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IFRS

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International Financial Reporting Standards This document contains summaries, history and resources for International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).Table of contentsIFRSs at a glance3IFRS 1 First-time Adoption of International Financial Reporting Standards4Overview4Definition of first-time adoption4Measurement7Disclosures in the financial statements of a first-time adopter8Exceptions to the retrospective application of other IFRSs9IFRS 2 Share-based Payment14Overview14Definition of share-based payment14Scope14Recognition and measurement15Illustration Recognition of employee share option grant15Disclosure18IFRS 3 Business Combinations19Overview19Key definitions19Scope19Determining whether a transaction is a business combination20Method of accounting for business combinations20Choice in the measurement of non-controlling interests (NCI)23Business combination achieved in stages (step acquisitions)24Disclosure27IFRS 4 Insurance Contracts30Overview30Scope30Disclosures32IFRS 5 Non-current Assets Held for Sale and Discontinued Operations34Overview34Held-for-sale classification34Held for distribution to owners classification34Disposal group concept35Measurement35Presentation36Disclosures36Classification as discontinuing36IFRS 6 Exploration for and Evaluation of Mineral Resources38Overview38Definitions38Accounting policies for exploration and evaluation38Presentation and disclosure39IFRS 7 Financial Instruments: Disclosures40Overview40Disclosure requirements of IFRS 740Nature and extent of exposure to risks arising from financial instruments43Transfers of financial assets44IFRS 8 Operating Segments46Overview46Scope46Operating segments46Reportable segments46Disclosure requirements47IFRS 9 Financial Instruments49Overview49Initial measurement of financial instruments49Subsequent measurement of financial assets49Debt instruments50Fair value option50Measurement guidance51Derecognition of financial assets52Derecognition of financial liabilities53Qualifying criteria for hedge accounting54Impairment59Scope of Impairment model59Disclosures63IFRS 10 Consolidated Financial Statements64Overview64Key definitions64Accounting requirements66Disclosure69IFRS 11 Joint Arrangements70Overview70Key definitions70Financial statements of parties to a joint arrangement72Disclosure73IFRS 12 Disclosure of Interests in Other Entities74Overview74Key definitions75Disclosures required75IFRS 13 Fair Value Measurement77Overview77Key definitions77Fair value hierarchy78Measurement of fair value79Valuation techniques80Disclosure81Specific disclosures required82IFRS 14 Regulatory Deferral Accounts84Overview84Scope84Key definitions85Accounting policies for regulatory deferral account balances85Presentation in financial statements85Disclosures86IFRS 15 Revenue from Contracts with Customers87Overview87Scope87Key definitions88Accounting requirements for revenue89Contract costs93Presentation in financial statements94Disclosures94

IFRSs at a glanceTitleDate issuedEffective Date

IFRS 1 First-time Adoption of International Financial Reporting Standards 24 Nov 200801 Jul 2009

IFRS 2 Share-based Payment 19 Feb 200401 Jan 2005

IFRS 3 Business Combinations 10 Jan 200801 Jul 2009

IFRS 4 Insurance Contracts (N/E)31 Mar 200401 Jan 2005

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations 31 Mar 200401 Jan 2005

IFRS 6 Exploration for and Evaluation of Mineral Resources (N/E)09 Dec 200401 Jan 2006

IFRS 7 Financial Instruments: Disclosures 18 Aug 200501 Jan 2007

IFRS 8 Operating Segments 30 Nov 200601 Jan 2009

IFRS 9 Financial Instruments 24 Jul 201401 Jan 2018

IFRS 10 Consolidated Financial Statements 12 May 201101 Jan 2013

IFRS 11 Joint Arrangements 12 May 201101 Jan 2013

IFRS 12 Disclosure of Interests in Other Entities (N/E)12 May 201101 Jan 2013

IFRS 13 Fair Value Measurement (N/I)12 May 201101 Jan 2013

IFRS 14 Regulatory Deferral Accounts (N/E)30 Jan 201401 Jan 2016

IFRS 15 Revenue from Contracts with Customers (N/E)28 May 201401 Jan 2017

IFRS 1 First-time Adoption of International Financial Reporting Standards OverviewIFRS 1 First-time Adoption of International Financial Reporting Standards sets out the procedures that an entity must follow when it adopts IFRSs for the first time as the basis for preparing its general purpose financial statements. A restructured version of IFRS 1 was issued in November 2008 and applies if an entity's first IFRS financial statements are for a period beginning on or after 1 July 2009.Definition of first-time adoptionA first-time adopter is an entity that, for the first time, makes an explicit and unreserved statement that its general purpose financial statements comply with IFRSs. [IFRS 1.3]An entity may be a first-time adopter if, in the preceding year, it prepared IFRS financial statements for internal management use, as long as those IFRS financial statements were not made available to owners or external parties such as investors or creditors. If a set of IFRS financial statements was, for any reason, made available to owners or external parties in the preceding year, then the entity will already be considered to be on IFRSs, and IFRS 1 does not apply. [IFRS 1.3]An entity can also be a first-time adopter if, in the preceding year, its financial statements: [IFRS 1.3] asserted compliance with some but not all IFRSs, or included only a reconciliation of selected figures from previous GAAP to IFRSs. (Previous GAAP means the GAAP that an entity followed immediately before adopting to IFRSs.)However, an entity is not a first-time adopter if, in the preceding year, its financial statements asserted: Compliance with IFRSs even if the auditor's report contained a qualification with respect to conformity with IFRSs. Compliance with both previous GAAP and IFRSs.An entity that applied IFRSs in a previous reporting period, but whose most recent previous annual financial statements did not contain an explicit and unreserved statement of compliance with IFRSs can choose to: apply the requirements of IFRS 1 (including the various permitted exemptions to full retrospective application), or retrospectively apply IFRSs in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, as if it never stopped applying IFRSs. [IFRS 1.4A]Overview for an entity that adopts IFRSs for the first time in its annual financial statements for the year ended 31 December 2014Accounting policiesSelect accounting policies based on IFRSs effective at 31 December 2014.IFRS reporting periodsPrepare at least 2014 and 2013 financial statements and the opening balance sheet (as of 1 January 2012 or beginning of the first period for which full comparative financial statements are presented, if earlier) by applying the IFRSs effective at 31 December 2014. [IFRS 1.7] Since IAS 1 requires that at least one year of comparative prior period financial information be presented, the opening balance sheet will be 1 January 2012 if not earlier. This would mean that an entity's first financial statements should include at least: [IFRS 1.21] three statements of financial position two statements of profit or loss and other comprehensive income two separate statements of profit or loss (if presented) two statements of cash flows two statements of changes in equity, and related notes, including comparative information If a 31 December 2014 adopter reports selected financial data (but not full financial statements) on an IFRS basis for periods prior to 2013, in addition to full financial statements for 2014 and 2013, that does not change the fact that its opening IFRS balance sheet is as of 1 January 2012.

