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lu/ifrsInternationalFinancialReportingStandardsJune20132PwCLuxembourgSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP1Preface2Howtousethispublication3TheLuxembourgregulatoryframework4Accountingframework7Presentationoffinancialstatements10Assets,liabilitiesandequity20Intangibleassetsotherthangoodwill,formationexpenses21Property,plantandequipment26Investmentproperty31Capitalisationofborrowingcosts35Leases37Inventories44Impairmentofnon-financialassets48Non-currentassetsheldforsaleanddiscontinuedoperations52Financialassets54Financialliabilities66Equity71Derivativesandhedgeaccounting74Provisionsandcontingency80Employeebenefits84Share-basedpayment90Deferredtaxes92Investmentinsubsidiaries,associatesandjointlycontrolledentitiesinseparatefinancialstatements96Revenueandexpenses100Revenuerecognition101Expensesrecognition106Consolidationandbusinesscombinations107Consolidatedfinancialstatements109Investmentsinassociates117Investmentsinjointarrangements119Businesscombinations125Otheraccountingandreportingtopics129Fairvalue130Foreigncurrencytranslation133Earningspershare135Relatedpartytransactions137Segmentreporting139Postbalancesheetevents141Yourcontacts142Contents2PwCLuxembourgPrefaceInternationalFinancialReportingStandards("IFRS")hasgainedmomentuminEurope.
Theglobalisationofbusinessandfinancehasinevitablyledtocallsforacommonsetofhighquality,globalaccountingstandards.
IFRShasbeensuccessfullyadoptedinalmostahundredcountriesoverthelastcoupleofyears.
TheInternationalAccountingStandards("IAS")RegulationissuedbytheEuropeanUnion("EU")in2002requiresthatlistedcompaniesinEuropepreparefinancialinformationusingIFRS.
Luxembourgactivelysupportsthedevelopmentoftheseinternationalaccountingstandardsand,since2010,theoptiontouseIFRSasadoptedbytheEuropeanUnionforthepreparationofbothstatutoryandconsolidatedfinancialstatementsofnon-listedentitieshasbeenintroducedintonationallawthroughtheendorsementoftheEU"modernisation"and"fairvalue"directives.
Thelawof10December2010modifyingtheAccountingLawof19December2002introducesthefairvalueoptionintheLuxembourgaccountingframeworkinadditiontoIFRS.
Thesechangesleadtothepossibilityofchoosingbetweenseveralaccountingframeworks:LuxembourgGenerallyAcceptedAccountingPrinciples("LuxGAAP")underthehistoricalcostconvention,fullIFRSframeworkasadoptedbytheEuropeanUnionoramixedaccountingframework(historicalcostwithfairvalueoptionforsomeelements).
ThispublicationallowsacomparisonofIFRSasadoptedbytheEuropeanUnionandLuxGAAPasapplicabletodayinentitiessubjecttotheabovementionedAccountingLaw.
Wehopeyouwillfindthisguideofinterestandstayatyourdisposaltoprovidesupportwhateveryourneedsmaybe.
Anne-SophiePreud'hommePartner,LuxGAAPLeaderMarcMinetPartner,IFRSLeaderSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP3ThisPwCLuxembourgpublicationisdesignedforthosewhowishtogainabroadunderstandingofthekeysimilaritiesanddifferencesbetweenIFRSasadoptedbytheEuropeanUnionandtheLuxembourgregulatoryandaccountingframework.
TheLuxembourgframeworkmaterialofthisbrochureisbasedontheamendedlawof19December2002(the"AccountingLaw")forthepreparationofstand-aloneaccountsandonsectionXVIoftheamendedlawof10August1915(the"CompanyLaw")forthepreparationofconsolidatedaccounts.
AbbreviatedreferencesareprovidedtothearticlesoftheAccountingLawasamended(e.
g.
Art.
1(2)indicatesArticle1alinea2oftheAccountingLaw).
Abbreviatedreferencesarealsoprovidedtothearticlesofthelawof10August1915asamendedandareindicatedby"*"(e.
g.
Art.
76*indicatesArticle76oftheCompanyLaw).
NosummarypublicationcanencompassthemanydifferencesofdetailthatexistbetweenIFRSandLuxGAAP.
Eveniftheoverallapproachtakenintheguidanceissimilar,therecanbedifferencesinthedetailedapplication,whichcouldhaveamaterialimpactonthefinancialstatements.
Thispublicationfocusesonthesimilaritiesanddifferencesmostcommonlyfoundinpractice.
Forfurtherdetailsonthepreparationofannualaccounts,weinviteyoutorefertoourpublication"HandbookforthepreparationofannualaccountsunderLuxembourgaccountingframework".
Whereapplicable,asummaryofrecentdevelopmentshasbeenaddedattheendofsomesectionstoanticipatefuturechangesinstandardsandinterpretations.
Whenapplyingtheindividualaccountingframeworks,readersshouldconsideralltherelevantaccountingstandardsandtheapplicablelaws.
Listedcompaniesshouldalsofollowrelevantsecuritiesregulationsandrelevantstockexchangelistingrules.
ThispublicationtakesaccountofauthoritativepronouncementsandrecentdevelopmentsissuedunderIFRSandLuxGAAPupto31March2013.
Itisbasedonthemostrecentversionofthosepronouncements.
Shouldanearlierversionofapronouncementstillbeeffectiveatthedateofthispublication,referencetothisfacthasbeeninserted.
Thispublicationisexclusivelydesignedonlyforthegeneralinformationofreadersandnotforreliancepurpose.
Thereadermustbeawarethattheinformationtowhichhe/shehasaccessisprovided"asis"withoutanyexpressorimpliedguaranteebyPwCLuxembourg.
Noreadershouldactonorrefrainfromactingonthebasisofanymattercontainedinthispublicationwithoutconsideringand,ifnecessary,takingappropriateadviceinrespectofhis/herownparticularcircumstances.
HowtousethispublicationTheLuxembourgregulatoryframework4PwCLuxembourgSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP5Thelawof10December2010(amendingtheAccountingLaw)introducedmajorchangesintheLuxembourgaccountingregulatoryframework.
Itgivescompaniesthepossibilitytoprepareandfiletheirstand-aloneandconsolidatedaccountsaccordingoneofthefollowingregimes:LuxGAAPunderhistoricalcostconvention;LuxGAAPwithsomefairvalueoptions;IFRSasadoptedbytheEuropeanUnion.
Therefore,LuxembourgcompaniesmaynowoptforIFRSonavoluntarybasis.
However,companieswhosesecuritiesareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnionmustpublishtheirconsolidatedaccountsinaccordancewithIFRSasadoptedbyEU,pursuanttotheECregulationN°1606/2002.
