Illustrative IFRS/ HKFRS Consolidated Financial Statements · PDF file Financial Reporting...

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Transcript of Illustrative IFRS/ HKFRS Consolidated Financial Statements · PDF file Financial Reporting...

  • International/ Hong Kong Financial Reporting Standards

    www.pwchk.com

    Illustrative IFRS/ HKFRS Consolidated Financial Statements 31 December 2015

  • IFRS Manual of Accounting (English with Chinese translation) IFRS Manual of Accounting is a comprehensive practical guide to IFRS and provides straightforward explanations on how to prepare financial statements in accordance with IFRS, with hundreds of practical examples. IFRS Manual of Accounting with Chinese translation has been released in different volumes. The following volumes have been published by China Financial & Economic Publishing House. Depending on the topic, each release may be a chapter or a combination of a number of chapters from the manual.

    MoA Volume 14: Consolidated financial statements and joint arrangements This volume covers Chapter 24 – Consolidated financial statements and Chapter 28 – Joint arrangements of the English version and their translation.

    MoA Volume 15: Employee benefits This volume covers Chapter 11 – Employee benefits of the English version and its translation.

    MoA Volume 16: Insurance contracts and Fair value This volume covers Chapter 8 – Insurance contracts and Chapter 34 – Fair value of the English version and their translation.

    The below volumes (English with Chinese translation) are also available:

    • IFRS Manual of Accounting - Volume 1: Revenue and construction contracts • IFRS Manual of Accounting - Volume 2: Accounting principles and applicability of IFRS; Presentation of

    financial statements; Accounting policies, accounting estimates and errors • IFRS Manual of Accounting - Volume 3: Taxation • IFRS Manual of Accounting - Volume 4: Share-based payment • IFRS Manual of Accounting - Volume 5: Business combinations • IFRS Manual of Accounting - Volume 6: Intangible assets and inventories • IFRS Manual of Accounting - Volume 7: Property, plant and equipment, investment property and lease

    accounting • IFRS Manual of Accounting - Volume 8: Impairment of assets • IFRS Manual of Accounting - Volume 9: Consolidated and separate financial statements and equity

    accounting • IFRS Manual of Accounting - Volume 10: Disposals of subsidiaries, business and non-current assets • IFRS Manual of Accounting - Volume 11: Foreign currencies • IFRS Manual of Accounting - Volume 12: Earnings per share • IFRS Manual of Accounting - Volume 13: Service concession arrangements • IFRS Manual of Accounting - Financial Instruments (English with Chinese translation) Volume 1 • IFRS Manual of Accounting - Financial Instruments (English with Chinese translation) Volume 2 • IFRS Manual of Accounting - Financial Instruments (English with Chinese translation) Volume 3

    Please visit www.pwccn.com/home/eng/ifrs_accounting_manual.html for details.

    PwC’s Accounting Technical Publications

    http://www.pwccn.com/home/eng/ifrs_accounting_manual.html

  • Illustrative IFRS/HKFRS Consolidated Financial Statements Specimen Holdings Limited

    i

    Introduction This publication provides an illustrative set of consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS)/ Hong Kong Financial Reporting Standards (HKFRS), for a fictional manufacturing, wholesale and retail group (Specimen Holdings Limited).

