22
(7)
21
C
36
Other expense (income)
Amortization 410
(410)
EBIT 1,050
1
154
1,205
EBIT
Financing income
(137)
3
(342)
A
(476)
Financing income
Financing expense
256
(2)
430
A-D
684
Financing expense
EBT 931
–
66
997
EBT
Income taxes
162
60
E
222
Income taxes
Net income
769
–
6
775
Net income
Attributable to
Attributable to shareholders
equity holders of
of Bombardier
755
7
762
Bombardier
Attributable to NCI
14
(1)
13
Attributable to NCI
Basic EPS
0.42
0.01
0.43
Basic EPS
Diluted EPS
0.42
–
0.42
Diluted EPS
RECLASSIFICATIONS FROM CANADIAN GAAP REPORTING TO IFRS
A classified statement of financial position has been presented under IFRS, based on the operating cycle for operating
items and based on a 12-month period for non-operating items.
The following are mandatory reclassifications of items in the statement of financial position upon transition to IFRS:
•
Financial assets and financial liabilities are presented separately from non-financial assets and non-financial liabilities.
•
Provisions are presented separately from other payables.
•
Other long-term employment benefits, such as long-term disability and service awards, are segregated from
retirement benefits and are presented in other liabilities.
The Corporation has also made the following elective reclassification of items in the statements of financial position
to place focus on key accounts under IFRS:
•
Aerospace program tooling is presented separately from goodwill and other intangibles.
•
Flexjet fractional ownership deferred costs and fractional ownership deferred revenues are no longer presented
separately and are included in other assets and other liabilities, respectively.
•
Aircraft financing is no longer presented separately and is included in other financial assets, except for assets
under operating leases which are presented as non-financial assets classified according to their nature.
•
Derivative financial instruments are no longer presented separately and are included in other financial assets
and other financial liabilities.
326 Chapter
5
The Corporation has made the following mandatory reclassification of items in the statement of income:
•
Amortization expense is no longer presented separately and is classified between cost of sales, SG&A and
R&D based on the function of the underlying assets.
The Corporation has made the following elective reclassifications of items in the statement of income:
•
Expected return on pension plan assets and accretion on retirement benefit obligations are presented in
financing expense and financing income and are no longer included in EBIT.
•
Other income and expenses related to operations, such as foreign exchange gains and losses, are no longer included
in other expense (income) and are instead classified as cost of sales unless the item is unusual and material.
•
Under Canadian GAAP, changes in valuation of credit and residual value guarantees, loans and lease
receivables, lease subsidies, investments in financing structures and servicing fees are presented in cost of
sales or other expense (income). Under IFRS, changes in the value of these items are presented in financing
expense or financing income if the changes arise from variation in interest rates. Other changes in valuation of
these items are presented in other expense (income) under IFRS.
RECONCILIATION OF COMPREHENSIVE INCOME FROM CANADIAN GAAP TO IFRS
The following reconciliation illustrates the restatements to comprehensive income reported under Canadian GAAP
to IFRS for the fiscal year ended January 31, 2011.
RECONCILIATION OF COMPREHENSIVE INCOME
Item
Comprehensive income under Canadian GAAP ( as reported)
$
799
Differences on net income
6
Differences on OCI
Retirement
benefits
A
35
Other
(35)
Income tax impact of all restatements
E
(28)
(28)
Comprehensive income under IFRS
$
777
The following items explain the significant restatements to OCI resulting from the change in accounting policies upon
adoption of IFRS.
A. RETIREMENT
BENEFITS
A net actuarial gain of $35 million was recognized during the fiscal year ended January 31, 2011. This net actuarial
gain was comprised of:
Actuarial gains, mainly due to changes in discount rates
$
161
Loss arising from variations in the asset ceiling and additional liability
(70)
Foreign exchange losses on the translation of plan assets and liabilities
(56)
Net actuarial gain
$ 35
Actuarial gains and losses are recognized in OCI under IFRS in accordance with the Corporation’s choice of accounting policy.
[...]
E.
