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…
Amendment of IAS 16: Proceeds before intended use
Question In May 2020, IASB issued the amendment to IAS 16 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 the asset to the…
Testing goodwill for impairment
Question Our company acquired a subsidiary and goodwill on acquisition arose. According to IFRS, we have to test the goodwill for any impairment at least annually. How can we do it? The goodwill does not have any fair value and it’s not possible to determine…
Difference between provision and actual expenses
Question We make some provisions and accruals each year in our financial statements. However, the actual expenses incurred are almost always different from the accrual or a provision made. How should we book the difference between actual expenses and a provision? Should we restate the…
Revenue under different Incoterms (EXW, DAP)
Question Our company sells goods to the wholesalers and other distributors. The individual contracts contain different Incoterms, such as as EXW or DAP. Does the recognition of revenue depend on the specific Incoterm? Answer Incoterms are pre-defined commercial terms of sales and they relate…
Accounting for “buy two + get one free”
Question We are a FMCG (“fast-moving consumption goods”) company and we often offer the promotional packages “buy 2 + get 1 free”. How shall we account for these offers? Can we recognize the revenue for 2 products, expenses for the same products as costs of…
Accounting for gain or loss on sale of shares classified at FVOCI
Question We have shares (equity instruments) purchased for CU 100. We classified them as at fair value through other comprehensive income (FVOCI), because we collect dividends from them, but occasionally we make profits from trading of these shares. One year after purchase, the fair value…
Accounting for adjustments at the first-time adoption of IFRS
Question We are working on the first-time adoption of IFRS in our company. How shall we account for the adoption adjustments? Answer In line with IFRS 1 First-time Adoption of International Financial Reporting Standards (par.11), all adjustments are debited or credited to opening retained…
Accounting for transfer of an asset from the owner-occupied PPE to the investment property
Question We apply the revaluation model for accounting for our buildings in line with IAS 16 Property, plant and equipment. Recently, we stopped using one of our buildings as our head office and we rented the building out to tenants. Consequently, we transferred this building…
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