Adjustments required to move from previous GAAP to IFRSs at the time of first-time adoptionDerecognition of some previous GAAP assets and liabilitiesThe entity should eliminate previous-GAAP assets and liabilities from the opening balance sheet if they do not qualify for recognition under IFRSs. [IFRS 1.10(b)] For example: IAS 38 does not permit recognition of expenditure on any of the following as an intangible asset: research start-up, pre-operating, and pre-opening costs training advertising and promotion moving and relocationIf the entity's previous GAAP had recognised these as assets, they are eliminated in the opening IFRS balance sheet If the entity's previous GAAP had allowed accrual of liabilities for "general reserves", restructurings, future operating losses, or major overhauls that do not meet the conditions for recognition as a provision under IAS 37, these are eliminated in the opening IFRS balance sheet If the entity's previous GAAP had allowed recognition of contingent assets as defined in IAS 37.10, these are eliminated in the opening IFRS balance sheetRecognition of some assets and liabilities not recognised under previous GAAPConversely, the entity should recognise all assets and liabilities that are required to be recognised by IFRS even if they were never recognised under previous GAAP. [IFRS 1.10(a)] For example: IAS 39 requires recognition of all derivative financial assets and liabilities, including embedded derivatives. These were not recognised under many local GAAPs. IAS 19 requires an employer to recognise a liability when an employee has provided service in exchange for benefits to be paid in the future. These are not just post-employment benefits (e.g., pension plans) but also obligations for medical and life insurance, vacations, termination benefits, and deferred compensation. In the case of 'over-funded' defined benefit plans, this would be a plan asset. IAS 37 requires recognition of provisions as liabilities. Examples could include an entity's obligations for restructurings, onerous contracts, decommissioning, remediation, site restoration, warranties, guarantees, and litigation. Deferred tax assets and liabilities would be recognised in conformity with IAS 12.ReclassificationThe entity should reclassify previous-GAAP opening balance sheet items into the appropriate IFRS classification. [IFRS 1.10(c)] Examples: IAS 10 does not permit classifying dividends declared or proposed after the balance sheet date as a liability at the balance sheet date. If such liability was recognised under previous GAAP it would be reversed in the opening IFRS balance sheet. If the entity's previous GAAP had allowed treasury stock (an entity's own shares that it had purchased) to be reported as an asset, it would be reclassified as a component of equity under IFRS. Items classified as identifiable intangible assets in a business combination accounted for under the previous GAAP may be required to be reclassified as goodwill under IFRS 3 because they do not meet the definition of an intangible asset under IAS 38. The converse may also be true in some cases. IAS 32 has principles for classifying items as financial liabilities or equity. Thus mandatorily redeemable preferred shares that may have been classified as equity under previous GAAP would be reclassified as liabilities in the opening IFRS balance sheet.Note that IFRS 1 makes an exception from the "split-accounting" provisions of IAS 32. If the liability component of a compound financial instrument is no longer outstanding at the date of the opening IFRS balance sheet, the entity is not required to reclassify out of retained earnings and into other equity the original equity component of the compound instrument. The reclassification principle would apply for the purpose of defining reportable segments under IFRS 8. Some offsetting (netting) of assets and liabilities or of income and expense items that had been acceptable under previous GAAP may no longer be acceptable under IFRS.MeasurementThe general measurement principle there are several significant exceptions noted below is to apply effective IFRSs in measuring all recognised assets and liabilities. [IFRS 1.10(d)]How to recognise adjustments required to move from previous GAAP to IFRSsAdjustments required to move from previous GAAP to IFRSs at the date of transition should be recognised directly in retained earnings or, if appropriate, another category of equity at the date of transition to IFRSs. [IFRS 1.11]EstimatesIn preparing IFRS estimates at the date of transition to IFRSs retrospectively, the entity must use the inputs and assumptions that had been used to determine previous GAAP estimates as of that date (after adjustments to reflect any differences in accounting policies). The entity is not permitted to use information that became available only after the previous GAAP estimates were made except to correct an error. [IFRS 1.14]Changes to disclosuresFor many entities, new areas of disclosure will be added that were not requirements under the previous GAAP (perhaps segment information, earnings per share, discontinuing operations, contingencies and fair values of all financial instruments) and disclosures that had been required under previous GAAP will be broadened (perhaps related party disclosures).Disclosure of selected financial data for periods before the first IFRS statement of financial position (balance sheet)If a first-time adopter wants to disclose selected financial information for periods before the date of the opening IFRS balance sheet, it is not required to conform that information to IFRS. Conforming that earlier selected financial information to IFRSs is optional.[IFRS 1.22]If the entity elects to present the earlier selected financial information based on its previous GAAP rather than IFRS, it must prominently label that earlier information as not complying with IFRS and, further, it must disclose the nature of the main adjustments that would make that information comply with IFRS. This latter disclosure is narrative and not necessarily quantified.[IFRS 1.22]Disclosures in the financial statements of a first-time adopterIFRS 1 requires disclosures that explain how the transition from previous GAAP to IFRS affected the entity's reported financial position, financial performance and cash flows. [IFRS 1.23] This includes:1. reconciliations of equity reported under previous GAAP to equity under IFRS both (a) at the date of transition to IFRSs and (b) the end of the last annual period reported under the previous GAAP. (For an entity adopting IFRSs for the first time in its 31 December 2014 financial statements, the reconciliations would be as of 1 January 2012 and 31 December 2013.)2. reconciliations of total comprehensive income for the last annual period reported under the previous GAAP to total comprehensive income under IFRSs for the same period [IFRS 1.24(b)]3. explanation of material adjustments that were made, in adopting IFRSs for the first time, to the statement of financial position, statement of comprehensive income and statement of cash flows (the latter if presented under previous GAAP) [IFRS 1.25]4. if errors in previous GAAP financial statements were discovered in the course of transition to IFRSs, those must be separately disclosed [IFRS 1.26]5. if the entity recognised or reversed any impairment losses in preparing its opening IFRS balance sheet, these must be disclosed [IFRS 1.24(c)]6. appropriate explanations if the entity has elected to apply any of the specific recognition and measurement exemptions permitted under IFRS 1 for instance, if it used fair values as deemed costDisclosures in interim financial reportsIf an entity is going to adopt IFRSs for the first time in its annual financial statements for the year ended 31 December 2014, certain disclosure are required in its interim financial statements prior to the 31 December 2014 statements, but only if those interim financial statements purport to comply with IAS 34 Interim Financial Reporting. Explanatory information and reconciliation are required in the interim report that immediately precedes the first set of IFRS annual financial statements. The information includes reconciliations between IFRS and previous GAAP. [IFRS 1.32]Exceptions to the retrospective application of other IFRSsThere are five exceptions to the general principle of retrospective application effective 1 January 2010. The five exceptions are: IAS 39 Derecognition of financial instrumentsA first-time adopter shall apply the derecognition requirements in IAS 39 prospectively for transactions occurring on or after 1 January 2004. However, the entity may apply the derecognition requirements retrospectively provided that the needed information was obtained at the time of initially accounting for those transactions. [IFRS 1.B2-3]IAS 39 Hedge accountingThe general rule is that the entity shall not reflect in its opening IFRS balance sheet (statement of financial position) a hedging relationship of a type that does not qualify for hedge accounting in accordance with IAS 39. However, if an entity designated a net position as a hedged item in accordance with previous GAAP, it may designate an individual item within that net position as a hedged item in accordance with IFRS, provided that it does so no later than the date of transition to IFRSs. [IFRS 1.B5]Note: Modified requirements apply when an entity applies IFRS 9 Financial Instruments (2013).IAS 27 Non-controlling interestIFRS 1.B7 lists specific requirements of IFRS 10Consolidated Financial Statements that shall be applied prospectively.Full-cost oil and gas assetsEntities using the full cost method may elect exemption from retrospective application of IFRSs for oil and gas assets. Entities electing this exemption will use the carrying amount under its old GAAP as the deemed cost of its oil and gas assets at the date of first-time adoption of IFRSs.Determining whether an arrangement contains a leaseIf a first-time adopter with a leasing contract made the same type of determination of whether an arrangement contained a lease in accordance with previous GAAP as that required by IFRIC 4 Determining whether an Arrangement Contains a Lease, but at a date other than that required by IFRIC 4, the amendments exempt the entity from having to apply IFRIC 4 when it adopts IFRSs.Optional exemptions from the basic measurement principle in IFRS 1There are some further optional exemptions to the general restatement and measurement principles set out above. The following exceptions are individually optional. They relate to: business combinations [IFRS 1.Appendix C] and a number of others [IFRS 1.Appendix D]: share-based payment transactions insurance contracts fair value, previous carrying amount, or revaluation as deemed cost leases cumulative translation differences investments in subsidiaries, jointly controlled entities, associates and joint ventures assets and liabilities of subsidiaries, associated and joint ventures compound financial instruments designation of previously recognised financial instruments fair value measurement of financial assets or financial liabilities at initial recognition decommissioning liabilities included in the cost of property, plant and equipment financial assets or intangible assets accounted for in accordance with IFRIC12 Service Concession Arrangements borrowing costs transfers of assets from customers extinguishing financial liabilities with equity instruments severe hyperinflation joint arrangements stripping costs in the production phase of a surface mineSome, but not all, of them are described below.Business combinations that occurred before opening balance sheet dateIFRS 1 includes Appendix C explaining how a first-time adopter should account for business combinations that occurred prior to transition to IFRS.An entity may keep the original previous GAAP accounting, that is, not restate: previous mergers or goodwill written-off from reserves the carrying amounts of assets and liabilities recognised at the date of acquisition or merger, or how goodwill was initially determined (do not adjust the purchase price allocation on acquisition)However, should it wish to do so, an entity can elect to restate all business combinations starting from a date it selects prior to the opening balance sheet date.In all cases, the entity must make an initial IAS 36 impairment test of any remaining goodwill in the opening IFRS balance sheet, after reclassifying, as appropriate, previous GAAP intangibles to goodwill.The exemption for business combinations also applies to acquisitions of investments in associates, interests in joint ventures and interests in a joint operation when the operation constitutes a business.Deemed costAssets carried at cost (e.g. property, plant and equipment) may be measured at their fair value at the date of transition to IFRSs. Fair value becomes the 'deemed cost' going forward under the IFRS cost model. Deemed cost is an amount used as a surrogate for cost or depreciated cost at a given date. [IFRS 1.D6]If, before the date of its first IFRS balance sheet, the entity had revalued any of these assets under its previous GAAP either to fair value or to a price-index-adjusted cost, that previous GAAP revalued amount at the date of the revaluation can become the deemed cost of the asset under IFRS. [IFRS 1.D6]If, before the date of its first IFRS balance sheet, the entity had made a one-time revaluation of assets or liabilities to fair value because of a privatisation or initial public offering, and the revalued amount became deemed cost under the previous GAAP, that amount would continue to be deemed cost after the initial adoption of IFRS. [IFRS 1.D8]This option applies to intangible assets only if an active market exists. [IFRS 1.D7]If the carrying amount of property, plant and equipment or intangible assets that are used in rate-regulated activities includes amounts under previous GAAP that do not qualify for capitalisation in accordance with IFRSs, a first-time adopter may elect to use the previous GAAP carrying amount of such items as deemed cost on the initial adoption of IFRSs. [IFRS 1.D8B]Eligible entities subject to rate-regulation may also optionally apply IFRS14 Regulatory Deferral Accounts on transition to IFRSs, and in subsequent financial statements.IAS 19 Employee benefits: actuarial gains and lossesAn entity may elect to recognise all cumulative actuarial gains and losses for all defined benefit plans at the opening IFRS balance sheet date (that is, reset any corridor recognised under previous GAAP to zero), even if it elects to use the IAS 19 corridor approach for actuarial gains and losses that arise after first-time adoption of IFRS. If a first-time adopter uses this exemption, it shall apply it to all plans. [IFRS 1.D10]Note: This exemption is not available where IAS 19 Employee Benefits (2011) is applied. IAS 19 (2011) is effective for annual reporting periods beginning on or after 1 January 2013.IAS 21 Accumulated translation reservesAn entity may elect to recognise all translation adjustments arising on the translation of the financial statements of foreign entities in accumulated profits or losses at the opening IFRS balance sheet date (that is, reset the translation reserve included in equity under previous GAAP to zero). If the entity elects this exemption, the gain or loss on subsequent disposal of the foreign entity will be adjusted only by those accumulated translation adjustments arising after the opening IFRS balance sheet date. [IFRS 1.D13]IAS 27 Investments in separate financial statementsIn May 2008, the IASB amended the standard to change the way the cost of an investment in the separate financial statements is measured on first-time adoption of IFRSs. The amendments to IFRS 1: allow first-time adopters to use a 'deemed cost' of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements remove the definition of the cost method from IAS 27 and add a requirement to present dividends as income in the separate financial statements of the investor require that, when a new parent is formed in a reorganisation, the new parent must measure the cost of its investment in the previous parent at the carrying amount of its share of the equity items of the previous parent at the date of the reorganisationAssets and liabilities of subsidiaries, associates and joint ventures: different IFRS adoption dates of investor and investeeIf a subsidiary becomes a first-time adopter later than its parent, IFRS 1 permits a choice between two measurement bases in the subsidiary's separate financial statements. In this case, a subsidiary should measure its assets and liabilities as either: [IFRS 1.D16] the carrying amount that would be included in the parent's consolidated financial statements, based on the parent's date of transition to IFRSs, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary or the carrying amounts required by IFRS 1 based on the subsidiary's date of transition to IFRSsA similar election is available to an associate or joint venture that becomes a first-time adopter later than an entity that has significant influence or joint control over it. [IFRS 1.D16]If a parent becomes a first-time adopter later than its subsidiary, the parent should in its consolidated financial statements, measure the assets and liabilities of the subsidiary at the same carrying amount as in the separate financial statements of the subsidiary, after adjusting for consolidation adjustments and for the effects of the business combination in which the parent acquired the subsidiary. The same approach applies in the case of associates and joint ventures. [IFRS 1.D17]July 2009: Two Amendments to IFRS 1On 23 July 2009, the IASB amended IFRS 1 to: exempt entities using the full cost method from retrospective application of IFRSs for oil and gas assets. exempt entities with existing leasing contracts from reassessing the classification of those contracts in accordance with IFRIC 4 Determining whether an Arrangement contains a Lease when the application of their national accounting requirements produced the same result.November 2009: Proposed Limited Scope Exemption for IFRS 7 DisclosuresOn 26 November 2009, the IASB issued an exposure draft (ED) proposing to amend IFRS 1 to state that an entity need not provide the comparative prior-period information required by the March 2009 amendments to IFRS 7 Improving Disclosures about Financial Instruments for first-time adopters adopting before 1 January 2010. As a result, IFRS 1, Appendix E, paragraph E1 will be amended as follows:E1 A first-time adopter may apply the transitional provisions in paragraph 44G of IFRS 7 to the extent that the entity's first IFRS reporting period starts earlier than 1 January 2010.The proposed limited exemption from comparative IFRS 7 disclosures for first-time adopters is consistent with the exemption permitted for early adopters of the March 2009 amendments to IFRS 7. Deadline for comments on the ED is 29 December 2009. Click for IASB Press Release (PDF 101k).January 2010: IASB amends IFRS 1 to provide IFRS 7 disclosure exemptionOn 28 January 2010, the IASB amended IFRS 1 to exempt first-time adopters of IFRSs from providing the additional disclosures introduced in March 2009 by Improving Disclosures about Financial Instruments (Amendments to IFRS 7). The amendment gives first-time adopters the same transition provisions that Amendments to IFRS 7 provides to current IFRS preparers. The amendment is effective on 1 July 2010, with earlier application permitted. Click for IASB Press Release (PDF 100k).December 2010: Two Amendments to IFRS 1On 20 December, the IASB amended IFRS 1 to: provide relief for first-time adopters of IFRSs from having to reconstruct transactions that occurred before their date of transition to IFRSs. provide guidance for entities emerging from severe hyperinflation either to resume presenting IFRS financial statements or to present IFRS financial statements for the first time.