INCOME TAX IMPACT OF ALL RESTATEMENTS
The related deferred income tax assets have not been fully recognized in some countries, as it is not probable that all
of the income tax benefits will be realized, and additional income tax expense was recorded in other counties.
First-time
adoption
327
6.3.3
Recognition and reversal of impairments
If a first-time adopter recognised or reversed any impairment losses on transition to
IFRSs it should disclose the information that IAS 36 would have required if the
entity had recognised those impairment losses or reversals in the period beginning
with the date of transition to IFRSs (see Chapter 20). [IFRS 1.24]. This provides
transparency about impairment losses recognised on transition that might otherwise
receive less attention than impairment losses recognised in earlier or later periods.
[IFRS 1.BC94].
6.3.4
Inclusion of IFRS 1 reconciliations by cross reference
The reconciliation disclosures required by IFRS 1 are generally quite lengthy. While
IFRS 1 allows an entity’s first interim report under IAS 34 to give certain of these
disclosures by way of cross-reference to another published document, [IFRS 1.32-33],
there is no corresponding
exemption for disclosure in the entity’s first annual IFRS
financial statements. Therefore, a first-time adopter should include all disclosures
required by IFRS 1 within its first annual IFRS financial statements in the same way
it would need to include other lengthy disclosures such as those on business
combinations, financial instruments and employee benefits. Any additional
voluntary information regarding the conversion to IFRSs that was previously
published but that is not specifically required by IFRS 1 need not be repeated in the
first IFRS financial statements.
6.4
Designation of financial instruments
If, on transition, a first-time adopter designates a previously recognised financial
asset or financial liability as a ‘financial asset or financial liability at fair value
through profit or loss’ (see 5.11.1 and 5.11.2 above), paragraphs 29 – 29A of IFRS 1
require it to disclose:
• the fair value of any financial assets or financial liabilities designated into it at the
date of designation; and
• their classification and carrying amount in the previous GAAP financial statements.
Although it is related to the designations made under IAS 39, the extract below provides
a good illustration of the above disclosure requirement.
Extract 5.14: Industrial Alliance Insurance and Financial Services Inc. (2011)
Notes to consolidated financial statements [extract]
Note 4. Transition to International Financial Reporting Standards (IFRS) [extract]
Exemptions from retrospective application
The Company applied certain optional exemptions to the retrospective application of IFRS when it prepared its
opening Statement of Financial Position. The exemptions applied are described below: [...]
5.
Designation of previously recognized financial instruments
The Company availed itself of this exemption and reclassified the debentures classified as designated at fair value
through profit or loss as a financial liability at amortized cost. Consequently, the financial assets matching these
liabilities were reclassified from designated at fair value through profit or loss to available for sale.
328 Chapter
5
Details on adjustments to equity and comprehensive income are presented below: [...]
d)
Fair value of financial instruments:
Given that the designation of financial instruments can be changed under IFRS 1, the Company reclassified bonds
matching the debentures with a fair value of $305 from designated at fair value through profit or loss to available for sale.
This reduced the retained earnings and increased the accumulated other comprehensive income by the same amount.
Furthermore, according to previous GAAP, the Company could classify stocks for which there was no active market
as available for sale at cost. These stocks must now be measured at fair value. To do this, the Company uses an
internal measurement method. The fair value of these stocks is $54.
Compared to previous accounting standard, IAS 39 added impairment criteria for stocks classified as available for
sale. Hence, stocks classified as available for sale should be impaired if the unrealized loss accounted in the
Comprehensive Income Statement is significant or prolonged. [...]
f)
Reclassification of debentures – reversal of fair value:
The Company used the IFRS 1 exemption on the designation of financial instruments and amended the designation of
certain debentures. According to previous GAAP, these debentures were designated at fair value through profit or loss
and had a fair value of $327. According to IFRS, these debentures are classified as financial liabilities at amortized cost.
