Financial Reporting Update 2017 - Nelson · PDF file21/02/2017 1 © 2013‐2017 Nelson...

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20132017NelsonConsultingLimited 1
FinancialReportingUpdate201721February2017
LAMChiYuenNelsonCFACharterHolder,FCPA(Practising)MBAMScBBAACISACSCGMACPA(U.S.)CTAFCAFCCAFCPA(Aust.)FHKIoD FSCAFTIHKMHKSI
20132017NelsonConsultingLimited 2PhototakenbyStephanieandNelson2016

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Effectivefor2016Dec.YearEnd
Amendments to HKFRS 11 Accounting for Acquisitions of Interests in Joint Operations
Amendments to HKAS 16 and HKAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation
Amendments to HKAS 16 and HKAS 41 Agriculture: Bearer Plants
Amendments to HKAS 27 Equity Method in Separate Financial Statements
Amendments to HKFRS 10 and HKAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Annual Improvements to HKFRSs 2012-2014 Cycle
Amendments to HKAS 1 Disclosure Initiative Amendments to HKFRS 10 and 12 and HKAS 28 Investment
Entities: Applying the Consolidation Exception HKFRS 14 Regulatory Deferral Accounts
1 Jan.2016
1 Jan.2016
1 Jan.2016
1 Jan.2016
1 Jan.2016 (deferred indefinitely)
1 Jan.2016(or other)
1 Jan.2016 1 Jan.2016
1 Jan.2016
Selected new interpretations and amendments to HKFRSs
Effective for periods beginning on/after
UpdatedtoHKICPAUpdateNo.196ofJanuary2017
Amendments to HKAS 7 Disclosure Initiative (Statement of Cash Flows)
Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses
Amendments to HKFRS for Private Entities
1 Jan. 2017
1 Jan. 2017
1 Jan. 2017

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Effectiveafter2017Dec.YearEnd
HKFRS 9 (2014) Financial Instruments HKFRS 15 Revenue from Contracts with Customers Amendments to HKFRS 15 Effective Date of HKFRS 15 Revenue
from Contracts with Customers Amendments to HKFRS 15 Clarifications to HKFRS 15 Revenue
from Contracts with Customers Amendments to HKFRS 2 Classification and Measurement of
Share-based Payment Transactions Amendments to HKFRS 4 Insurance Contracts HKFRS 16 Leases
1 Jan. 2018 1 Jan. 2017 1 Jan. 2018
1 Jan. 2018
1 Jan. 2018
1 Jan. 2018 1 Jan. 2019
NeworRevisedHKFRSEffectivefor2016
TodaysAgenda
NeworRevisedHKFRSEffectiveafter2017,includingHKFRS9,15and16
Full Presentation can be found in:
www.Facebook.com/NelsonCFA

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TodaysAgenda
Full Presentation can be found in:
www.Facebook.com/NelsonCFA
20132017NelsonConsultingLimited 8PhototakenbyStephanieandNelson2008

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Amendments to HKFRS 11 Accounting for Acquisitions of Interests in Joint Operations
Amendments to HKAS 16 and HKAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation
Amendments to HKAS 16 and HKAS 41 Agriculture: Bearer Plants
Amendments to HKAS 27 Equity Method in Separate Financial Statements
Amendments to HKFRS 10 and HKAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Annual Improvements to HKFRSs 2012-2014 Cycle
Amendments to HKAS 1 Disclosure Initiative Amendments to HKFRS 10 and 12 and HKAS 28 Investment
Entities: Applying the Consolidation Exception HKFRS 14 Regulatory Deferral Accounts
1 Jan.2016
1 Jan.2016
1 Jan.2016
1 Jan.2016
1 Jan.2016 (deferred indefinitely)
1 Jan.2016(or other)
1 Jan.2016 1 Jan.2016
1 Jan.2016
AccountingforAcquisitionsofInterestsinJointOperations(AmendmentstoHKFRS11)

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AmendmentstoHKFRS11
HKFRS11 Paragraph21Aisadded: Whenanentityacquiresaninterestinajointoperation inwhichtheactivity
ofthejointoperationconstitutesabusiness,asdefinedinHKFRS3,itshall apply,totheextentofitsshareinaccordancewithparagraph20,
alloftheprinciplesonbusinesscombinationsaccountinginHKFRS3,and
otherHKFRSs,thatdonotconflictwiththeguidanceinthisHKFRSand
disclose theinformationthatisrequiredinthoseHKFRSsinrelationtobusinesscombinations.
Thisappliestotheacquisitionofboth theinitialinterest andadditionalinterests inajointoperationinwhichtheactivityofthejointoperationconstitutesabusiness.
TheaccountingfortheacquisitionofaninterestinsuchajointoperationisspecifiedinparagraphsB33AB33D.(HKFRS11.21A)
AcceptableMethodsofDepreciationandAmortisation(AmendmentstoHKAS16andHKAS38)