IFRS 2 Share-based PaymentOverviewIFRS 2 Share-based Payment requires an entity to recognise share-based payment transactions (such as granted shares, share options, or share appreciation rights) in its financial statements, including transactions with employees or other parties to be settled in cash, other assets, or equity instruments of the entity. Specific requirements are included for equity-settled and cash-settled share-based payment transactions, as well as those where the entity or supplier has a choice of cash or equity instruments.Definition of share-based paymentA share-based payment is a transaction in which the entity receives goods or services either as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the entity's shares or other equity instruments of the entity. The accounting requirements for the share-based payment depend on how the transaction will be settled, that is, by the issuance of (a) equity, (b) cash, or (c) equity or cash.ScopeThe concept of share-based payments is broader than employee share options. IFRS 2 encompasses the issuance of shares, or rights to shares, in return for services and goods. Examples of items included in the scope of IFRS 2 are share appreciation rights, employee share purchase plans, employee share ownership plans, share option plans and plans where the issuance of shares (or rights to shares) may depend on market or non-market related conditions.IFRS 2 applies to all entities. There is no exemption for private or smaller entities. Furthermore, subsidiaries using their parent's or fellow subsidiary's equity as consideration for goods or services are within the scope of the Standard.There are two exemptions to the general scope principle: First, the issuance of shares in a business combination should be accounted for under IFRS 3 Business Combinations. However, care should be taken to distinguish share-based payments related to the acquisition from those related to continuing employee services Second, IFRS 2 does not address share-based payments within the scope of paragraphs 8-10 of IAS32 Financial Instruments: Presentation, or paragraphs 5-7 of IAS39 Financial Instruments: Recognition and Measurement. Therefore, IAS 32 and IAS 39 should be applied for commodity-based derivative contracts that may be settled in shares or rights to shares.IFRS 2 does not apply to share-based payment transactions other than for the acquisition of goods and services. Share dividends, the purchase of treasury shares, and the issuance of additional shares are therefore outside its scope.Recognition and measurementThe issuance of shares or rights to shares requires an increase in a component of equity. IFRS 2 requires the offsetting debit entry to be expensed when the payment for goods or services does not represent an asset. The expense should be recognised as the goods or services are consumed. For example, the issuance of shares or rights to shares to purchase inventory would be presented as an increase in inventory and would be expensed only once the inventory is sold or impaired.The issuance of fully vested shares, or rights to shares, is presumed to relate to past service, requiring the full amount of the grant-date fair value to be expensed immediately. The issuance of shares to employees with, say, a three-year vesting period is considered to relate to services over the vesting period. Therefore, the fair value of the share-based payment, determined at the grant date, should be expensed over the vesting period.As a general principle, the total expense related to equity-settled share-based payments will equal the multiple of the total instruments that vest and the grant-date fair value of those instruments. In short, there is truing up to reflect what happens during the vesting period. However, if the equity-settled share-based payment has a market related performance condition, the expense would still be recognised if all other vesting conditions are met. The following example provides an illustration of a typical equity-settled share-based payment.Illustration Recognition of employee share option grantCompany grants a total of 100 share options to 10 members of its executive management team (10 options each) on 1 January 20X5. These options vest at the end of a three-year period. The company has determined that each option has a fair value at the date of grant equal to 15. The company expects that all 100 options will vest and therefore records the following entry at 30 June 20X5 - the end of its first six-month interim reporting period.Dr. Share option expense250