"Companies"meansallcorporateentitiesincludingLuxembourgbranchesofforeigncompaniesbutexcludesbankinginstitutions,pensionfunds,insuranceandreinsurancecompaniesthathavetheirspecificaccountingframework.
SICAR("Sociétéd'investissementencapitalàrisque"/"investmentcompanyinriskcapital"),SIF("SpecialisedInvestmentFund")andinvestmentfundsshallfollowtheAccountingLawinadditiontothespecificguidanceavailableintheirspecificlaw.
Thedifferentaccountingregimesapplicablecanbesummarisedasfollow:AccountingregimesLuxGAAPIFRSHistoricalcostconventionFairvalueoptionCompanieswhosesecuritiesareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnionStand-aloneaccountsOptionalOptionalOptionalConsolidatedaccountsNotapplicableNotapplicableMandatoryOthercompaniesStand-aloneaccountsOptionalOptionalOptionalConsolidatedaccountsOptionalOptionalOptionalCompaniespreparingtheirannualaccountsinaccordancewithIFRSremainsubjecttothefollowingLuxGAAPrequirements:Articles68and68bis:obligationtoprepareamanagementreportThemanagementofthecompanyhastoprepareamanagementreport.
Luxembourgbranchesofforeigncompaniesandindividualbusinessownersarenotobligedtoprepareamanagementreportaswellassmall-sized1companiesprovidedthattheyincludeintheirnotestotheannualaccountstheinformationconcerninganyacquisitionofownshares.
However,thisexemptiondoesnotapplytocompanieswhosetransferablesecuritiesarequotedonaEUregulatedmarket.
Themanagementreportmustincludeatleastafairreviewofthedevelopmentofthecompany'sbusiness,itsresultsandpositionwhichprovidesclarificationonthedatashownintheannualaccountstogetherwithadescriptionofthemainrisksanduncertaintiesthecompanyisfacing.
Thisanalysisshouldincludekeyindicatorsofperformanceforbothfinancialandnon-financialaspectswhichimpacttheactivityofthecompanyandinparticularinformationrelatedtoenvironmentalandpersonal1Acompanyiscategorisedasasmall-sizedentitywhentwoofthethreecriteriasetoutbelowarenotexceeded:-totalbalancesheet:4.
4meuros;-netturnover:8.
8meuros;-averagenumberoffull-timestaffemployedduringthefinancialyear:50.
Arenotconsideredassmall-sizedentitiesundertakingswhosesecuritiesareadmittedtotradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion.
TheLuxembourgregulatoryframework6PwCLuxembourgmatters.
Medium-sizedcompanies21areexemptfromprovidingnon-financialinformation.
However,thisexemptiondoesnotapplytocompanieswhosetransferablesecuritiesarequotedonaEUregulatedmarket.
Thereportshallgivealsoanindicationof:anyimportanteventsthathaveoccurredsincetheendofthefinancialyear;thecompany'slikelyfuturedevelopment;inrespectoftheacquisitionsofownshares:-thereasonsforacquisitionsmadeduringthefinancialyear;-thenumberandthenominalvalue,or,intheabsenceofnominalvalue,theaccountingparvalue,ofthesharesacquiredanddisposedofduringthefinancialyearandtheproportionofthesubscribedcapitalwhichtheyrepresent;-incaseofacquisitionordisposalforvalue,theconsiderationfortheshares;and-thenumberandnominalvalue,or,intheabsenceofnominalvalue,theaccountingparvalue,ofallthesharesacquiredandheldinthecompany'sportfolioaswellastheproportionofthesubscribedcapitalwhichtheyrepresent;theexistenceofbranchesofthecompany;andwithrespecttotheuseoffinancialinstrumentsbytheundertakingandwhenthisisrelevantforthevaluationofitsassets,liabilities,financialsituationandprofitandloss:-theobjectivesandpoliciesofthecompanyintermsoffinancialriskmanagement,includingitspolicyconcerningthehedgingofeachmaincategoryoftransactionsforwhichhedgeaccountingisused;and-thecompany'sexposuretomarket,credit,liquidityandtreasuryrisks.
Moreover,companiesforwhichtransferablesecuritiesarequotedonaEUregulatedmarketshallincludeacorporategovernancestatementinthemanagementreportorissueitasaseparatereport.
Articles69,69bis,69ter:auditrequirementsLuxembourgcompanies,exceptsmall-sizedcompanies,musthavetheirannualaccountsauditedbyanapprovedindependentauditor("Réviseurd'entreprisesagréé").
Articles70and71:parentcompaniesandsubsidiariesspecificregimeUndercertainconditionsdescribedinarticle70oftheAccountingLaw,subsidiariesincludedintheconsolidatedaccountsdrawnupbytheparentundertakingarenotobligedtoapplytheprovisionsoftheAccountingLawregardingthecontent,theauditandthepublicationofannualaccounts.
Undercertainconditionsdescribedinarticle71oftheAccountingLaw,aparentcompanyisnotobligedtoapplytheprovisionsoftheAccountingLawregardingtheauditandpublicationoftheprofitandlossaccount.
Articles65(1)2°,9°,12°,13°,15°and16°:contentofthenotestotheannualaccountsInadditiontotheIFRSdisclosurerequirements,thenotestotheannualaccountsmustinclude:informationregardingundertakingsinwhichthecompanyholdsatleast20%ofthecapital(thisdisclosureisdescribedinthesection"Investmentinsubsidiaries,associatesandjointlycontrolledentitiesinseparatefinancialstatements");theaveragenumberofstaffemployedduringtheperiod,brokendownbycategories;theamountoftheemolumentsgrantedduringtheperiod(thisdisclosureisdescribedinthesection"Employeebenefits");theamountofadvancesandloansgrantedtothemanagementandsupervisorybodies;thenameandregisteredofficeoftheundertakingwhichdrawupconsolidatedaccounts;andseparatelytheauditfees,theotherassuranceservices,thefeesrelatedtotaxadvisoryservicesandallotherfeesreceivedbythestatutoryauditororauditfirm.
On20December2011,theaccountingdraftbilln°6376hasbeenfiledtotheParliament.
ThisdraftbillprovidesanumberofchangestotheAccountingLawandtheCompanyLaw,indetailingforexampleruleswhenapplyingthefairvalueoption,makingthesubstanceoverformprincipleoptionaloreliminatingthepossibilityofadaptingthestructureandnomenclatureofthebalancesheetandprofitandlossaccountaccordingtothecompany'sbusiness.
Thesechangeshavebeenmentionedinthisbrochurewhererelevant.
2Acompanyiscategorisedasamedium-sizedentitywhentwoofthethreecriteriasetoutbelowarenotexceeded:-totalbalancesheet:>4.
4meurosand≤17.
5meuros;-netturnover:>8.
8meurosand≤35meuros;-averagenumberoffull-timestaffemployedduringthefinancialyear:>50and≤250.
