Decommissioning, restoration, and similar liabilities On Jan 01, 01, entity E acquires a machine for CU 220 that is available for use on the same day. Payment is effected in cash on the same day. The useful life of the machine is three years. The machine consists of some materials that are ecologically harmful. Consequently, E is legally obliged to dispose of the machine appropriately […]

Finance lease or operating lease? As from Jan 01, 01 entity E leases a machine. The lease term is four years. The economic life (IAS 17.4) and the useful life (IAS 17.4) of the machine are six years. At the end of each year, a minimum lease payment of CU 1 has to be made. There is no purchase option and no transfer of ownership […]

Operating leases in the lessee”s financial statements Entity E leases a machine under an operating lease from lessor F. The lease term, which begins on Jan 01, 01, is three years. F provides an incentive for E to enter into the lease by granting three rent-free months at the beginning of the lease term. After the rent-free period of time, the monthly lease payments, which […]

Finance leases in the lessor”s financial statements On Jan 01, 01 entity E acquires a machine which it leases to entity F starting the same date. The lease term, the economic life (IAS 17.4), and the useful life (IAS 17.4) of the machine are three years. At the end of each year, E receives a minimum lease payment of CU 1. On Jan 01, 01, […]

Sale and leaseback transactions Entity E owns a machine with a carrying amount of CU 10 and a fair value of CU 12.8 as at Jan 01, 01. On Jan 01, 01, E sells the machine for CU 12.8 to entity F and leases the machine back starting the same date for a minimum lease payment of CU 4 p.a., payable at the end of […]

Expected loss on a contract with progress billings On Jan 01, 01, entity E concludes a fixed price contract. Total contract revenue is CU 180. When E prepares its financial statements as at Dec 31, 01, the estimate of total contract costs is CU 160 which are estimated to be incurred in fourths in each of the years 01–04. However, in 02 contract costs of […]

Customer loyalty program – allocation of the consideration Entity E operates a restaurant chain. If a guest consumes dishes and/or beverages worth at least CU 10, he is granted a coupon that entitles him to consume a free piece of Sacher torte (fair value = CU 1). On Dec, 29, 01, Mr X consumes dishes and beverages worth CU 19. Thus, he is granted a […]

Uncertainties about collectibility Year 01 On Jan 01, 01, entity E concludes a fixed price contract. Under this contract, E constructs a special-purpose machine for customer C according to C”s specifications. Total contract revenue is CU 39. The total contract costs of CU 30 will be incurred in thirds in each of the years 01–03. It is agreed that the billing for the whole price […]

Customer loyalty program – realization of the consideration attributable to the award credits In 01, entity E generated sales revenue amounting to CU 1,000. According to IFRIC 13, CU 900 thereof was allocated to the main transactions and the remaining amount of CU 100 was allocated to the 100 award credits granted in 01 within the scope of a customer loyalty program. The award credits […]

Cost-to-cost method: specific topics Entity E constructs both standard and customized solar panels. The latter are constructed specifically for a particular contract. The solar panels are used as part of the façade of buildings and are installed at the building site of the customer, ready-to-use. In 01, E receives orders A and B (among others). Contract A requires customized solar panels, whereas standard solar panels […]