International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards
Page 977
11.3.2
definition, Ch. 14, 4.1
derivative liabilities, Ch. 14, 11.3.4
measurement, Ch. 14, 4.2
entity incorporate credit risk into the valuation of its
financial assets and liabilities with offsetting positions, Ch. 14,
derivative contracts, Ch. 14, 11.3.3
12
with third-party credit enhancements, Ch. 14, 11.3.1
criteria for using the portfolio approach for offsetting
not held by other parties as assets, Ch. 14, 11.2.2
positions, Ch. 14, 12.1
restrictions preventing the transfer of, Ch. 14, 11.4
accounting policy considerations, Ch. 14, 12.1.1
that are held by other parties as assets, Ch. 14, 11.2.1
level 1 instruments in, Ch. 14, 12.1.4
market participants, Ch. 14, 7
minimum level of offset, to use portfolio approach,
assumptions, Ch. 14, 7.2
Ch. 14, 12.1.3
characteristics, Ch. 14, 7.1
presentation considerations, Ch. 14, 12.1.2
non-financial assets, application to, Ch. 14, 10
measuring fair value for offsetting positions, Ch. 14, 12.2
highest and best use, Ch. 14, 10.1
exposure to market risks, Ch. 14, 12.2.1
legally permissible, Ch. 14, 10.1.1
exposure to the credit risk of a particular counterparty,
vs. current use, Ch. 14, 10.1.2
Ch. 14, 12.2.2
vs. intended use, Ch. 14, 10.1.3
hierarchy, Ch. 14, 16
valuation premise, Ch. 14, 10.2
categorisation within, Ch. 14, 16.2
in combination with other assets and/or liabilities,
over-the-counter derivative instruments, Ch. 14,
Ch. 14, 10.2.2
16.2.4
liabilities association, Ch. 14, 10.2.3
significance of inputs, assessing, Ch. 14, 16.2.1
stand-alone basis, Ch. 14, 10.2.1
third-party pricing services/brokers, Ch. 14, 16.2.3
unit of account vs., Ch. 14, 10.2.4
transfers between levels within, Ch. 14, 16.2.2
for part-grown biological assets, Ch. 38, 4.7
IFRS 13, objective of, Ch. 14, 1.3
present value techniques, Ch. 14, 21
IFRS 13, overview, Ch. 14, 1.2
components of, Ch. 14, 21.2
at initial recognition, Ch. 14, 13
risk and uncertainty in, Ch. 14, 21.2.2
day 1 gains and losses, Ch. 14, 13.2
time value of money, Ch. 14, 21.2.1
exit price vs. entry price, Ch. 14, 13.1
discount rate adjustment technique, Ch. 14, 21.3
related party transactions, Ch. 14, 13.3
expected present value technique, Ch. 14, 21.4
inputs to valuation techniques, Ch. 14, 15
general principles for use of, Ch. 14, 21.1
broker quotes and pricing services, Ch. 14, 15.5
price, Ch. 14, 9
general principles, Ch. 14, 15.1
transaction costs, Ch. 14, 9.1
premiums and discounts, Ch. 14, 15.2
transportation costs, Ch. 14, 9.2
blockage factors (or block discounts), Ch. 14, 15.2.1
principal (or most advantageous) market, Ch. 14, 6
pricing within the bid-ask spread, Ch. 14, 15.3
scope, Ch. 14, 2
bid-ask spread, Ch. 14, 15.3.2
exclusions, Ch. 14, 2.2
mid-market pricing, Ch. 14, 15.3.1
exemptions from the disclosure requirements of IFRS
risk premiums, Ch. 14, 15.4
13, Ch. 14, 2.2.4
of intangible assets, determining, Ch. 9, 5.5.2.F
fair value, measurements similar to, Ch. 14, 2.2.3
level 1 inputs, Ch. 14, 17
lease transactions, Ch. 14, 2.2.2
alternative pricing methods, Ch. 14, 17.2
share-based payments, Ch. 14, 2.2.1
quoted prices in active markets Ch. 14, 17.3
fair value measurement exceptions, Ch. 14, 2.4
unit of account, Ch. 14, 17.4
IFRS 13, items in scope of, Ch. 14, 2.1
use of, Ch. 14, 17.1
fair value disclosures, Ch. 14, 2.1.1
level 2 inputs, Ch. 14, 18
fair value measurements, Ch. 14, 2.1.2
examples of, Ch. 14, 18.2
short-term receivables and payables, Ch. 14, 2.1.3
making adjustments to, Ch. 14, 18.4