TheLuxembourgregulatoryframeworkAccountingframeworkSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP78PwCLuxembourgSubjectIFRSLuxGAAPConceptualFrameworkQualitativecharacteristicsoffinancialinformationTheprincipalqualitativecharacteristicsthatmaketheinformationprovidedinfinancialstatementsusefultousersareunderstandability,relevance,materiality,reliability,substanceoverform,prudence,completeness,comparability,timelinessandachievingabalancebetweenbenefitandcost.
Informationismaterialifitsomissionormisstatementcouldinfluencetheeconomicdecisionsofusersmadeonthebasisofthefinancialstatements.
Materialitydependsonthesizeoftheomissionormisstatementassessedintheparticularcircumstances.
Thereisnodefinitionofthequalitativecharacteristicsoftheannualaccountsassuchbuttheregulationsstatethattheannualaccountsshallbedrawnupclearly,inaccordancewiththeAccountingLawandgiveatrueandfairviewoftheassets,liabilities,financialpositionandresultsofthecompany.
Thefinancialinformationmustbecomparable,presentedconsistentlyandbasedontheprudenceprinciple.
TheAccountingLawalsostatesthatthepresentationofamountswithinitemsintheprofitandlossaccountandbalancesheetshallhaveregardstothesubstanceofthereportedtransactionorarrangement.
Accordingtothedraftbilln°6376,thesubstanceoverformprincipleshouldbecomeoptional.
[Art.
26(2)&(3);29(6)and51(1)b)tof)]ReportingelementsTherearefivereportingelementsinthestatementoffinancialpositionandthestatementofcomprehensiveincome:assets,liabilities,equity,income(includingrevenuesandgains)andexpenses(includinglosses).
Assetsareresourcescontrolledbyanentityasaresultfromapastevent.
Liabilitiesarepresentobligationsarisingfromapastevent.
Assetsandliabilitiesarerecognisedonthestatementoffinancialpositionwhenitisprobablethateconomicbenefitswillflowtoorfromtheentity,andthosebenefitsarereliablymeasurable.
Equityistheresidualinterestintheassetsafterdeductingtheentity'sliabilities.
Incomerelatestoincreasesineconomicbenefitsthatresultinincreasesinequityotherthanthoserelatingtocontributionsfromequityparticipants.
Expensesaredecreasesineconomicbenefitsthatresultindecreasesinequityotherthanthoserelatingtodistributionstoequityparticipants.
LuxGAAPhasthesamefivereportingelementsinthebalancesheetandintheprofitandlossaccountasIFRSalthougheachelementisnotdefinedassuchintheAccountingLaw.
[Art.
26;34and46]AccountingframeworkSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP9SubjectIFRSLuxGAAPConceptualFrameworkHistoricalcostHistoricalcostisthemainaccountingconvention.
However,IFRSpermitstherevaluationoffinancialinstruments,intangibleassets,property,plantandequipment("PPE")andinvestmentproperty.
IFRSalsorequirescertaincategoriesoffinancialinstrumentstobereportedatfairvalue.
Inventoriesshallbemeasuredatthelowerofcostandnetrealisablevalue.
Historicalcostisalsothemainaccountingconvention.
However,theAccountingLawpermitstherevaluationofcertainfinancialinstrumentsandothercategoriesofassets.
Accordingtothedraftbilln°6376,theothercategoriesofassetswillberestrictedtotheassetswhichareeligibletothefairvalueoptioninIFRS.
Inventoriesshallbemeasuredatlowerofcostormarketvalue.
[Art.
52;62;64bis;64terand64sexies]First-timeadoptionofaccountingframeworkIFRSincludesaspecificstandardonhowacompanyshouldapplyIFRSforthefirsttime(IFRS1-First-timeAdoptionofInternationalFinancialReportingStandards).
Itintroducescertainreliefsandimposescertainrequirementsanddisclosures.
First-timeadoptionofIFRSastheprimaryaccountingbasisrequiresfullretrospectiveapplicationofIFRSeffectiveatthereportingdateforanentity'sfirstIFRSfinancialstatements,withoptionalexemptionsprimarilyforPPE,businesscombinations,share-basedpaymentsandpensionplanaccountingandlimitedmandatoryexceptions.
ComparativeinformationispreparedandpresentedonthebasisofIFRS.
Almostalladjustmentsarisingfromthefirst-timeapplicationofIFRSareadjustedagainstopeningretainedearningsofthefirstperiodpresentedonanIFRSbasis.
Someadjustmentsaremadeagainstgoodwilloragainstotherclassesofequity.
Further,inanentity'sfirstIFRSfinancialstatements,itmustpresentreconciliationsofprofitorlossinrespectofthelastperiodreportedunderpreviousGAAP,ofequityattheendofthatperiodandofequityatthestartoftheearliestperiodpresentedincomparativesinthosefirstIFRSfinancialstatements.
Finally,anentity'sfirstIFRSfinancialstatementsshallincludeatleastthreestatementsoffinancialposition(includingtheopeningstatementoffinancialpositionatIFRStransitiondate),twostatementsofcomprehensiveincome,twoseparateincomestatements(ifpresented),twostatementsofcashflowsandtwostatementsofchangesinequityandrelatednotes.
Thereisnospecificguidanceonfirst-timeadoptionoftheLuxembourgaccountingframework.
Therefore,first-timeadoptionofLuxGAAPdoesnotrequirethefullretrospectiveapplicationofLuxGAAP.
Thecomparativefigureshavetobeadjustedtoensurecomparabilityofthepreviousyearitems.
Thismustbedisclosedinthenotestotheannualaccountswithrelevantcomments.
[Art.
29(4)]Accountingframework10PwCLuxembourgPresentationoffinancialstatementsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP11SubjectIFRSLuxGAAPGeneralrequirementsScopeandstandardTheapplicablestandardisIAS1-PresentationofFinancialStatements.
Thepresentationofannualaccountsiscoveredbythefollowingarticles:26(1);26(2);26(5);28;29(4);33;34;35;39(1);39(2);46;47;49;51(1)b);51(1)f);51(2);65;66;320(1)*and337*.
ComplianceEntitiesshouldmakeanexplicitandunreservedstatementthatfinancialstatementscomplywithIFRS.
Compliancecannotbeclaimedunlessthefinancialstatementscomplywithalltherequirementsofeachapplicablestandardandeachapplicableinterpretation.
TheannualaccountsshallbedrawnupclearlyandinaccordancewiththeprovisionoftheChapterIIoftheAccountingLaw"Annualaccounts".
TheconsolidatedannualaccountsshallbepreparedinaccordancewiththesectionXVIoftheCompanyLaw.
ComponentsoffinancialstatementsThefinancialstatementsarecomposedof:statementoffinancialposition;statementofcomprehensiveincome;statementofchangesinequity;statementofcashflows;accountingpolicies;andnotestothefinancialstatements.
