IFRS accounting guides

Navigating the accounting for business combinations: Applying IFRS 3 in practice
Mergers and acquisitions (business combinations) can have a fundamental impact on the acquirer's operations, resources and strategies. For most companies such transactions are infrequent and each is unique.

IFRS 3 Business Combinations (IFRS 3) and IAS 27 Consolidated and Separate Financial Statements (IAS 27), were revised in January 2008 and apply to business combinations occurring on or after 1 July 2009. The revised Standards made major changes to business combination accounting and make this a challenging area in financial reporting.

Navigating the changes to International Financial Reporting Standards: A briefing for Chief Financial Officers
Grant Thornton International have released this new publication which provides a summary of recent changes to International Financial Reporting Standards. It covers new Standards and Interpretations that have been issued and amendments made to existing ones that will affect many companies’ future financial reporting. Through this publication, we aim to provide Chief Financial Officers with a high-level awareness of the requirements of changes that were finalised by 30 November 2011 and give you brief descriptions of each.

For Australian purposes the application dates are identical as the Australian Accounting Standards Board use the same application dates as the IFRS standards.

For further reading, you can look at the relevant Australian Technical Alerts on the Grant Thornton website:
TA Alert 2010-56 What's new for December 2010
TA Alert 2010-55 AASB 108 disclosures for standards issued not yet effective

Preparing for Global Leasing Standards: Implications for the real estate industry
Real estate companies and other lessor organisations around the world - and especially their lessees - face the prospect of fundamental changes in how they account for leases. New lease accounting standards proposed by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) are expected to become International Finanancial Reporting Standards (IFRS) by the end of 2011. They could create costly process changes for some real estate firms and reshape the accounting models of others - and they ahve all the firms looking for potential real estate market side effects. Reaction within the real estate sector to the proposed standards and initial deliberations has ranged from annoyance to concern.

We are pleased to bring you this publication from Grant Thornton International which provides an overview of how these proposed changes in the leasing standard could impact the real estate industry.

Further information and discussion is available by contacting Sian Sinclair (Industry Leader - Real Estate & Construction) at sian.sinclair@au.gt.com, Keith Reilly (National Head of Professional Standards) at keith.reilly@au.gt.com or a member of Grant Thornton's National Audit Support team at nationalaudit.support@au.gt.com.

Deferred tax: A Chief Financial Officer's guide to avoiding the pitfalls (Understanding deferred tax under AASB 112/IAS 12 Income Taxes) (December 2009)
Preparation of financial statements under International Financial Reporting Standards (IFRS) requires the application of IAS 12 Income Taxes (IAS 12). IAS 12 is not new. However, for many finance executives, the concepts underlying the computation of deferred tax are not intuitive. IAS 12 takes a mechanistic approach to the calculations but also requires executives to have a thorough knowledge of the relevant tax laws. For this reason, many Chief Financial Officers (CFOs) find the calculation of a deferred tax provision causes significant practical difficulties.

We are pleased to publish this guide Deferred tax: A Chief Financial Officer's guide to avoiding the pitfalls. The guide is intended for CFOs of businesses that prepare financial statements under IFRS. It illustrates IAS 12's approach to the calculation of deferred tax balances and summarises the approach to calculating the deferred tax provision in order to help CFOs prioritise and identify key issues.

Financial Instruments on Display - Illustrative Disclosures & Guidance under IFRS 7/ AASB 7 (September 2009)
IFRS 7 Financial Instruments: Disclosures (IFRS 7) is not new - it came into effect for annual periods beginning on or after 1 January 2007. Nonetheless we think this guide, Financial Instruments on Display - Illustrative Disclosures and Guidance on IFRS 7, is very topical.

Experience has shown that IFRS 7 presents challenges, and two years of practical experience enables us to share our insights into the most problematic areas. Moreover, the global financial crisis has put the spotlight on the adequacy of risk and other disclosures concerning financial instruments. The crisis has also led the IASB to add some significant new requirements to IFRS 7 in recent months, and these come into effect from 1 January 2009.

IAS32/AASB132: Financial Instruments Presentation - Liability or equity? (July2009)
The Grant Thornton IFRS team is pleased to publish this guide "Liability or equity? A practical guide to the classification of financial instruments under IAS 32".

When an entity issues a financial instrument, it must determine its classification either as a liability (debt) or as equity. That determination has an immediate and significant effect on the entity's reported results and financial position. IAS 32 Financial Instruments: Presentation (IAS 32) addresses this classification process. Although IAS 32's approach is founded upon principles, its outcomes sometimes seem surprising. This guide offers extensive insights into the more problematic aspects of debt and equity classification under IAS 32, including those that are expected to arise from the amendments published in 2008, which are effective for periods beginning on or after 1 January 2009.

