revaluation model in IAS 16 Property, Plant and Equipment. The amendments also incorporate SIC-21 into IAS 12 after excluding investment property measured at fair value from the scope of the guidance previously contained in SIC-21. Entities are required to apply the amendments for annual periods beginning on or after January 1, 2012. Earlier application is permitted. JULY 1, 2012 Amendments to IAS 1 Presentation of Financial Statements Publish date: June 16, 2011 The amendments published at this time improve the consistency and clarity of the presentation of items of other comprehensive income (OCI). The amendments also highlight the importance that the Board places on presenting profit or loss and OCI together and with equal prominence. The main change resulting from the amendments was a requirement for entities to group items presented in OCI on the basis of whether they
Effective Dates of New IFRS Pronouncements Issued since December 2010 5 are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments did not address which items are presented in OCI. The amendments did not change the option to present items of OCI either before tax or net of tax. However, if the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Entities are required to apply the amendments for annual periods beginning on or after July 1, 2012. Earlier application is permitted. JANUARY 1, 2013 IFRS 10 Consolidated Financial Statements* Publish date: May 12, 2011 The new standard published replaces the consolidation requirements in SIC-12 Consolidation special purpose entities and IAS 27 Consolidated and separate financial statements. It builds on existing principles of IAS 27 by identifying the concept of control as the determining factor in whether an entity should be included in the consolidated financial statements. It eliminates the risks and rewards approach used in SIC-12. The new standard also provides additional guidance to assist in the determination of control where this is difficult to assess, including where an entity has potential voting rights (such as share options) over another, agency relationships and cases where voting rights are not the principal indicator of control. The standard is effective for annual periods beginning on or after January 1, 2013. *Earlier application is permitted where the standard is adopted as an entire package. Such package is made up of IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements; IFRS 12, Disclosure of Interests in Other Entities; IAS 27, Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures.
Effective Dates of New IFRS Pronouncements Issued since December 2010 6 IFRS 11 Joint Arrangements* Publish date: May 12, 2011 The new standard requires that a party to a joint arrangement recognizes its rights and obligations arising from the arrangements rather than focusing on the legal form. IFRS 11 replaces IAS 31 Interests in Joint Ventures. The IFRS is to be applied by all entities that are a party to a joint arrangement, of which two or more parties have joint control. The IFRS classifies joint arrangements into two types joint operations and joint ventures. IFRS 11 requires a joint operator to recognize and measure the assets and liabilities (and recognize the related revenues and expenses) in relation to its interest in the arrangement in accordance with relevant IFRSs applicable to the particular assets, liabilities, revenues and expenses. IFRS 11 requires a joint venturer to recognize an investment and to account for that investment using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures, unless the entity is exempted from applying the equity method as specified in that standard. The standard is effective for annual periods beginning on or after January 1, 2013. *Earlier application is permitted where the standard is adopted as an entire package. Such package is made up of IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements; IFRS 12, Disclosure of Interests in Other Entities; IAS 27, Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures. IFRS 12 Disclosure of Interests in Other Entities* Publish date: May 12, 2011 The new standard combines, and makes consistent, certain existing disclosures that were previously included, in some cases with overlapping requirements, in IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. In addition, it introduces certain new disclosure requirements, in particular those related to unconsolidated structured entities where a lack of transparency about entities exposures to related risks was highlighted by the global financial crisis. The standard is effective for annual periods beginning on or after January 1, 2013. *Earlier application is permitted where the standard is adopted as an entire package. Such package is made up of IFRS 10, Consolidated
Effective Dates of New IFRS Pronouncements Issued since December 2010 7 Financial Statements; IFRS 11, Joint Arrangements; IFRS 12, Disclosure of Interests in Other Entities; IAS 27, Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures. IAS 27 Separate Financial Statements* Publish date: May 12, 2011 The standard contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. Issued concurrently with IFRS 10, together they supersede IAS 27 Consolidated and Separate Financial Statements. It carries forward most of the requirements of that standard relating to separate financial statements unchanged, although the disclosure requirements of that standard have now been incorporated into IFRS 12. IAS 28 Investments in Associates and Joint Ventures* In order to locate all related guidance together, the requirements for separate financial statements previously included in IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures have been incorporated into the amended IAS 27. In addition, the previous requirement in IAS 27 to disclose the country of incorporation or residence of subsidiaries, joint ventures and associates (and, if applicable, the parent entity that prepares consolidated financial statements in accordance with IFRS) has been expanded to include disclosure of the principal place of business. The standard is effective for annual periods beginning on or after January 1, 2013. *Earlier application is permitted where the standard is adopted as an entire package. Such package is made up of IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements; IFRS 12, Disclosure of Interests in Other Entities; IAS 27, Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures. Publish date: May 12, 2011 The standard prescribes the accounting treatment for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. The new standard supersedes IAS 28 Investments in Associates. It carries forward most of the requirements of IAS 28 Investments in Associates relating to separate financial statements unchanged, with the exception of the incorporation of accounting for joint ventures, although the disclosure requirements of that standard have now been incorporated into IFRS 12. In order to locate all related guidance together, the requirements for separate financial statements previously included in IAS 28 Investments
