Workshop On Latest Developments in IAS: A.F.Ferguson & Co

A.F.Ferguson & Co.
A member firm of pwc
Workshop on latest developments in IAS
Improvements Project
A.F.Ferguson & Co.

A member firm of
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By: Syed Fahim ul Hasan
Partner
A.F. Ferguson & Co., Karachi
A.F.Ferguson & Co.

A member firm of PwC
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Improvement to IAS
• Revised standards applicable to financial
periods beginning on or after January 1,
2005 (except for IAS 38 which is applicable for periods
beginning on or after March 31, 2004)
• Earlier application encouraged and the fact

should be disclosed
• When adopting requirement of a standard,
the entire revised standard must be
adopted
A.F.Ferguson & Co.

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IAS 1 Presentation of Financial Statements
 True and fair override in very rare circumstances
• If not prohibited by the relevant regulatory
framework
• ‘true and fair’ presumes compliance with IFRS
 Disclose:
• Management concludes FS are fairly presented
• Identify requirement not applied
• Reason why treatment so misleading
• For each period presented, the financial impact
of the departure on each item in the FS
A.F.Ferguson & Co.
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IAS 1 … contd.
 New disclosures
• Judgements made in applying accounting
policies
- Most significant effect of measurement of
items
• Key assumptions about future and other
estimation uncertainties that risk future material
adjustments
• Separate income statement disclosure
- Profit or loss for the period
- Profit or loss attributable to minority interest
- Profit or loss attributable to equity holders of
the parent
A.F.Ferguson & Co.
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IAS 1 … contd.
 New disclosures…contd.
• Statement of change in equity
- Total income and expenses for the period

attributable to ‘minority interest’ and ‘equity
holders of the parent’
A.F.Ferguson & Co.

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IAS 1 … contd.
 Other changes
• Classified balance sheet presentation
required i.e. current and non-current
- Liquidity basis or mixed basis is used only
when reliable and more relevant.
- Post balance sheet events (refinancing,
correction of defaults) do not affect
classification of debt
• Presentation of extraordinary items prohibited
A.F.Ferguson & Co.

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IAS 1 … contd.
 Other changes
• Capital disclosures (effective from January 1, 2007)
IAS 1 has introduced requirements for all entities
to disclose:
- the entity's objectives, policies and processes
for managing capital;
- quantitative data about what the entity regards
as capital;
- whether the entity has complied with any
capital requirements; and
- if it has not complied, the consequences of
such non-compliance.
A.F.Ferguson & Co.
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IAS 2 Inventories
 Scope changes
• Clarifies the types of inventories exempted from
measurement (but not disclosures) requirements
- Commodity broker-traders measured at NRV
through profit or loss
- Producers of agricultural and forest products,
agricultural produce after harvest and mineral
products measured at fair value less costs to
sell through profit or loss
• All inventories covered – words ‘held under the
historical cost system’ removed
A.F.Ferguson & Co.
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IAS 2 …contd.
 Other changes
• LIFO method not permitted
• Finance cost of inventories on deferred
settlement terms
- Difference between purchase price for normal
credit terms and the amount paid is interest
expense over financing period
• Exchange differences as inventory cost no
longer permitted
• Consistency – same cost formula be used for
similar inventories
• Disclosure – Inventories carried at fair vale less
cost to sell
A.F.Ferguson & Co.
10
IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
 Main changes
• All voluntary changes in accounting policies and
corrections of errors must be made retrospectively
- Allowed alternative method eliminated
- Apply new accounting policy and correction to
prior period errors to comparative information for
prior periods as far back as practicable
- If impracticable to determine cumulative effect,
apply new accounting policy and correction of
errors prospectively from earliest period
practicable
• Distinction between fundamental errors and other
material errors eliminated
• Change in accounting estimate and prior period errors
defined
A.F.Ferguson & Co.
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IAS 8 …contd.
 Change in accounting estimate is an

adjustment of the carrying amount of an asset or
a liability, or the amount of the periodic
consumption of an asset, that results from the
assessment of the present status of, and
expected future benefits and obligations
associated with, assets and liabilities. Changes in
accounting estimates result from new
information or new developments and,
accordingly are not corrections of errors
A.F.Ferguson & Co.
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IAS 8 …contd.
 Prior period errors are omissions from, and
misstatements in, the entity’s financial statements for one
or more prior periods arising from a failure to use, or
misuse of, reliable information that:
a) was available when financial statements for those
periods were authorised for issue; and
b) Could reasonably be expected to have been obtained
and taken into account in the preparation and
presentation of those financial statements
Such errors include the effects of mathematical mistakes,

mistakes in applying accounting policies, oversight or
misinterpretation of facts, and fraud
A.F.Ferguson & Co.