practical expedient for impaired financial assets carried at
market corroborated inputs, Ch. 14, 18.3
amortised cost, Ch. 14, 2.4.2
recently observed prices in an inactive market, Ch. 14,
present value techniques, Ch. 14, 2.3
18.5
transaction, Ch. 14, 8
level 3 inputs, Ch. 14, 19
estimation, Ch. 14, 8.3
examples of, Ch. 14, 19.2
identification, Ch. 14, 8.2
use of, Ch. 14, 19.1
volume and level of activity for an asset/liability, Ch. 14,
liabilities and an entity’s own equity, application to, Ch. 14, 11
8.1
financial liability with demand feature, Ch. 14, 11.5
unit of account, Ch. 14, 5.1
general principles
asset’s (or liability’s) components, Ch. 14, 5.1.4
fair value of an entity’s own equity, Ch. 14, 11.1.2
level 1 assets and liabilities, Ch. 14, 17.4
fair value of liability, Ch. 14, 11.1.1
and portfolio exception, Ch. 14, 5.1.2
settlement value vs. transfer value, Ch. 14, 11.1.3
and PxQ, Ch. 7, 3.3.2.D, 7.3; Ch. 14, 5.1.1
non-performance risk, Ch. 14, 11.1
vs. valuation premise, Ch. 14, 5.1.3
130 Index
Fair value measurement —contd
accounting by lessors, Ch. 23, 4.2; Ch. 24, 6.2–6.2.4
valuation techniques, Ch. 14, 14
disposal of assets held under finance leases, measurement,
cost approach, Ch. 14, 14.3
Ch. 23, 4.2.4
income approach, Ch. 14, 14.4
finance income, allocation of, Ch. 23, 4.2.2
market approach, Ch. 14, 14.2
initial measurement, Ch. 24, 6.2.1
selecting appropriate, Ch. 14, 14.1
lessor’s net investment in lease, Ch. 23, 4.2.1
making changes to valuation techniques, Ch. 14,
remeasurement, Ch. 24, 6.2.4
14.1.4
residual values, Ch. 23, 4.2.3
single vs. multiple valuation techniques, Ch. 14, 14.1.1
subsequent measurement, Ch. 24, 6.2.3
using multiple valuation techniques to measure fair
manufacturer/dealer lessors, Ch. 23, 4.4; Ch. 24, 6.2.2
value, Ch. 14, 14.1.2
termination of finance leases, Ch. 23, 4.3
valuation adjustments, Ch. 14, 14.1.3
by lessees, Ch. 23, 4.3.1
Fair value model, investment property, Ch. 19, 6. See also
early termination by lessees, Ch. 23, 4.3.1.A
Investment property
by lessors, Ch. 23, 3.2.1
completed investment property, inability to determine fair
early termination for lessors, Ch. 23, 4.3.2.B
value, Ch. 19, 6.2
impairment of lease receivables, Ch. 23, 4.3.2.A
deferred taxation for property held by a ‘single asset’ entity,
Financial Accounting Standards Board (FASB), Ch. 1, 2.9, 3.2;
Ch. 19, 6.10
Ch. 14, 23.2
estimation of fair value, Ch. 19, 6.1
Financial assets
fixtures and fittings subsumed, Ch. 19, 6.5
accounting f
or loss of control, interest retained in the former
future capital expenditure and development value (‘highest
subsidiary is a financial asset, Ch. 7, 3.3.1
and best use’), Ch. 19, 6.8
call options over non-controlling interest, Ch. 7, 6.1, 6.3, 6.4,
negative present value, Ch. 19, 6.9
6.6
prepaid and accrued operating lease income, Ch. 19, 6.6
classification and measurement on first-time adoption, Ch. 5,
properties held under a lease, Ch. 19, 6.7
4.9
property under construction, Ch. 19, 6.3
classifying, Ch. 44, 2
transaction costs incurred, Ch. 19, 6.4
debt instruments, Ch. 44, 2.1
Fair value through other comprehensive income (FVTOCI),
equity instruments and derivatives, Ch. 44, 2.2
Ch. 44, 8; Ch. 50, 7.2, 8.2
contractual obligation to deliver, Ch. 43, 4.2
debt instruments, subsequent measurement
definition, Ch. 41, 2.1; Ch. 43, 3; Ch. 48, 2.1
accumulated impairment amount for, Ch. 47, 14.3
derecognition, Ch. 48, 3
financial assets measured at, Ch. 47, 9
designated as measured at fair value through profit/loss, Ch.
