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Entities are to apply the provisions of IAS 36 in assessing the recoverable amount of an intangible asset and when and how to determine whether an asset is impaired. RETIREMENTS AND DISPOSALS Intangible assets shall be derecognized on disposal or when no future economic benefits are expected to be derived from their use or disposal. Any gain or loss on derecognition amounts to the difference between the net disposal proceeds, if any, less the carrying amount of the asset. The gain or loss is to be recognized in profit or loss. DISCLOSURES The Standard requires these disclosures for each class of intangible asset, distinguishing between internally generated and other assets: • Whether useful lives are indefinite or finite and, if finite, the useful lives or amortization rates used • The amortization methods used • The gross carrying amount and accumulated amortization and impairment losses at the beginning and end of the period • The line items in the statement of comprehensive income in which amortization is included • Additions, separately showing those internally generated, those acquired separately, and those acquired through business combinations • Assets classified as held for sale under IFRS 5 • Increases or decreases during the period resulting from revaluations • Impairment losses • Reversals of impairment losses • Amortization recognized during the period • Net exchange differences on retranslation • Other changes during the period • For assets with indefinite useful lives, the carrying amount of the asset and the reasons supporting such an assessment • Description, carrying amount, and remaining amortization period of any intangible assets that are material to the entity’s financial statements • The existence and carrying amounts of intangible assets whose title is restricted or pledged as security for liabilities • Contractual commitments for the acquisition of intangible assets • Intangible assets acquired by way of government grant and initially recognized at fair value, including their fair values, their carrying amounts, and whether subsequently carried under the cost or revaluation model • The amount of research and development expenditure expensed during the period If intangible assets are stated at revalued amounts, then these points are to be disclosed: • For each class of asset • The effective date of revaluation • The carrying amount • The carrying amount that would have been recognized had the cost model been used • The revaluation surplus that relates to intangible assets at the beginning and end of the period, indicating changes during the period and any restrictions on distributions to shareholders • The methods and significant assumptions used in estimating fair values In addition to the preceding disclosures, entities are encouraged to disclose the description of any fully amortized intangible assets that are still in use and of any significant intangible assets controlled by the entity not recognized as assets as they failed to meet the recognition criteria. Notes to the Financial Statements Accounting Policies Intangible assets EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS BASF, Annual Report, 2009 Internally generated intangible assets are primarily comprised of internally developed software. Such software, as well as other internally generated assets for internal use, are valued at cost and amortized over their useful lives. Impairments are recorded if the carrying amount of an asset exceeds the recoverable amount. Costs also include, in addition to those costs directly attributable to the asset, an appropriate allocation of overhead cost. Borrowing costs are capitalized to the extent that they are material and relate to the period over which the asset is generated.
The weighted-average useful lives of intangible assets amounted to Notes to the Financial Statements Trademarks and Other Intangible Assets Trademarks and other intangible assets consist of the following: Average amortization in years 2009 2008 Distribution, supply, and similar rights 14 16 Product rights, licenses, and trademarks 17 18 Know-how, patents, and production technologies 9 12 Internally generated intangible assets 6 6 Other rights and values 3 6 ADIDAS GROUP, Annual Report, 2009 Trademarks and other intangible assets € in millions Dec. 31, 2009 Dec. 31, 2008 Trademarks, gross 1,342 1,390 Less: accumulated amortization 0 0 Trademarks, net 1,342 1,390 Software, patents, and concessions, gross 538 517 Less: accumulated amortization 378 313 Other intangible assets, net 160 204 Trademarks and other intangible assets, net 1,502 1,594 The Group determines whether trademarks with indefinite useful lives are impaired at least on an annual basis. This requires an estimation of the fair value less costs to sell of the cash-generating units to which the trademark is allocated. Estimating the fair value less costs to sell requires the Group to make an estimate of the expected future brand-specific sales and appropriate arm’s-length royalty rates from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. There was no impairment expense for the years ending December 31, 2009 and 2008.
