New and updated IFRSs

New and updated standards for annual reporting periods beginning on or after 1 January 2021

For annual reporting periods beginning on or after 1 January 2021

IFRS

Effective date

Brief description

Interest Rate Benchmark Reform – Phase 2
(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

1/1/2021

The Phase 2 amendments address issues that might affect financial reporting during the reform of an interest rate benchmark, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate. Major changes:
(i) Added a practical expedient that enables a company to account for a change in the contractual cash flows that are required by the reform by updating the effective interest rate to reflect, for example, the change in an interest rate benchmark from IBOR to an alternative benchmark rate, i.e., apply IFRS 9:B5.4.5 rather than IFRS 9:B5.4.6, and
(ii) Provide relief from specific hedge accounting requirements.

Amendments to IFRS 4 Insurance Contracts
(Deferral of IFRS 9)

1/1/2021

The IASB has made two changes to IFRS 4 as follows:
(i) Insurers meeting the criteria in IFRS 4, paragraph 20B can temporarily be permitted (although are not required) to apply IAS 39 Financial Instruments: Recognition and Measurement instead of IFRS 9 for annual periods beginning before 1 January 2021, and
(ii) Insurers are permitted, but not required, to apply the ‘overlay approach’ to designated financial assets. This means that insurers would reclassify between profit or loss and other comprehensive income an amount so that the net impact on profit or loss is the same as if IAS 39 had been applied to designated financial assets.

New Standard effective from 1 April 2021

IFRS

Effective date

Brief description

Covid-19-Related Rent Concessions beyond 30 June 2021
(Amendments to IFRS 16)

1/4/2021

In March 2021, IASB issued an amendment to IFRS 16 which extended the COVID-19 related rent concessions beyond 30 June 2021. This amendment is required to be mandatorily adopted by a lessee who had elected to apply the original practical expedient.

List of pronouncements with a mandatory effective date in future accounting periods

Effective for periods beginning on or after 1 January 2022

IFRS

Effective date

Brief description

Annual Improvements to IFRSs -
2018-2020 cycle

1/1/2022

- IFRS 1 First time adoption of International Financial Reporting Standards
Subsidiary as a first-time adopter: The amendment permits a subsidiary that applies IFRS 1:D16(a) to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.

- IFRS 9 Financial instruments
Fees in the ‘10 per cent’ test for derecognition of financial liabilities: The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in assessing whether to derecognise a financial liability (IFRS 9:B3.3.3.6).

- IFRS 16 Leases
Lease incentives: The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.

- IAS 41 Agriculture
Taxation in fair value measurements: The amendment removes the requirement in IAS 41:22 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13.

IAS 16 Property, Plant and Equipment
(Amendment – Proceeds before Intended Use)

1/1/2022

The amendment changes the accounting for proceeds from sale of items produced before a PPE is available for use. Previously IAS 16 requires the proceeds from selling items before intended use to be offset against the cost of PPE.  Under the amendments these proceeds are to be included the statement of profit or loss and should not be deduced from the cost of the PPE.

IAS 37 Provisions, Contingent Liabilities and Contingent Assets
(Amendment – Onerous Contracts – Cost of Fulfilling a Contract)

1/1/2022

The amendment added paragraph 68A to specify which costs an entity includes in determining the cost of fulfilling a contract for the purposes of the assessment whether the contract is onerous. Costs to include consists both:
(i) the incremental costs of fulfilling that contract—for example, direct labour and materials;
(ii) an allocation of other costs that relate directly to fulfilling contracts— for example, an allocation of the depreciation charge.

IFRS 3 Business Combinations
(Amendment – Reference to the Conceptual Framework)

1/1/2022

IFRS 3:11 specifies that all identifiable assets acquired and liabilities assumed in a business combination must meet the definitions of assets and liabilities in the Conceptual Framework. As the definition of assets and liabilities in the 2018 Conceptual Framework differs from the 1989 Framework, IFRS 3:11 needed to be updated in line with the requirements of the 2018 Conceptual Framework.

The amendment also intrdocues new exceptions for liabilities and contingent liabilities within the scope of IAS 37 and IFRIC 21 (IFRS 3:21A, 21B, 21C).

Effective for periods beginning on or after 1 January 2023

IFRS

Effective date

Brief description

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 generate cash flows that vary substantially over time. It therefore takes the approach of:
(i) Combining current measurement of future cash flows with recognising profit over the period that services are provided under the contract
(ii) Presenting insurance service results (including insurance revenue) separately from insurance finance income or expenses, and
(iii) 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.

Classification of Liabilities as Current or Non-current

(Amendments to IAS 1)

1/1/2023

The amendment clarifies that an entity’s right to defer settlement must exist ‘at the end of the reporting period’.  Classification of current/non-current requires an assessment of whether an entity has the right to defer settlement of a liability and not whether the entity will exercise that right. In addition, if an entity’s right to defer settlement of a liability is subject to the entity complying with specified conditions, the entity has a right to defer settlement of the liability at the end of the reporting period if it complies with those conditions at that date.

Disclosure of Accounting Policies

(Amendments to IAS 1 and IAS 8; IFRS Practice Statement 2)

1/1/2023

The amendment changes the disclosure requirement with respect to accounting policies from ‘significant accounting policies’ to ‘material accounting policy information’.
It provides guidance on when an accounting policy information is likely to be considered material:
(i) Accounting policy information related to immaterial transactions/ events/ conditions would be considered immaterial.
(ii) Accounting policy information related to material transactions/ events/ conditions may not necessarily be material. 
(iii) As per the amendment, accounting policy information is expected to be material if users of an entity’s financial statements would need it to understand other material information in the financial statements.

Definition of Accounting Estimates (Amendments to IAS 8)

1/1/2023

The amendment has been added the definition of ’accounting estimates’. Also, clarification provided that the effects on an accounting estimate 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 IAS 12)

1/1/2023

These amendments clarify whether the initial recognition exemption applies to certain transactions that often result in both an asset and a liability being recognised simultaneously.