IFRS 8/AASB8: Applying IFRS 8 in Practice (June 2009)
The IASB published IFRS 8 Operating Segments (AASB 8 is the Australian equivalent ) which applies to listed entities and those in the process of listing for annual reporting period commencing on or after 1 January 2009.

IFRS 8 requires much of the management segmental information used internally to be published externally so that investors, analysts and other users of entities' financial statements can review an entity's operations from the same perspective as management. This is a radically different approach from the previous segment reporting standard and has the potential to highlight sensitive information to competitors as well as other users of financial statements. This guide will help management to understand the requirements of IFRS 8 (AASB 8) and consider what the required disclosures say about the way they manage their business.

Further information and discussion is available by contacting Keith Reilly - National Head of Professional Standards at keith.reilly@au.gt.com or a member of the National Audit Support team at nationalaudit.support@au.gt.com.

IAS 23/AASB 123: Capitalisation of borrowing costs - from theory to practice (April 2009)
The Grant Thornton IFRS team is pleased to announce the publication of 'Capitalisation of borrowing costs - from theory to practice'. The International Accounting Standards Board (IASB) issued a revised version of IAS 23 Borrowing Costs in March 2007 (AASB equivalent version AASB 123 issued June 2007). The new standard which applies for financial periods commencing as from 1 January 2009 (i.e. December 2009 balancers onwards) will result in a change in accounting policy for entities that applied the benchmark treatment of expensing borrowing costs under the previous standard. These entities will now need to develop procedures to calculate the amount of borrowing costs to be capitalised. Although the concept of capitalising borrowing costs is simple and familiar to many, putting that concept into practice frequently leads to questions. Many of these questions are considered in this guide. We have not attempted to cover every aspect of IAS 23, however, we believe this guide will help in addressing the problems most often encountered in practice.

IAS 39/AASB 139: Financial Instruments - A Chief Financial Officer's guide to avoiding the traps (April 2009)
The Grant Thornton IFRS team is pleased to announce the publication of Financial Instruments - A Chief Financial Officer's guide to avoiding the traps (the Guide). The guide is intended for Chief Financial Officers (CFOs) of businesses that prepare financial statements under IFRS.

It summarises the impact of IAS 39 (rebadged as AASB 139 in Australia) Financial Instruments: Recognition and Measurement together with relevant parts of IAS 32 (AASB 32) Financial Instruments: Presentation, and illustrates the main challenges that businesses typically encounter in order to help CFOs to prioritise and identify key issues. The guide will help a CFO to understand potential problem areas in order to know when to consult further.

IFRS 5/AASB 5: Non-current assets held for sale and discontinued operations (May 2008)
'Non-current Assets Held For Sale and Discontinued Operations - Challenges in Applying IFRS 5' is a publication by the IFRS team at Grant Thornton International Ltd (of which Grant Thornton Australia is a member). IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (IFRS 5) which is identical to AASB 5 Non-current Assets Held for Sale and Discontinued Operations, apart from Australian regulatory references, is not a new standard but experience has shown that implementing it can be a complex and time-consuming exercise. Significant judgment is required in some areas. Management and auditors should therefore assess the impact of IFRS 5 as soon as they become aware that it may be relevant. This publication explains IFRS 5's key implementation issues, common approaches to practical application and also includes several examples illustrating the Standard's disclosure and presentation requirements.

Further information and discussion is available by contacting Keith Reilly - National Head of Professional Standards at keith.reilly@au.gt.com or a member of the National Audit Support team at nationalaudit.support@au.gt.com.

IFRS 3/AASB 3: Intangible Assets Guide (May 2008)
'Intangible Assets in a Business Combination - Identifying and valuing intangibles under IFRS 3' is a publication by the IFRS team at Grant Thornton International Ltd. The revised version of IFRS 3 Business Combinations, published by the International Accounting Standards Board in January 2008 (which is identical to AASB 3 Business Combinations, apart from Australian regulatory references), has drawn renewed attention to a complex and developing area of financial reporting - the recognition and measurement of intangible assets. Acquirers in business combinations can expect reported amounts of intangible assets and goodwill to be closely scrutinised by investors, analysts and regulators. The Intangible Assets Guide includes practical guidance on the detection of intangible assets in a business combination and explains how they might be valued. An overview of IFRS 3 summarises the main aspects of accounting for business combinations and draws out a number of practical points to consider.

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