Investments in Joint Ventures Overview

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Investments in Joint Ventures Overview that is what this is……

An entity with joint control of an investee shall account for its investment in a joint venture using the equity method except when that investment qualifies for exemption in IAS 28. Investments in Joint Ventures Overview

The exemptions include:Investments in Joint Ventures Overview

  • if the entity is a parent that is exempt from preparing consolidated financial statements by the scope exception in paragraphs 4(a) of IFRS 10 Consolidated Financial Statements; or Investments in Joint Ventures Overview
  • all of the following apply: Investments in Joint Ventures Overview
    1. the entity is a wholly-owned subsidiary, or is a partially-owned subsidiary of another entity and its other owners, including those
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Hedges of exposures affecting OCI

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Hedges of exposures affecting OCI is showing examples of exposures as hedged items recorded through other comprehensive income (OCI) and hedge accounting of Aggregated exposures.

Hedges of exposures affecting other comprehensive income

Only hedges of exposures that could affect profit or loss qualify for hedge accounting. The sole exception to this rule is when an entity is hedging an investment in equity instruments for which it has elected to present changes in fair value in OCI, as permitted by IFRS 9. Using that election, gains or losses on the equity investments will never be recognised in profit or loss.

For such a hedge, the fair value change of the hedging instrument is recognised in OCI. Ineffectiveness is Read more

Hedge accounting requirements

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Hedge accounting requirements – IFRS 9 now allows, for fair value hedges, the designation of layer components from a defined nominal amount or a defined, but open, population. IFRS 9 stillHedge accounting requirements includes some restrictions, in particular that a layer component that includes a prepayment option does not qualify as a hedged item in a fair value hedge if the fair value of the prepayment option is affected by changes in the hedged risk. Hedge accounting requirements

When an entity has an option to prepay a loan, at fair value, the fair value of the option is not affected by changes in the hedged risk. Consequently, an entity would be able to designate a hedge as described in Read more

Groups of items Hedging

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Groups of items hedging, designation of layer components these are relevant for a practical risk management process to base hedge accounting on. Hedge accounting under IAS 39 was primarily designed from a single instrument viewpoint, and therefore less effective to apply. A hedging relationship would typically include a single hedging instrument (e.g., an interest rate swap) hedging a single item (e.g., a loan). However, for operational reasons entities often economically hedge several items together on a group basis. IAS 39 allows several items to be hedged together as a group, but there are restrictions such that there are relatively few types of groups that are eligible as hedged items.

In an effort to address the issues raised Read more

Hedging a component of a group

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Hedging a component of a group provides clear examples of hedge accounting in practice. A group designation can also consist of hedging a component of a group of items, such as a layer component of a group. A component could also be a proportion of a group of items, such as 50% of a fixed rate bond series with a total volume of CU 100m. Whether an entity designates a layer component or a proportionate component depends on the entity’s risk management objective.

The benefits of identifying a layer component, discussed at ‘Hedge accounting requirements in IFRS 9‘, may be even more relevant when applied to a group of items. A bottom layer hedging strategy Read more

Time value of options

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Time value of options is about one of the other changes from IAS 39 to IFRS 9 in respect of hedge accounting

Time value of options is one leg of the fair value of an option, the other leg is the intrinsic value. When using an option for hedging activities, only the intrinsic value is used for offsetting the fair value changes attributable to the hedged risk (unless the hedged item is also an option, see ‘Hedged items‘). Unchanged from IAS 39, an entity can either designate an option as a hedging instrument in its entirety, or it can separate the intrinsic value and the time value and designate only the intrinsic value.

Under IAS Read more

The way to IFRS 9 Financial Instruments

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This is the way to IFRS 9 Financial Instruments, introducing the why? for this new IFRS standard. In July 2014 the International Accounting Standards Board (IASB) published the 4th and final version of IFRS 9 Financial Instruments.

The way to IFRS 9 Financial Instruments

This was the conclusion of a major project started in 2002 as part of the Norwalk Agreement (WIKI) between the IASB and US Financial Accounting Standards Board (FASB) as a long term reform of financial instrument accounting.

The project had been divided into three phases in order to allow a step by step approach. Once a phase was completed, the corresponding chapters were created in IFRS 9 and withdrawn from IAS … Read more

IAS 34 Interim financial statements

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IAS 34 Interim financial statements provide all there is to know for producing Interim financial statements, what, where, when and what is in them.


IAS 34 prescribes the guidelines for an entity regarding the preparation of interim financial statements by providing information about the minimum contents of interim financial reports along with the recognition and measurement principles for such financial reports. These interim financial reports will provide the most recent activities, circumstances and financial affairs of the reporting entity


IAS 34 does not define, which entity is required to publish the interim financial reports, the time period after the end of interim period within which these financial reports should be published and how frequently these Read more

Hyperinflation in Argentina

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Hyperinflation in Argentina – Argentina is now (October 2019) considered to be a hyperinflationary economy. IAS 29 – Financial Reporting in Hyperinflationary Economies is therefore applicable to entities whose functional currency is the Argentine peso.

Assessment of the situation

Hyperinflation in ArgentinaIAS 29 sets out a number of quantitative and qualitative characteristics for the purpose of assessing whether an economy is hyperinflationary (IAS 29 3), including:

  • the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency (e.g., the US dollar or the euro);
  • transactions are conducted in terms of a relatively stable foreign currency;
  • sales and purchases on credit take place at prices that compensate for the expected loss
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Borrowing costs

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IAS 23 Borrowing Costs requires that borrowing costs directly attributable to the acquisition, construction or production of a ‘qualifying asset’ (one that necessarily takes a substantial period of time to get ready for its intended use or sale) are included in the cost of the asset. Other borrowing costs are recognised as an expense.


IAS 23 shall be applied in accounting for borrowing costs but it does not deal with the actual or imputed cost of equity, including preferred capital not classified as a liability.

The standard does not apply to borrowing costs directly attributable to acquisition, construction or production of:

  • a qualifying asset measured at fair value, e.g. a biological asset; or 
  • inventories that are
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