    Specimen Holdings Limited is an existing preparer of IFRS/HKFRS consolidated financial statements; IFRS/HKFRS 1, First-time adoption of International/Hong Kong Financial Reporting Standards, is not applicable. This publication is based on the requirements of IFRS/HKFRS standards and interpretations for financial years beginning on or after 1 January 2015. This publication includes the disclosures required by the new Hong Kong Companies Ordinance (Cap. 622) and the Rules Governing the Listing Securities on The Stock Exchange of Hong Kong Limited and the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the “Listing Rules”) published up to and including September 2015. Their related disclosures are marked in red and orange respectively. This publication has not included all the disclosures required by the Listing Rules. For example, the disclosure of corporate governance has not been included as it is expected to vary significantly from one company to another company and should be tailored to suit the particular circumstances of the company. Please refer to Appendix 14 of Main Board Listing rules / Appendix 15 of GEM Listing rules for detailed disclosure requirements of corporate governance report. PricewaterhouseCoopers’ commentary has been provided, in boxes, to explain the detail behind the presentation of a number of challenging areas. These commentary boxes relate to the presentation in: the consolidated balance sheet, the balance sheet, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows, the summary of significant accounting policies, and financial risk management. Areas in which presentation has changed significantly since 2014 have been highlighted in grey. For 2015, the significant changes include disclosures under the new Hong Kong Companies Ordinance (Cap. 622), enhanced segment disclosures under IFRS/HKFRS 8 and disclosures for Amendments to IAS/HKAS 16 and IAS/HKAS 41 on Agriculture: bearer plants. We have attempted to create a realistic set of financial statements for a corporate entity. Certain types of transaction have been excluded, as they are not relevant to the group’s operations. The example disclosures for some of these additional items have been included in Appendices V to VI. The new and amended standards and interpretations, which are effective for financial year ended 31 December 2015 are summarised in the below section. The forthcoming IFRS/HKFRS requirements are outlined in a table in Appendix IX. We have included in Appendices VII and VIII the link to the website where illustrative disclosures required for the early adoption of IFRS 9 “Financial Instrument” and IFRS 15 “Revenue from contracts with customers” can be downloaded. The example disclosures should not be considered the only acceptable form of presentation. The form and content of each reporting entity’s financial statements are the responsibility of the entity’s management. Alternative presentations to those proposed in this publication may be equally acceptable if they comply with the specific disclosure requirements prescribed in IFRS/HKFRS. These illustrative financial statements are not a substitute for reading the standards and interpretations, the Hong Kong Companies Ordinance and the Listing Rules themselves, or for professional judgement as to the fairness of presentation. They do not cover all possible disclosures that IFRS/HKFRS, the Hong Kong Companies Ordinance and the Listing Rules require. Further specific information may be required in order to ensure fair presentation under IFRS/HKFRS depending on the circumstances. Additional disclosures may be required in order to comply with local laws and/or stock exchange regulations if the subject company is incorporated overseas and/or listed in an overseas stock exchange. The new Hong Kong Companies Ordinance (Cap. 622) came into effect on 3 March 2014 and replaces certain provisions in the predecessor Companies Ordinance (Cap. 32) governing the formation, operation and financial reporting obligations of companies.

  • Illustrative IFRS/HKFRS Consolidated Financial Statements Specimen Holdings Limited

    ii

    Introduction (Continued) An overview of the major changes in disclosures required under the new Hong Kong Companies Ordinance (Cap. 622) is as follows: • Most of the specific disclosures required under Tenth Schedule of the Companies Ordinance (Cap.32) have been

    removed in order to streamline the disclosure requirements that overlap with the accounting standard, leaving only a small number of public interest disclosure requirements not covered by the HKFRS being retained in Schedule 4 of the Hong Kong Companies Ordinance (Cap. 622), including:

    (a) the aggregate amount of any outstanding loans to directors and employees to acquire shares in the company authorised under sections 280 and 281 of the new Companies Ordinance;

    (b) information regarding a company’s ultimate parent undertaking; and (c) auditors’ remuneration • The Company’s balance sheet is no longer required to be presented as a primary statement. It is presented in the notes

    to the financial statements. Except for the note disclosing the movement of the Company’s reserves, the balance sheet of the Company is not required to contain any other notes. Accordingly, all the corresponding notes in relation to the Company’s balance sheet have been removed in this illustrative disclosure.

    • More extensive disclosures are required for the benefits and interests of directors, as follows:

    (a) the directors’ emoluments; (b) the directors’ retirement benefits; (c) payments made or benefit provided in respect of the termination of the service of directors, whether in the capacity of

    directors or in any other capacity while directors; (d) loans, quasi-loans and other dealings in favour of:

    (i) directors of the Company and of a holding company of the Company; (ii) bodies corporate controlled by such directors; and (iii) entities connected with such director