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IAS 8 …contd.
 New disclosures
• Changes in accounting policy – initial application
or voluntary changes
- Identify change
- Whether change is in accordance with transitional
provisions and description of transitional provision
- Reasons why new accounting policy reliable and
more relevant
- Amount of adjustment to each line item
- Amount of adjustment to basic and diluted EPS
- Amount of adjustment to prior periods
- More disclosures required if application is
impracticable
A.F.Ferguson & Co.
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IAS 8 …contd.
 New disclosures … contd.
• When new standard or interpretation not applied

but issued and is not yet effective
- The fact and estimate of impact of application

now required (was encouraged before)
- Implication regarding the application of IFRS 1
to 7
A.F.Ferguson & Co.

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IAS 8 …contd.
 New disclosures … contd.
• Prior period errors

- Nature
- Amount of correction for each line item
- Amount of correction for basic and diluted
EPS
- Amount of correction at the beginning of
earliest period
- If retrospective restatement impracticable
more disclosures are required
A.F.Ferguson & Co.

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IAS 8 …contd.
 Other changes
• Materiality
- Concept of materiality defined
- IFRS not to be applied if effect of application
is immaterial
- FS do not comply with IFRS if they contain
material errors
A.F.Ferguson & Co.

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IAS 10 Events after the Balance Sheet Date
 Clarifies
• When dividends are declared after the balance

sheet date, do not recognise dividends as
liability
• Disclosure such dividend in the notes in
accordance with IAS 1
A.F.Ferguson & Co.

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IAS 16 Property, Plant and Equipment
 Main change
• All exchange of non-monetary assets measured

at fair value whether or not they have similar use
and fair value
- unless the transaction lacks commercial
substance ; or
- fair value of neither the asset received nor
asset given up is reliably measurable
In which case asset will be recorded at cost
A.F.Ferguson & Co.

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IAS 16 Property, Plant and Equipment
 Main change…contd.
• Definition of ‘residual value’ changed

- Amount could receive at the balance sheet
date if the asset were in the condition that it
will be at expected disposal date
- Does not include expected future inflation
• Residual value, depreciation method and useful
life must be reviewed at least annually
A.F.Ferguson & Co.

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IAS 16 …contd.
 Clarifies
• Depreciation to continue on idle PPE
• Requirements of components approach
- An item of PPE often a combination of various
items with separate useful lives
- Use separate lives calculate depreciation, test
for derecognition and replacement or renewal
of a component of PPE
• Cost of PPE – initial estimate of costs of
dismantlement, removal or restoration of PPE
- Costs recognised and measured under IAS 37
A.F.Ferguson & Co.
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IAS 16 …contd.
 Other changes
• Capitalising subsequent costs
- Use general recognition principle
 No longer test against ‘originally assessed
standard of performance’
- Requires derecognition of parts replaced
• Clarifies and gives examples of items not to be
included in acquisition costs
- Start up costs
- Cost of introducing new product or service
- Administrative and general overhead costs
• No depreciation charged if the residual value of
asset exceeds the carrying value
A.F.Ferguson & Co.
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IAS 16 …contd.
 New disclosures
• Depreciation
- Whether recognised in the profit or loss or as
part of cost of other assets
- Accumulated depreciation at the end of FY
• Change in estimates of
- Residual value
- Costs of dismantling, removing or restoring of
PPE
- Useful lives
- Depreciation methods
A.F.Ferguson & Co.
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IAS 16 …contd.
 New disclosures
• Revaluations
- Methods and significant assumptions applied
to estimate fair values
• Reconciliation of carrying values at the beginning

and end of the period
A.F.Ferguson & Co.

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IAS 16 …contd.
• Disclosures encouraged
• Carrying amount of temporarily idle property,
plant and equipment
• Carrying amount of fully depreciated assets still
in use
• Carrying amount of assets retired from active use
and not classified as held for sale as per IFRS 5
(IAS-35)
• When the cost model is used, the fair value of
assets when it is materially different from the
carrying amount
A.F.Ferguson & Co.
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IAS 17 Leases
 Main changes
• Lease of land and building to be split into two
elements
- A lease of land and a lease of building(s)
- Based on the fair value of the components
• A lessee can classify an operating lease as
investment property, if it accounts for it as a
finance lease
A.F.Ferguson & Co.

