Illustrative IFRS/HKFRS Consolidated Financial Statements ... · PDF file The second amendment...

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Transcript of Illustrative IFRS/HKFRS Consolidated Financial Statements ... · PDF file The second amendment...

  • Illustrative IFRS/HKFRS Consolidated Financial Statements 31 December 2012

    International/ Hong Kong Financial Reporting Standards

    www.pwchk.com

  • PwC’s Accounting Technical Publications 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.

    IFRS Manual of Accounting - Volume 6: Intangible assets and inventories This volume covers Chapter 15 – Intangible assets and Chapter 20 - Inventories of the English version and its translation.

    IFRS Manual of Accounting - Volume 7: Property, plant and equipment, investment property and lease accounting This volume covers Chapter 16 - Property, plant and equipment, Chapter 17 – Investment property and Chapter 19 – Lease accounting of the English version and its translation.

    IFRS Manual of Accounting - Volume 8: Impairment of assets This volume covers Chapter 18 – Impairment of assets of the English version and its translation.

    IFRS Manual of Accounting - Volume 9: Consolidated and separate financial statements and equity accounting This volume covers Chapter 24 - Consolidated and separate financial statements and Chapter 27- equity accounting of the English version and its translation.

    IFRS Manual of Accounting - Volume 10: Disposals of subsidiaries, business and non-current assets This volume covers Chapter 26 – Disposals of subsidiaries, business and non-current assets of the English version and its 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 - Financial Instruments (English with Chinese translation) Volume 1

  • 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 2012. This publication includes the disclosures required by the Hong Kong Companies Ordinance 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 October 2012. 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 23 of Main Board Listing rules / Appendix 16 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 2011 have been highlighted in grey. 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 2012, are summarised in the below section. The example disclosures for the early adoption of IFRS/HKFRS 9, IFRS/HKFRS 10 and IFRS/HKFRS 11, IFRS/HKFRS 13, Amendment to IAS/HKAS 1 and IAS/HKAS 19 (revised) have been included in Appendices VII to XI respectively. The forthcoming IFRS/HKFRS requirements are outlined in a table in Appendix XII. 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. Please refer to Disclosure Checklist 2012 for IFRS/HKFRS, the Hong Kong Companies Ordinance and the Listing Rules for detailed disclosure requirements. Readers should refer to PricewaterhouseCoopers’ industry illustrative financial statements for industry specific transactions and presentations, including:  Illustrative financial statements : Investment funds  Illustrative financial statements : Investment property  Illustrative financial statements : Private equity  Illustrative financial statements : Insurance  Illustrative financial statements for authorised institutions in Hong Kong We have also produced a set of illustrative financials statements prepared under IFRS for small and medium entities: “IFRS for SMEs – Illustrative consolidated financial statements 2010”.

  • Illustrative IFRS/HKFRS Consolidated Financial Statements

    Specimen Holdings Limited

    ii

    New and amended standards that have been issued and are effective for periods commencing on 1 January 2012

    Standards Key requirements Effective date

    Amendment to

    IFRS/HKFRS 7, ‘Financial

    instruments: Disclosures’,

    on transfer of financial

    assets

    These amendments are as part the IASBs comprehensive review of

    off balance sheet activities. The amendments promote

    transparency in the reporting of transfer transactions and improve

    users' understanding of the risk exposures relating to transfers of

    financial assets and the effect of those risks on an entity’s financial

    position, particularly those involving securitisation of financial

    asset.

    1 July 2011

    Amendment to

    IFRS/HKFRS 1, ‘First time

    adoption’, on

    hyperinflation and fixed

    dates

    The first amendment replaces references to a fixed date of ‘1

    January 2004’ with ‘the date of transition to IFRSs/HKFRSs’, thus

    eliminating the need for companies adopting IFRSs/HKFRSs for

    the first time to restate derecognition transactions that occurred

    before the date of transition to IFRSs/HKFRSs. The second

    amendment provides guidance on how an entity should resume

    presenting financial statements in accordance with IFRSs/HKFRSs

    after a period when the entity was unable to comply with

    IFRSs/HKFRSs because its functional currency was subject to

    severe hyperinflation.

    1 July 2011

    Amendment to IAS/HKAS

    12, ‘Income taxes’, on

    deferred tax

    Currently IAS/HKAS 12, 'Income taxes', requires an entity to

    measure the deferred tax relating to an asset depending on whether

    the entity expects to recover the carrying amount of the asset

    through use or sale. It can be difficult and subjective to assess

    whether recovery will be through use or thro