Theannualaccountsarecomposedof:balancesheet;profitandlossaccount;accountingpolicies;andnotestotheannualaccounts.
ThestatementofchangesinequityandthestatementofcashflowsarenotrequiredbytheAccountingLaw.
ComparativedataOneyearofcomparativesisrequiredforallnumericalinformationinthefinancialstatements,withlimitedexceptions.
Comparativeinformationforqualitativedisclosuresisalsorequiredunlessdeemednotrelevantinimprovingthequalityofthefinancialstatements.
Inlimitednotedisclosures,morethanoneyearofcomparativeinformationisrequired.
LuxGAAPrequiresoneyearofcomparativesforeverycaptioninthebalancesheetandintheprofitandlossaccount.
Althoughnotspecificallyindicated,allnumericalinformationinthenotestotheannualaccountsgenerallyincludeoneyearofcomparatives.
Wherethefiguresfromoneyeararenotcomparabletofiguresoftheotheryearandwherethefiguresoftheprecedingyearhavebeenadjusted,thismustbedisclosedinthenotestotheannualaccountswithrelevantcomments.
Presentationoffinancialstatements12PwCLuxembourgSubjectIFRSLuxGAAPStatementoffinancialposition-balancesheetFormatThecurrent/non-currentdistinctionisrequiredbyIAS1-PresentationofFinancialStatementsforassetsandliabilities,exceptwhenaliquiditypresentationprovidesmorerelevantandreliableinformation.
Allassetsandliabilitiesarepresentedbroadlyinorderofliquidityinsuchcases.
Otherwise,thereisnoprescribedstatementoffinancialpositionformatandmanagementmayusejudgementregardingtheformofpresentationinmanyareas.
However,IFRSrequirespresentationofminimumitemsonthefaceofthestatementoffinancialposition,includingamongothers:assets:property,plantandequipment,investmentproperty,intangibleassets,financialassets,investmentsaccountedforusingtheequitymethod,biologicalassets,inventories,tradeandotherreceivables,deferredtaxassets,cashandcashequivalents,assetsclassifiedasheldforsaleandassetsincludedindisposalgroupsclassifiedasheldforsale;equityandliabilities:issuedcapitalandservesattributabletoownersoftheparent,financialliabilities,provisions,currentanddeferredtaxliabilities,tradeandotherpayables,financialliabilities,liabilitiesincludedindisposalgroupsclassifiedasheldforsaleandnon-controllinginterests(presentedwithinequity).
TheAccountingLawprescribesinarticle34astandardformatforthepresentationofthebalancesheet.
Theformatpresentsthetotalassetsandtotalliabilities.
Sincetheintroductionoftheelectronicfilingin2012,thisformatcannolongerbeadaptedtothespecificbusinessofthecompany.
Asallowedbyarticle35,small-sizedcompanies(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")maydrawuptheirbalancesheetintheformofanabridgedbalancesheet.
ThesederogationsarenotvalidforthecompanieswhosesecuritiesareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion.
Current/non-currentclassificationWherethedistinctionismade,assetsareclassifiedascurrentassetsiftheyareheldforsaleorconsumedinthenormalcourseoftheentity'soperatingcycle,orcashandcashequivalents.
Bothassetsandliabilitiesareclassifiedascurrentwhentheyareheldfortradingorexpectedtoberealisedwithin12monthsofthestatementoffinancialpositiondate.
Interest-bearingliabilitiesareclassifiedascurrentwhentheyareduetobesettledwithin12monthsofthestatementofthefinancialpositiondate,eveniftheoriginaltermwasforaperiodofmorethan12months.
Anagreementtorefinanceorreschedulepaymentsonalong-termbasisthatiscompletedafterthestatementofthefinancialpositiondatedoesnotresultinnon-currentclassificationofthefinancialliabilitiesevenifexecutedbeforethefinancialstatementsareissued.
TheAccountingLawrequirestopresentassetsinorderofliquidityandliabilitiesinorderofrepayability,accordingtotheprescribedformat.
IntheformatprescribedbytheAccountingLaw,thereisadistinctionbetweenfixedandcurrentassets.
Whetherassetsaretobeshownasfixedorcurrentassetsshalldependuponthepurposeforwhichtheyareintended.
Fixedassetsareassetsintendedforuseonacontinuingbasisforthepurposeoftheundertaking'sactivity.
Separatepresentationofassetsandliabilitiesintoamountsduewithinoneyearorafteroneyearisalsorequired.
Borrowingsdueafterfiveyearsmustbedisclosedseparatelyinthenotestotheannualaccounts.
PresentationoffinancialstatementsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP13SubjectIFRSLuxGAAPStatementoffinancialposition-balancesheetOffsettingassetsandliabilitiesAssetsandliabilitiescannotbeoffset,exceptwherespecificallypermittedbyastandard.
Financialassetsandfinancialliabilitiesareoffsetwhenanentityhasalegallyenforceablerighttooffsettherecognisedamountsandintendstosettletransactionsonanetbasisortorealisetheassetandsettletheliabilitysimultaneously.
Amasternettingagreement,intheabsenceoftheintentiontosettlenetorrealisetheassetandliabilitysimultaneously,isnotsufficienttopermitnetpresentationofderivativefinancialinstrumentsevenifitcreatesalegallyenforceablerightofoffset.
Generally,anentity'srightofoffsetunderamasternettingagreementisconditionalandenforceableonlyontheoccurrenceofsomefutureeventsandnetpresentationisnotpermitted.
Anyoffsetbetweenassetsandliabilitiesitemsisprohibited.
Presentationoffinancialstatements14PwCLuxembourgSubjectIFRSLuxGAAPStatementofcomprehensiveincome-profitorlossaccountFormatEntitiesshouldpresentallitemsofincomeandexpensesrecognisedinaperiod:inasinglestatementofcomprehensiveincome;orintwostatements:astatementdisplayingcomponentsofprofitorloss(separateincomestatement)andasecondstatementbeginningwithprofitorlossanddisplayingcomponentsofothercomprehensiveincome.
ThereisnoprescribedformatforthestatementofcomprehensiveincomeinIAS1-PresentationofFinancialStatements.
Theentityshouldselectamethodofpresentingitsexpensesrecognisedinprofitorlosseitherbyfunctionorbynature.
Thiscaneitherbe,asitisencouraged,onthefaceofthestatementofcomprehensiveincomeorintheseparateincomestatement(ifpresented).
Additionaldisclosureofexpensesbynatureisrequirediffunctionalpresentationisused.
Entitiesshouldnotmixfunctionalandnatureclassificationsofexpensesbyexcludingcertainexpensesfromthefunctionalclassificationstowhichtheyrelate.