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IAS 17 Leases
 Main changes
• Eliminates the choice in accounting for initial
direct costs (lessors)
- Include in the leased asset and recognise as
an expense over the lease term
- Manufacturer or dealer to recognise as
expense at the time of recognition of selling
profit
• Special transition provisions
• Inception and commencement of lease
A.F.Ferguson & Co.

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IAS 21 The Effects of Changes in Foreign
Exchange Rates
 Incorporates SIC-19 and SIC-30
• Replaces ‘measurement currency’ with ‘functional
currency’ – two have same meaning and the
definition of ‘presentation currency’ added
Approach
 First step: Translate all the branches and subsidiaries
FC balances into functional currency of the group,
exchange differences to go to P&L
 Second step: Translate financial statements to
presentation currency, exchange differences to go to
equity
A.F.Ferguson & Co.
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IAS 21 The Effects of Changes in Foreign
Exchange Rates
 Incorporates SIC-19 and SIC-30
• No change in accounting practices for many
entities except
- Additional guidance on determining the
functional currency
 Emphasis on the currency that determines
the pricing of transactions and in which
transactions are denominated
 Entities should reassess their functional
currency to be consistent with new
guidance
A.F.Ferguson & Co.
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IAS 21 …contd.
 Other changes
• Eliminated distinction between foreign
operations and foreign entities
- But foreign operations and reporting entity
likely to have same functional currency, so no
real change
• Goodwill and fair value adjustments to
assets/liabilities arising on the acquisition of
foreign operations shall be treated as the
assets/liabilities of that foreign operations and
be re-translated at each balance sheet date
- Using closing rate
A.F.Ferguson & Co.
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IAS 21 …contd.
 Other changes
- Special transition provisions for this change
 Only prospective application required
 Retrospective application encouraged
- All other changes resulting from the

application of IAS 21 be treated under IAS 8
• Eliminated the allowed alternative of capitalising

unexpected severe devaluations
A.F.Ferguson & Co.

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IAS 21 …contd.
 Primary Rules
1. All exchange differences to go to P&L with
exception:
- When functional currency is different and
translation into presentation currency is done,
the exchange differences will go to equity
- In case of monetary items forming part of net
investment in a foreign operation presented in
the consolidated financial statements of
reporting entity, the exchange differences will
go to equity
A.F.Ferguson & Co.

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IAS 21 …contd.
 Primary Rules
2. Foreign currency transactions presented in
functional currency
- All FC monetary items at closing balance
sheet rate
- FC Non-monetary items measured in terms of
historical cost at the rate of transaction
date
- FC Non-monetary items measured in terms of
fair value at the rate when the fair
value was measured
- All exchange differences will go to P&L
A.F.Ferguson & Co.
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IAS 21 …contd.
 Primary Rules
3. Foreign currency transactions presented in other
than functional currency
- Assets and liabilities at closing balance
sheet rate
- P&L items at the rate of transaction
date
- All exchange differences will go to equity
4. If gain or loss on a non-monetary item is
recognised directly in equity, any exchange
component of that gain or loss shall also be
recognised directly in equity
A.F.Ferguson & Co.
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IAS 21 …contd.
 New disclosures
• When presentation currency is different from
functional currency
- Disclose the fact, functional currency and
reason for different presentation currency
- Reason for change of functional currency, if
applicable
• Convenience translation also allowed
- only can be shown as supplementary
information
- disclose functional currency and the method
of translation
A.F.Ferguson & Co.
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IAS 24 Related Party Disclosures
 Definition of related party expanded to include
- Parties with joint control over the entity
- Joint ventures in which the entity is a venturer
- Post employment benefit plans for the benefit of
employees of an entity or entity or entity’s related
party
• Expanded scope includes close family members of
- Individuals with direct, joint or indirect control or
significant influence
- Key management personnel of the entity or its
parent
A.F.Ferguson & Co.
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IAS 24 … contd.
 No exemption
- Parent companies, investors or ventures in
separate financial statements
- Profit oriented state-controlled enterprises
 Requires new disclosures including
- Terms and conditions of related party balances
- Whether outstanding balances are secured
- The nature of the consideration to be provided
in settlement
- Details of guarantees given or received
A.F.Ferguson & Co.
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IAS 24 … contd.
 Requires new disclosures including …contd.
- The expense recognised during the period in
respect of bad and doubtful debts due from
related parties
- Classification of amounts payable to, and
receivable from, related parties into different
categories of related parties
- The name of the entity’s parent and, if different
the ultimate controlling party. If neither of these
two parties produce financial statements
available for public use, the name of the next
most senior parent that does so, is required
A.F.Ferguson & Co.
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IAS 24 … contd.
 Disclosure required separately for each of the