Cr. Equity250

[(100 15) 6 periods] = 250 per period

If all 100 shares vest, the above entry would be made at the end of each 6-month reporting period. However, if one member of the executive management team leaves during the second half of 20X6, therefore forfeiting the entire amount of 10 options, the following entry at 31 December 20X6 would be made:Dr. Share option expense150

Cr. Equity150

[(90 15) 6 periods = 225 per period. [225 4] [250+250+250] = 150

Measurement guidanceDepending on the type of share-based payment, fair value may be determined by the value of the shares or rights to shares given up, or by the value of the goods or services received: General fair value measurement principle. In principle, transactions in which goods or services are received as consideration for equity instruments of the entity should be measured at the fair value of the goods or services received. Only if the fair value of the goods or services cannot be measured reliably would the fair value of the equity instruments granted be used. Measuring employee share options. For transactions with employees and others providing similar services, the entity is required to measure the fair value of the equity instruments granted, because it is typically not possible to estimate reliably the fair value of employee services received. When to measure fair value - options. For transactions measured at the fair value of the equity instruments granted (such as transactions with employees), fair value should be estimated at grant date. When to measure fair value - goods and services. For transactions measured at the fair value of the goods or services received, fair value should be estimated at the date of receipt of those goods or services. Measurement guidance. For goods or services measured by reference to the fair value of the equity instruments granted, IFRS 2 specifies that, in general, vesting conditions are not taken into account when estimating the fair value of the shares or options at the relevant measurement date (as specified above). Instead, vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for goods or services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. More measurement guidance. IFRS 2 requires the fair value of equity instruments granted to be based on market prices, if available, and to take into account the terms and conditions upon which those equity instruments were granted. In the absence of market prices, fair value is estimated using a valuation technique to estimate what the price of those equity instruments would have been on the measurement date in an arm's length transaction between knowledgeable, willing parties. The standard does not specify which particular model should be used. If fair value cannot be reliably measured. IFRS 2 requires the share-based payment transaction to be measured at fair value for both listed and unlisted entities. IFRS 2 permits the use of intrinsic value (that is, fair value of the shares less exercise price) in those "rare cases" in which the fair value of the equity instruments cannot be reliably measured. However this is not simply measured at the date of grant. An entity would have to remeasure intrinsic value at each reporting date until final settlement. Performance conditions. IFRS 2 makes a distinction between the handling of market based performance conditions from non-market performance conditions. Market conditions are those related to the market price of an entity's equity, such as achieving a specified share price or a specified target based on a comparison of the entity's share price with an index of share prices of other entities. Market based performance conditions are included in the grant-date fair value measurement (similarly, non-vesting conditions are taken into account in the measurement). However, the fair value of the equity instruments is not adjusted to take into consideration non-market based performance features - these are instead taken into account by adjusting the number of equity instruments included in the measurement of the share-based payment transaction, and are adjusted each period until such time as the equity instruments vest.Modifications, cancellations, and settlementsThe determination of whether a change in terms and conditions has an effect on the amount recognised depends on whether the fair value of the new instruments is greater than the fair value of the original instruments (both determined at the modification date).Modification of the terms on which equity instruments were granted may have an effect on the expense that will be recorded. IFRS 2 clarifies that the guidance on modifications also applies to instruments modified after their vesting date. If the fair value of the new instruments is more than the fair value of the old instruments (e.g. by reduction of the exercise price or issuance of additional instruments), the incremental amount is recognised over the remaining vesting period in a manner similar to the original amount. If the modification occurs after the vesting period, the incremental amount is recognised immediately. If the fair value of the new instruments is less than the fair value of the old instruments, the original fair value of the equity instruments granted should be expensed as if the modification never occurred.The cancellation or settlement of equity instruments is accounted for as an acceleration of the vesting period and therefore any amount unrecognised that would otherwise have been charged should be recognised immediately. Any payments made with the cancellation or settlement (up to the fair value of the equity instruments) should be accounted for as the repurchase of an equity interest. Any payment in excess of the fair value of the equity instruments granted is recognised as an expenseNew equity instruments granted may be identified as a replacement of cancelled equity instruments. In those cases, the replacement equity instruments are accounted for as a modification. The fair value of the replacement equity instruments is determined at grant date, while the fair value of the cancelled instruments is determined at the date of cancellation, less any cash payments on cancellation that is accounted for as a deduction from equity.DisclosureRequired disclosures include: the nature and extent of share-based payment arrangements that existed during the period how the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period was determined the effect of share-based payment transactions on the entity's profit or loss for the period and on its financial position.

IFRS 3 Business Combinations OverviewIFRS 3 Business Combinations outlines the accounting when an acquirer obtains control of a business (e.g. an acquisition or merger). Such business combinations are accounted for using the 'acquisition method', which generally requires assets acquired and liabilities assumed to be measured at their fair values at the acquisition date. It sets out the principles on the recognition and measurement of acquired assets and liabilities, the determination of goodwill and the necessary disclosures.Key definitionsbusiness combinationA transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as 'true mergers' or 'mergers of equals' are also business combinations as that term is used in [IFRS 3]businessAn integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participantsacquisition dateThe date on which the acquirer obtains control of the acquireeacquirerThe entity that obtains control of the acquireeacquireeThe business or businesses that the acquirer obtains control of in a business combinationScopeIFRS 3 must be applied when accounting for business combinations, but does not apply to: The formation of a joint venture* [IFRS 3.2(a)] The acquisition of an asset or group of assets that is not a business, although general guidance is provided on how such transactions should be accounted for [IFRS 3.2(b)] Combinations of entities or businesses under common control (the IASB has a separate agenda project on common control transactions) [IFRS 3.2(c)] Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under IFRS10 Consolidated Financial Statements. [IFRS 3.2A]Determining whether a transaction is a business combinationIFRS 3 provides additional guidance on determining whether a transaction meets the definition of a business combination, and so accounted for in accordance with its requirements. This guidance includes: Business combinations can occur in various ways, such as by transferring cash, incurring liabilities, issuing equity instruments (or any combination thereof), or by not issuing consideration at all (i.e. by contract alone) [IFRS 3.B5] Business combinations can be structured in various ways to satisfy legal, taxation or other objectives, including one entity becoming a subsidiary of another, the transfer of net assets from one entity to another or to a new entity [IFRS 3.B6] The business combination must involve the acquisition of a business, which generally has three elements: [IFRS 3.B7] Inputs an economic resource (e.g. non-current assets, intellectual property) that creates outputs when one or more processes are applied to it Process a system, standard, protocol, convention or rule that when applied to an input or inputs, creates outputs (e.g. strategic management, operational processes, resource management) Output the result of inputs and processes applied to those inputs.Method of accounting for business combinations1. Acquisition methodThe acquisition method (called the 'purchase method' in the 2004 version of IFRS 3) is used for all business combinations. [IFRS 3.4]Steps in applying the acquisition method are: [IFRS 3.5]1. Identification of the 'acquirer'2. Determination of the 'acquisition date'3. Recognition and measurement of the identifiable assets acquired, the liabilities assumed and any non-controlling interest (NCI, formerly called minority interest) in the acquiree4. Recognition and measurement of goodwill or a gain from a bargain purchaseIdentifying an acquirerThe guidance in IFRS10 Consolidated Financial Statements is used to identify an acquirer in a business combination, i.e. the entity that obtains 'control' of the acquiree. [IFRS 3.7]If the guidance in IFRS 10 does not clearly indicate which of the combining entities is an acquirer, IFRS 3 provides additional guidance which is then considered: The acquirer is usually the entity that transfers cash or other assets where the business combination is effected in this manner [IFRS 3.B14] The acquirer is usually, but not always, the entity issuing equity interests where the transaction is effected in this manner, however the entity also considers other pertinent facts and circumstances including: [IFRS 3.B15] relative voting rights in the combined entity after the business combination the existence of any large minority interest if no other owner or group of owners has a significant voting interest the composition of the governing body and senior management of the combined entity the terms on which equity interests are exchanged The acquirer is usually the entity with the largest relative size (assets, revenues or profit) [IFRS 3.B16] For business combinations involving multiple entities, consideration is given to the entity initiating the combination, and the relative sizes of the combining entities. [IFRS 3.B17]Acquisition dateAn acquirer considers all pertinent facts and circumstances when determining the acquisition date, i.e. the date on which it obtains control of the acquiree. The acquisition date may be a date that is earlier or later than the closing date. [IFRS 3.8-9]IFRS 3 does not provide detailed guidance on the determination of the acquisition date and the date identified should reflect all relevant facts and circumstances. Considerations might include, among others, the date a public offer becomes unconditional (with a controlling interest acquired), when the acquirer can effect change in the board of directors of the acquiree, the date of acceptance of an unconditional offer, when the acquirer starts directing the acquiree's operating and financing policies, or the date competition or other authorities provide necessarily clearances.

