Questions & Answers

Can you recognize revenue without a written contract under IFRS 15?

Question Can we recognize revenue if the customer hasn’t signed the contract but has accepted the goods?” Answer IFRS 15 is quite flexible, as it doesn’t require a signed contract, just an enforceable agreement. And, we must assess enforceability of the agreement practically under IFRS…

Can we capitalize fees for removal of illegal squatters?

Question: We have incurred considerable legal expenses to remove illegal squatters from a piece of land we own in order for us to build a shopping center on the land. Can we capitalize those costs? Answer In line with IAS 16, YES. These legal…

Lease term when contract is for indefinite period

Should you apply short-term lease exemption when you have a lease contract with indefinite period? Find out here, with real-life example.

Component accounting for PPE (IAS 16) with examples

Component accounting in line with IAS 16 – what it is, how to apply it, practical example and real-life illustrations on real-life companies.

Different profit or loss for specified main business activity (IFRS 18)

Specified main business activity under IFRS 18 – how to determine if it is specified and if it is main? And what to do next about it? CPDbox answers to real questions by real people

New profit or loss statement under IFRS 18 and discontinued operations

Why should we present discontinued operations in new profit or loss statement under IFRS 18 AFTER income taxes? Is it logical and correct?

Should we apply ECL model under IFRS 9 if we have only trade receivables?

Question: We do not have any financial assets, except for trade receivables. Do we have to apply Expected Credit Loss rules under IFRS 9? Answer Yes, of course, because the trade receivables are in fact financial assets at amortized cost under IFRS 9. However,…

Are contract assets and contract liabilities monetary or non-monetary?

Question: We are a shipbuilding company with the functional currency of USD. We entered in the long-term contract to build a ship for a customer in China. The contract price is set in CNY. How do we account for a contract asset under IFRS 15?…

Irregular lease payments under IFRS 16 Leases

Question We took the lease contract to rent a building for 6 years with total cost of CU 60 000, of which: CU 30 000 is paid up front before we moved in; and CU 30 000 is paid at the beginning of the 4th…

Deferred tax asset on tax losses carried forward

Question In some countries, tax legislation permits offsetting the tax losses of the company against the future tax profits. For example, the tax loss not fully deducted in the year 1 can be carried forward and set off against the profits in the next three…

Amendment of IAS 16: Proceeds before intended use

Question In May 2020, IASB issued the amendment to IAS 16 Property, Plant and Equipment applicable for the periods starting on or after January 1, 2022. This amendment says that we should not deduct any proceeds from selling items produced in the process of bringing…

Are income tax advances financial instruments?

Question We paid significant amount of cash as advances for income tax liabilities in accordance with our tax legislation. Are these prepayments for tax financial assets? Should we include them in expected credit loss calculation? If not, what standard shall we apply? Answer No,…