Financial Policy Division July 2004 Financial Management Forum IFRS Opening Balance Sheet
Structure of presentation <ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Overview of transition to IFRS  </li></ul></...
Introduction <ul><li>Status: </li></ul><ul><ul><li>AASB Standards </li></ul></ul><ul><ul><li>DTF analysis ( www. dtf . wa ...
Financial Reporting Timelines Financial Reporting  (June year-ends) AGAAP (Published) 31/12/03 30/6/04* 31/12/04 30/06/05*...
Overview of transition to IFRS <ul><li>AASB 1 requirements </li></ul><ul><ul><li>Opening Balance Sheet consistent IFRS </l...
Overview of transition to IFRS <ul><li>AASB 1048 Interpretation and Application of Standards </li></ul><ul><ul><li>Applies...
Audit expectations <ul><li>Opening balance sheet </li></ul><ul><ul><li>Significant accounting policies notes </li></ul></u...
Balance sheet  - identifying key areas of change <ul><li>Summary checklist in handout </li></ul>
<ul><li>Opening IFRS Balance Sheet – </li></ul><ul><li>Assets </li></ul>
Property, Plant and Equipment (PPE) <ul><li>GAAP IFRS </li></ul><ul><li>PPE PPE </li></ul><ul><li>Intangibles </li></ul><u...
Property, Plant and Equipment <ul><li>AASB 116 Property, Plant and Equipment </li></ul><ul><li>AASB 136 Impairment of Asse...
Property, Plant and Equipment <ul><li>AASB 116 does not change: </li></ul><ul><ul><li>Initial recognition at cost (fair va...
Property, Plant and Equipment <ul><li>Key changes under AASB 116 that do not impact on the opening balance sheet: </li></u...
Property, Plant and Equipment <ul><li>Key changes under AASB 116 that impact on the opening balance sheet: </li></ul><ul><...
Property, Plant and Equipment <ul><li>Costs of dismantling, removal and restoring to be recognised in the cost of PPE   </...
Property, Plant and Equipment <ul><li>Costs of dismantling, removal and restoring  to be recognised in the cost of PPE   <...
Property, Plant and Equipment <ul><li>Change in recognition criteria for subsequent costs - replacement parts and major in...
Property, Plant and Equipment <ul><li>Derecognition of replacement parts and inspections </li></ul><ul><li>Refer AASB 116 ...
Property, Plant and Equipment <ul><li>No progressive revaluations </li></ul><ul><ul><li>Transitional provisions in AASB 10...
Property, Plant and Equipment <ul><li>No progressive revaluations </li></ul><ul><ul><li>Where a class has assets at cost a...
Property, Plant and Equipment <ul><li>Land and buildings </li></ul><ul><ul><li>Land and building at FV by 30 June 2005 (TI...
Property, Plant and Equipment <ul><li>AASB 136 Impairment of Assets </li></ul><ul><ul><li>Assessment of PPE in opening bal...
Property, Plant and Equipment <ul><li>AASB 136 continued </li></ul><ul><ul><li>For PPE at cost, impairment losses are adju...
Property, Plant and Equipment <ul><li>AASB 136 continued </li></ul><ul><ul><li>Assets at cost  </li></ul></ul><ul><ul><ul>...
Property, Plant and Equipment <ul><li>AASB 136 continued </li></ul><ul><ul><li>Surplus assets </li></ul></ul><ul><ul><ul><...
Intangible Assets <ul><li>AASB 138 Intangible Assets </li></ul><ul><ul><li>Identification criteria </li></ul></ul><ul><ul>...
Intangible Assets <ul><li>AASB 138 continued </li></ul><ul><ul><li>Initial recognition at cost  </li></ul></ul><ul><ul><li...
Intangible Assets <ul><li>AASB 138 continued </li></ul><ul><ul><li>Opening balance sheet adjustments: </li></ul></ul><ul><...
Non-Current Assets Held for Sale <ul><li>AASB 5 Non-Current Assets Held for Sale   and Discontinued Operations </li></ul><...
Non-Current Assets Held for Sale <ul><li>AASB 5  continued – </li></ul><ul><ul><li>Measurement </li></ul></ul><ul><ul><ul>...
Non-Current Assets Held for Sale <ul><ul><li>Opening balance sheet adjustments:  </li></ul></ul><ul><ul><li>Consider item ...
