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October 2010



To contact the Moore Stephens Technical Accounting Services team call Rob Mackay, Gihan Fernando or Lisa Panetta on (03) 8635 1800 or email:

Rob Mackay
rmackay@moorestephens.com.au

Gihan Fernando
gfernando@moorestephens.com.au

Lisa Panetta
lpanetta@moorestephens.com.au

    Exposure Draft 196 – Fair Value Option for Financial Liabilities

    Exposure Draft 196 – Fair Value Option for Financial Liabilities

    Exposure Draft 197 – Presentation of Items of Other Comprehensive Income

    Exposure Draft 197 – Presentation of Items of Other Comprehensive Income

    Exposure Draft 198 – Revenue from Contracts with Customers

    This exposure draft was issued in July 2010 by the IASB and is anticipated that it will replace AASB 118 Revenue and AASB 111 Construction Contracts. The main principle of the ED requires an entity to recognise revenue as the goods or services
    provided are transferred to the customer at an amount reflecting the consideration received or receivable.

    Exposure Draft 199 – Measurement Uncertainty Analysis Disclosure for Fair Value Measurements

    This exposure draft proposes an entity to disclose a measurement uncertainty analysis for fair value measurements categorised within Level 3 of the fair value hierarchy. The analysis would take into account the effect of correlation between unobservable inputs if such correlation is relevant when estimating the effect on a fair value measurement of a change in more than one unobservable input.

    Exposure Draft 202R – Leases

    We are all familiar with the current requirements for classifying leases as either finance leases or operating leases. Whilst leases are a major form of finance for many entities, the current accounting models have been criticised for the ‘off-balance’ sheet accounting of operating leases which can be quite similar in nature to their on-balance sheet counterpart, yet treated differently due the notional assignment of risks and benefits to the lessor in the arrangement. Conceptually, it is argued that the economic benefits controlled under an operating lease deserve to be recognised as assets (with accompanying liability) just as they are with a finance lease.

    Exposure Draft 204 -Deferred Tax: Recovery of Underlying Assets

    This exposure draft (issued September 2010) states that for investment property, property plant and equipment and intangible assets measured using a fair value or revaluation model, the measurement of deferred tax liabilities and deferred tax assets should reflect a rebuttable presumption that the carrying amount of the underlying asset will be recovered entirely through its sale. The presumption is rebutted only where there is clear evidence that the assets value will be consumed by the entity over its economic life.

    Exposure Draft 205 – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation

    The objective of this amendment is to allow the subsidiaries of certain entities relief from consolidation, equity accounting of associations, and proportionate consolidation of joint venture operations. Relief would be made available where their parent or ultimate parent complies with the relevant exemption criteria even though the parent or ultimate parent does not produce IFRS compliant consolidated financial statements because it has adopted Australian Accounting Standards – Reduced Disclosure Requirements (being a non-IFRS reporting framework) or is a not-for-profit entity.

    Draft IFRIC Interpretation DI/2010/1 – Stripping Costs in the Production Phase of a Surface Mine

    During the mine development phase, stripping costs (removal of surface waste material) are generally capitalised as part of the depreciable cost of the mine. Once production begins, a degree of continued stripping will usually be required, and this may include a ‘stripping campaign’ which involves the removal of overburden in targeting a specific ore body. The need for such a stripping campaigns are identified in the planning stage of development.

    Amendments to IFRS 7 Financial Instruments: Disclosures

    The IASB has recently issued amendments to IFRS 7 Financial Instruments: Disclosures as part of its review of off balance sheet activities.

    Parent related disclosures required under Corporate Reform Consolidated financial statements

    We have had some queries in relation to the necessity to maintain certain disclosures related to parent entity information where the separate financial statements of the parent entity have not been included in a group’s financial report pursuant to the reforms introduced by the recent amendments to the Corporations Act.


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