Effective Dates of New IFRS Pronouncements Issued since December 2010 8 in Associates and IAS 31 Interests in Joint Ventures have been incorporated into the amended IAS 27. The standard is effective for annual periods beginning on or after January 1, 2013. *Earlier application is permitted where the standard is adopted as an entire package. Such package is made up of IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements; IFRS 12, Disclosure of Interests in Other Entities; IAS 27, Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures. IFRS 13 Fair Value Measurement Publish date: May 12, 2011 The new standard defines fair value, sets out in a single IFRS a framework for measuring fair value, and requires disclosures about fair value measurements. The new standard applies to IFRSs that require or permit fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except in specified circumstances. The standard includes a fair value hierarchy concept that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). The standard has an effective date of January 1, 2013 with earlier application permitted. It is applied prospectively. Amendments to IAS 19 Employee Benefits Publish date: June 16, 2011 These amendments make several significant changes to accounting for defined benefit plans by eliminating the corridor approach; streamlining the presentation of changes in assets and liabilities, and enhancing disclosure requirements. Enhanced disclosures are required with a focus on the following specified objectives: the characteristics of an entity s defined benefit plans and the amounts in the financial statements that result from those plans; risks arising from defined benefit plans, including a sensitivity analysis for each significant actuarial assumption, and participation in multiemployer plans.
Effective Dates of New IFRS Pronouncements Issued since December 2010 9 Transitional provisions apply such that the carrying amount of assets outside the scope of IAS 19 need not be adjusted for changes in employee benefit costs that were included in their carrying amount, and the sensitivity analysis does not need to be created retrospectively. The amendments are effective for annual periods beginning on or after January 1, 2013. IFRIC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Publish date: October 19, 2011 This Interpretation applies to waste removal costs that are incurred in surface mining activity during the production phase of the mine ( production stripping costs ). It clarifies when production shipping should lead to the recognition of production stripping costs as an asset; initial measurement of the stripping activity asset, and subsequent measurement of the stripping activity asset. The standard is effective for annual periods beginning on or after January 1, 2013. Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards- Government Loans Publish date: March 13, 2012 This amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRS by adding a new exception to retrospective application. A first-time adopter of IFRS now applies the measurement requirements of the financial instrument standards (IAS 32 or IFRS 9) to a government loan with a below-market rate of interest prospectively from the date of transition to IFRS. Alternatively, a first-time adopter may elect to apply the measurement requirements retrospectively to a government loan, if the information needed was obtained when it first accounted for that loan. This election is available on a loan-by-loan basis. The amendments are effective for annual periods beginning on or after January 1, 2013, with earlier application permitted. Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities Publish date: December 16, 2011 The amendments introduce new disclosures to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company s financial position and improves transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received.
Effective Dates of New IFRS Pronouncements Issued since December 2010 10 The amendments are effective for annual periods beginning on or after January 1, 2013 and are to be retrospectively applied. IFRS Improvements 2009-2011 Publish date: May 17, 2012 The amendments reflect the annual improvements to IFRSs: 2009-2011 cycle, which here contains amendments to five existing standards. The annual improvements project provides a mechanism to make necessary, but non-urgent, amendments to existing IFRSs. The five standards are as follows: IFRS 1 First-time Adoption of International Financial Reporting Standards - with amendments made to repeated application of IFRS and borrowing costs; IAS 1 Presentation of Financial Statements - with amendments made to clarify the requirements for comparative information; IAS 16 Property, Plant and Equipment - with amendments made to the classification of servicing equipment; IAS 32 Financial Instruments: Presentation - with amendments made to the tax effect of distributions to holders of equity instruments, and IAS 34 Interim Financial Reporting - with amendments made to interim financial reporting and segment information for total assets and liabilities. The most notable amendments relate to changes to IAS 16 where it has been clarified that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory and IAS 1 where upon adoption of IFRS, an entity that capitalized borrowing costs in accordance with its previous GAAP, may carry forward, without adjustment, the amount previously capitalized in its opening statement of financial position at the date of transition to IFRS. The amendments are effective for annual periods beginning on or after January 1, 2013 and are applied retrospectively. Entities are permitted to early adopt any individual amendment within the Annual Improvements to IFRSs: 2009-2011 Cycle without early adopting all other amendments. Amendments to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities - Transition Guidance Publish Date: June 28, 2012 The amendments clarify the transition guidance in IFRS 10 Consolidated Financial Statements. The amendments also provide additional transition relief in IFRS 10, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other
Effective Dates of New IFRS Pronouncements Issued since December 2010 11 Entities, limiting the requirement to provide adjusted comparative information to only the preceding comparative period. Furthermore, for disclosures related to unconsolidated structured entities, the amendments will remove the requirement to present comparative information for periods before IFRS 12 is first applied. The amendments are effective for periods beginning on or after January 1, 2013 with earlier application permitted. This is consistent with the effective dates of IFRS 10, 11 and 12. Although early application is permitted, the amendments must be applied concurrent with IFRS 10, 11 and 12. JANUARY 1, 2014 Amendments to IAS 32 Financial Instruments: Presentation Publish date: December 16, 2011 These amendments address inconsistencies in current practice when applying the offsetting criteria in IAS 32 Financial Instruments: Presentation. The amendments clarify both the meaning of currently has a legally enforceable right of set-off ; and that some gross settlement systems may be considered equivalent to net settlement. The amendments are effective for annual periods beginning on or after January 1, 2014 and are required to be applied retrospectively.