Non-Current Assets Held for Sale <ul><ul><li>Opening balance sheet adjustments continued: </li></ul></ul><ul><ul><li>For P...
Inventories <ul><li>AASB 102 Inventories </li></ul><ul><ul><li>Inventory held for distribution </li></ul></ul><ul><ul><ul>...
<ul><li>Opening IFRS Balance Sheet – </li></ul><ul><li>Liabilities </li></ul>
Employee Benefit Obligations <ul><li>AASB 119 Employee Benefits </li></ul><ul><ul><li>Recognition & measurement </li></ul>...
Employee Benefit Obligations <ul><li>AASB 119 continued </li></ul><ul><ul><ul><li>Defined benefit superannuation plans </l...
Employee Benefit Obligations <ul><li>AASB 119 continued </li></ul><ul><ul><ul><li>Other long-term employee benefits </li><...
Provision for Other Liabilities <ul><li>AASB 137 Provisions, Contingent Liabilities and Contingent Assets </li></ul><ul><l...
Income Taxes <ul><li>AASB 112 Income Taxes </li></ul><ul><ul><ul><li>applies to agencies subject to the ‘income tax equiva...
AASB 1047 Disclosing the Impact of Adopting IFRS <ul><li>Applies to annual or interim reporting periods ending on or after...
DTF Action <ul><li>Complete gap analysis for all new standards – almost final now </li></ul><ul><li>Policy position on som...
Contact details <ul><li>Website www. dtf . wa . gov .au/ias2005 </li></ul><ul><li>John Stanley 9222 9280 </li></ul><ul><li...
<ul><li>Questions ??? </li></ul>
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Financial Management Forum IFRS Opening Balance Sheet

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  • CPA PSC introduction or Graeme Doyle Mention the deadline for agency data is 31 July. In addition to submitting TIMS data, agencies are also requested to fax the following by 31 July 2004: 1.Completed Questionnaire (including AASB 1047 disclosures); 2.Certification of Information Provided in Questionnaire; and 3.Year End Certification (following submission of actuals data in TIMS).
  • Status of AASB Standards - the AASB has (or was planning to from its meeting on 14-15 July) released all Final Standards on the AASB’s website by Friday, 23 July 2004). DTF analyses on our website reflect the Pending Standards and will need to be updated if there are any changes. Our focus will be on the preparation of the opening balance sheet, noting: What may change What will stay the same Our discussions will be limited to not for profit entities.
  • You will have seen this slide before……..(package only not in slides) This diagram reflects the reporting requirements over the next 3 year ends. Requirements from AASB 1047 ‘Disclosing the Impact of Adopting Australian Equivalents to IFRSs’ at both 30/6/04 and 30/6/05. AND that of AASB 1 ‘First-time Adoption of Australian Equivalents to IFRSs’. It is clear that entities will maintain 2 sets of financial statements for the 2004-05 financial year; one set in accordance with the existing AAS/AASB Standards for the 30 June 2005 financial year end, the other an IFRS set of statements to obtain opening comparative figures for the first IFRS financial statements as at 30 June 2006.
  • In general, AASB 1 requires an entity to comply with each IFRS effective at the reporting date for its first IFRS financial statements. (para 7) An entity shall use the same accounting policies in its opening IFRS balance sheet and throughout all periods presented in its first IFRS financial report (EXCEPT for financial instruments). ((para 8) An entity shall not apply different versions of IFRSs that were effective at earlier dates, but may apply a new IFRS not yet mandatory if it permits early adoption.) (para 10) recognise all A &amp; L whose recognition is required by IFRSs Not recognise items as A &amp; L if IFRSs do not permit such recognition Reclassify items that it recognised under previous GAAP as one type of A, L or component of E, but are a different type under IFRSs Apply IFRSs in measuring all recognised A &amp; L. Retrospective application (para 11) - In preparing its opening IFRS balance sheet, an entity will typically need to adjust the amounts that it reported previously for the same date using its previous GAAP. The adjustments arise from events and transactions BEFORE the date of transition. This issue will be brought out in some of the examples that Phil will talk about. An entity shall recognise those adjustments directly in equity (“in retained earnings (or, if appropriate, another category of equity)”) rather than in its income statement. It permits limited optional and mandatory exemptions from this requirement in specified areas. We are modifying some aspects of AASB 1 and other standards in TI 1106 ‘Transition to Australian Equivalents to IFRSs’. We are giving you a revised draft and the more significant requirements and changes will be picked up in the detail of this presentation. TI 1106: The revisedl TI will be amended to remove the requirement to expense all borrowing costs under AASB 123. We decided that this was an unnecessary change in accounting policy and that DTF would not mandate with respect to the choice. So agencies will have a choice to either expense all borrowing costs OR expensing borrowing costs except where capitalised as part of a qualifying asset. Clarify that TI 954 ‘Revaluation of Non-Current Physical Assets’ (para 3) the requirement that agencies must measure land &amp; buildings on the fair value basis – does not apply where the fair value basis is not appropriate: Inventories (lower of cost or NRV) L&amp;B ‘held for sale’ (lower of CA and FV – costs to sell) Also TI 1106, requires agencies to apply its previous GAAP in the comparative information within the scope of AASB 132 and AASB 139. The effect of this requirement is that the transition date for AASB 132 and AASB 139 will be 1 July 2005 rather than 1 July 2004. Consequently there will be no impact on the Opening Balance Sheet. FPE’s listed V NFPE’s. Presently only Gold Corporation Release date of final TI ???
