Current issues Flashcards
Accounting for cryptocurrencies
Accounting standard, current identification and measurement.
No current accounting standards
Current practice:
Does not meet definition for cash or equivalents (not widely accepted and not subject to ‘insignificant risk of changes to value’)
Does not meet criteria for a financial asset (no equity interest or contractual right to cash)
Does not have physical substance so not a tangible asset
Most closes relates to intangible assets as it is identifiable and non-monetary and no substance. Therefore should measure at:
Initially = cost Subsequently = cost less amortisation and impairment (however likely to have indefinite life) or revalued (as long as there is an active market).
Require extensive disclosures.
Cryptocurrency - IFRS interpretations committee agenda decision
Concluded it should be treated as an intangible asset because:
Capable of being separated and sold individually
No right to receive a fixed or determinable number of units of currency
Also - holding of cryptocurrency for sale in ordinary course of business should be accounted for under IAS 2 inventories
Initial coin offering
Definition and accounting
Raise of funds through issuance of cryptoasset (token) in exchange for fiat currency or an established crypto
The token = a new cryptocurrency or a ‘token’ with a promise attached (share of profits, free/discounted products)
Accounting:
Dr cash/asset Cr depending on the rights given
Effects of a natural disaster
To consider:
Events after the reporting period - if after y/e then non-adjusting
Impairments, Compensation, going concern, Onerous contracts (may contain force majeure break clause and allow termination), Effect on debt covenants
ED 2019/7 General presentation and disclosure
Developed in response from investors about comparability and transparency of performance reporting in P&L
Key features:
Defined sub-totals / sections = operating, Integral assocaites and JVs, Investing & Financing
Disaggregate information in a more useful way = no including large ‘other expenses’ balances or over do it. (Disaggregation card)
Disclose information about alternative performance measures = requires definitions of measurements and disclosure in 1 note of all used
ED 2019/7 General presentation and disclosure - disagregation
Operating expenses
Income and expenses (unusual)
Other
Operating = catagrosie operating expense by nature / function and provide a disclosure note of analysis of operating expenses
Income and expenses = define unusual, present in notes
Other = notes to explain aggregation and disagregation, include specific line items in FS like goodwill.
ED 2019/7 General presentation and disclosure
Amendments to other standards
Disclosure of interest in other entities = definitions of integral and non-integral and disclosures of both
EPS = specific guidance and requirements on calculation
Interim reporting = include management performance measures and include some of the other changes from this disclosure note
Accounting policies = definition of materiality
Materiality practice statement
Change
Current issue
IASB amended materiality definition to include obscuring information having the same effect as omitting and misstating it.
Current issue:
Failing to provide enough relevant info
Excess disclosures of non-material info can obscure relevant info
Stopping the use of the standard as a checklist and including everything even if not material
Materiality practice statement
4 step process
1 - Identify information that is potentially material (Consider IFRS and needs of primary users)
2 - Assess whether that information is material (impact primary users)
3 - Organise info into draft FS (apply judgement and emphasis material matters)
4 - Review FS (has all material info been presented)
