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Accounting Updates


Amendments to PFRS 10, PFRS 12 and PAS 27, Investment Entities
An investment entity is an entity that:

Obtains funds from one or more investors for the purpose of providing those investor(s)
with professional investment management services;
Commits to its investor(s) that its business purpose is to invest funds solely for returns
from capital appreciation, investment income or both; and,
Measures and evaluates the performance of substantially all of its investments on a fair
value basis

Associates and Joint Ventures Held By An Investment Entity

Revenue Recognition Overview       The IASB and the US Financial Accounting Standards Board (FASB) jointly issued a new revenue recognition standard on 28 May 2014. This standard replaces the majority of existing IFRS and US GAAP requirements on revenue recognition IFRS 15 supersedes: o IAS 18. property. Revenue—Barter Transactions Involving Advertising o Services The standard covers the recognition. plant and equipment. intangible assets) .. Transfers of Assets from Customers o SIC-31. Revenue o IAS 11. Construction Contracts o IFRIC 13. business processes and internal controls will likely be significant for some entities The IASB and FASB have set up a joint transition resource group. The impact on financial statements. Customer Loyalty Programmes o IFRIC 15. Agreements for the Construction of Real Estate o IFRIC 18. measurement and disclosure of revenue. Scope and scope exceptions What is in scope or affected by the standard:   Contracts with customers Sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g.Subsidiary Provides Investment-Related Services IFRS 15.

depending on what is modified. Modifications are treated as a separate contract or part of the original contract.What is not in scope:     Leasing contracts Insurance contracts Financial instruments and certain other contracts Certain non-monetary exchanges Summary of the model Core principle: Recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Step 2: Identify the performance obligations    A performance obligation is defined as a promise in a contract with a customer to transfer a good or service. Step 1: Identify the contract(s) with the customer    A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations. o Could be written. Performance obligations are identified at contract inception and determined based on: o Contractual terms o Customary business practice Identify distinct performance obligations . oral or implied o Does not exist if both parties can cancel without penalty Multiple contracts entered into at the same time with the same customer should be combined if certain conditions are met.

Control can transfer “over time” or at a “point in time.” . an entity is required to estimate the selling price Using a residual approach is allowed only when prices vary widely or are uncertain Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation    Revenue is recognized upon satisfaction of a performance obligation by transferring a good or service to a customer. Variable consideration o Estimate using the technique that better predicts the amount to which an entity will be entitled: expected value or most likely amount o Apply constraint: include variable amounts only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur Step 4: Allocate the transaction price to the performance obligations     Transaction price allocated to all distinct performance obligations o Two potential exceptions:  Variable consideration  Discounts Allocation is based on stand-alone selling prices When the stand-alone selling price is not directly observable. Control includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Significant financing component (time-value of money) 2. o A good or service is considered to be transferred when the customer obtains control.Step 3: Determine the transaction price   Transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring a promised good or service Transaction price reflects the effects of the following: 1. Control of an asset refers to the ability to direct the use of and obtain substantially all the remaining benefits from the asset. Non-cash consideration 3. Consideration paid or payable to a customer 4.

Income Taxes). an entity: 1. Entities should consider all payments imposed by the government pursuant to legislations. Applicable to all levies except: o Those other than outflows that are within the scope of other standards (e.Offsetting Requirements In PAS 32 With New Application Guidance A financial asset and a financial liability shall be offset when. Currently has a legally enforceable right to set off the recognized amounts   Must not be contingent on a future event Must be legally enforceable in all of the following circumstances:  Normal course of business  Event of default  Event of insolvency or bankruptcy of the entity and all of the counterparties 2. the gross settlement mechanism has features that eliminate or result in insignificant credit and liquidity risk. or to realize the asset and settle the liability simultaneously  This will occur if. an entity is only required to disclose the recoverable amount of an individual asset (including goodwill) or a CGU for which it has recognized or reversed an impairment loss Expand and clarify the disclosure requirements applicable when an asset or CGU’s recoverable amount has been determined on the basis of fair value less costs of disposal. and only when. 2. and only if.  Disclose the discount rate(s) used when the recoverable amount is based on fair value less costs of disposal that was measured using a present value technique Philippine Interpretation IFRIC–21. and Fines or other penalties for breaches of legislation. Recoverable Amount Disclosures for Non-Financial Assets The amendments:   Remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) for which the carrying amount of goodwill or intangible assets with indefinite useful lives allocated to that unit is significant when compared to the entity’s total carrying amount of goodwill or intangible assets with indefinite useful lives  Instead. Levies Overview Definition  A levy is an outflow of resources embodying economic benefits that is imposed by Scope 1.. PAS 12.g. Intends either to settle on a net basis. . and that will process receivables and payables in a single settlement process or cycle. Amendments to PAS 36.

000 the total amount of exclusions from gross income of salaried employees relating to their 13th month pay and other benefits and to amend the pertinent provisions of Revenue Regulations No.000 to P82. 3. The exclusion shall apply to 13th month pay and other benefits paid or accrued beginning January 1.000 pursuant to RA No. 2.000 nontaxable De Minimis Benefits effective January 1. The salient points of the Regulation are as follows: 1. Additional P10. 2. 2015 “Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivity incentive scheme provided that the total annual monetary value received from both CBA and productivity incentive scheme combined do not exceed ten thousand pesos (P10. Prof. The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment occurs. For a levy that is triggered upon reaching a minimum threshold – no liability should be recognized before the specified minimum threshold is reached. The total amount of exclusion from gross income of 13th month pay and other benefits received by salaried employees under Section 32 (B). 2-98. 10653 which increased from P30. Margaret Joyce R. 3-2015 dated 9 March 2015 to implement Republic Act (“RA”) No. Araceli Angeles . 2015. A levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time. 10653. The exclusion of P82.000) per employee.000 to P82. 3. Francisco.Recognition of Liability for A Levy 1. per taxable year. Tax Code is increased from P30. TAX Updates: 1.” 2. The exclusion does not also apply to gross income of self-employed individuals and income generated from business. The Commissioner of Internal Revenue (“CIR”) has issued Revenue Regulations (“RR”) No. It does not cover other types of compensation under an employer-employee relationship such as basic salary and other allowances.000 applies only to the 13th month pay and other benefits of salaried employees.

Synthesis .BSA2I BAC 518 .