Investor Presentaiton
Appendix C
Recent IFRIC agenda decisions
Meeting date
September
2022
(continued)
September
2022
Issue discussed by the Committee
Special purpose acquisition
companies ("SPAC"): Accounting for
warrants at acquisition:
How does an entity account for
warrants on acquiring a SPAC?
(continued)
IFRS 9 and IFRS 16 - Lessor
forgiveness of lease payments:
How does a lessor apply the expected
credit loss ("ECL") model to the
operating lease receivable before a
rent concession is granted if it expects
to forgive payments due from the
lessee under lease contract?
Does a lessor apply the derecognition
requirements in IFRS 9 or lease
modification requirements in IFRS 16
in accounting for the rent concession?
Summary of the Committee's conclusion on the issue
If the entity concludes that it does not assume the SPAC warrants as part of
the acquisition, it determines to what extent it issued each type of
instrument to acquire the cash and the stock listing exchange service. As no
IFRS specifically applies in making this determination, the entity applies
paragraphs 10-11 of IAS 8 in developing and applying an accounting policy
that results in information that is relevant and reliable. The Committee
observed that the entity could:
(a) allocate the shares and new warrants to the acquisition of cash
and the stock exchange listing service on the basis of the relative
fair values of the instruments issued.
(b) use other allocation methods if they meet the requirement of
paragraphs 10-11 of IAS 8. However, an accounting policy that
results in the entity allocating all the new warrants issued to the
acquisition of the stock exchange listing service solely to avoid the
new warrants being classified as financial liabilities applying IAS 32
would not meet these requirements.
Operating lease receivables recognised by a lessor under IFRS 16 are subject
to the derecognition and impairment requirements in IFRS 9.
Before a rent concession is granted, the Committee concluded that the
lessor measures ECLs on the operating lease receivable as required by
paragraph 5.5.17 of IFRS 9, i.e. in a way that reflects an unbiased and
probability-weighted amount, the time value of money and reasonable and
supportable information. This measurement of ECLs includes the lessor
considering its expectations of forgiving lease payments recognised as part
of that receivable.
When the rent concession in granted, the Committee concluded that the
lessor should:
(a) remeasure ECL on the operating lease receivable;
(b) apply the derecognition requirements in IFRS 9 to forgiven lease
payments that have been recognised as operating lease
receivables; and
(c) apply the lease modification requirements in IFRS 16 to forgiven
lease payments that have not been recognised as operating lease
receivables.
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