IFRS news May 2018 The May 2018 issue includes the following articles: Must know Presentation of interest revenue for certain financial instruments Accounting for fixed consideration in licence arrangements in the pharmaceutical and life sciences ind Such financial guarantees are in the scope of IFRS 9 and are accounted for as described here. the performance obligation related to the service type warranty is a performance obligation that qualifies for over time recognition as it enhances an asset that is controlled by the customer at the time of performance (2 years). Performance Guarantee. In other words, the warranty in question is not treated as a separate performance obligation and is not accounted for under IFRS 15 but the expected or estimated costs of warranty expenses will be provided for under IAS 37. The purpose of this sort of guarantee is to solidify the contractual connection between a seller and buyer. FGCs are recognized as a financial liability at the time the guarantee is issued. IFRS (comprising International Financial Reporting Standards, ... by guarantee. guarantees and financial options included in the insurance contracts. ABC sells refrigerators for CU 100 and the legal warranty period is 2 years. IFRS 15 contains quite a good guidance about warranties. Potential impact: The accounting for product returns under the revenue standard will be largely unchanged from current guidance under IFRS and US GAAP. It depends. Financial Instruments: Disclosures. Our knowledge and experience of the lifecycle of a tech company means we are uniquely placed to give you the advice and support you need to meet the growth challenges your business faces. Normally, this 1 year warranty on top of the regular warranty period required by the law would be assessed as the service-type warranty. 6. It is just guidance and you need to consider it yourself. A financial guarantee contract is initially recognised at fair value. the manufacturer is obligated to fulfil the warranty and not the distributor?). Adapting the way your firm or partnership operates to manage the impact of new technologies and increased competition is not easy. Instead, they set out the principal changes to the disclosure requirements from those under IFRS 7 . The State may require a performance bond (as specified in Exhibit A) if, in the opinion of the State, it will ensure performance of the Contract. In this case can anyone help me with the same under IFRS / Ind AS? + free IFRS mini-course. How do you account for the warranty in the distributors accounts, if the item was sold by a distributor, and it has a manufacturing warranty (ie. To better reflect changes in insurance obligations and risks, IFRS 17 requires a company to update the fulfilment cash flows at each reporting date, using current estimates that are consistent with relevant market information. If the dealer is just the reseller, then from his point of view, only the commission on the sale of a guarantee enters into the total transaction price (since he is acting as an agent). A performance bond is issued to one party of a contract as a guarantee against the failure of the other party to meet obligations in the contract. Jackson ® Reports 2012 Record IFRS Net Income of $992.0 Million Record 2012 IFRS1 net income of $992.0 million, up 73.0% Record total sales … The present value of this differential over the term of the loan would therefore be the initial fair value. Share-based Payment. We will help you navigate the ups and downs so you can deliver primary care services keeping... Insightful and expert accountancy and business advice delivered by experienced operators who understand the sector. an advance received on an electrification contract), in the event of non-completion of the contract by the client. If no premium is received (often the case in intragroup situations), the fair value must be determined using a different method that quantifies the economic benefit of the FGC to the holder. Under IAS 37, a provision is not recognised until an outflow of resources is probable and the amount is reliably measurable. Some products issued by non-insurers might fall in scope of IFRS 17 (if they issue contracts Thanks! If you look carefully to the example above, it says that 40 000 is a discounted cost. IFRS 9 retains the same initial recognition requirements as IAS 39 for issued FGCs but introduces different subsequent measurement requirements. Scope – financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a … Alternative performance measures The use of alternative performance measures (APMs or “non-GAAP measures”) is gaining popularity in communicating financial information to investors. So, you should account for this type of warranty under IAS 37 and not as a separate performance obligation in line with IFRS 15. Our international network of experts cover oil & gas, renewable, mining, agribusiness across 162... Our dedicated Not for Profit team are experts in delivering business and accountancy services to the education, social housing, charity and membership body sectors. IFRS Newsletter Bringing you the latest information on recent IFRS topics December 2020 Dear all, We are pleased to welcome you to the new edition of our IFRS Newsletter. Formulas: Weighted average, FIFO or FOFO? 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