EY In Balance Issue 5/2021
Welcome to In EY In Balance, providing you with the latest financial reporting insights.
A recent IFRIC decision has clarified accounting for the costs of customizing and configuring cloud delivered software. Many entities may be challenged by retrospective adjustments or prominent financial report disclosures.
Following amendments to AASB 112, entities should now recognise appropriate amounts of deferred tax arising from decommissioning and leasing arrangements.
We have released two Australian publications covering the impacts of negative interest rates and effective reporting of KMP remuneration.
The team
Featured
Cloud computing costs - on your balance sheet?
Many preparers of 30 June 2021 financial reports might need to reflect an accounting policy change for cloud software costs previously capitalised as intangible assets. Disclosure is required when the adjustment is deferred to the next financial report. Our publication provides an overview of accounting for cloud computing costs.
What is ASIC focused on for 30 June 2021?
ASIC’s focus is on asset values, provisions, solvency & going concern, subsequent events and disclosures in the financial report and operating and financial review. ASIC emphasises the importance of disclosing key assumptions, risks, the drivers of results, management strategies and prospects.
“Negative interest rates” - what impact on financial reporting?
Negative interest rates would be a relatively new phenomenon to Australia and New Zealand, however, some countriesexperienced them before. They can affect many accounting areas such as provisions, lease liabilities, employee benefits, revenue and financial instruments. Our publication touches on the considerations.
Deferred tax on leases and decommissioning liabilities - clarified!
To resolve mixed practices, the IASB has clarified that the initial recognition exception is not applicable for decommissioning liabilities and leases. Entities would now recognise appropriate DTA and DTL amounts upon recognising such assets and liabilities. Our publication provides an overview.
The removal of SPFS and the introduction of SDS
The AASB has removed the reporting entity concept that has been part of the Australian reporting framework for decades. Many entities will have to prepare GPFS instead of SPFS. Transition is eased with relief and guidance. Watch the AASB’s webinars (part 1, part 2 and part 3).
Communicating your “Pay for performance” story
KMP remuneration is inherently a sensitive topic. Entities are challenged by motivating executives with attractive rewards while protecting the shareholders interest. Our publication presents some practical pointers in drafting clear, transparent and understandable remuneration reporting.