  • The OAG have previously indicated that they will be auditing this and have requested it be prepared by 31 October 2004. They have indicated that the following would be required: The opening balance sheet itself A full set of “Significant accounting policies” notes Other notes: Supporting information for items presented on the face of the balance sheet – where further breakdown of the line items is appropriate eg. Property, plant &amp; equipment. (informal notes not the full notes to the accounts) Notes to explain the material adjustments. DTF will not be doing a model opening balance sheet nor full accounting policy notes What we will go into today is the key areas of change of the opening balance sheet. When preparing this information for audit I suggest using your last annual report and the AASB 1047 disclosures that were made and reflecting these in the significant account policies notes. Guidance on the format of the opening balance sheet as well as the notes to explain the material adjustments can be obtained from the AASB 1 Implementation Guidance – IG Example 11. This shows 3 columns – the previous GAAP, effect of transition to IFRSs and the IFRSs. It also shows notes for each of the adjustments.
  • As a tool we have prepared this summary checklist – it is separate in the handout. We will be focussing on key areas of change and have noted these as: Key changes Possible changes, which agencies need to consider on a case by case basis. No change 2 areas that I will touch on…. For financial instruments - recognition, measurement and disclosure will be on the existing basis (Australian Generally Accepted Accounting Principles). The transition date for the applicable Standards (AASB 132 and AASB 139) is 1 July 2005. (This is because TI 1106 requires agencies to apply its previous GAAP in the comparative information) For Investment Properties – there is the option to measure these at fair value or cost after initial measurement. We are mandating that the fair value model will be used. Next 2 speakers are going to talk about the key areas of change…….
  • TI 954 will be amended for reporting periods commencing on or after 1 January 2005 to apply the fair value requirement to land and buildings measured in accordance with AASB 116 PPE and AASB 140 Investment Property . Land and buildings measured under AASB 102 Inventories and AASB 5 Non-Current Assets Held for Sale and Discontinued Operations will not be subject be to this fair value requirement.