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Title Page Copyright Page Foreword
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DIVIDENDS DISCLOSURE: KEY ELEMENTS
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CONSOLIDATED FINANCIAL STATEMENTS A
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ELABORATION AND INTERPRETATION OF T
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MULTIPLE-CHOICE QUESTIONS Chapter 3
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FOREWORD TO THE FIRST EDITION by th
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PREFACE Achieving consistency in fi
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ABOUT THE AUTHORS Abbas Ali Mirza i
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ecognition and use of IFRS. A major
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SIC 12, Consolidation—Special-Pur
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The IFRS Advisory Council shall com
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Chapter 2 IASB FRAMEWORK INTRODUCTI
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ELEMENTS OF FINANCIAL STATEMENTS Th
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Chapter 3 PRESENTATION OF FINANCIAL
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XYZ Inc. is a manufacturer of telev
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Statement of Comprehensive Income I
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Available-for-sale financial assets
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Notes The notes should disclose the
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equired by the counterparty to sett
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The costs of purchase constitute al
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Based on the FIFO cost flow assumpt
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• Accounting policies adopted for
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f. Choices a and c. g. Choices a, b
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1. They should be “short term”
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2. Proceeds from disposal of debt i
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1. Cash collections from customers
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3. Placements and withdrawals of de
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Additional Information Retained ear
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c. Indirect Method Cash paid to sup
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Notes to the Consolidated Cash Flow
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Chapter 6 ACCOUNTING POLICIES, CHAN
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een applied. The impact of the new
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• For current and each prior peri
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An entity should disclose amounts a
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Notes to the Financial Statements (
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d. The entity would find the determ
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Given these facts, what is the “a
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existed at the end of the reporting
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Chapter 8 CONSTRUCTION CONTRACTS (I
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2. Costs that are attributable to c
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4. Revenue, costs, and profits to b
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Facts 34 Construction contracts Mil
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ecognized as revenue. Therefore, $7
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The Standard Applies to the Account
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ACCOUNTING FOR DEFERRED TAX To acco
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TEMPORARY DIFFERENCES NOT RECOGNIZE
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Required Show the impact on the fin
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Solution Zero. There is no temporar
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Solution Facts CASE STUDY 13 East i
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Since 20X4, Frontier has incurred s
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calculated that the liability and e
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Chapter 10 PROPERTY, PLANT, AND EQU
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Required 2. Initial delivery and ha
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disposal. Any gain on disposal is t
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financing liability and the financi
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Chapter 11 LEASES (IAS 17) BACKGROU
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the fair value of the asset. During
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ate in the lease is 9.3% (approxima
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Discuss how this transaction should
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The basic lease accounting model ha
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6. The lease of land and buildings
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Chapter 12 REVENUE (IAS 18) BACKGRO
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• Do not involve the same counter
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• The costs incurred and the cost
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Up to March 31, 20X9, the value of
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e that the real estate developer as
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Turnover is recognized when the ris
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Chapter 13 EMPLOYEE BENEFITS (IAS 1
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The accounting for a defined contri
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The amount of the expense or income
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• Fair value of plan assets: $50
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8. Past service cost: $115 million.
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Pensions Employee costs Employee co
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9. An entity operates a defined ben
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For quite some time, it has been un
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Solution Citimart Inc. would need t
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The Standard does not favor either
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Chapter 15 THE EFFECTS OF CHANGES I
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Facts An entity purchases equipment
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The exchange difference is calculat
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disposal was recognized. The same a
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Difference 7 Total 89.5 (say 90m) T
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ate on December 31, 20X9 is $1 =
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On December 1, 2009, Compassionate
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1. In order to capitalize the borro
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Chapter 17 RELATED-PARTY DISCLOSURE
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Solution Yes, under IAS 24 (revised
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warrant disclosure because it may n
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Facts Zeeba Inc. is part of a major
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The Used Equipment Co (Pty) Limited
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Key management personnel are define
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Chapter 18 ACCOUNTING AND REPORTING
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Total accounts payable 41,000 Accru
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Employee contributions 50,000 Total
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Chapter 19 CONSOLIDATED AND SEPARAT
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2. Noncontrolling interests in the
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When an entity loses control of a s
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Initially, the fair value of the as
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c. The ultimate parent entity produ
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EQUITY METHOD Under the equity meth
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What is the relationship between Co
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What amount should be shown in A’
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(f) (g) (h) December 31 60 73 Assoc
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. The carrying value of the associa
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PRACTICAL INSIGHT Turkiye Petrol Ra
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Cash 5,150 Share capital (300/100
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Chapter 22 INTERESTS IN JOINT VENTU
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Facts Three entities decide to form
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current period (IFRIC 1.5). Thus in
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Methods of valuation techniques use
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of impairment exists, the carrying