following categories
 The parent
 Entities with joint control or significant influence
 Subsidiaries
 Associates
 JVs
 Key management personnel
 Other RPs
A.F.Ferguson & Co.

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IAS 24 … contd.
 Disclosure not required (Significant Change)
- Pricing of transactions – Discussions on the

pricing of transactions and related disclosures
between RP have been removed because the
Standard does not apply to the measurement of
RP transactions. Further, the Standard clarifies
that an entity discloses that the terms of related
party transactions are equivalent to those that
prevail in arm’s length transactions only if such
terms can be substantiated
A.F.Ferguson & Co.
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IAS 27 Consolidated and Separate Financial
Statements
 Conditions changed for exemption not to prepare
Consolidated Financial Statements (All to be met)
- The parent is a wholly owned subsidiary, or a partially
owned subsidiary and all owners (including those not
otherwise entitled to vote) do not object
- No debt or equity instruments traded in a public market
- Not in process of filing its FS with a regulatory authority
(eg SECP) to issue any class of instruments to public and
- The ultimate or any intermediate parent of the parent
produces consolidated FS that comply with IFRS and are
available for public use
A.F.Ferguson & Co.

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IAS 27 … contd.
 Main changes
• Clarifies – no exemption from consolidation
- Venture capital organisations
- Mutual funds
- Unit trusts and similar entities
• Uniform accounting policies to be used in the

group
- Impracticability exemption removed
A.F.Ferguson & Co.

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IAS 27 … contd.
 Main changes
• Prohibits equity method of accounting by a

parent in separate Financial Statements
• New presentation of minority interests
- Within equity but separately from the parent
shareholders’ equity
- Separately in income statement
A.F.Ferguson & Co.

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IAS 27 … contd.
 Other changes…contd.
• Limited exemption – a newly acquired subsidiary
excluded from consolidation only when
- To be disposed of within 12 months from
acquisition
- Management actively seeking a buyer
• Eliminates explicit exemption for a subsidiary
operating under severe long-term restrictions
(control must be lost)
• Incorporates SIC-33 – potential voting rights
A.F.Ferguson & Co.
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IAS 27 … contd.
 Other changes
• More disclosures required
- Summarised information of subsidiaries not
consolidated
- Nature of relationship when parent does not
own more than half of the voting power
- Reasons why no control when the company
owns more than half (potential) voting power
- Reporting date of the FS of a subsidiary if
different dates from parent
A.F.Ferguson & Co.

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IAS 28 Investments in Associates
 Main changes
• Scope exclusion
- For some types of investors
 Venture capital organisations
 Mutual funds
 Unit trusts and similar entities
 Investment limited insurance funds
- Must be held for trading under IAS 39

- Similar exemptions in IAS 31
A.F.Ferguson & Co.

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IAS 28 Investments in Associates
 Main changes
Equity Method for associates with significant

control must be used whether the investor also
has investments in subsidiaries and prepares
Consolidated Financial Statements or not.
However, the investor should not apply Equity
method when preparing separate Financial
Statements under IAS 27
The Standard does not permit not to use Equity

method when associate with significant
influence operates under severe long-term
restrictions (Significant influence must be lost)
A.F.Ferguson & Co.
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IAS 28 ...contd.
 Conditions changed for exemption for application of
Equity method similar to those provided to parents not
to prepare Consolidated Financial Statements in IAS 27
- The investor is a wholly owned subsidiary, or a partially owned
subsidiary and all owners (including those not otherwise
entitled to vote) do not object to the investor not to apply
Equity method
- Not in process of filing its FS with a regulatory authority (eg
SECP) to issue any class of instruments to public and
- The ultimate or any intermediate parent of the investor
A.F.Ferguson & Co.
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IAS 28 … contd.
• Modifies guidance in SIC-20 Equity Accounting

Method – Recognition of Losses
- Investor’s net investment now includes

other long-term interest except trade
receivables, trade payables or any long-term
receivables with adequate collateral
(secured loans)
A.F.Ferguson & Co.