  • Land and buildings held as Non-Current Inventory are excluded from AASB 5
  • As we finalise gap analyses on each standard we will update our website Model financial statements – prior to August 2005
  • Financial Management Forum IFRS Opening Balance Sheet

    1. 1. Financial Policy Division July 2004 Financial Management Forum IFRS Opening Balance Sheet
    2. 2. Structure of presentation <ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Overview of transition to IFRS </li></ul></ul><ul><ul><li>Audit expectations </li></ul></ul><ul><ul><li>Balance sheet - key areas of change </li></ul></ul><ul><ul><li>AASB 1047 – 30 June 2004 disclosures </li></ul></ul><ul><ul><li>Conclusion </li></ul></ul>
    3. 3. Introduction <ul><li>Status: </li></ul><ul><ul><li>AASB Standards </li></ul></ul><ul><ul><li>DTF analysis ( www. dtf . wa . gov .au/ias2005 ) </li></ul></ul><ul><li>Focus: </li></ul><ul><ul><li>Preparation of opening balance sheet </li></ul></ul><ul><ul><li>Not For Profit (NFP) entities </li></ul></ul>
    4. 4. Financial Reporting Timelines Financial Reporting (June year-ends) AGAAP (Published) 31/12/03 30/6/04* 31/12/04 30/06/05* 31/12/05 30/06/06 * AASB 1047 disclosures (AASB 1047 also applies to interim reporting) IFRS (Unpublished) IFRS (Published)
    5. 5. Overview of transition to IFRS <ul><li>AASB 1 requirements </li></ul><ul><ul><li>Opening Balance Sheet consistent IFRS </li></ul></ul><ul><ul><ul><li>Same accounting policies in this and all periods presented in first IFRS financial report </li></ul></ul></ul><ul><ul><ul><li>Retrospective application </li></ul></ul></ul><ul><ul><li>Opening adjustments to equity </li></ul></ul><ul><li>Treasurer’s Instruction 1106 </li></ul>
    6. 6. Overview of transition to IFRS <ul><li>AASB 1048 Interpretation and Application of Standards </li></ul><ul><ul><li>Applies to annual reporting periods beginning on or after 1 January 2005 </li></ul></ul><ul><ul><li>‘ Service Standard’ listing UIG Abstracts applicable </li></ul></ul><ul><ul><ul><li>to be updated by re-issuing AASB 1048 when new or revised Abstracts are released </li></ul></ul></ul><ul><ul><li>UIG Abstracts to be called Interpretations </li></ul></ul><ul><ul><li>Applies to opening balance sheet </li></ul></ul><ul><ul><ul><li>adjustments to accumulated surplus (deficit) or, if appropriate, another category of equity </li></ul></ul></ul>
    7. 7. Audit expectations <ul><li>Opening balance sheet </li></ul><ul><ul><li>Significant accounting policies notes </li></ul></ul><ul><ul><li>Other notes: </li></ul></ul><ul><ul><ul><li>Supporting information – where further breakdown of line items is appropriate </li></ul></ul></ul><ul><ul><ul><li>Notes to explain material adjustments from 30 June closing balance sheet </li></ul></ul></ul>
    8. 8. Balance sheet - identifying key areas of change <ul><li>Summary checklist in handout </li></ul>
    9. 9. <ul><li>Opening IFRS Balance Sheet – </li></ul><ul><li>Assets </li></ul>
    10. 10. Property, Plant and Equipment (PPE) <ul><li>GAAP IFRS </li></ul><ul><li>PPE PPE </li></ul><ul><li>Intangibles </li></ul><ul><li>Assets Held for Sale </li></ul><ul><li>Investment Property </li></ul>
    11. 11. Property, Plant and Equipment <ul><li>AASB 116 Property, Plant and Equipment </li></ul><ul><li>AASB 136 Impairment of Assets </li></ul><ul><li>AASB 123 Borrowing costs </li></ul><ul><ul><ul><li>allows borrowing costs on qualifying assets to be expensed or capitalised </li></ul></ul></ul><ul><li>TI 954 Revaluation of Non-Current Assets </li></ul><ul><ul><ul><li>land and buildings at fair value by 30 June 2005 </li></ul></ul></ul><ul><li>TI 1106 Transition to IFRS </li></ul><ul><ul><ul><li>deemed cost not permitted (AASB 1) </li></ul></ul></ul><ul><ul><ul><li>assume asset will be replaced unless identified as surplus (AASB 136) </li></ul></ul></ul>
    12. 12. Property, Plant and Equipment <ul><li>AASB 116 does not change: </li></ul><ul><ul><li>Initial recognition at cost (fair value is acquired at no cost or for nominal cost) </li></ul></ul><ul><ul><li>Assets at cost or fair value (FV) </li></ul></ul><ul><ul><li>Consistent measurement within class </li></ul></ul><ul><ul><li>FV = market value or depreciated replacement cost for specialised assets </li></ul></ul><ul><ul><li>Frequency of revaluation - no material variance from FV </li></ul></ul><ul><ul><li>Accounting for revaluations </li></ul></ul><ul><ul><li>Treatment of depreciation on revaluation - gross or net </li></ul></ul><ul><ul><li>Depreciation </li></ul></ul>