Thefollowingminimumitemshavetobepresentedonthefaceofthestatementofcomprehensiveincome:revenue;financecosts;shareofpost-taxresultsofassociatesandjointventuresaccountedforusingtheequitymethod;taxexpense;post-taxgainorlossattributabletotheresultsandtoremeasurementofdiscontinuedoperations;profitorlossfortheperiod;eachcomponentofothercomprehensiveincomeclassifiedbynature(netoftaxorgrosswithnetcumulativetaxeffectonallitemsofothercomprehensiveincome);shareoftheothercomprehensiveincomeofassociatesandjointventuresaccountedforusingtheequitymethod;andtotalcomprehensiveincome.
Theportionofprofitorlossandtotalcomprehensiveincomeattributabletothenon-controllinginterestsandtotheownersoftheparentareseparatelydisclosedonthefaceofthestatementofcomprehensiveincomeasUnderLuxGAAP,allitemsofincomeandexpensesarepresentedinasinglestatementnamedprofitandlossaccount.
Thereisaprescribedformatinarticle46fortheprofitandlossaccount.
Theundertakingsreferredtoinarticle47(small-sizedandmedium-sizedcompanies–refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")maydrawuptheirprofitandlossaccountintheformofanabridgedprofitandlossaccount.
Thisexemptionis,however,notpermittedforcompanieswhosesecuritiesareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion.
Undertakingshavetheabilitytoincludeintheirannualaccountsastatementofcomprehensiveincomeinadditiontotheprofitandlossaccount.
PresentationoffinancialstatementsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP15SubjectIFRSLuxGAAPStatementofcomprehensiveincome-profitorlossaccountallocationsofprofitorlossandtotalcomprehensiveincomefortheperiodwithinthatcaption.
Anentitythatdisclosesanoperatingresultshallincludeallitemsofanoperatingnature,includingthosethatoccurirregularlyorinfrequentlyorareunusualinamount.
Thecomponentsofothercomprehensiveincomeshallinclude:changesinrevaluationsurplus(onitemsofproperty,plantandequipmentorintangibles);remeasurementofdefinedbenefitobligationsonemployeebenefits;gainsandlossesarisingfromtranslationofaforeignoperation;gainsandlossesonremeasuringavailable-for-salefinancialassets;andeffectiveportionofgainsandlossesonhedginginstrumentsinacashflowhedge.
Itemsthatwillnotberecycledsuchasrevaluationgainsonproperty,plantandequipmentarepresentedseparatelyfromitemsthatmayberecycledinthefuture,suchasdeferredgainsandlossesoncashflowhedges.
Entitiesthatchoosetopresentothercomprehensiveincomeitemsbeforetaxarerequiredtoshowtheamountoftaxrelatedtothetwogroupsseparately.
From2013,thetitleusedbyIAS1forthestatementofcomprehensiveincomehaschangedto"statementofprofitorlossandothercomprehensiveincome".
HoweverIAS1stillpermitsentitiestouseothertitles.
SignificantitemsAseparatedisclosureisrequiredforitemsofincomeandexpensesthatareofsuchsize,natureorincidencethatseparatedisclosureisnecessarytoexplaintheperformanceoftheentityfortheperiod.
Disclosuremaybeonthefaceoftheincomestatementorinthenotes.
IFRSdoesnotuseordefinethetermsignificantitems.
TheAccountingLawdoesnotdefinethetermsignificantitems.
ExtraordinaryitemsThepresentationofextraordinaryitemsisprohibited.
Article49definesextraordinaryitemsasincomeandchargesthatariseotherwisethaninthecourseofordinaryactivity.
Whenmaterial,extraordinaryitemsshallbeexplainedinthenotestotheannualaccounts.
Small-sizedcompanies(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")areexemptedtodisclosethisinformation,unlesstheyissuesecuritieswhichareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion.
Presentationoffinancialstatements16PwCLuxembourgSubjectIFRSLuxGAAPStatementofchangesinequityFormatAstatementofchangesinequityispresentedasaprimarystatementforallentitiesinaccordancewithIAS1-PresentationofFinancialStatements.
Thefollowingminimumitemshavetobepresented:totalcomprehensiveincomefortheperiod,showingseparatelythetotalamountsattributabletoownersoftheparentandtonon-controllinginterests;foreachcomponentofequity,theeffectsofretrospectiveapplicationorretrospectiverestatementrecognisedinaccordancewithIAS8-AccountingPolicies,ChangesinAccountingEstimatesandErrors;theamountsoftransactionswithownersintheircapacityasowners,showingseparatelycontributionsbyanddistributionstoowners;andforeachcomponentofequity,areconciliationbetweenthecarryingamountatthebeginningandattheendoftheperiod,separatelydisclosingeachchange.
Astatementofchangesinequityisnotrequiredbutmaybeincludedonavoluntarybasisintheannualaccounts.
IFRScanbeusedasabenchmark.
PresentationoffinancialstatementsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP17SubjectIFRSLuxGAAPStatementofcashflowsFormatAstatementofcashflowsispresentedinaccordancewithIAS7-StatementofCashFlowsasaprimarystatementforallentities.
Cashflowsfromoperating,investingandfinancingactivitiesareclassifiedseparately.
Astatementofcashflowsisnotrequiredbutmaybeincludedonavoluntarybasisintheannualaccounts.
IFRScanbeusedasabenchmark.
Direct/indirectmethodInflowsandoutflowsof"cashandcashequivalents"arereportedinthestatementofcashflows.
Thestatementofcashflowsmaybepreparedusingeitherthedirectmethod(cashflowsderivedfromaggregatingcashreceiptsandpaymentsassociatedwithoperatingactivities)ortheindirectmethod(cashflowsderivedfromadjustingnetincomefortransactionsofanoncashnaturesuchasdepreciation).
Theindirectmethodismorecommoninpractice.
Non-cashinvestingandfinancingtransactionsaretobedisclosed.
IFRScanbeusedasabenchmark.
DefinitionsofcashandcashequivalentsCashiscashonhand,anddemanddeposits.
Cashequivalentsareshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandaresubjecttoaninsignificantriskofchangesinvalue.
Aninvestmentnormallyqualifiesasacashequivalentonlywhenithasamaturityofthreemonthsorlessfromitsacquisitiondate.
Bankoverdraftsarenormallyconsideredfinancingactivitiessimilartoborrowings.
However,iftheyarerepayableondemandandformanintegralpartofanentity'scashmanagement,bankoverdraftsareacomponentofcashandcashequivalentsinthestatementofcashflows.
CashisnotdefinedintheAccountingLaw.
Thecashcaptiondoesnotinclude"cashequivalent"whichisclassifiedwithinthetransferablesecurities.
Bankoverdraftsarenormallyconsideredtobeliabilitiesandaccountedforinthecaptionamountsowedtocreditinstitutions.