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IAS 28 … contd.
 Other changes
• Similar exemption as in IAS 27 that an
investee treated as financial asset if
- To be disposed within twelve months from
acquisition
- Management is actively seeking a buyer
• Uniform accounting policies to be use
- Impractically exemption eliminated
 Extensive disclosure requirements similar to

IAS 27
A.F.Ferguson & Co.
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IAS 31 Interests in Joint Ventures
 Main changes
• Scope exclusion
- For some types of investors
 Venture capital organisations
 Mutual funds
 Unit trusts and similar entities
 Investment limited insurance funds
- Must be held for trading under IAS 39

- Similar exemptions in IAS 28
A.F.Ferguson & Co.

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IAS 31…contd.
The Standard does not permit not to use

Proportionate Consolidation or Equity method
when the JV with operates under severe long-term
restrictions (Joint control must be lost)
A.F.Ferguson & Co.

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IAS 31 Interests in Joint Ventures
 Conditions changed for exemption for application of
Proportionate Consolidation or Equity method similar to those
provided to parents not to prepare Consolidated Financial
Statements in IAS 27
- The venturer is a wholly owned subsidiary, or a partially owned
subsidiary and all owners (including those not otherwise
entitled to vote) do not object to the investor not to apply
Proportionate Consolidation or Equity method
- Not in process of filing its FS with a regulatory authority (eg
SECP) to issue any class of instruments to public and
- The ultimate or any intermediate parent of the venturer
A.F.Ferguson & Co.
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IAS 31…contd.
• Joint venture treated as a financial asset if
- To be disposed off within 12 months of
acquisition
- Management is actively seeking a buyer
• Prohibits Proportionate Consolidation or Equity
methods in separate financial statements of a
venture
 Disclosure
• Method used to recognised interest in Joint
Venture that is proportion consolidation or equity
A.F.Ferguson & Co.

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IAS 32 Financial Instruments Disclosure and
Presentation
 Covers
• Classification as debt or equity
• Compound financial instruments
• Offsetting in the balance sheet
• Disclosure
 Standard was originally issued 1995
 Major changes in Dec 2003:
• All disclosures from old IAS 39 moved to IAS 32

• Many new disclosures added
A.F.Ferguson & Co.

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IAS 32…contd.
 Definition
• Expands definition of financial asset and
financial liability
- Includes some contracts that will or may be
settled in the entity’s own equity instruments
• Derivative
- Provides new guidance on when a derivative
contract on an entity’s own equity is a liability
- With settlement option is classified as FA or
FL unless all settlement options result in
being an equity instrument
- Past practice or the intended settlement
method no longer considered
A.F.Ferguson & Co.
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IAS 32…contd.
 Definition … contd.
• Financial liability
- Holder has a right to put it back to the issuer
for cash or another financial assets
- Even if the amount of cash or other financial
asset is determined on the basis of an index
- Includes puttable equity that gives the holder
right to a residual interest
 Significant impact on open-ended mutual funds,
unit trust, partnerships and co-operative entities
- Contingent settlement provisions exist
- Considers all terms and conditions agreed
between members of the group and the
holders of the instrument
A.F.Ferguson & Co.
57
IAS 32…contd.
• The Standard provides guidance on

measurement of the components of
compound financial instruments
• Incorporates SIC-16 Share Capital –
Reacquired Own Equity Instruments
(Treasury Shares)
A.F.Ferguson & Co.

58
Equity or liability (non-derivative)
Contractual obligation to deliver cash Yes Liability
or financial asset
NO
Instrument to be settled in the issuer’s

own equity is a non-derivative with a Liability
Yes
fixed value obligation to deliver a
variable number of its own shares
NO
Equity
A.F.Ferguson & Co.