    13. 13. Property, Plant and Equipment <ul><li>Key changes under AASB 116 that do not impact on the opening balance sheet: </li></ul><ul><ul><li>Gains and losses on disposal of items of PPE to be recognised in Income Statement on net basis </li></ul></ul><ul><ul><li>Additional note disclosure for revalued assets </li></ul></ul>
    14. 14. Property, Plant and Equipment <ul><li>Key changes under AASB 116 that impact on the opening balance sheet: </li></ul><ul><ul><li>Costs of dismantling, removal and restoring to be recognised in the cost of PPE </li></ul></ul><ul><ul><li>Change in recognition criteria for subsequent costs </li></ul></ul><ul><ul><ul><li>replacement parts </li></ul></ul></ul><ul><ul><ul><li>major inspections </li></ul></ul></ul><ul><ul><li>Derecognition of replacement parts and inspections </li></ul></ul><ul><ul><li>No progressive revaluations </li></ul></ul>
    15. 15. Property, Plant and Equipment <ul><li>Costs of dismantling, removal and restoring to be recognised in the cost of PPE </li></ul><ul><li>Refer AASB 116 paragraphs 16 (c) and 18, AASB 1 Implementation Guidance paragraph IG13, UIG 1 Changes in Existing Decommissioning, Restorative and Similar Liabilities </li></ul><ul><ul><li>Present value of obligation recognised as provision under AASB 137 </li></ul></ul><ul><ul><li>Initial estimate of provision added to cost of the related asset and depreciated over the useful life of the asset </li></ul></ul><ul><ul><li>Unwinding of the discount is interest expense </li></ul></ul><ul><ul><li>Other changes to the provision added to the cost of the asset </li></ul></ul><ul><ul><li>Costs retained for revalued assets - see UIG 1 </li></ul></ul>
    16. 16. Property, Plant and Equipment <ul><li>Costs of dismantling, removal and restoring to be recognised in the cost of PPE </li></ul><ul><li>Where an agency has a provision in the opening balance sheet, the following opening balance sheet adjustments are required where an expense was previously recognised when the liability was incurred: </li></ul><ul><li>DR Asset present value of the liability at the date the liability was incurred </li></ul><ul><li>CR Acc Depreciation depreciation to 30 June 2004 </li></ul><ul><li>CR Acc Surplus (deficit) the difference </li></ul>
    17. 17. Property, Plant and Equipment <ul><li>Change in recognition criteria for subsequent costs - replacement parts and major inspections </li></ul><ul><li>Refer AASB 116 paragraphs 12 to 14 </li></ul><ul><li>Any existing replacement parts or inspections that have been expensed would need to be recognised and depreciated to 30 June 2004 </li></ul><ul><li>Opening balance sheet adjustments: </li></ul><ul><li>DR Asset cost </li></ul><ul><li>CR Acc Depreciation depreciation to 30 June 2004 </li></ul><ul><li>CR Acc Surplus (deficit) the difference </li></ul>
    18. 18. Property, Plant and Equipment <ul><li>Derecognition of replacement parts and inspections </li></ul><ul><li>Refer AASB 116 paragraphs 12 to 14 and 67 to 72 </li></ul><ul><li>Where an agency recognises a replacement part in the opening balance sheet, the estimated carrying amount of the part being replaced is derecognised </li></ul><ul><li>Opening balance sheet adjustments: </li></ul><ul><li>CR Asset cost </li></ul><ul><li>DR Acc Depreciation depreciation to replacement date </li></ul><ul><li>DR Acc Surplus (deficit) the difference </li></ul>
    19. 19. Property, Plant and Equipment <ul><li>No progressive revaluations </li></ul><ul><ul><li>Transitional provisions in AASB 1041 allow a progressive revaluation over the 5 years to 30 June 2005 </li></ul></ul><ul><ul><li>Consequently, a class of PPE may have assets measured at of cost and assets measured at fair value (FV) at 30 June 2004 </li></ul></ul><ul><ul><li>No equivalent transitional provisions in AASB 116 - a class must be all at cost or FV in the opening balance sheet </li></ul></ul><ul><ul><li>TI 1106 does not permit deemed cost option </li></ul></ul>