Acquired assets and liabilitiesIFRS 3 establishes the following principles in relation to the recognition and measurement of items arising in a business combination: Recognition principle. Identifiable assets acquired, liabilities assumed, and non-controlling interests in the acquiree, are recognised separately from goodwill [IFRS 3.10] Measurement principle. All assets acquired and liabilities assumed in a business combination are measured at acquisition-date fair value. [IFRS 3.18]Exceptions to the recognition and measurement principles

The following exceptions to the above principles apply: Contingent liabilities the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets do not apply to the recognition of contingent liabilities arising in a business combination [IFRS 3.22-23] Income taxes the recognition and measurement of income taxes is in accordance with IAS 12 Income Taxes [IFRS 3.24-25] Employee benefits assets and liabilities arising from an acquiree's employee benefits arrangements are recognised and measured in accordance with IAS 19 Employee Benefits (2011) [IFRS 2.26] Indemnification assets - an acquirer recognises indemnification assets at the same time and on the same basis as the indemnified item [IFRS 3.27-28] Reacquired rights the measurement of reacquired rights is by reference to the remaining contractual term without renewals [IFRS 3.29] Share-based payment transactions - these are measured by reference to the method in IFRS 2 Share-based Payment Assets held for sale IFRS 5 Non-current Assets Held for Sale and Discontinued Operations is applied in measuring acquired non-current assets and disposal groups classified as held for sale at the acquisition date.

In applying the principles, an acquirer classifies and designates assets acquired and liabilities assumed on the basis of the contractual terms, economic conditions, operating and accounting policies and other pertinent conditions existing at the acquisition date. For example, this might include the identification of derivative financial instruments as hedging instruments, or the separation of embedded derivatives from host contracts.[IFRS 3.15] However, exceptions are made for lease classification (between operating and finance leases) and the classification of contracts as insurance contracts, which are classified on the basis of conditions in place at the inception of the contract. [IFRS 3.17]Acquired intangible assets must be recognised and measured at fair value in accordance with the principles if it is separable or arises from other contractual rights, irrespective of whether the acquiree had recognised the asset prior to the business combination occurring. This is because there is always sufficient information to reliably measure the fair value of these assets. [IAS 38.33-37] There is no 'reliable measurement' exception for such assets, as was present under IFRS 3 (2004).GoodwillGoodwill is measured as the difference between: the aggregate of (i) the value of the consideration transferred (generally at fair value), (ii) the amount of any non-controlling interest (NCI, see below), and (iii) in a business combination achieved in stages (see below), the acquisition-date fair value of the acquirer's previously-held equity interest in the acquiree, and the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed (measured in accordance with IFRS 3). [IFRS 3.32]This can be written in simplified equation form as follows:

Goodwill=Consideration transferred+Amount of non-controlling interests+Fair value of previous equity interests-Net assets recognised

If the difference above is negative, the resulting gain is a bargain purchase in profit or loss, which may arise in circumstances such as a forced seller acting under compulsion. [IFRS 3.34-35] However, before any bargain purchase gain is recognised in profit or loss, the acquirer is required to undertake a review to ensure the identification of assets and liabilities is complete, and that measurements appropriately reflect consideration of all available information. [IFRS 3.36]Choice in the measurement of non-controlling interests (NCI)IFRS 3 allows an accounting policy choice, available on a transaction by transaction basis, to measure non-controlling interests (NCI) either at: [IFRS 3.19] fair value (sometimes called the full goodwill method), or the NCI's proportionate share of net assets of the acquiree.The choice in accounting policy applies only to present ownership interests in the acquiree that entitle holders to a proportionate share of the entity's net assets in the event of a liquidation (e.g. outside holdings of an acquiree's ordinary shares). Other components of non-controlling interests at must be measured at acquisition date fair values or in accordance with other applicable IFRSs (e.g. share-based payment transactions accounted for under IFRS2 Share-based Payment). [IFRS 3.19]ExampleP pays 800 to acquire an 80% interest in the ordinary shares of S. The aggregated fair value of 100% of S's identifiable assets and liabilities (determined in accordance with the requirements of IFRS 3) is 600, and the fair value of the non-controlling interest (the remaining 20% holding of ordinary shares) is 185.The measurement of the non-controlling interest, and its resultant impacts on the determination of goodwill, under each option is illustrated below:

NCI based onfair valueNCI based onnet assets

Consideration transferred800800

Non-controlling interest185 (1)120 (2)

985920

Net assets(600)(600)

Goodwill385320

(1) The fair value of the 20% non-controlling interest in S will not necessarily be proportionate to the price paid by P for its 80% interest, primarily due to any control premium or discount [IFRS 3.B45](2) Calculated as 20% of the fair value of the net assets of 600.