However,ifthecompanyhasanetpositivebalancewiththesamebank,thebankoverdraftcanbedeductedfromthecashifthereisapossiblelegalcompensation.
Presentationoffinancialstatements18PwCLuxembourgSubjectIFRSLuxGAAPChangesinaccountingpolicyandotheraccountingchangesChangesinaccountingpolicyChangesinaccountingpolicyareaccountedforretrospectivelyinaccordancewithIAS8-AccountingPolicies,ChangesinAccountingEstimatesandErrors.
Comparativeinformationisrestatedandtheamountoftheadjustmentrelatingtopriorperiodsisadjustedagainsttheopeningbalanceofretainedearningsoftheearliestyearpresented.
Anexemptionapplieswhenitisimpracticabletochangecomparativeinformation.
Entitiesarerequiredtopresentastatementoffinancialposition(balancesheet)atthebeginningoftheearliestcomparativeperiodwhentheyapplyanaccountingpolicyretrospectivelyorwhentheyreclassifyitemsintheirfinancialstatements.
Policychangesmadeuponadoptionofanewstandardmustbeaccountedforinaccordancewiththatstandard'stransitionprovisions.
Themethoddescribedaboveisusediftransitionprovisionsarenotspecified.
Accountingpoliciesmustbeappliedconsistentlyandshallnotbemodifiedfromoneyeartoanother.
Anyexceptionaldeparturerequiresanexplanatorynotedetailingthereasonforsuchchangesandshalldetailtheimpactontheassetsandliabilities,thefinancialsituationandtheresultsoftheundertaking.
Thechangesinaccountingpoliciesareaccountedintheprofitandlossaccountintheyeartheyoccur.
Alternatively,themanagementmaydecidetoaccountforthechangesinaccountingpoliciesintheretainedearningsattheopeningofthefinancialyear.
Comparativefigurescannotberestatedbutmanagementmayopttoinsertintheannualaccountsnexttothecomparativefiguresacolumnwith"pro-forma"figureswherepreviousyear'sdatahavebeenrestatedusingthenewaccountingrulesofthecompany.
CorrectionoferrorsThesamemethodasforchangesinaccountingpolicyapplies.
Byvirtueoftheprincipleofintangibilityoftheopeningbalance,correctionsoferrorsarerecordedintheprofitandlossaccountintheyearwhendiscovered.
Alternatively,themanagementmaydecidetoaccountthecorrectionoferrorsintheretainedearningsattheopeningofthefinancialyear.
Wherethefiguresfromoneyeararenotcomparabletofiguresofthenextyearandwherethefiguresoftheprecedingyearhavebeenadjusted,thismustbedisclosedinthenotestotheannualaccounts,withrelevantcomments.
ChangesinaccountingestimatesChangesinaccountingestimatesarerecognisedprospectivelybyincludingtheeffectsinprofitorlossintheperiodthatisaffected(thatis,theperiodofchangeandfutureperiods)exceptifthechangeinestimatesgivesrisetochangesinassets,liabilitiesorequity.
Inthiscase,itisrecognisedbyadjustingthecarryingamountoftherelatedasset,liabilityorequityintheperiodofchange.
NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
PresentationoffinancialstatementsFuturedevelopmentsGuidanceonmanagementcommentaryInternationalAccountingStandardBoard("IASB")hasissuedanon-mandatorypracticestatementtohelpentitiespresentanarrativereport,oftenreferredtoasmanagementcommentary.
ThepracticestatementisnotanIFRS.
Thepracticestatementliststheinformationthatmanagementmightchoosetoprovidetousersofthefinancialstatementswithanexplanationoftheentity'sfinancialposition,financialperformanceandcashflows.
Itexplainsmanagement'sobjectivesanditsstrategiesforachievingthoseobjectives.
Thefocusofmanagementcommentarywillbespecifictoeachentity.
TheIASB'spracticestatementprovidesabroadframeworkofprinciples,qualitativecharacteristicsandelementsthatmightbeusedtoprovideusersofthefinancialreportwithdecision-usefulinformation.
Managementcommentarymightincludeadescriptionofthenatureofthebusiness,management'sobjectivesandstrategiestomeetthoseobjectives,criticalfinancialandnon-financialresources,principalrisks,performanceanddevelopmentoftheentityandperformancemeasures.
Entitiesthatarenotcurrentlyrequiredtoprovidemanagementcommentaryandnowelecttodosowillbeabletoapplythenewpracticestatement.
Entitiesthatcurrentlyprovidemanagementcommentaryinaccordancewithlocallegislationorlistingrequirementsareunlikelytobeaffected.
Entitiesthatelecttoapplythenon-mandatorypracticestatementshouldreviewanyexistingmanagementcommentarytoidentifyandincludesomeorallofthefeaturesrequiredbythepracticestatement.
IfaLuxembourgishentitypreparesstatutoryIFRSfinancialstatements,requirementsregardingmanagementreportshallcomplywithLuxembourgregulation(refertosection"TheLuxembourgregulatoryframework").
ConceptualFrameworkTheIASBiscurrentlyreviewingitsFrameworkandseekstoconvergeitwiththeconceptualframeworkoftheUSstandardssetter(theFinancialAccountingStandardsBoard–"FASB").
TheConceptualFrameworkprojectwillfocusonthefollowing:reportingentity,elementsoffinancialstatements(includingrecognitionandderecognition),measurement,presentationanddisclosure.
Beforebeingpausedin2010,theIASBcompletedchaptersontheobjectiveoffinancialreportingandqualitativecharacteristicsofusefulinformation.
TheIASBagreedtorestartthisprojectinSeptember2012.
Adiscussionpaperistargetedtobereleasedduringthesecondquarterof2013.
Similaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP19PresentationoffinancialstatementsAssets,liabilitiesandequity20PwCLuxembourgSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP21SubjectIFRSLuxGAAPIntangibleassetsotherthangoodwill,formationexpensesScopeandstandardTheapplicablestandardisIAS38-IntangibleAssets.
Intangiblefixedassetsandformationexpensesarecoveredbythefollowingarticles:34;39;53;55;59(1);64sexies;64septiesand65.
DefinitionsAnintangibleassetisanidentifiablenon-monetaryassetwithoutphysicalsubstance.
FormationexpensesdonotqualifyasassetsunderIFRSandshallbeexpensedimmediately.
Intangiblefixedassetsareitemswithoutphysicalsubstancewhichareintendedforuseonacontinuingbasisforthepurposeoftheundertaking'sactivity.
Intangibleitemsarecomposedof:researchanddevelopmentcosts;concessions,patents,licenses,trademarksandsimilarrightsandassets;andpaymentsonaccountandintangibleassetsunderdevelopment.
Formationexpensesareexpensesrelatingtothecreationorextensionofanundertakingorofalineofbusiness(forexampleset-upcosts).