    20. 20. Property, Plant and Equipment <ul><li>No progressive revaluations </li></ul><ul><ul><li>Where a class has assets at cost and FV, all assets in the class must be measured at FV in the opening balance sheet </li></ul></ul><ul><ul><li>Revaluation increments and decrements are adjusted against accumulated surplus (deficit) or the asset revaluation reserve </li></ul></ul><ul><ul><li>Where a class of assets is measured at cost there is no requirement to revalue to FV – except land and buildings </li></ul></ul>
    21. 21. Property, Plant and Equipment <ul><li>Land and buildings </li></ul><ul><ul><li>Land and building at FV by 30 June 2005 (TI 954) </li></ul></ul><ul><ul><li>AASB 1 requires consistent accounting policies to be applied during transition (1 July 2004 to 30 June 2006) </li></ul></ul><ul><ul><li>Therefore, all land and buildings must be measured at fair value in the opening balance sheet </li></ul></ul><ul><ul><li>Valuations provided by the Valuer General are consistent with fair value </li></ul></ul><ul><ul><li>TI 954 will be amended to exclude land and buildings subject to AASB 5 – non-current assets held for sale or AASB 102 – inventories from the fair value requirement </li></ul></ul>
    22. 22. Property, Plant and Equipment <ul><li>AASB 136 Impairment of Assets </li></ul><ul><ul><li>Assessment of PPE in opening balance sheet for indications of impairment </li></ul></ul><ul><ul><li>Measure recoverable amount where indication of impairment exists </li></ul></ul><ul><ul><li>Recoverable amount is the higher of FV less costs to sell and depreciated replacement cost </li></ul></ul><ul><ul><li>Write-down to recoverable amount where this is less than the carrying amount </li></ul></ul>
    23. 23. Property, Plant and Equipment <ul><li>AASB 136 continued </li></ul><ul><ul><li>For PPE at cost, impairment losses are adjusted against accumulated surplus (deficit), </li></ul></ul><ul><ul><li>For PPE at FV, impairment losses are accounted for as revaluation decrements and are adjusted against asset revaluation reserve and/or accumulated surplus (deficit) </li></ul></ul><ul><ul><li>Limited impact expected </li></ul></ul>
    24. 24. Property, Plant and Equipment <ul><li>AASB 136 continued </li></ul><ul><ul><li>Assets at cost </li></ul></ul><ul><ul><ul><li>depreciated replacement cost would normally exceed depreciated cost </li></ul></ul></ul><ul><ul><ul><li>risks are insufficient depreciation recognised and falling replacement costs </li></ul></ul></ul><ul><ul><li>Assets at FV </li></ul></ul><ul><ul><ul><li>for specialised assets FV is depreciated replacement cost (recoverable amount) </li></ul></ul></ul><ul><ul><ul><li>where FV is market value, maximum impairment is selling costs </li></ul></ul></ul>
    25. 25. Property, Plant and Equipment <ul><li>AASB 136 continued </li></ul><ul><ul><li>Surplus assets </li></ul></ul><ul><ul><ul><li>recoverable amount is higher of FV less costs to sell and the present value of cash flows expected to be derived from an asset </li></ul></ul></ul><ul><ul><ul><li>if reclassified as ‘Held for sale’ in accordance with AASB 5, AASB 136 does not apply </li></ul></ul></ul><ul><ul><li>Agencies required to assess assets for impairment </li></ul></ul>
    26. 26. Intangible Assets <ul><li>AASB 138 Intangible Assets </li></ul><ul><ul><li>Identification criteria </li></ul></ul><ul><ul><ul><li>must be separable, or </li></ul></ul></ul><ul><ul><ul><li>arise from contractual or legal rights </li></ul></ul></ul><ul><ul><li>Additional recognition requirements for internally generated intangible assets </li></ul></ul><ul><ul><ul><li>all research expenditure expensed </li></ul></ul></ul><ul><ul><ul><li>specific rules for development expenditure </li></ul></ul></ul><ul><ul><ul><li>brands, mastheads, publishing titles, customer list and items similar in substance cannot be recognised </li></ul></ul></ul><ul><ul><ul><li>only expenditure incurred from date when the recognition criteria met can be capitalised </li></ul></ul></ul>
    27. 27. Intangible Assets <ul><li>AASB 138 continued </li></ul><ul><ul><li>Initial recognition at cost </li></ul></ul><ul><ul><li>Subsequent measurement at cost or fair value (FV) </li></ul></ul><ul><ul><li>Revaluation only permitted where there is an active market to determine FV </li></ul></ul><ul><ul><li>Active market </li></ul></ul><ul><ul><ul><li>homogenous items </li></ul></ul></ul><ul><ul><ul><li>willing buyers and sellers at any time </li></ul></ul></ul><ul><ul><ul><li>prices available to the public </li></ul></ul></ul><ul><ul><li>Software not integral to the related hardware is an intangible asset </li></ul></ul>