Business combination achieved in stages (step acquisitions)Prior to control being obtained, an acquirer accounts for its investment in the equity interests of an acquiree in accordance with the nature of the investment by applying the relevant standard, e.g. IAS28 Investments in Associates and Joint Ventures (2011), IFRS11 Joint Arrangements, IAS39 Financial Instruments: Recognition and Measurement or IFRS9 Financial Instruments. As part of accounting for the business combination, the acquirer remeasures any previously held interest at fair value and takes this amount into account in the determination of goodwill as noted above. Any resultant gain or loss is recognised in profit or loss or other comprehensive income as appropriate. The accounting treatment of an entity's pre-combination interest in an acquiree is consistent with the view that the obtaining of control is a significant economic event that triggers a remeasurement. Consistent with this view, all of the assets and liabilities of the acquiree are fully remeasured in accordance with the requirements of IFRS 3 (generally at fair value). Accordingly, the determination of goodwill occurs only at the acquisition date. This is different to the accounting for step acquisitions under IFRS 3 (2004).Related transactions and subsequent accountingGeneral principlesIn general: transactions that are not part of what the acquirer and acquiree (or its former owners) exchanged in the business combination are identified and accounted for separately from business combination the recognition and measurement of assets and liabilities arising in a business combination after the initial accounting for the business combination is dealt with under other relevant standards, e.g. acquired inventory is subsequently accounted under IAS2 Inventories. [IFRS 3.54]When determining whether a particular item is part of the exchange for the acquiree or whether it is separate from the business combination, an acquirer considers the reason for the transaction, who initiated the transaction and the timing of the transaction. [IFRS 3.B50]Contingent considerationContingent consideration must be measured at fair value at the time of the business combination and is taken into account in the determination of goodwill. If the amount of contingent consideration changes as a result of a post-acquisition event (such as meeting an earnings target), accounting for the change in consideration depends on whether the additional consideration is classified as an equity instrument or an asset or liability: If the contingent consideration is classified as an equity instrument, the original amount is not remeasured If the additional consideration is classified as an asset or liability that is a financial instrument, the contingent consideration is measured at fair value and gains and losses are recognised in either profit or loss or other comprehensive income in accordance with IFRS 9 Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement If the additional consideration is not within the scope of IFRS 9 (or IAS 39), it is accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets or other IFRSs as appropriate.Where a change in the fair value of contingent consideration is the result of additional information about facts and circumstances that existed at the acquisition date, these changes are accounted for as measurement period adjustments if they arise during the measurement period.Acquisition costsCosts of issuing debt or equity instruments are accounted for under IAS32 Financial Instruments: Presentation and IAS39 Financial Instruments: Recognition and Measurement, IFRS9 Financial Instruments. All other costs associated with an acquisition must be expensed, including reimbursements to the acquiree for bearing some of the acquisition costs. Examples of costs to be expensed include finder's fees; advisory, legal, accounting, valuation and other professional or consulting fees; and general administrative costs, including the costs of maintaining an internal acquisitions department. [IFRS 3.53]Pre-existing relationships and reacquired rightsIf the acquirer and acquiree were parties to a pre-existing relationship (for instance, the acquirer had granted the acquiree a right to use its intellectual property), this must be accounted for separately from the business combination. In most cases, this will lead to the recognition of a gain or loss for the amount of the consideration transferred to the vendor which effectively represents a 'settlement' of the pre-existing relationship. The amount of the gain or loss is measured as follows: for pre-existing non-contractual relationships (for example, a lawsuit): by reference to fair value for pre-existing contractual relationships: at the lesser of (a) the favourable/unfavourable contract position and (b) any stated settlement provisions in the contract available to the counterparty to whom the contract is unfavourable. [IFRS 3.B51-53]However, where the transaction effectively represents a reacquired right, an intangible asset is recognised and measured on the basis of the remaining contractual term of the related contract excluding any renewals. The asset is then subsequently amortised over the remaining contractual term, again excluding any renewals. Contingent liabilitiesUntil a contingent liability is settled, cancelled or expired, a contingent liability that was recognised in the initial accounting for a business combination is measured at the higher of the amount the liability would be recognised under IAS37 Provisions, Contingent Liabilities and Contingent Assets, and the amount less accumulated amortisation under IAS18 Revenue. Contingent payments to employees and shareholdersAs part of a business combination, an acquirer may enter into arrangements with selling shareholders or employees. In determining whether such arrangements are part of the business combination or accounted for separately, the acquirer considers a number of factors, including whether the arrangement requires continuing employment (and if so, its term), the level or remuneration compared to other employees, whether payments to shareholder employees are incremental to non-employee shareholders, the relative number of shares owns, linkages to valuation of the acquiree, how the consideration is calculated, and other agreements and issues. Where share-based payment arrangements of the acquiree exist and are replaced, the value of such awards must be apportioned between pre-combination and post-combination service and accounted for accordingly. Indemnification assetsIndemnification assets recognised at the acquisition date (under the exceptions to the general recognition and measurement principles noted above) are subsequently measured on the same basis of the indemnified liability or asset, subject to contractual impacts and collectibility. Indemnification assets are only derecognised when collected, sold or when rights to it are lost. Other issuesIn addition, IFRS 3 provides guidance on some specific aspects of business combinations including: business combinations achieved without the transfer of consideration, e.g. 'dual listed' and 'stapled' arrangements [IFRS 3.43-44] reverse acquisitions [IFRS 3.B19] identifying intangible assets acquired [IFRS 3.B31-34]DisclosureDisclosure of information about current business combinationsAn acquirer is required to disclose information that enables users of its financial statements to evaluate the nature and financial effect of a business combination that occurs either during the current reporting period or after the end of the period but before the financial statements are authorised for issue. [IFRS 3.59]Among the disclosures required to meet the foregoing objective are the following: [IFRS 3.B64-B66] name and a description of the acquiree acquisition date percentage of voting equity interests acquired primary reasons for the business combination and a description of how the acquirer obtained control of the acquiree description of the factors that make up the goodwill recognised qualitative description of the factors that make up the goodwill recognised, such as expected synergies from combining operations, intangible assets that do not qualify for separate recognition acquisition-date fair value of the total consideration transferred and the acquisition-date fair value of each major class of consideration details of contingent consideration arrangements and indemnification assets details of acquired receivables the amounts recognised as of the acquisition date for each major class of assets acquired and liabilities assumed details of contingent liabilities recognised total amount of goodwill that is expected to be deductible for tax purposes details about any transactions that are recognised separately from the acquisition of assets and assumption of liabilities in the business combination information about a bargain purchase information about the measurement of non-controlling interests details about a business combination achieved in stages information about the acquiree's revenue and profit or loss information about a business combination whose acquisition date is after the end of the reporting period but before the financial statements are authorised for issueDisclosure of information about adjustments of past business combinationsAn acquirer is required to disclose information that enables users of its financial statements to evaluate the financial effects of adjustments recognised in the current reporting period that relate to business combinations that occurred in the period or previous reporting periods. [IFRS 3.61]Among the disclosures required to meet the foregoing objective are the following: [IFRS 3.B67] details when the initial accounting for a business combination is incomplete for particular assets, liabilities, non-controlling interests or items of consideration (and the amounts recognised in the financial statements for the business combination thus have been determined only provisionally) follow-up information on contingent consideration follow-up information about contingent liabilities recognised in a business combination a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period, with various details shown separately the amount and an explanation of any gain or loss recognised in the current reporting period that both: relates to the identifiable assets acquired or liabilities assumed in a business combination that was effected in the current or previous reporting period, and is of such a size, nature or incidence that disclosure is relevant to understanding the combined entity's financial statements.

IFRS 4 Insurance Contracts OverviewIFRS 4 Insurance Contracts applies, with limited exceptions, to all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds. In light of the IASB's comprehensive project on insurance contracts, the standard provides a temporary exemption from the requirements of some other IFRSs, including the requirement to consider IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors when selecting accounting policies for insurance contracts.ScopeIFRS 4 applies to virtually all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds. [IFRS 4.2] It does not apply to other assets and liabilities of an insurer, such as financial assets and financial liabilities within the scope of IAS 39 Financial Instruments: Recognition and Measurement. [IFRS 4.3] Furthermore, it does not address accounting by policyholders. [IFRS 4.4(f)]In 2005, the IASB amended the scope of IAS 39 to include financial guarantee contracts issued. However, if an issuer of financial guarantee contracts has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts, the issuer may elect to apply either IAS 39 or IFRS 4 to such financial guarantee contracts. [IFRS 4.4(d)]Definition of insurance contractAn insurance contract is a "contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder." [IFRS 4.Appendix A]Accounting policiesThe IFRS exempts an insurer temporarily (until completion of Phase II of the Insurance Project) from some requirements of other IFRSs, including the requirement to consider IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors in selecting accounting policies for insurance contracts. However, the standard: [IFRS 4.14] prohibits provisions for possible claims under contracts that are not in existence at the reporting date (such as catastrophe and equalisation provisions) requires a test for the adequacy of recognised insurance liabilities and an impairment test for reinsurance assets requires an insurer to keep insurance liabilities in its balance sheet until they are discharged or cancelled, or expire, and prohibits offsetting insurance liabilities against related reinsurance assets and income or expense from reinsurance contracts against the expense or income from the related insurance contract.Changes in accounting policiesIFRS 4 permits an insurer to change its accounting policies for insurance contracts only if, as a result, its financial statements present information that is more relevant and no less reliable, or more reliable and no less relevant. [IFRS 4.22] In particular, an insurer cannot introduce any of the following practices, although it may continue using accounting policies that involve them: [IFRS 4.25] measuring insurance liabilities on an undiscounted basis measuring contractual rights to future investment management fees at an amount that exceeds their fair value as implied by a comparison with current market-based fees for similar services using non-uniform accounting policies for the insurance liabilities of subsidiaries.Remeasuring insurance liabilitiesThe IFRS permits the introduction of an accounting policy that involves remeasuring designated insurance liabilities consistently in each period to reflect current market interest rates (and, if the insurer so elects, other current estimates and assumptions). Without this permission, an insurer would have been required to apply the change in accounting policies consistently to all similar liabilities. [IFRS 4.24]PrudenceAn insurer need not change its accounting policies for insurance contracts to eliminate excessive prudence. However, if an insurer already measures its insurance contracts with sufficient prudence, it should not introduce additional prudence. [IFRS 4.26]Future investment marginsThere is a rebuttable presumption that an insurer's financial statements will become less relevant and reliable if it introduces an accounting policy that reflects future investment margins in the measurement of insurance contracts. [IFRS 4.27]Asset classificationsWhen an insurer changes its accounting policies for insurance liabilities, it may reclassify some or all financial assets as 'at fair value through profit or loss'. [IFRS 4.45]Other issuesThe standard: clarifies that an insurer need not account for an embedded derivative separately at fair value if the embedded derivative meets the definition of an insurance contract [IFRS 4.7-8] requires an insurer to unbundle (that is, to account separately for) deposit components of some insurance contracts, to avoid the omission of assets and liabilities from its balance sheet [IFRS 4.10] clarifies the applicability of the practice sometimes known as 'shadow accounting' [IFRS 4.30] permits an expanded presentation for insurance contracts acquired in a business combination or portfolio transfer [IFRS 4.31-33] addresses limited aspects of discretionary participation features contained in insurance contracts or financial instruments. [IFRS 4.34-35]DisclosuresThe standard requires disclosure of: information that helps users understand the amounts in the insurer's financial statements that arise from insurance contracts: [IFRS 4.36-37] accounting policies for insurance contracts and related assets, liabilities, income, and expense the recognised assets, liabilities, income, expense, and cash flows arising from insurance contracts if the insurer is a cedant, certain additional disclosures are required information about the assumptions that have the greatest effect on the measurement of assets, liabilities, income, and expense including, if practicable, quantified disclosure of those assumptions the effect of changes in assumptions reconciliations of changes in insurance liabilities, reinsurance assets, and, if any, related deferred acquisition costs Information that helps users to evaluate the nature and extent of risks arising from insurance contracts: [IFRS 4.38-39] risk management objectives and policies those terms and conditions of insurance contracts that have a material effect on the amount, timing, and uncertainty of the insurer's future cash flows information about insurance risk (both before and after risk mitigation by reinsurance), including information about: the sensitivity to insurance risk concentrations of insurance risk actual claims compared with previous estimates the information about credit risk, liquidity risk and market risk that IFRS 7 would require if the insurance contracts were within the scope of IFRS 7 information about exposures to market risk arising from embedded derivatives contained in a host insurance contract if the insurer is not required to, and does not, measure the embedded derivatives at fair value.

