actualia ifrs 2020 - assets.kpmg...amendments to ifrs 9, ias 39 and ifrs 17 – ... subsidies;...

WebinarActualiaIFRS 2020

Agenda

IFRS updateIFRS

for 2020and beyond

Covid-19Potential impact on 2020 IFRS

financial statements

© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

IFRS updateIFRS for 2020 and beyond

4© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved

2020 IFRSs endorsed in the EU

Narrow-scopeamendments

Amendments to References to the Conceptual Framework in IFRS StandardsAmendments to IFRS 3: Definition of a Business

Amendments to IAS 1 and IAS 8: Definition of Material

Amendments to IFRS 9, IAS 39 and IFRS 17: Interest Rate Benchmark Reform (phase 1)

Narrow-scopeamendment

Amendment to IFRS 16: Rent Concessions(NB 2020 response to COVID-19)

2 0 2 0

Covid-19


IASBeffective date2022 2023

Narrow-scopeamendments

Amendments to IAS 37 Provisions: Onerous Contracts

Amendments to IAS 16 Property, Plant & Equipment: Proceeds before Intended Use

Amendments to IFRS 3: Business Combinations

Annual Improvements 2018-2020

Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

New standard IFRS 17 Insurance Contracts

2022-2023 IFRSs not yet endorsed by EU

ED 2019/7 General Presentation and Disclosures (amendments to IAS 1)

2 0 2 2 - 2 0 2 3


Amendments to IFRS 9, IAS 39 and IFRS 17 –Interbank Offered Rate (IBOR) reform

Reform of IBOR, may impact financial instruments practice & accounting

!IFRS

2 0 2 0( p h a s e 1 )

EU

Reliefs i.e. in respect of hedge accountingIFRS

2 0 2 1( p h a s e 2 )

PHASE 2PHASE 1


Amendments to IAS 37 - Onerous Contracts2 0 2 2

unavoidable costs(= cost to fulfil a contract)

incremental costs + allocated other direct costs

full direct costs

Unavoidable costsEconomic

benefitsUnavoidable

costs


Amendments to IAS 16 - Proceeds before PPE’s intended use

2 0 2 2

Start activities (pre-production)

Start intended use PPE

Sale proceeds and related production

costs in profit & loss


Amendments to IAS 1 - Classification of liabilities as current or non-current

exist at balance sheet date

‘substance’(before: ‘unconditionally’)

Amendments could have a significant impact on classification of liabilities

For convertible debt only ignore

conversion options classified as equity

2 0 2 3

Right to defer settlement


Brexit

Article 403 and possible impact of Brexit

Article 403

2 0 2 0


Regulators enforcement priorities 2020

IFRS 16

Non-Financial Information (NFI) disclosures

Application of the ESMA Guidelines in relation to APMs

IAS 36

IFRS 9

IAS 1

2 0 2 0

IFRS 7

Covid-19

IFRS Update General presentationand disclosures


ED IAS 1: Future re-shaping of financial statement presentation

P r o p o s a l s E D I A S 1

E X A M P L E O N T H E

N E X T S L I D E

Income statement

key changes


Proposed income statement3

new

sub

tota

lsP r o p o s a l s

E D I A S 1


Cash flow statement

key changes

Noteskey changes

Balance sheet

key changes

— New disclosure requirements

— Starting point— Elimination of options— New line items

— New line items

P r o p o s a l s E D I A S 1

https://home.kpmg/xx/en/home/insights/2020/01/presentation-disclosures-primary-financial-statements-exposure-draft.html

ED IAS 1: Future re-shaping of financial statement presentation

https://home.kpmg/xx/en/home/insights/2020/01/presentation-disclosures-primary-financial-statements-exposure-draft.html

Covid-19 Potential impact on2020 IFRS financial statements


Covid-19: various accounting issuesAccounting issues

Potential issues to be addressed for 2020 IFRS financial statements

‒ Rent concessions (i.e. reductions, deferrals)

‒ Deferral of loan payments

‒ Current/non-current classification of debts

‒ Accounting for government grants (wage costs subsidies; compensation for non-performed services)

‒ Impairment of non-current assets (i.e. goodwill)

‒ Presentation of expenses related to Covid-19

I m p a c t C o v i d - 1 9


Rent concessions related to Covid-19

Lessor Lessee

Covid-19 related Rent Concession:waiver / reduction / deferral of

lease payments

2020 Amendment to IFRS 16


Negative variable lease paymentsLease modification


Presentation of expenses related to Covid-19Covid-19 expenses

Companies may incur costs (directly) related to Covid-19


IAS 1 Presentation in the income statement: Only expenses that are incremental and directly attributable to Covid-19

Limited presentation possibilities ‒ Definition of ‘exceptional’? ‒ Presentation should fit in current structure of income

statement

E X A M P L E O N T H E

N E X T S L I D E


Presentation of expenses related to Covid-19 – example


Example income statement (expenses by nature)


Covid-19: impact on impairment assessmentImpairments‒ Covid-19 may give rise to indicators of impairment of fixed assets at year end‒ Even if no indicators, Covid-19 may impact impairment testing of goodwill‒ Recoverable amount of a CGU or asset likely be impacted

All other assets within the

scope of IAS 36

Test if indicators exist at the reporting date

Goodwill Indefinite useful life intangible assets

Annual impairment test



Traditional approach vs. ECF approach

Under ECF approach the discount rate excludes

risks that are reflected in the cash flows to avoid

double counting.Reflected in the

discount rate

ECF approachTraditional approach

Component 1: rf

Component 2: Risk-premium

Component 3: Uncertainty

about the future CFs

Reflected in the discount rate

Reflected in the cash flows



Impact on projecting cash flows - exampleI m p a c t

C o v i d - 1 9

Cash flows projections

90% 50%


WACC may increase due to higher uncertainty

Impact on discount rate (WACC)

WACC is based on debt and equity


RISK FREE RATE

COST OF DEBT SECTOR RISK

RISK NOT IN BETA


Covid-19: available information

https://home.kpmg/xx/en/home/insights/2020/03/covid-19-financial-reporting-resource-centre.html

…and many more

https://home.kpmg/xx/en/home/insights/2020/03/covid-19-financial-reporting-resource-centre.html

Thank you

WebinarActualia IFRS 2020

© 2020 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

actualia ifrs 2020 - assets.kpmg...amendments to ifrs 9, ias 39 and ifrs 17 – ... subsidies;...

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