    28. 28. Intangible Assets <ul><li>AASB 138 continued </li></ul><ul><ul><li>Opening balance sheet adjustments: </li></ul></ul><ul><ul><ul><li>intangibles assets must be reported on the face of the balance sheet </li></ul></ul></ul><ul><ul><ul><li>software reclassified as intangibles </li></ul></ul></ul><ul><ul><ul><li>derecognise revaluations (no active market) </li></ul></ul></ul><ul><ul><ul><li>derecognise assets that do not meet additional recognition criteria </li></ul></ul></ul><ul><ul><li>AASB 136 also applies to intangible assets </li></ul></ul>
    29. 29. Non-Current Assets Held for Sale <ul><li>AASB 5 Non-Current Assets Held for Sale and Discontinued Operations </li></ul><ul><ul><li>New class of asset </li></ul></ul><ul><ul><li>Recovery principally through sale </li></ul></ul><ul><ul><li>Must be available for immediate sale </li></ul></ul><ul><ul><li>Sale must be highly probable </li></ul></ul><ul><ul><li>Disclosed on the face of the balance sheet </li></ul></ul><ul><ul><li>Assets not depreciated once classified as held for sale </li></ul></ul><ul><ul><li>AASB 136 does not apply </li></ul></ul>
    30. 30. Non-Current Assets Held for Sale <ul><li>AASB 5 continued – </li></ul><ul><ul><li>Measurement </li></ul></ul><ul><ul><ul><li>measured at the lower of carrying amount and fair value (FV) less costs to sell </li></ul></ul></ul><ul><ul><ul><li>assets measured at FV must be revalued immediately prior to reclassification </li></ul></ul></ul><ul><ul><ul><li>any initial or subsequent write-down of an asset to fair value less costs to sell must be recognised as an impairment loss </li></ul></ul></ul><ul><ul><ul><li>a gain is recognised for any subsequent increase in fair value less costs to sell (only to the extent of impairment losses under this Standard or AASB 136) </li></ul></ul></ul>
    31. 31. Non-Current Assets Held for Sale <ul><ul><li>Opening balance sheet adjustments: </li></ul></ul><ul><ul><li>Consider item of PPE at cost that would have met the sale criteria at 1 July 2003 (and is unsold at 30 June 2004) </li></ul></ul><ul><ul><ul><li>asset must be reclassified </li></ul></ul></ul><ul><ul><ul><li>derecognise the depreciation for the 12 month period </li></ul></ul></ul><ul><ul><ul><li>where carrying amount at 1 July 2003 is higher than estimated FV less costs to sell, recognise an initial impairment loss </li></ul></ul></ul><ul><ul><ul><li>recognise any gains or other impairment losses for a subsequent write-down to FV less costs to sell or changes in FV less costs to sell </li></ul></ul></ul>
    32. 32. Non-Current Assets Held for Sale <ul><ul><li>Opening balance sheet adjustments continued: </li></ul></ul><ul><ul><li>For PPE carried at FV, any revaluations during the year would need to be derecognised </li></ul></ul>
    33. 33. Inventories <ul><li>AASB 102 Inventories </li></ul><ul><ul><li>Inventory held for distribution </li></ul></ul><ul><ul><ul><li>new class of assets held for distribution at no or nominal consideration </li></ul></ul></ul><ul><ul><ul><li>lower of cost and current replacement cost </li></ul></ul></ul><ul><ul><ul><li>separate disclosure (notes) </li></ul></ul></ul><ul><ul><li>Requirement for opening balance sheet </li></ul></ul><ul><ul><ul><li>identify and reclassify assets from current class to inventory </li></ul></ul></ul><ul><ul><ul><li>remeasure, adjustments to accumulated surplus (deficit) </li></ul></ul></ul>
    34. 34. <ul><li>Opening IFRS Balance Sheet – </li></ul><ul><li>Liabilities </li></ul>
    35. 35. Employee Benefit Obligations <ul><li>AASB 119 Employee Benefits </li></ul><ul><ul><li>Recognition & measurement </li></ul></ul><ul><ul><ul><li>post-employment benefits such as defined benefit plans </li></ul></ul></ul><ul><ul><ul><li>other long-term employee benefits </li></ul></ul></ul><ul><ul><li>Requirement for opening balance sheet </li></ul></ul><ul><ul><ul><li>Defined benefit superannuation plans </li></ul></ul></ul><ul><ul><ul><ul><li>Departments & Budget-funded statutory authorities </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>superannuation liabilities assumed by the Treasurer will not require recognition </li></ul></ul></ul></ul></ul>