hedges of exposures classified as, Ch. 49, 2.6.3
50, 4.4.3
non-derivative equity investments designation at, Ch. 44, 8
at fair value through profit/loss, Ch. 46, 2.4
Faithful representation, Ch. 2, 5.1.2
held for trading, Ch. 44, 4
Farm-ins and farm outs, extractive industries, Ch. 39, 6.2
hybrid financial assets, Ch. 44, 10.2.7.A
farm-in arrangements in the E&E phase, Ch. 39, 6.2.1
and liabilities with offsetting positions, Ch. 14, 12
farm-in arrangements outside the E&E phase: accounting by
criteria for using the portfolio approach for offsetting
the farmee, Ch. 39, 6.2.2
positions, Ch. 14, 12.1
farming into an asset, Ch. 39, 6.2.2.A
measuring fair value for offsetting positions, Ch. 14, 12.2
farming into a business which is a joint operation or results
measured at amortised cost, Ch. 47, 14.1
in the formation of a joint operation, Ch. 39, 6.2.2.B
measured at fair value through other comprehensive income,
farm-in arrangements outside the E&E phase: accounting by
Ch. 47, 14.3
the farmor, Ch. 39, 6.2.3
measured at fair value through profit/loss, Ch. 47, 9.1
modified financial assets, Ch. 47, 8.2
Federation of European Accountants (FEE), Ch. 1, 4.2.1
offsetting, Ch. 50, 7.4.1
Finance costs as a borrowing cost, Ch. 21, 5.5
cash pooling arrangements, Ch. 50, 7.4.1.E
derecognition of borrowings, gains and losses on, Ch. 21,
disclosure, Ch. 50, 7.4.2
5.5.2
enforceable legal right of set-off, Ch. 50, 7.4.1.A
derivative financial instruments, Ch. 21, 5.5.1
intention to settle net, Ch. 50, 7.4.1.C
derivative financial instruments, gains or losses on termination
master netting agreements, Ch. 50, 7.4.1.B
of, Ch. 21, 5.5.3
offsetting collateral amounts, Ch. 50, 7.4.1.F
dividends payable on shares classified as financial liabilities,
situations where offset is not normally appropriate, Ch. 50,
Ch. 21, 5.5.4
7.4.1.D
unwinding discounts, Ch. 21, 4.2
unit of account, Ch. 50, 7.4.1.C
Finance leases, accounting for, Ch. 23, 4, Ch. 24, 6.2
reclassifications of, Ch. 44, 9; Ch. 46, 2.7
accounting by lessees, Ch. 23, 4.1
redesignation of, Ch. 51, 8.4
accounting for leased asset, Ch. 23, 4.1.4
that are either past due or impaired, Ch. 50, 5.3.3
allocation of finance costs, Ch. 23, 4.1.2
transfers of, Ch. 50, 6
initial recognition, Ch. 23, 4.1.1
assets that are derecognised in their entirety, Ch. 50, 6.3
recording the liability, Ch. 23, 4.1.3
Index
131
disclosure requirements, Ch. 50, 6.3.2
contracts with discretionary participation features,
meaning of continuing involvement, Ch. 50, 6.3.1
Ch. 41, 3.3.2
assets that are not derecognised in their entirety, Ch. 50,
separating financial instrument components including
6.2
embedded derivatives from insurance contracts,
meaning of ‘transfer,’ Ch. 50, 6.1
Ch. 41, 3.3.3
Financial capital maintenance (framework), Ch. 2, 11.1
weather derivatives, Ch. 41, 3.3.1
Financial guarantee(s), Ch. 47, 5.8.1
leases, Ch. 41, 3.2
to provide a loan at a below-market interest rate, Ch. 46, 2.8
loan commitments, Ch. 41, 3.5
reimbursement rights in respect of provisions, Ch. 41, 3.10
Financial guarantee contracts, Ch. 41, 3.4; Ch. 45, 3.3.3; Ch. 51,
rights and obligations within the scope of IFRS 15,
2.2.3.D
Ch. 41, 3.13
definition, Ch. 41, 3.4.1; Ch. 47, 11
subsidiaries, associates, joint ventures and similar
debt instrument, Ch. 41, 3.4.1.B
investments, Ch. 41, 3.1
form and existence of contract, Ch. 41, 3.4.1.C
reimbursement for loss incurred, Ch. 41, 3.4.1.A
Financial instrument hosts, Ch. 45, 3.5
between entities under common control, Ch. 41, 3.4.4
Financial instruments, classification, Ch. 44, 1–10
holders of, Ch. 41, 3.4.3
‘business model’ assessment, Ch. 44, 5
IFRS 9 impairment requirements, Ch. 47, 1.2
applying in practice, Ch. 44, 5.6
