New and updated IFRS standards effective for the annual periods beginning on or after 1 January 2023

IFRS

Effective date

Brief description

BDO Global resources

IFRS 17

Insurance contracts

1/1/2023

The new standard takes the view that insurance contracts combine features of a financial instrument and a service contract, and that may generate cash flows that vary substantially over time. It therefore takes the approach of:

• Combining current measurement of future cash flows with recognising profit over the period that services are provided under the contract.
• Presenting insurance service results (including insurance revenue) separately from insurance finance income or expenses.
• Requiring an entity to make an accounting policy choice for each portfolio whether to recognise all insurance finance income or expenses for the reporting period in profit or loss, or to recognise some in other comprehensive income.

IFRS 17 At a Glance

IFRB 2020/10 IASB Issues Amendments to IFRS 17, Insurance Contracts

IFRB 2023/06 Implications of IFRS 17 for Non-insurers

Disclosure of Accounting Policies

(Amendment to IAS 1, IAS 8 and IFRS Practice Statement 2)

1/1/2023

• The amendments change the disclosure requirement with respect to accounting policies from ‘significant accounting policies’ to ‘material accounting policy information’.
• The amendments provide guidance on when an accounting policy information is likely to be considered material.
• The amendments to IAS 1 and IAS 8 are effective for annual reporting periods beginning on or after 1 January 2023, with earlier application permitted. As IFRS Practice Statements are non-mandatory guidance, no mandatorty effective date has been specified for the amendments to IFRS Practice Statement 2.

IFRB 2021/07 IASB issues amendments to IAS 1, IAS 8 and IFRS Practice Statement 2

Definition of Accounting Estimates

(Amendments to IAS 8)

1/1/2023

• The amendments added the definition of Accounting Estimates in IAS 8.
• The amendments also clarified that the effects of a change in an input or measurement technique are changes in accounting estimates, unless resulting from correction of prior period errors.

Deferred tax related to Assets and Liabilities arising from a Single Transaction

(Amendments to IFRS 16)

1/1/2023

• The amendments clarify whether the initial recognition exemption applies to certain transactions that often result in both an asset and a liability being recognised simultaneously (e.g., a lease in the scope of IFRS 16).
• The amendments introduce an additional criterion for the initial recognition exemption under IAS 12.15, whereby the exemption does not apply to the initial recognition of an asset or liability which at the time of the transaction, gives rise to equal taxable and deductible temporary differences.

IFRB 2021/10 IASB issues amendments to IAS 12 – Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction

International Tax Reform - Pillar Two Model Rules

(Amendments to IAS 12)

Effective immediately on issue of the Amendments

• The amendments create a temporary mandatory exception to the requirements of IAS 12 Income Taxes from recognition and disclosure of information about deferred tax assets and liabilities related to Pillar Two income taxes and provides for additional disclosure requirements with respect to an entity’s exposure to Pillar Two income taxes.
• The amendments issued in May 2023 are effective immediately and retrospectively in accordance with IAS 8, except for some disclosure requirements.

IFRB 2023/04 IASB issues Amendments to IAS 12 – International Tax Reform – Pillar Two Model Rules

IFRS

Effective date

Brief description

BDO Global resources

Classification of Liabilities as Current or Non-current

(Amendments to IAS 1)

1/1/2024

• Entity's right to defer settlement of a liability for at least twelve months after the reporting period must have substance and must exist at the end of the reporting period.
• Classification of a liability is unaffected by the likelyhood that the entity will exercise its right to defer settlement for at least twelve months after the reporting period.
• Clarification provided on the meaning of 'settlement' for the purpose of classifying a liability as current or non-current.

https://www.bdo.global/getmedia/a2f78b58-b579-4326-b28c-da4285983af0/IFRB-2022-07-IASB-issues-Amendments-to-IAS-1-Non-current-Liabilities-with-Covenants.pdf.aspx

Non-current Liabilities with Covenants

(Amendments to IAS 1)

1/1/2024

• If an entity's right to defer is subject to the entity complying with specified conditions, such conditions affect whether that right exists at the end of the reporting period, if the entity is required to comply with the condition on or before the end of the reporting period and not if the entity is required to comply with the conditions after the reporting period.

Lease liability in a Sale and Leaseback

(Amendments to IFRS 16)

1/1/2024

• Requirement for the seller-lessee to determine 'lease payments' or 'revised lease payments' in a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use retained by the seller-lessee.

IFRB 2022/05 IASB Issues Amendments to IFRS 16 – Lease liability in a Sale and Leaseback

Supplier Finance Arrangements

(Amendments to IAS 7 and IFRS 7)

1/1/2024

• The amendments introduce additional disclosure requirements about an entity's supplier finance arrangements.
• The amendments also provide clarification on characteristics of supplier finance arrangements.

IFRB 2023/05 IASB Issues Amendments to IAS 7 & IFRS 7 – Supplier Finance Arrangements