Hershiel P.

Pañares 70851 ACCTG 324

BSA 3 12:30-2:30 PM TTH
IFRIC Interpretations 16 – 20

IFRIC 16 — Hedges of a Net Investment in a Foreign Operation

NATURE OF THE A parent company may designate as a hedged risk only those exchange
HEDGED RISK AND differences which arise from a foreign operation using a different functional
THE AMOUNT OF THE currency from its own. The presentation currency does not expose an entity
HEDGED ITEM to risks which may be hedged.

HEDGING INSTRUMENT The hedging instrument in a hedge of a net investment in a foreign operation
may be held by any entity or entities within the group.

RECLASSIFICATION IFRIC 16 concludes that while IAS 39 must be applied to determine

ADJUSTMENTS ON the amount that needs to be reclassified to profit or loss from the
DISPOSAL OF THE foreign currency translation reserve in respect of the hedging
FOREIGN OPERATION instrument, IAS 21 must be applied in respect of the hedged item.

IFRIC 17 – Distributions of Non-cash Assets to Owners

WHEN TO RECOGNISE MEASUREMENT OF A ACCOUNTING FOR
A DIVIDEND PAYABLE DIVIDEND PAYABLE DIFFERENCES

The liability to pay a Measured at fair value of the

dividend is recognized
when the dividend is
appropriately authorized
and is no longer at the
discretion of the entity.
asset to be distributed. If cash
alternative is offered, assess
the likelihood of owners
choosing cash or non-cash
assets and measure the
dividend based on fair values.
Any differences between the
carrying amounts of the
assets distributed and the
dividend payable is
recognized in profit or loss.

EXAMPLE: SCOPE OF THE INTERPRETATION

For a transaction to be within the scope of this interpretation, no single shareholder controls
Company A, owned by public shareholders, and no group of shareholders is bound by a contractual
agreement to act together to control Company A jointly. Then Company A distributes certain assets
(e.g. available-for-sale securities) pro rata to the shareholders.

IFRIC 18 – Transfers of Assets from Customers

NOTE: IFRIC 18 was be superseded by IFRS 15 Revenue from Contracts

with Customers as of 1 January 2018
 ISSUES: CONSENSUS:
(a) Definition of (a) It meets the definition of an asset in EXAMPLE:
an asset; (b) Initial the Framework. However, right of A construction company
recognition; (c) ownership is not essential. (b) At fair installed pipe on the public
Accounting for value. (c) Recognized as revenue in land to connect the houses to
resulting credit; accordance with IAS 18. (d) If the the water main. If the
(d) Accounting of transaction is within the scope of the ownership of the pipe is
transfer of cash interpretation and the definition of transferred to the water
from its customer asset is met, the PPE is measured at company, it met the definition
cost and revenue is recognized at the of an asset and should
amount of cash received recognize it.

IFRIC 19 – Extinguishing Financial IFRIC 20 – Stripping Costs in the

Liabilities with Equity Instruments Production Phase of a Surface Mine

ARE EQUITY INSTRUMENTS ISSUED RECOGNITION OF PRODUCTION

TO EXTINGUISH FINANCIAL
LIABILITIES, CONSIDERATION PAID?
The issue of instruments is to be treated as
consideration to extinguish financial liabilities.
The financial liability is removed from the
statement of financial position only when IAS
39.39 is satisfied
INITIAL MEASUREMENT OF
CONSIDERATION PAID
STRIPPING COSTS AS AN ASSET
An entity shall recognize a stripping activity
asset if, and only if, all of the following are met:
(a) it is probable that the future economic
benefit associated with the stripping activity
will flow to the entity; (b) the entity can identify
the component of the ore body for which access
has been improved; and (c) the costs relating to
the stripping activity associated with that
component can be measured reliably

The equity instrument issued is measured at fair INITIAL MEASUREMENT OF THE

value. If fair value can’t be measured reliably, STRIPPING ACTIVITY ASSET
measurement should reflect the fair value of the The stripping-activity-asset is initially
liability extinguished
measured at cost: (a) Cost that are directly
incurred to perform the stripping activity (b) An
allocation of directly attributable costs.
DIFFERENCE BETWEEN CARRYING
AMOUNT OF FINANCIAL LIABILITY
EXTINGUISHED AND SUBSEQUENT MEASUREMENT OF
CONSIDERATION PAID THE STRIPPING ACTIVITY ASSET
The difference between the carrying amount of
the financial liability (or part of a financial Carried at cost or revalued amount, less
liability) extinguished, and the consideration depreciation (or amortization), less
paid, is recognized in profit or loss in accumulated impairment losses.
accordance with IAS 39.41