Is part-time BE eligible for IAS

Appendix according to IFRS / 3.3 Information on the hidden accounting and valuation options

Prof. Dr. rer. pole. Hanno Kirsch

Margin no. 72

Instruments of the financial statements policy according to IFRS are both open and hidden options in accounting and valuation. In the language used here, "open" options refer to the possibility for the balancing party to opt for different accounting and valuation alternatives for certain issues. The hidden options are characterized by the fact that there is no formal decision on the part of the accounting party to choose between different accounting or valuation alternatives. Instead, the management has the option at an upstream level to design the financial statements, in particular through assessments and forecasts, in such a way that different balance sheet and valuation approaches and forms of presentation are possible on the basis of these influencing parameters. Since there are no formal choices to be made between different alternatives, it seems justified to speak of hidden voting rights. The term "hidden voting rights" is used by some authors to describe these issues. Other authors speak of the scope for discretion in international accounting regulations.[1] Currently, the hidden options in accounting and valuation include:[2]

  • Hidden accounting options in IFRS accounting

    • Capitalization requirements for internally generated intangible assets (IAS 38.57),
    • Capitalization requirements for deferred tax assets, especially from loss carryforwards (IAS 12.24 and 12.34).
  • Hidden valuation options in IFRS accounting

    • Impairment of long-term assets (including groups of assets; IAS 36 in conjunction with IFRS 3),
    • Reversal of the value of individual assets or groups of assets (IAS 36.110 ff.),
    • Initial and subsequent valuation of goodwill (IAS 36.90 ff.),
    • Useful life and residual value of depreciable assets (IAS 16.57),
    • Classification of non-current assets held for sale (IFRS 5),
    • Financial instruments, in particular the classification of portfolios into a business model (IFRS 9, Chapters 4.1.2 a and 4.1.2A a), valuation and hedge accounting (IAS 39 or, to a limited extent, IFRS 9 due to its alignment with the risk management actually practiced),
    • Evaluation of production orders and customer contracts (IFRS 15),
    • Determination of the leasing period in the case of options in leasing contracts (IFRS 16.18) and, with restriction, classification of sale-and-lease-back transactions (IFRS 16.99),
    • Valuation of (active) deferred taxes (IAS 12.24 and 12.34),
    • Delimitation of financial investments in accordance with IAS 40 (factual right to choose to classify these properties),
    • Existence of an active market as a prerequisite for using the revaluation method for intangible assets (IAS 38.75),
    • Estimation of the actuarial parameters (e.g. wage and salary, pension trend, fluctuation) for calculating the pension provision according to IAS 19 and similar long-term obligations to employees,
    • Estimation of employee turnover and the company's performance when evaluating stock options issued to employees (IFRS 2.19) and
    • the impracticability of the complete and / or limited retrospective correction of accounting and valuation errors as well as the change in accounting and valuation methods (IAS 8.44 f. and IAS 8.24 f.).

3.3.1 Management Assessments

Margin no. 73

According to IAS 1.122, the management's assessments should be disclosed "in the summary of the main accounting and valuation methods or in the other explanations" which management has made when applying the accounting and valuation methods and which have a significant influence on the IFRS financial statements .

IAS 1.124 clarifies that, in individual cases, corresponding disclosure requirements already exist in accordance with special IFRS and that the disclosure obligations stipulated in IAS 1.122 already result from these standards. According to IFRS 12.9a, the reasons must be given why a majority-owned company is not controlled. IAS 40.75c requires the specification of the criteria that management uses in the event of difficulties in differentiating between financial investments (scope of IAS 40) and other real estate assets (scope of IAS 16, IAS 2 or IAS 11 or IFRS 15) distinguish.

IAS 1.122 contains compared to the above Disclosure required by individual IAS / IFRS ...

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