Home' A Plus Magazine : August 2013 Contents Members’ handbook
Handbook update no. 130
Update no. 130 contains the issuance of Recov-
erable Amount Disclosures for Non-Financial
Assets (Amendments to HKAS 36 Impairment
of Assets) and HK(IFRIC) – Int 21 Levies.
When HKFRS 13 Fair Value Measurement
was issued, a consequential amendment had
been made to HKAS 36, which required the
disclosure of information about the recover-
able amount of impaired assets if that amount
is based on fair value less costs of disposal.
However, the unintended result of those
amendments were that an entity would
instead be required to disclose the recover-
able amount for each cash-generating unit
for which the carrying amount of goodwill or
intangible assets with indefinite useful lives
allocated to that unit is significant in compari-
son with the entity’s total carrying amount
of goodwill or intangible assets with definite
useful lives. Consequently, this amendment
aligns the disclosure requirements in HKAS 36
with the original intention.
HK(IFRIC) – Int 21 addresses how an entity
should account for liabilities to pay levies
imposed by governments, other than income
taxes, in its financial statements. The principal
question raised was about when the entity
should recognize a liability to pay a levy.
This interpretation clarifies that the
obligating event that gives rise to a liability
to pay a levy is the activity described in the
relevant legislation that triggers the payment
of the levy.
The amendments to HKAS 36 and
HK(IFRIC) – Int 21 are effective for annual
periods beginning on or after 1 January 2014.
Invitation to comment on IASB exposure
(i) Insurance Contracts
As stated in the IASB’s press release, the
exposure draft builds upon proposals
published in 2010 and reflects feedback re-
ceived during the extensive public consulta-
tion period that followed the publication of
those proposals. The revised proposals aim
to provide a consistent basis for account-
ing for insurance contracts and to make it
easier for users of financial statements to
understand how insurance contracts affect
an entity’s financial position, financial per-
formance and cash flows. While the model
presented in the 2010 draft was broadly
supported, some specific issues were
raised that the IASB has sought to address.
The revised proposals respond to those
issues by introducing enhancements to the
presentation and measurement of insur-
ance contracts while seeking to minimize
artificial accounting volatility. Comments
are requested by 25 September.
(ii) Agriculture: Bearer Plants (proposed
amendments to IAS 16 and IAS 41)
Bearer plants are a class of biological
assets that, once mature, are held by an
entity solely to grow produce over their
productive life. IAS 41 Agriculture requires
all biological assets that are related to agri-
cultural activity, including bearer plants, to
be measured at fair value less costs to sell.
This requirement is based on the principle
that biological transformation is best
reflected by fair value measurement.
However, once mature, bearer plants
no longer undergo significant biological
transformation. Furthermore, their opera-
tion is similar to that of manufacturing.
Consequently, the exposure draft propos-
es that bearer plants are accounted for
by IAS 16 Property, Plant and Equipment
instead of IAS 41, thus permitting the
use of either a cost model or a revalua-
tion model. The produce growing on the
bearer plants would remain under the
fair value model in IAS 41. Comments are
requested by 30 September.
Institute comments on IASB consultation
The Institute sent a response to the IASB on its
Request for Information on Rate Regulation.
The Institute appreciated the effort of the
IASB in seeking examples of rate-regulatory
schemes to help identify the common features
of rate regulation, with a view to developing
specific guidance for accounting for the con-
sequences of rate regulation. Among different
types of rate regulation, electricity distribution
in Hong Kong was considered as a type of
industry, which was subject to rate regulation
that the Institute might consider as relevant.
In this connection, the Institute provided
examples of rate-regulatory schemes by ex-
tracting publicly available information issued
by the government of Hong Kong and the two
power generation, distribution and supply
companies that operate in Hong Kong.
Audit and assurance
Circular on Reporting to Grantees of the
Quality Education Fund
The Institute issued a Circular on Reporting
to Grantees of the Quality Education Fund.
The circular provides practical guidance
to practising members when reporting to
the grantees on the project accounts and
Professional accountants in
Consultation on public sector governance
released by IFAC and CIPFA
The International Federation of Accountants
and the Chartered Institute of Public Finance
and Accountancy have issued a consultation
paper, Good Governance in the Public Sec-
tor – Consultation Draft for an International
Framework, which aims to encourage better
service delivery and improved accountabili-
ty by establishing an international bench-
mark for good governance in the public
The latest standards and
54 August 2013
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