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AmendmentstoHKAS16
HKAS16 Paragraph56isamended: Thefutureeconomicbenefitsembodiedinanassetareconsumedbyan
entityprincipallythroughitsuse.However,otherfactorsConsequently,allthefollowingfactorsareconsideredindeterminingtheusefullifeofanasset:a. c. technicalorcommercialobsolescencearisingfromchangesor
improvementsinproduction,orfromachangeinthemarketdemandfortheproductorserviceoutputoftheasset.Expectedfuturereductionsinthesellingpriceofanitemthatwasproducedusinganassetcouldindicatetheexpectationoftechnicalorcommercialobsolescenceoftheasset,which,inturn,mightreflectareductionofthefutureeconomicbenefitsembodiedintheasset.(HKAS16.56(c))
AmendmentstoHKAS16
HKAS16 paragraphs62Aand81Iareadded: Adepreciationmethod thatisbasedonrevenuethatisgeneratedbyan
activity thatincludestheuseofanassetisnotappropriate. Therevenuegeneratedbyanactivitythatincludestheuseofanassetgenerallyreflectsfactorsotherthantheconsumptionoftheeconomicbenefitsoftheasset.
Forexample,revenueisaffectedbyotherinputsandprocesses,sellingactivitiesandchangesinsalesvolumesandprices.
Thepricecomponentofrevenuemaybeaffectedbyinflation,whichhasnobearinguponthewayinwhichanassetisconsumed.(HKAS16.62A)

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AmendmentstoHKAS38
HKAS38 Paragraph92isamended: Giventhehistoryofrapidchangesintechnology,computersoftwareand
manyotherintangibleassetsaresusceptibletotechnologicalobsolescence.
Therefore,itwilloftenbethecasethattheirusefullifeisshort. Expectedfuturereductionsinthesellingpriceofanitemthatwas
producedusinganintangibleassetcouldindicatetheexpectationoftechnologicalorcommercialobsolescenceoftheasset,which,inturn,mightreflectareductionofthefutureeconomicbenefitsembodiedintheasset.(HKAS38.92)
HKAS38 Inparagraph98, thephraseunitofproductionmethodhas
beenamendedtounitsofproductionmethod.
AmendmentstoHKAS38
HKAS38 Paragraphs98A98Careadded. Thereisarebuttablepresumption thatanamortisationmethodthatis
basedontherevenuegeneratedbyanactivity thatincludestheuseofanintangibleassetisinappropriate (sameasHKAS16)
Thispresumptioncanbeovercome onlyinthelimitedcircumstances:a. inwhichtheintangibleassetisexpressedasameasureofrevenue,as
describedinparagraph98C;orb. whenitcanbedemonstratedthatrevenue
andtheconsumptionoftheeconomicbenefits oftheintangibleassetarehighlycorrelated.(HKAS38.98A)

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AmendmentstoHKAS38
HKAS38 Paragraphs98A98Careadded. Inchoosinganappropriateamortisationmethod
inaccordancewithparagraph98,anentitycoulddeterminethepredominantlimitingfactor thatisinherentintheintangibleasset (HKAS38.98B)
Inthecircumstanceinwhichthepredominantlimitingfactor thatisinherentinanintangibleassetistheachievementofarevenuethreshold,therevenuetobegeneratedcanbeanappropriatebasisforamortisation (HKAS38.98C)
AmendmentstoHKAS38Example
Forexample,anentitycouldacquireaconcessiontoexploreandextractgoldfromagoldmine. Theexpiryofthecontractmight
bebasedonafixedamountoftotalrevenuetobegeneratedfromtheextraction forexample,acontractmayallowtheextractionofgoldfromthemineuntiltotalcumulativerevenuefromthesaleofgoldreaches$2billion,and
notbebasedontimeorontheamountofgoldextracted.(HKAS38.98C)

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AmendmentstoHKAS38Example
Inanotherexample,therighttooperateatollroadcouldbebasedonafixedtotalamountofrevenuetobegenerated fromcumulativetollscharged Forexample,acontractcouldallowoperationofthe
tollroaduntilthecumulativeamountoftollsgeneratedfromoperatingtheroadreaches$100million(HKAS38.98C)
AmendmentstoHKAS38
HKAS38 Paragraphs98A98Careadded. Inthecaseinwhichrevenue hasbeenestablished
asthepredominantlimitingfactor inthecontractfortheuseoftheintangibleasset, therevenuethatistobegeneratedmightbeanappropriatebasisforamortising theintangibleasset, providedthatthecontractspecifiesafixedtotalamountofrevenuetobegenerated onwhichamort

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