6.5
Disclosures regarding deemed cost
6.5.1
Use of fair value as deemed cost
If a first-time adopter uses fair value as deemed cost for any item of property, plant and
equipment, investment property, right-of-use asset under IFRS 16 or an intangible asset
in its opening IFRS statement of financial position (see 5.5.1 above), it should disclose
for each line item in the opening IFRS statement of financial position: [IFRS 1.30]
• the aggregate of those fair values; and
• the aggregate adjustment to the carrying amounts reported under previous GAAP.
This disclosure is illustrated in Extracts 5.6 and 5.7 at 5.5.1 above.
6.5.2
Use of deemed cost for investments in subsidiaries, joint ventures
and associates
If a first-time adopter measures its investments in subsidiaries, joint ventures or
associates at deemed cost in the parent (joint venturer or investor) company’s opening
IFRS statement of financial position (see 5.8.2 above), the entity’s first IFRS separate
financial statements should disclose:
(a) the aggregate deemed cost of those investments for which deemed cost is their
previous GAAP carrying amount;
(b) the aggregate deemed cost of those investments for which deemed cost is fair value;
and
(c) the aggregate adjustment to the carrying amounts reported under previous GAAP.
[IFRS 1.31].
6.5.3
Use of deemed cost for oil and gas assets
If a first-time adopter uses the deemed cost exemption in paragraph D8A(b) of IFRS 1
for oil and gas assets (see 5.5.3 above), it should disclose that fact and the basis on which
carrying amounts determined under previous GAAP were allocated. [IFRS 1.31A].
First-time
adoption
329
6.5.4
Use of deemed cost for assets used in operations subject to rate
regulation
If a first-time adopter uses the exemption for assets used in operations subject to rate
regulation (see 5.5.4 above), it should disclose that fact and the basis on which carrying
amounts were determined under previous GAAP. [IFRS 1.31B].
6.5.5
Use of deemed cost after severe hyperinflation
If a first-time adopter uses the exemption to elect fair value as the deemed cost in its
opening IFRS statement of financial position for assets and liabilities because of severe
hyperinflation (see 5.17 above), it should disclose an explanation of how, and why, the
first-time adopter had, and then ceased to have, a functional currency that has both of
the following characteristics: [IFRS 1.31C]
(a) a reliable general price index is not available to all entities with transactions and
balances in the currency; and
(b) exchangeability between the currency and a relatively stable foreign currency does
not exist.
6.6
Interim financial reports
6.6.1
Reconciliations in the interim financial reports
If a first-time adopter presents an interim financial report under IAS 34 for part of the
period covered by its first IFRS financial statements: [IFRS 1.32]
(a) each such interim financial report should, if the entity presented an interim
financial report for the comparable interim period of the immediately preceding
financial year, include:
• a reconciliation of its equity under previous GAAP at the end of that
comparable interim period to its equity under IFRSs at that date; and
• a reconciliation to its total comprehensive income under IFRSs for that
comparable i
nterim period (current and year to date). The starting point for
that reconciliation is total comprehensive income under previous GAAP for
that period or, if an entity did not report such a total, profit or loss under
previous GAAP.
(b) in addition, the entity’s first interim financial report under IAS 34 for part of the
period covered by its first IFRS financial statements should include the
reconciliations described at 6.3.1 above or a cross-reference to another published
document that includes these reconciliations.
For an entity presenting annual financial statements under IFRSs, it is not
compulsory to prepare interim financial reports under IAS 34. Therefore, the above
requirements only apply to first-time adopters that prepare interim reports under
IAS 34 on a voluntary basis or that are required to do so by a regulator or other
party. [IFRS 1.IG37].
330 Chapter
5
Examples 5.38 and 5.39 below show which reconciliations should be included in half-
year reports and quarterly reports, respectively.
Example 5.38: Reconciliations to be presented in IFRS half-year reports
As in Example 5.37 at 6.3.1 above, Entity A’s date of transition to IFRSs is 1 January 2018, the end of its first
IFRS reporting period is 31 December 2019 and it publishes a half-year report as at 30 June 2019 under IAS 34.
Which primary financial statements and reconciliations should Entity A present in its first IFRS half-year report?
1 January
30 June
31 December
30 June
2018
2018
2018
2019
Statement of financial position
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 66