Recognition–GeneralrulesTherecognitioncriteriarequirethatitisprobablethatfutureeconomicbenefitsattributabletotheassetwillflowtotheentity(probabilitycriterion),theasset'scostcanbereliablymeasured(reliabilitycriterion)andtheassetisidentifiable(identifiablecriterion).
Theidentifiablecriterionismetwhenintangibleassetisseparable(thatis,itcanbesold,transferred,licensed,rentedorexchanged),orwhereitarisesfromcontractualorlegalrights.
Theoverridingrecognitioncriteriaapplytobothinitialcostsandsubsequentexpenditureincurredinacquiringorinternallygeneratinganintangibleasset.
Iftherecognitioncriteriaarenotmet,costsmustbeexpensed.
Itisimportanttodistinguishbetweenthedifferentwaysofacquiringanintangibleassetasitwillaffecttheassumptionsmadeinapplyingthethreerecognitioncriteriaandtheinitialmeasurementoftheassets.
Thethreemajorcategoriesofintangibleassetsincludeinternallygeneratedintangibleassets,separatelyacquiredintangibleassetsorintangibleassetsacquiredinabusinesscombination.
Intangiblefixedassetsarerecognisedwhenthecontrol(generallythepropertyrights)istransferred.
Therecognitionofintangiblefixedassetsshallalsobebasedonthesubstanceoverformprinciple.
Thisprincipleshouldbecomeoptionalwiththeadoptionofthedraftbilln°6376.
Formationexpensesmaybeeithercapitalisedordirectlyexpensed.
Thesameprincipleappliestoresearchanddevelopmentcosts.
Recognition–AdditionalcriteriaforinternallygeneratedintangiblesThecostsassociatedwiththecreationofintangibleassetsareclassifiedbetweentheresearchphaseanddevelopmentphase.
Costsintheresearchphasearealwaysexpensed.
Costsinthedevelopmentphaseareexpensedunlesstheentitycandemonstrateallofthefollowing:thetechnicalfeasibilityofcompletingtheintangibleasset;NospecificguidanceintheAccountingLaw.
Inpractice,internallygeneratedfixedassetscanbecapitalisedunderthethreefollowingcriteria:theexpensesmustbeincurredbythecompanyforitsownaccount;theexpensesmustofferareasonablechanceoftechnicalsuccessandprofitability;andthecompanymustbeabletodemonstrateanexclusivepropertyright.
Assets,liabilitiesandequity22PwCLuxembourgSubjectIFRSLuxGAAPIntangibleassetsotherthangoodwill,formationexpensestheintentiontocompletetheintangibleasset;theabilitytouseorsellit;howtheintangibleassetwillgeneratefutureeconomicbenefits(theentityshalldemonstratetheexistenceofamarketor,ifforinternaluse,theusefulnessoftheintangibleasset);theavailabilityofadequateresourcestocompletethedevelopment;andtheabilitytomeasurereliablytheexpenditureattributabletotheintangibleassetduringitsdevelopment.
Developmentcostsinitiallyrecognisedasanexpensecannotbecapitalisedinasubsequentperiod.
Recognition–WebsitedevelopmentcostsCostsincurredduringtheplanningstageareexpensed.
Costsincurredforactivitiesduringthewebsite'sapplicationandinfrastructuredevelopmentstagesarecapitalised,andcostsincurredduringtheoperationalstageareexpensedasincurred.
Generalrulesforinternallygeneratedintangiblefixedassetsapply.
Recognition–IntangibleassetsacquiredinabusinesscombinationIFRS3-BusinessCombinationsrequiresthat,inabusinesscombination,theacquirerrecognisesanidentifiableintangibleassetifitsfairvaluecanbereliablymeasured.
Thisistheonlycriterionthathastobesatisfiedasitispresumedthattheprobabilitycriterionissatisfied.
Theconditionisdeemedtobesatisfied,becausetheprobabilityfactorisreflectedinthefairvalueattributedtotheintangibleasset.
Thecostofanintangibleassetacquiredinabusinesscombinationisitsfairvalueattheacquisitiondate.
Theacquirer'sintentionsorspecificcircumstancesarenotrelevanttothemeasurementoffairvalueasfairvalueisnotentity-specific.
ButthereliablemeasurementcriterionwillalwaysbemetforintangibleassetsacquiredinabusinesscombinationunderIFRS3.
Theeffectsofuncertaintyarereflectedinmeasuringtheasset'sfairvalue.
Herearetypesandexamplesofidentifiableintangibleassetsacquiredinabusinesscombination:marketing-relatedassets:trademarks,newspapermastheads,internetdomainnames,non-competitiveagreements,etc.
;customer-relatedassets:customerslists,orderorproductionbacklogs,customercontractsandrelatedcustomerrelationships,non-contractualcustomerrelationships,etc.
;NospecificguidanceintheAccountingLaw.
IFRScanbeusedasabenchmark.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP23SubjectIFRSLuxGAAPIntangibleassetsotherthangoodwill,formationexpensescontract-basedassets:licensings,royalties,advertisings,constructions,management,serviceorsupplycontracts,operatingandbroadcastrights,franchiseagreements,etc.
;andtechnology-basedassets:patentedtechnologies,researchanddevelopmentworks,computersoftwares,unpatentedtechnology,databases,etc.
InitialmeasurementInternallygeneratedandseparatelyacquiredintangibleassetsareinitiallymeasuredatcostwhileintangibleassetsacquiredinabusinesscombinationareinitiallymeasuredatfairvalue.
Intangiblefixedassetsmustbeinitiallymeasuredatpurchasepriceorproductioncost.
PurchasepriceThepurchasepriceshallbecalculatedbyaddingtothepricepaidtheexpensesincidentalthereto.
Ancillarycostsincludealldirectcostswiththeexceptionofdistributioncosts,overheadandfinancingcosts.
ProductioncostTheproductioncostshallbecalculatedbyaddingtothepurchasepriceoftherawmaterialsandconsumablesthecostsdirectlyattributabletotheintangiblefixedassetsinquestion.
Areasonableproportionofthecostswhichareonlyindirectlyattributabletotheproductinquestionmaybeaddedintotheproductioncoststotheextenttowhichtheyrelatetotheperiodofproduction.
Interestoncapitalborrowedtofinancetheproductionofintangiblefixedassetsmaybeincludedintheproductioncosttotheextentitrelatestotheperiodofproduction.
Therecognitionofintangiblefixedassetsacquiredinabusinesscombinationcanbemadeatbookvalueormarketvaluedependingonthepurchasepriceallocationdocumentation.
Assets,liabilitiesandequity24PwCLuxembourgSubjectIFRSLuxGAAPIntangibleassetsotherthangoodwill,formationexpensesSubsequentmeasurementIntangibleassetswithafinitelifearesubjecttoamortisationandcarriedathistoricalcostlessaccumulatedamortisation/impairment,oratfairvaluelesssubsequentamortisation/impairment.