issuers of, Ch. 41, 3.4.2
consolidated and subsidiary accounts, Ch. 44, 5.5
maturity analysis, Ch. 50, 5.4.2.F
hold to collect contractual cash flows, Ch. 44, 5.2
Financial instrument(s). See also IAS 32, IAS 39, IFRS 7; IFRS 9
hold to collect contractual cash flows and selling financial
contracts to buy or sell commodities and other non-financial
assets, Ch. 44, 5.3
items, Ch. 41, 4
impact of sales on the assessment, Ch. 44, 5.2.1
contracts that may be settled net, Ch. 41, 4.1
level at which the business model assessment is applied,
normal sales and purchases (or own use contracts),
Ch. 44, 5.1
Ch. 41, 4.2
transferred financial assets that are not derecognised,
commodity broker-traders and similar entities,
Ch. 44, 5.2.2
Ch. 41, 4.2.2
contractual cash flows, Ch. 44, 6
contracts containing volume flexibility, Ch. 41, 4.2.5
auction rate securities, Ch. 44, 6.4.4
electricity and similar ‘end-user’ contracts, Ch. 41, 4.2.4
bonds with a capped or floored interest rate, Ch. 44, 6.3.3
fair value option in IFRS 9, Ch. 41, 4.2.6
contractual features that change the timing or amount,
net settlement of similar contracts, Ch. 41, 4.2.1
Ch. 44, 6.4.4
written options that can be settled net, Ch. 41, 4.2.3
contractually linked instruments, Ch. 44, 6.6
definitions, Ch. 41, 2.1
conventional subordination features, Ch. 44, 6.3.1
applying, Ch. 41, 2.2
convertible debt, Ch. 44, 6
.4.5
contingent rights and obligations, Ch. 41, 2.2.3
de minimis features, Ch. 44, 6.4.1.A
derivative financial instruments, Ch. 41, 2.2.8
debt covenants, Ch. 44, 6.4.4
dividends payable, Ch. 41, 2.2.9
dual currency instruments, Ch. 44, 6.4.5
equity instruments, Ch. 41, 2.1; Ch. 41, 2.2.7
five-year constant maturity bond, Ch. 44, 6.4.2
financial asset, Ch. 41, 2.1
fixed rate bond prepayable by the issuer at fair value,
financial instrument, Ch. 41, 2.1
Ch. 44, 6.4.5
financial liability, Ch. 41, 2.1
full recourse loans secured by collateral, Ch. 44, 6.3.2
leases, Ch. 41, 2.2.4
interest rate period, Ch. 44, 6.4.2
need for a contract, Ch. 41, 2.2.1
inverse floater, Ch. 44, 6.4.5
non-financial assets and liabilities and contracts thereon,
investment in open-ended money market or debt funds,
Ch. 41, 2.2.5
Ch. 44, 6.4.5
payments for goods and services, Ch. 41, 2.2.6
lender has discretion to change the interest rate, Ch. 44, 6.3.4
simple financial instruments, Ch. 41, 2.2.2
meaning of ‘interest’, Ch. 44, 6.2
discretionary participation feature in, Ch. 51, 6.2
meaning of ‘principal,’ Ch. 44, 6.1
scope, Ch. 41, 3
modified time value of money component, Ch. 44, 6.4.2
business combinations, Ch. 41, 3.7
multiple of a benchmark interest rate, Ch. 44, 6.4.5
contingent pricing of property, plant and equipment and
non-genuine features, Ch. 44, 6.4.1.B
intangible assets, Ch. 41, 3.8
non-recourse loans, Ch. 44, 6.5
disposal groups classified as held for sale and discontinued
perpetual instruments with potentially deferrable coupons,
operations, Ch. 41, 3.11
Ch. 44, 6.4.5
employee benefit plans and share-based payment,
prepayment, assets originated at a premium or discount,
Ch. 41, 3.9
Ch. 44, 6.4.4.B
equity instruments, Ch. 41, 3.6
prepayment options, Ch. 44, 6.4.4
financial guarantee contracts, Ch. 41, 3.4
prepayment, negative compensation, Ch. 44, 6.4.4.A
indemnification assets, Ch. 41, 3.12
regulated interest rates, Ch. 44, 6.4.3
insurance and similar contracts, Ch. 41, 3.3
term extension options, Ch. 44, 6.4.4
132 Index
Financial instruments, classification —contd
term extension and similar call, put and prepayment
contractual cash flows —contd
options in debt instruments, Ch. 42, 5.1.3
unleveraged inflation-linked bonds, Ch. 44, 6.3.5
identifying the terms of embedded derivatives and host