Changes to Financial Reporting Statements
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Transcript of Changes to Financial Reporting Statements
CHANGES TO FINANCIAL REPORTING STANDARDS
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Aniela Tkacz, National Technical Manager
DISCLAIMER SLIDE This presentation and associated document(s) (Presentation) are provided by Staples
Rodway (SR) as an information service only. SR provides no warranty regarding the accuracy or completeness of the Presentation. All opinions, conclusions, forecasts or recommendations are reasonably held by SR at the time of compilation but are subject to change without notice to you. SR assumes no obligation to update the Presentation after it has been issued.
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Roadmap • NZ IFRS 15 Revenue from
Contracts with Customers
• NZ IFRS 9 Financial instruments
• NZ IFRS 16 Leases – what can we expect?
• Questions
NZ IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS
Effective 1 January 2018
1. Mai 2023
FIVE STEP MODELRETRANSFER OF GOODS OR SERVICES
Step 1• Identify the contracts with the customer
Step 2• Identify the separate performance obligations
Step 3• Determine the transaction price
Step 4• Allocate the transaction price
Step 5• Recognise revenue when a performance obligation is
satisfied
CONTRACT MODIFICATIONS
Are the goods and/or services
distinct?
Are elements of the modification
distinct?
Are the additional goods/services provided at the
standalone selling price?
Are all remaining goods/services
distinct?
Treat as part of existing contract (IFRS
15.21 (b)
Combination – judgement needed
(IFRS 15.21 (c))
Considered a new separate contract
(IFRS 15.20)
Treat as termination of
old and creation of new contract (IFRS 15.21 (a))
Yes
Yes Yes
Yes
No No
No No
NZ IFRS 9 FINANCIAL INSTRUMENTS
Effective 1 January 2018
1. Mai 2023
OBJECTIVE
Hedge accounting
Impairment
Classification and measurement of financial assets and financial
liabilities
NZ IFRS 9
Establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows
𝟐
𝟏
𝟑
CLASSIFICATION OF FINANCIAL ASSETS
*Excludes investments in equity instruments. An entity can elect to present FV changes in OCI. Source: IASB’s project summary.
Business model = hold
to collect
Other business models
Business model = hold to collect and
sellCash flows are solely principal
and interest (SPPI)
Other types of cash flows
Amortised cost FVOCI*
FVTPL FVTPL FVTPL
FVTPL
Step 1 Step
2
1. Mai 2023
Other changes – risk management
Risk management
• Objective• Hedging instruments• Hedged items• Qualifying criteria• Accounting for qualifying hedge
relationships• Groups and net positions• Discontinuation and rebalancing• Presentation and disclosure
Hedge accountin
g
NZ IFRS 16 LEASESEffective 1 January 2019
WHAT’S NEW?IAS 17
Classify leases as operating or financing based on the
transfer of risks and rewards
Significant analyst ‘back of the envelope adjustments’ to estimate the impact of
leases.
Off balance sheet lease financing numbers were
substantial. Listed companies using IFRS or US GAAP disclosed almost US$3 trillion of off balance sheet
lease commitments.
IFRS 16
All leases on the balance sheet excluding short-term or low-
value leases.
and more… enhanced disclosure requirements, lessor accounting model substantially unchanged
and so on….
Lessee has a right-of-use asset and a corresponding lease
liability
Effective APB 1 January 2019
DEFINITION OF A LEASEA contract that conveys the right to use an asset for a period of time in exchange for consideration
Is there an identified asset?
Does the customer have the right to
substantially all the benefits from the
asset?
Who directs how and for what purpose the
asset is used?
Customer operates the asset or has designed its construction
Contract contains a lease
Contract does not contain a
lease
Yes
CustomerNo No
Yes
DefinedSupplier
YesNo
EFFECTS ON THE INCOME STATEMENTFor many companies the overall effect on profit or loss is not expected to be significant.
IFRS 16 is expected to result in higher EBITDA and operating profit for companies that have material off balance sheet leases.
Profit before tax
EBITDA
Operating profit and finance costs
Interest expense and the depreciation charge during the first half of the lease term is generally expected to be higher than a straight-line expense for off balance sheet leases recognised applying IAS 17.
This is because the depreciation of the lease asset typically will be recognised on a straight-line basis while the interest expense generally decreases over the lease term as the lease liability decreases.Metric Measure Calculation Effect
EBITDA Profitability
Earning before interest, tax, depreciation and amortisation
Increase
EBITDAR Profitability
Profit before interest, tax, depreciation, amortisation and rent.
No change
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