    36. 36. Employee Benefit Obligations <ul><li>AASB 119 continued </li></ul><ul><ul><ul><li>Defined benefit superannuation plans </li></ul></ul></ul><ul><ul><ul><ul><li>Other statutory authorities </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>fair value of the proportionate share of the plan assets (if any), less </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>present value of the proportionate share of the gross obligation to pay the defined benefits </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>discount rate to be used is based on government bonds </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>agencies to liaise with GESB and their actuary </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>remeasure, adjustments to accumulated surplus (deficit) </li></ul></ul></ul></ul></ul>
    37. 37. Employee Benefit Obligations <ul><li>AASB 119 continued </li></ul><ul><ul><ul><li>Other long-term employee benefits </li></ul></ul></ul><ul><ul><ul><ul><li>if payable later than 12 months, to be discounted and now include: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>annual leave, sick leave, deferred salary scheme, non-monetary benefits </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>discount rate used to calculate PV of long-term employee benefits to be based on government bonds </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>remeasure, adjustments to accumulated surplus (deficit) </li></ul></ul></ul></ul>
    38. 38. Provision for Other Liabilities <ul><li>AASB 137 Provisions, Contingent Liabilities and Contingent Assets </li></ul><ul><li>Provision for dividends </li></ul><ul><ul><ul><li>applies to Public Corporations that are required to return a dividend to Government </li></ul></ul></ul><ul><ul><ul><li>AASB 110 ‘Events after the Balance Sheet Date’ clarifies that a provision for dividend liability is not recognised if approved after reporting date </li></ul></ul></ul><ul><li>Requirement for opening balance sheet </li></ul><ul><ul><ul><li>may need to adjust provision for dividends for those approved after 30 June 2004 </li></ul></ul></ul><ul><ul><ul><li>adjustments to accumulated surplus (deficit) </li></ul></ul></ul>
    39. 39. Income Taxes <ul><li>AASB 112 Income Taxes </li></ul><ul><ul><ul><li>applies to agencies subject to the ‘income tax equivalent regime’ </li></ul></ul></ul><ul><li>‘ Balance sheet approach’ </li></ul><ul><ul><ul><li>current and deferred tax liabilities and assets </li></ul></ul></ul><ul><ul><ul><li>“ tax base” and “temporary differences” </li></ul></ul></ul><ul><li>Requirement for opening balance sheet </li></ul><ul><ul><ul><li>current tax liabilities and assets recognised for tax payable for the current year </li></ul></ul></ul><ul><ul><ul><li>deferred tax assets or liabilities for temporary differences </li></ul></ul></ul><ul><ul><ul><li>remeasure, adjustments to accumulated surplus (deficit) </li></ul></ul></ul>
    40. 40. AASB 1047 Disclosing the Impact of Adopting IFRS <ul><li>Applies to annual or interim reporting periods ending on or after 30 June 2004 </li></ul><ul><ul><ul><li>requires agencies to disclose: </li></ul></ul></ul><ul><ul><ul><ul><li>an explanation of how the transition to Australian equivalents to IFRSs is being managed; and </li></ul></ul></ul></ul><ul><ul><ul><ul><li>a narrative explanation of the key differences in accounting policies that are expected to arise from adopting Australian equivalents to IFRSs </li></ul></ul></ul></ul><ul><ul><ul><li>guidance and example disclosures provided in IFRS package sent to PAOs in June 2004 </li></ul></ul></ul>
    41. 41. DTF Action <ul><li>Complete gap analysis for all new standards – almost final now </li></ul><ul><li>Policy position on some individual issues (e.g. treatment options) </li></ul><ul><li>Resolve whole-of-government reporting issues – collection of comparatives </li></ul><ul><li>Prepare new model financial statements for IFRS </li></ul>
    42. 42. Contact details <ul><li>Website www. dtf . wa . gov .au/ias2005 </li></ul><ul><li>John Stanley 9222 9280 </li></ul><ul><li>email: [email_address] </li></ul><ul><li>Phillip Forward 9222 9282 </li></ul><ul><li>email: [email_address] </li></ul><ul><li>Anthony Smith 9222 9368 </li></ul><ul><li>email: [email_address] </li></ul>
    43. 43. <ul><li>Questions ??? </li></ul>

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