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations OverviewIFRS 5 Non-current Assets Held for Sale and Discontinued Operations outlines how to account for non-current assets held for sale (or for distribution to owners). In general terms, assets (or disposal groups) held for sale are not depreciated, are measured at the lower of carrying amount and fair value less costs to sell, and are presented separately in the statement of financial position. Specific disclosures are also required for discontinued operations and disposals of non-current assets.Held-for-sale classificationIn general, the following conditions must be met for an asset (or 'disposal group') to be classified as held for sale: [IFRS5.6-8] management is committed to a plan to sell the asset is available for immediate sale an active programme to locate a buyer is initiated the sale is highly probable, within 12 months of classification as held for sale (subject to limited exceptions) the asset is being actively marketed for sale at a sales price reasonable in relation to its fair value actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or withdrawnThe assets need to be disposed of through sale. Therefore, operations that are expected to be wound down or abandoned would not meet the definition (but may be classified as discontinued once abandoned). [IFRS5.13]An entity that is committed to a sale involving loss of control of a subsidiary that qualifies for held-for-sale classification under IFRS5 classifies all of the assets and liabilities of that subsidiary as held for sale, even if the entity will retain a non-controlling interest in its former subsidiary after the sale. [IFRS5.8A]Held for distribution to owners classificationThe classification, presentation and measurement requirements of IFRS5 also apply to a non-current asset (or disposal group) that is classified as held for distribution to owners. The entity must be committed to the distribution, the assets must be available for immediate distribution and the distribution must be highly probable. Disposal group conceptA 'disposal group' is a group of assets, possibly with some associated liabilities, which an entity intends to dispose of in a single transaction. The measurement basis required for non-current assets classified as held for sale is applied to the group as a whole, and any resulting impairment loss reduces the carrying amount of the non-current assets in the disposal group in the order of allocation required by IAS 36. [IFRS5.4]MeasurementThe following principles apply: At the time of classification as held for sale. Immediately before the initial classification of the asset as held for sale, the carrying amount of the asset will be measured in accordance with applicable IFRSs. Resulting adjustments are also recognised in accordance with applicable IFRSs. After classification as held for sale. Non-current assets or disposal groups that are classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell (fair value less costs to distribute in the case of assets classified as held for distribution to owners). Impairment. Impairment must be considered both at the time of classification as held for sale and subsequently: At the time of classification as held for sale. Immediately prior to classifying an asset or disposal group as held for sale, impairment is measured and recognised in accordance with the applicable IFRSs (generally IAS16 Property, Plant and Equipment, IAS36 Impairment of Assets, IAS38 Intangible Assets, and IAS39 Financial Instruments: Recognition and Measurement / IFRS9 Financial Instruments). Any impairment loss is recognised in profit or loss unless the asset had been measured at revalued amount under IAS 16 or IAS 38, in which case the impairment is treated as a revaluation decrease. After classification as held for sale. Calculate any impairment loss based on the difference between the adjusted carrying amounts of the asset/disposal group and fair value less costs to sell. Any impairment loss that arises by using the measurement principles in IFRS5 must be recognised in profit or loss [IFRS5.20], even for assets previously carried at revalued amounts. This is supported by IFRS5 BC.47 and BC.48, which indicate the inconsistency with IAS 36. Assets carried at fair value prior to initial classification. For such assets, the requirement to deduct costs to sell from fair value may result in an immediate charge to profit or loss. Subsequent increases in fair value. A gain for any subsequent increase in fair value less costs to sell of an asset can be recognised in the profit or loss to the extent that it is not in excess of the cumulative impairment loss that has been recognised in accordance with IFRS5 or previously in accordance with IAS 36. No depreciation. Non-current assets or disposal groups that are classified as held for sale are not depreciated. The measurement provisions of IFRS5 do not apply to deferred tax assets, assets arising from employee benefits, financial assets within the scope of IFRS9 Financial Instruments, non-current assets measured at fair value in accordance with IAS41 Agriculture, and contractual rights under insurance contracts. PresentationAssets classified as held for sale, and the assets and liabilities included within a disposal group classified as held for sale, must be presented separately on the face of the statement of financial position. DisclosuresIFRS 5 requires the following disclosures about assets (or disposal groups) that are held for sale: description of the non-current asset or disposal group description of facts and circumstances of the sale (disposal) and the expected timing impairment losses and reversals, if any, and where in the statement of comprehensive income they are recognised if applicable, the reportable segment in which the non-current asset (or disposal group) is presented in accordance with IFRS 8 Operating SegmentsDisclosures in other IFRSs do not apply to assets held for sale (or discontinued operations, discussed below) unless those other IFRSs require specific disclosures in respect of such assets, or in respect of certain measurement disclosures where assets and liabilities are outside the scope of the measurement requirements of IFRS5. Classification as discontinuingA discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, and: represents either a separate major line of business or a geographical area of operations is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale and the disposal involves loss of control.IFRS5 prohibits the retroactive classification as a discontinued operation, when the discontinued criteria are met after the end of the reporting period. [IFRS5.12]Disclosure in the statement of comprehensive income The sum of the post-tax profit or loss of the discontinued operation and the post-tax gain or loss recognised on the measurement to fair value less cost to sell or fair value adjustments on the disposal of the assets (or disposal group) is presented as a single amount on the face of the statement of comprehensive income. If the entity presents profit or loss in a separate statement, a section identified as relating to discontinued operations is presented in that separate statement. [IFRS5.33-33A].Detailed disclosure of revenue, expenses, pre-tax profit or loss and related income taxes is required either in the notes or in the statement of comprehensive income in a section distinct from continuing operations. [IFRS5.33] Such detailed disclosures must cover both the current and all prior periods presented in the financial statements. [IFRS5.34]Cash flow informationThe net cash flows attributable to the operating, investing, and financing activities of a discontinued operation is separately presented on the face of the cash flow statement or disclosed in the notes. [IFRS5.33]DisclosuresThe following additional disclosures are required: adjustments made in the current period to amounts disclosed as a discontinued operation in prior periods must be separately disclosed [IFRS5.35] if an entity ceases to classify a component as held for sale, the results of that component previously presented in discontinued operations must be reclassified and included in income from continuing operations for all periods presented [IFRS5.36]