59
Equity or liability (derivative)
Does the issuer potentially have an
obligation to settle gross in cash? Yes Liability
NO
Will settlement be exchange of fixed

number of shares for fixed amount? Yes Equity
NO
Derivative (note that any net cash or net

share settlement feature even at issuer’s
discretion, will lead to derivative
treatment)
A.F.Ferguson & Co.
60
IAS 32…contd.
 New disclosures for fair value estimates
- Method and significant assumptions applied for each
class of financial asset and liability
- Whether determined in full or in part by reference to
published price quotations in an active market or by
valuation technique
- Whether fair values determined in full or in part using
valuation technique based on assumptions not supported
by observable market prices or rates
- If change in assumptions would change the fair value and
a range of reasonable possible alternative assumptions
- Amount of the change in fair value estimated using a
valuation technique and recognised in P&L
A.F.Ferguson & Co.
61
IAS 33 Earnings per Share
 Significant redrafting (FAS 128)

 Additional disclosure requirements
- Separate presentation on the face of income
statements of basic and diluted EPS from
continuing and discontinuing operations
 Incorporates SIC-24 Earnings per Share – Financial
Instruments and Other Contracts that May be Settled
in Shares without changes
 Requires adjustment to earnings (numerator) for
redemption of preferred shares
 Provides additional guidance and illustrative
examples
A.F.Ferguson & Co.
62
IAS 38 Intangible Assets
 Cost and revaluation model (same as IAS 16)
 Subsequent expenditure
- To capitalise on rare occasions
 If residual value > or = carrying amount
- Amortisation ceases
 Amortisation resumes when
- Residual value < carrying amount
 All exchanges involving non-monetary assets
- At fair value
- unless
 Transaction lacks commercial substance
 Fair value not measurable
A.F.Ferguson & Co.

63
IAS 38 …contd.
 Useful life - Indefinite / definite life

 Disclosure
- Indefinite useful life assets
- Aggregate research and development
expenditure
A.F.Ferguson & Co.

64
IAS 39 Financial Instrument Recognition
and Measurement
 Scope
• New guidance on calculation of effective interest rates
• Loan commitments excluded from IAS 39
- If cannot be settled net and are not measured at fair
value with changes recognised in P&L
• Financial guarantee contracts excluded
- When specified payments to be made to reimburse the
holder for a loss it incurs because a specified debtor
fails to make payment when due under the original or
modified terms
• Financial guarantee contracts are included in IAS 39 if
- Provide for payments to be made in response to a
variable e.g. changes in specified interest rate,
financial instrument price
A.F.Ferguson & Co.
65
IAS 39 …contd.
 Main change
• Derecognition
- Derecognition rules rewritten to clarify their
application
- Concepts of control and risks and rewards of
ownership determine derecognition of a
financial asset
- Abandoned ED proposal to use solely
continuing involvement, however, continuing
involvement considered if not substantially
all the risks transferred
- Provides guidance when a part of financial
asset should be derecognised
A.F.Ferguson & Co.
66
IAS 39 …contd.
 Main change
• Classification
- Option to classify loans and receivable as
available for sale (AFS)
- Securities quoted in an active market can be
classified as available for sale, held for
trading or held to maturity
- Option available to designate at inception any
financial instrument as measured at fair value
with changes in P&L
- Loans and receivables category expanded to
include purchased loans and receivables not
quoted in an active market
A.F.Ferguson & Co.
67
IAS 39 …contd.
 Main change …contd.
• Effective interest rate definition amended
- Requires the use of estimated cash flows to calculate
effective yield
- Exception in rare cases when reliable estimate of cash
flow is not possible, in such cases use contractual
cash flows instead of estimated cash flows
• Expands guidance on measurement of fair values
and clarifies fair value measurement hierarchy
• Confirms that impairment follow an ‘incurred loss’
model rather than an ‘expected loss’ model
• Option removed to show changes in available for
sale through P&L
A.F.Ferguson & Co.
68
IAS 39 …contd.
 Hedge accounting
• Apply fair value model for hedging firm
commitments
• Option to account for firm commitment in a

foreign currency as a cash flow hedge
• Option to apply cost basis adjustments for

hedging non financial assets or liabilities
• Removal of cost basis adjustment for hedging

financial assets or liabilities
A.F.Ferguson & Co.
69
IAS 40 Investment Property
 Investment property may include property interest held by a
lessee under an operating lease
- If accounted for at Fair Value under IAS 40
- IAS 40 overrides IAS 17 for classification of lease
and the lease be recorded as finance lease
 Disclosures required
- Model used (Cost or Fair Value)
- If Fair Value model is applied state whether, and in what
circumstances, property interest held under operating lease
is classified and accounted for as investment property
- Reconciliation between the valuation obtained for
investment property and the amounts disclosed in the
financial statements
 Special transition rules
A.F.Ferguson & Co.
70
Thank you
A.F.Ferguson & Co.

71

Workshop On Latest Developments in IAS: A.F.Ferguson & Co

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A.F.Ferguson & Co.

A member firm of pwc