Effective Dates of New IFRS Pronouncements Issued since December 2010 12 Amendments to IFRS 10 Investment Entities Publish date: October 31, 2012 The amendments apply to a particular class of business that qualify as investment entities. The IASB uses the term investment entity to refer to an entity whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. An investment entity must also evaluate the performance of its investments on a fair value basis. Such entities could include private equity organizations, venture capital organizations, pension funds, sovereign wealth funds and other investment funds. Under IFRS 10 Consolidated Financial Statements, reporting entities were required to consolidate all investees that they control (i.e. all subsidiaries). Preparers and users of financial statements have suggested that consolidating the subsidiaries of investment entities does not result in useful information for investors. Rather, reporting all investments, including investments in subsidiaries, at fair value, provides the most useful and relevant information. In response to this, the Investment Entities amendments provide an exception to the consolidation requirements in IFRS 10 and require investment entities to measure particular subsidiaries at fair value through profit or loss, rather than consolidate them. The amendments also set out disclosure requirements for investment entities. The amendments are effective for annual periods beginning on or after January 1, 2014. This is one year later than the January 1, 2013 effective date of IFRS 10, but the IASB has permitted early adoption in order to allow investment entities to apply the Investment Entities amendments at the same time they first apply the rest of IFRS 10.
Effective Dates of New IFRS Pronouncements Issued since December 2010 13 JANUARY 1, 2015 IFRS 9 Financial Instruments Publish date: November 12, 2009 - Classification and Measurement of Financial Assets (IFRS 9 (2009)) October 28, 2010 Accounting for Financial Liabilities (IFRS 9 (2010)) December 16, 2011 - Mandatory Effective Date and Transition Disclosures (Amendments to IFRS 9 and IFRS 7) The standard establishes the principles for the financial reporting of financial assets and liabilities. IFRS 9 specifies how an entity should classify and measure financial assets and financial liabilities, including some hybrid contracts. It is the first part of Phase 1 of the IASB s project to replace IAS 39. The main phases are: Phase 1: Classification and measurement; Phase 2: Impairment methodology, and Phase 3: Hedge accounting. IFRS 9 will on completion of all phases supersede IAS 39 Financial Instruments: Recognition and Measurement. The current requirements of IFRS 9 cover the classification, measurement and derecognition of financial assets and financial liabilities with impairment and hedging provisions still under consultation. IFRS 9 establishes that an entity initially measure a financial asset or financial liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The standard also states that: financial assets shall subsequently be measured at fair value unless it meets the conditions for measurement at amortized cost and is not irrevocably designated at fair value through profit or loss, and financial liabilities shall subsequently be measured at amortized cost using the effective interest method, except for financial liabilities: (i) (ii) (iii) (iv) at FVTPL; that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies; financial guarantee contracts, and commitments to provide a loan at a below-market interest rate. The amendment changes the effective date of IFRS 9 (2009) and IFRS 9 (2010) so that IFRS 9 is required to be applied for annual periods beginning on or after January 1, 2015. Early application is permitted.
Effective Dates of New IFRS Pronouncements Issued since December 2010 14 Amendments to IFRS 7 - IFRS 7 Financial Instruments: Disclosures Transition Disclosures December 16, 2011 With the amendments to IFRS 9 Financial Instruments entities applying IFRS 9 do not need to restate prior periods but are required to provide modified disclosures. The new disclosures include but are not Limited to: Changes in the classifications of financial assets and financial liabilities, showing separately: The changes in the carrying amounts on the basis of their measurement categories in accordance with IAS 39 (i.e. not resulting from a change in measurement attribute on transition to IFRS 9); and The changes in the carrying amounts arising from a change in measurement attribute, such as from amortized cost to fair value, on transition to IFRS 9. The amendment that changed the effective date of IFRS 9 also modifies the relief from restating prior periods and such is required to be applied for annual periods beginning on or after January 1, 2015. Early application is permitted. BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 40 offices and over 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multinational clients through a global network of 1,204 offices in 138 countries. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information, please visit www.bdo.com. To ensure compliance with Treasury Department regulations, we wish to inform you that any tax advice that may be contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. Material discussed in this tax alert is meant to provide general information and should not be acted on without professional advice tailored to your firm's individual needs. 2013 BDO USA, LLP. All rights reserved. www.bdo.com