IFRS 6 Exploration for and Evaluation of Mineral Resources OverviewIFRS 6 Exploration for and Evaluation of Mineral Resources has the effect of allowing entities adopting the standard for the first time to use accounting policies for exploration and evaluation assets that were applied before adopting IFRSs. It also modifies impairment testing of exploration and evaluation assets by introducing different impairment indicators and allowing the carrying amount to be tested at an aggregate level (not greater than a segment).DefinitionsExploration for and evaluation of mineral resources means the search for mineral resources, including minerals, oil, natural gas and similar non-regenerative resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Exploration and evaluation expenditures are expenditures incurred in connection with the exploration and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource is demonstrable. Accounting policies for exploration and evaluationIFRS 6 permits an entity to develop an accounting policy for recognition of exploration and evaluation expenditures as assets without specifically considering the requirements of paragraphs 11 and 12 of IAS8 Accounting Policies, Changes in Accounting Estimates and Errors. [IFRS 6.9] Thus, an entity adopting IFRS 6 may continue to use the accounting policies applied immediately before adopting the IFRS. This includes continuing to use recognition and measurement practices that are part of those accounting policies.ImpairmentIFRS 6 effectively modifies the application of IAS36 Impairment of Assets to exploration and evaluation assets recognised by an entity under its accounting policy. Specifically: Entities recognising exploration and evaluation assets are required to perform an impairment test on those assets when specific facts and circumstances outlined in the standard indicate an impairment test is required. The facts and circumstances outlined in IFRS 6 are non-exhaustive, and are applied instead of the 'indicators of impairment' in IAS 36 [IFRS 6.19-20] Entities are permitted to determine an accounting policy for allocating exploration and evaluation assets to cash-generating units or groups of CGUs. [IFRS 6.21] This accounting policy may result in a different allocation than might otherwise arise on applying the requirements of IAS 36 If an impairment test is required, any impairment loss is measured, presented and disclosed in accordance with IAS 36. Presentation and disclosureAn entity treats exploration and evaluation assets as a separate class of assets and make the disclosures required by either IAS16 Property, Plant and Equipment or IAS38 Intangible Assets consistent with how the assets are classified. IFRS 6 requires disclosure of information that identifies and explains the amounts recognised in its financial statements arising from the exploration for and evaluation of mineral resources, including: 1. its accounting policies for exploration and evaluation expenditures including the recognition of exploration and evaluation assets2. the amounts of assets, liabilities, income and expense and operating and investing cash flows arising from the exploration for and evaluation of mineral resources.

IFRS 7 Financial Instruments: Disclosures OverviewIFRS 7 Financial Instruments: Disclosures requires disclosure of information about the significance of financial instruments to an entity, and the nature and extent of risks arising from those financial instruments, both in qualitative and quantitative terms. Specific disclosures are required in relation to transferred financial assets and a number of other matters. This standard puts all of those financial instruments disclosures together in a new standard on Financial Instruments: Disclosures. The remaining parts of IAS 32 deal only with financial instruments presentation matters.Disclosure requirements of IFRS 7IFRS requires certain disclosures to be presented by category of instrument based on the IAS 39 measurement categories. Certain other disclosures are required by class of financial instrument. For those disclosures an entity must group its financial instruments into classes of similar instruments as appropriate to the nature of the information presented. The two main categories of disclosures required by IFRS 7 are:1. information about the significance of financial instruments.2. information about the nature and extent of risks arising from financial instrumentsInformation about the significance of financial instrumentsStatement of financial position Disclose the significance of financial instruments for an entity's financial position and performance. This includes disclosures for each of the following categories: financial assets measured at fair value through profit and loss, showing separately those held for trading and those designated at initial recognition held-to-maturity investments loans and receivables available-for-sale assets financial liabilities at fair value through profit and loss, showing separately those held for trading and those designated at initial recognition financial liabilities measured at amortised cost Other balance sheet-related disclosures: special disclosures about financial assets and financial liabilities designated to be measured at fair value through profit and loss, including disclosures about credit risk and market risk, changes in fair values attributable to these risks and the methods of measurement. reclassifications of financial instruments from one category to another (e.g. from fair value to amortised cost or vice versa) information about financial assets pledged as collateral and about financial or non-financial assets held as collateral reconciliation of the allowance account for credit losses (bad debts) by class of financial assets information about compound financial instruments with multiple embedded derivatives breaches of terms of loan agreements Statement of comprehensive income Items of income, expense, gains, and losses, with separate disclosure of gains and losses from: financial assets measured at fair value through profit and loss, showing separately those held for trading and those designated at initial recognition. held-to-maturity investments. loans and receivables. available-for-sale assets. financial liabilities measured at fair value through profit and loss, showing separately those held for trading and those designated at initial recognition. financial liabilities measured at amortised cost. Other income statement-related disclosures: total interest income and total interest expense for those financial instruments that are not measured at fair value through profit and loss fee income and expense amount of impairment losses by class of financial assets interest income on impaired financial assets Other disclosures Accounting policies for financial instruments Information about hedge accounting, including: description of each hedge, hedging instrument, and fair values of those instruments, and nature of risks being hedged for cash flow hedges, the periods in which the cash flows are expected to occur, when they are expected to enter into the determination of profit or loss, and a description of any forecast transaction for which hedge accounting had previously been used but which is no longer expected to occur if a gain or loss on a hedging instrument in a cash flow hedge has been recognised in other comprehensive income, an entity should disclose the following: the amount that was so recognised in other comprehensive income during the period the amount that was removed from equity and included in profit or loss for the period the amount that was removed from equity during the period and included in the initial measurement of the acquisition cost or other carrying amount of a non-financial asset or non- financial liability in a hedged highly probable forecast transactionNote: Where IFRS 9 Financial Instruments (2013) is applied, revised disclosure requirements apply. The required hedge accounting disclosures apply where the entity elects to adopt hedge accounting and require information to be provided in three broad categories: (1) the entitys risk management strategy and how it is applied to manage risk (2) how the entitys hedging activities may affect the amount, timing and uncertainty of its future cash flows, and (3) the effect that hedge accounting has had on the entitys statement of financial position, statement of comprehensive income and statement of changes in equity. The disclosures are required to be presented in a single note or separate section in its financial statements, although some information can be incorporated by reference. For fair value hedges, information about the fair value changes of the hedging instrument and the hedged item Hedge ineffectiveness recognised in profit and loss (separately for cash flow hedges and hedges of a net investment in a foreign operation) Information about the fair values of each class of financial asset and financial liability, along with: comparable carrying amounts description of how fair value was determined the level of inputs used in determining fair value reconciliations of movements between levels of fair value measurement hierarchy additional disclosures for financial instruments whose fair value is determined using level 3 inputs including impacts on profit and loss, other comprehensive income and sensitivity analysis information if fair value cannot be reliably measuredThe fair value hierarchy introduces 3 levels of inputs based on the lowest level of input significant to the overall fair value: Level 1 quoted prices for similar instruments Level 2 directly observable market inputs other than Level 1 inputs Level 3 inputs not based on observable market dataNote that disclosure of fair values is not required when the carrying amount is a reasonable approximation of fair value, such as short-term trade receivables and payables, or for instruments whose fair value cannot be measured reliably. Nature and extent of exposure to risks arising from financial instrumentsQualitative disclosures The qualitative disclosures describe: risk exposures for each type of financial instrument management's objectives, policies, and processes for managing those risks changes from the prior periodQuantitative disclosures The quantitative disclosures provide information about the extent to which the entity is exposed to risk, based on information provided internally to the entity's key management personnel. These disclosures include: summary quantitative data about exposure to each risk at the reporting date disclosures about credit risk, liquidity risk, and market risk and how these risks are managed as further described below concentrations of riskCredit risk Credit risk is the risk that one party to a financial instrument will cause a loss for the other party by failing to pay for its obligation. Disclosures about credit risk include: maximum amount of exposure (before deducting the value of collateral), description of collateral, information about credit quality of financial assets that are neither past due nor impaired, and information about credit quality of financial assets whose terms have been renegotiated for financial assets that are past due or impaired, analytical disclosures are required information about collateral or other credit enhancements obtained or called Liquidity risk Liquidity risk is the risk that an entity will have difficulties in paying i