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Chapter 23 FINANCIAL INSTRUMENTS: P
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Contracts for contingent considerat
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has the unconditional right to refu
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principal and interest cash flows)
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On January 15, 20X5, Entity A issue
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instruments. A financial instrument
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The major components of market risk
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Credit risk is the risk that a cust
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1. Are there any circumstances when
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• A purchased put option to sell
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• Sales that are so close to matu
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eceived nothing on entering into th
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price plus interest. In this case,
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CASE STUDY 4 This case illustrates
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financial liabilities measured at f
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Example If Entity A receives a cash
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If the reporting period does not co
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cash flow pattern, credit quality,
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of the cash flows. 2. Entity A purc
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PRACTICAL INSIGHT IAS 39 does not p
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This case illustrates how to accoun
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This case illustrates how to accoun
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This case illustrates when to separ
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change in fair value of the derivat
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A cash flow hedge is a hedge of the
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This case illustrates the accountin
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PRACTICAL INSIGHT It is often possi
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Derivatives are measured on the bal
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15. Which of the following is not o
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Page 296 and 297: Chapter 26 INTERIM FINANCIAL REPORT
Page 298 and 299: should be applied and previously re
Page 300 and 301: Consolidated balance sheet at June
Page 302 and 303: 1. Under IAS 34, interim financial
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Page 306 and 307: development costs. An impairment lo
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Page 310 and 311: can be reasonably allocated. 3. Thi
Page 312 and 313: PRACTICAL INSIGHT Austrian Airlines
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Page 316 and 317: . Loss on goodwill. c. Loss on a bu
Page 318 and 319: Recognition of Provisions Those lia
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Page 324 and 325: A Singapore-based shipping company
Page 326 and 327: c. Because Amazon Inc. can avoid th
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Page 330 and 331: Examples of activities that may fai
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Page 340 and 341: If, on acquisition, it is not possi
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Page 346 and 347: Required Value of biological asset
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Page 350 and 351: Notes to Group Financial Statements
Page 352 and 353: d. There is no requirement in the S
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Page 356 and 357: Solution In order to prepare the op
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Page 360 and 361: 2. No journal entry is required as
Page 362 and 363: IFRS 1 discusses exemptions under t
Page 364 and 365: Solution In valuing the shares of V
Page 366 and 367: • Unilever was an early adopter (
Page 368 and 369: Chapter 33 SHARE-BASED PAYMENTS (IF
Page 370 and 371: date of the cancelation is deducted
Page 372 and 373: party, to satisfy its obligations t
Page 374 and 375: Playful has ordered an amount of in
Page 376 and 377: May 31, 20X8 August 1, 20X8 5,000
Page 378 and 379: Should the plans be valued at fair
Page 380 and 381: 4. An entity issues fully paid shar
Page 382 and 383: Chapter 34 BUSINESS COMBINATIONS (I
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Future losses or other costs that a
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93 Interest (13) Profit before tax
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This choice of method of accounting
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The error in 20X9, regarding the om
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This makes a total NCI of $554m. c)
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$m J retained earnings 360 Share of
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Intercompany transactions and the r
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11. The “excess of the acquirer
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Chapter 35 INSURANCE CONTRACTS (IFR
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Required Discuss how the reinsuranc
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Guaranteed residual values Guarante
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Chapter 36 NONCURRENT ASSETS HELD F
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SUNDRY POINTS Exchanges of noncurre
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Before classification of the item a
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Noncurrent assets Current assets No
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c. At carrying value. d. In accorda
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IAS 8 specifies a hierarchy of crit
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fuel used, rig costs, delay rentals
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Chapter 38 FINANCIAL INSTRUMENTS: D
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other than credit risk (i.e., chang
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2. Whether fair values are determin
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d. Transfers into or out of Level 3
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equires that any derivative that do
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The amount recognized in the income
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a. To provide presentation and disc
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amongst the top management personne
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Recreational clubs $ 50 million vs
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Chapter 40 FINANCIAL INSTRUMENTS (I
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Discussion The entity’s objective
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The following are indicators of whe
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However as IFRS 9 eliminates the av
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Facts CASE STUDY 6 Hant has an equi
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Chapter 41 IFRS FOR SMEs INTRODUCTI
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the IFRS for SMEs, if an entity can
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2. The subsidiary’s business acti
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All grants are measured at the fair
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The present value of the fine will
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3. If SMEs choose to follow the Sta
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1. b 2. a 3. a 4. c 5. a 1. a 2. c*
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1. b 2. a 3. b 1. d 2. b 3. c 4. c
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2. b 3. b 4. a 5. a 6. b 7. b 8. b
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18. d* 19. b 20. b 21. a 22. b 23.
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INDEX Abandonment Accounting compou
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Control business combinations conso
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interests. See IAS 32, Financial In
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events after the reporting period G
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gross basis versus net basis indire
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IAS 18, Revenue amendment to backgr
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net assets available for benefits n
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fair value per share financial stat
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initial measurement interest income
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scope of share-based payment transa
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credit risk effective date fair val
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property, plant, and equipment Impa
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Market risk Materiality Measurement
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Recoverable amount, impairment loss
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usiness combinations financial inst
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