IFRS

Not long ago, we had a look at the valuation of fixed assets for impairment, i.e. we briefly discussed the impairment test. The choice of this topic was due to the economic downturn in certain industries. Today, we are going to discuss another area of financial reporting, very popular in recent years, namely cryptocurrencies. How do you recognise and value these virtual assets in your financial statements?

On Monday, 26 July, a draft act amending the PIT Act, CIT Act and certain other acts was published, being a part of what is known as the “Polish Deal”. It rolls out many taxation changes, including more lenient conditions for applying the “Estonian CIT”.

Last year we wrote a lot in our blog about the new IFRS 16 standard that significantly changes the concept behind considering contracts in terms of the necessity to disclose transactions in the lessee’s balance sheet.  We are going to continue on this topic, answering another batch of the most frequently asked questions concerning this standard.

For quite some time now we have been observing the increased activity of entities, asking questions about leases and requesting the analysis of contracts they have signed to use specific assets, be it lease or rental.

Much has been said so far about possible exclusions from the new standard, the valuation of assets and liabilities, discount, implementation of the new standard or lease components. Another issue that should be considered on the so-called inception date is the definition of a lease contract. According to IFRS 16, a contract is a lease if, in return for payment, it has the right to exercise control, including but not limited to obtaining economic benefits, over the use of an identified asset for an agreed period of time.

In the last article we mentioned that individuals may apply the new standard in the same way as other new standards – with a full retrospective approach. The modified retrospective approach may be of much greater interest. We cannot forget the opening balance adjustment completely, nevertheless the International Accounting Standards Board agreed to significant savings in time and costs when changing standards and implementing IFRS 16 by limiting the restatement of comparative years.

We previously focused on establishing and discussing the leasing and non-leasing components and on how to divide fees between these parts of the contract. The following articles will cover topics related to the modifications of lease contracts and variable fees. We receive many queries about IFRS 16 and the application of the new regulations as of 1 January 2019, so let us start by looking at the application of the standard for the first time.

Not so long ago I wrote about a certain wrong approach to the valuation of fixed assets (revaluation model). Frequently, in the "revaluation" model, companies measure fixed assets at the fair value and cease to depreciate. Thus, the rules are confused with those that have been established for the valuation of investment properties. This is precisely according to IAS 40 that an entity may measure its investment properties at the fair value and does not need to depreciate. But first things first...

As we financiers and accountants know, the use of IFRS[1] in Poland is not popular (yet); solutions included in the Accounting Act prevail, and with respect to recognising and subsequent depreciation of property, plant and equipment, these are also often solutions derived from the Income Tax Act. But what can we do?   [1] IFRS are the International Accounting Standards, International Financial Reporting Standards and their interpretations issued by the Standards Board in London.

On 13 January 2016, the International Accounting Standards Board (IASB) issued the new International Financial Reporting Standard No. 16 (IFRS) – "Leases", which supersedes IAS No. 17.