IAS 37 Provisions, Contingent Liabilities and Contingent Assets

Sales warranties

Sales warranties – the Case: Example on recognising and measuring provisions

A manufacturer gives warranties at the time of sale to purchasers of its product. Under the terms of the contract for sale, the manufacturer undertakes to make good, by repair or replacement, manufacturing defects that become apparent within three years from the date of sale. On the basis of experience, it is probable (ie more likely than not) that there will be some claims under the warranties.

Considerations Sales warranties

Present obligation as a result of a past obligating event—the obligating event is the sale of the product with a warranty, which gives rise to a legal obligation. Sales warranties

An outflow of resources embodying economic benefits in settlement—probable … Read more

Argentinas sovereign debt overhaul intentions

Argentinas sovereign debt overhaul intentions – Read the papers…… Argentinas sovereign debt overhaul intentions

July – August 2019 – Argentina’s assets tumbled in the wake of President Mauricio Macri suffering an unexpected bruising primary election loss this month at the hands of populist-leaning Peronist Alberto Fernandez, with the central bank forced to burn through its reserves to prop up an ailing peso.

Unable to roll over much of its short-term local debt, Treasury Minister Hernan Lacunza on Wednesday announced plans to extend maturities of local law bonds held by institutional investors and stated intentions to do so on international debt and dues owed to the International Monetary Fund.

Some $7 billion of short-term debt, $50 billion long-term debt … Read more

Natural disasters Disclosure by Telefonica

Natural disasters Disclosure by Telefonica – telecommunication infrastructure is very sensitive to natural disasters, so it is good reading about that in the 2018 Consolidated financial statements Telefonica S.A.

We have Global Business Continuity Regulations which, among other matters, contemplate the controls necessary to ensure the security and continuity of our processes, defining the necessary management, roles and responsibilities. These regulations contemplate:

  • Business Continuity Plan: Outlines the process and associated logistics so that the Company can recover and restore critical functions that have been partially or totally disrupted within a given time after an unwanted shutdown. Natural disasters Disclosure by Telefonica
  • Global Crisis System: By means of which we manage the high-impact incidents that threaten us. It
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Natural disasters Asset impairments

Natural disasters Asset impairments contains an explanation of the accounting considerations a reporting entity faces when operations are affected by a natural disaster. A combination of impairments of assets and insurance coverage for property damage and business interruption.

Impairment of assets

If an entity determines that the events resulting from a natural disaster have triggered impairment indicators, an impairment test must be performed in accordance with IAS 36 Impairment of Assets for the respective asset(s) and/or cash-generating unit(s). Indicators of impairment as a result of a natural disaster could include: Natural disasters – Asset impairments

  • Observable indications that the asset’s value has declined during the period significantly more than what would be expected as a result of the passage of
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Natural disasters – Insurance recoveries and reimbursements

An entity may experience a loss related to a natural disaster either through the impairment of an asset or the incurrence of a liability. For example, as a result of damage from a natural disaster, an entity may determine that an item of property, plant and equipment is impaired in accordance with IAS 36 Impairment of assets or that a receivable from a customer is impaired in accordance with IFRS 9 Financial instruments (or IAS 39, if still applicable). Alternatively, an entity may incur costs to repair a damaged facility or determine that it has a liability to repair an environmental damage in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Natural disasters – Insurance recoveries and Read more

Natural disasters – Hedge accounting

The natural disaster and potential subsequent events can disrupt many business transactions that may be postponed or cancelled. For example, entities may have been forecasting purchases of local goods or sales of their goods to local entities. Prior to the disaster, many such transactions may have constituted ‘highly probable’ hedged transactions in cash flow hedges under IFRS 9 Financial instruments (or IAS 39, if still applicable). However, purchases and sales that were considered highly probable a few weeks prior to the natural disaster, may no longer be highly probable (in full or partially) or may not be expected to occur at all. Natural disasters – Hedge accounting

Entities consider whether any hedges of forecast transactions may cease to qualify for … Read more