Subsequentrevaluationofintangibleassetstotheirfairvalueisbasedonpricesobservableonanactivemarket.
Revaluationsareperformedregularlyandatthesametimeifanentityadoptsthistreatment.
Therevaluationmodelisveryrareinpractice.
Theresidualvalueattheendoftheusefullifeispresumedtobezero,unlessthereiseitheracommitmentbyathirdpartytopurchasetheassetand/orthereisanactivemarketfortheasset.
Intangibleassetswithindefiniteusefullivesarenotsubjecttoamortisationandarecarriedathistoricalcostunlessimpaired.
Impairmentreviewsarerequiredwheneverchangesineventsorcircumstancesindicatethatanintangibleasset'scarryingamountmaynotberecoverable.
Annualimpairmenttestsarerequiredforintangibleassetswithindefiniteusefullivesandforassetsnotyetreadyforuse.
Reversalsofimpairmentlossesareallowedunderspecificcircumstances.
Intangiblefixedassetsarecarriedathistoricalcostlessaccumulatedamortisationandvalueadjustment.
Alternatively,intangiblefixedassetscanbefairvaluedusingthemarketvalueoranyvalueresultingfromgenerallyacceptedvaluationmodelsandtechniques.
HistoricalcostconventionIntangiblefixedassetswithindefinitelifearenotamortised,butshouldbetestedannuallyforvalueadjustments.
Intangiblefixedassetswithdefinitelifeareamortisedovertheireconomicusefullife.
Formationexpensesandresearchanddevelopmentcosts,ifcapitalised,shallbewrittenoffonastraight-linebasisoveraperiodoffiveyearsmaximum.
Theperiodofamortisationofresearchanddevelopmentcanbeextendedwhereitisexpectedthatthebenefitswillexceedfiveyears.
Nodividendcanbedistributedinsofartheyhavenotbeencompletelywrittenoffunlessthereareavailablereservesequaltotheexpensesnotwrittenoff.
Valueadjustmentsmustbemadesothatintangiblefixedassetsarevaluedatthelowerfiguretobeattributedtothematthebalancesheetdateifitisexpectedthatthereductioninvaluewillbepermanent.
Valueadjustmentsmaynotbecontinuedifthereasonsforwhichthevalueadjustmentsweremadehaveceasedtoapply.
FairvalueoptionUndertheexistingAccountingLaw,intangiblefixedassetscanbefairvalued(possiblemodificationcontemplatedbydraftbilln°6376,fairvalueoptionavailableiffairvaluepermittedunderIFRS).
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP25SubjectIFRSLuxGAAPIntangibleassetsotherthangoodwill,formationexpensesDisclosureThedisclosuresrequiredarecomprehensiveandincludethemethodchosenforsubsequentmeasurement,theestimatedusefullife,amortisationratesaswellasthemovementingrosscarryingamount,inaccumulateddepreciationandinimpairmentwhichshallreconcilewiththenetcarryingamountanddepreciationchargeoftheyear.
Thisinformationmustbegivenbyclasses.
Thereasonsupportingtheassessmentofindefinitelifewhencompanyholdssuchassetsshallbedisclosed.
Forassetsonwhichtherevaluationmodelisapplied,themovementinrevaluationsurplusandtherestrictiononitsdistributiontoshareholdersaswellaswhatwouldhavebeenthecarryingamounthadthecompanychosenthecostmodelshallbedisclosed.
Thenotestotheannualaccountsmustincludethevaluationmethodsappliedtothevariousitemsandthemethodsemployedincalculatingtheamortisation.
Inaddition,ifintangiblefixedassetsaresubjecttoexceptionalamortisation,theamountoftheadjustmentsandthereasonsformakingthemmustbedisclosedinthenotestotheannualaccounts.
Intheeventthatborrowinginterestisincludedintheproductioncost,theinclusionofsuchinterestmustbedisclosed.
Movementsofthecategoriesofintangiblefixedassetsduringtheyearmustbedisclosedinthenotestotheannualaccounts.
Theformationexpensesmustbedetailedinthenotestotheannualaccounts.
Movementsinformationexpensesshallbedetailedinthenotestotheannualaccounts.
Wherevaluationatfairvaluehasbeenapplied,annualaccountsmustdisclosethefollowing:themainassumptionsinrelationtothemodelsandvaluationtechniquesused;themovementsoffairvaluebookeddirectlyintheprofitandlossaccountandinthefairvaluereserve;themovementsofthefairvaluereserve.
Small-sizedcompanies(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework"),areexemptedfromtheobligationtodisclosemovementsofthecategoriesofintangiblefixedassetsandformationexpenses.
Assets,liabilitiesandequity26PwCLuxembourgSubjectIFRSLuxGAAPProperty,plantandequipmentScopeandstandardTheapplicablestandardisIAS16-Property,PlantandEquipment.
Thestandarddoesnotapplyto:investmentproperty;biologicalassetsrelatedtoagriculturalactivity;recognisingandmeasuringexplorationandevaluationassets;mineralrightsandmineralreservessuchasoil,naturalgasandsimilarnon-regenerativeresources;andplantandequipmentclassifiedasheldforsaleinaccordancewithIFRS5-Non-currentAssetsHeldforSaleandDiscontinuedOperations.
Tangiblefixedassetsarecoveredbythefollowingarticles:34;39;40;55;64sexies;64septiesand65.
DefinitionsProperty,plantandequipment("PPE")aretangibleassetsthatare:heldforuseintheproductionorsupplyofgoodsandservices,forrentaltoothersorforadministrativepurposes;andexpectedtobeusedduringmorethanoneperiod.
Property,plantandequipmentarenotdefinedassuchintheAccountingLawbutlistedintheprescribedformatofthebalancesheet.
Theyareclassifiedasfixedassetsiftheyareintendedforuseonacontinuingbasisforthepurposeoftheundertaking'sactivity.
Inpractice,theyaredisclosedastangiblefixedassetsinthebalancesheet.
Tangiblefixedassetsarecomposedof:landandbuildings;plantandmachinery;otherfixturesandfittings,toolsandequipment;andpaymentsonaccountandtangibleassetsincourseofconstruction.
RecognitionGeneralIFRSassetrecognitioncriteriaapply.
PPEisrecognisediffutureeconomicbenefitsattributabletotheassetareprobableandthecostoftheassetcanbemeasuredreliably.
Sufficientcertaintythatfutureeconomicbenefitswillflowtotheentityisnormallyachievedonlywhentherisksandrewardsoftheassethavepassedtotheentity.
Beforethis,thetransactioncanusuallybecancelledwithoutsignificantpenaltyand,therefore,theassetshouldnotberecognised.
Normally,thetransferofrisksandrewardsisassumedtooccurwhenanunconditionalandirrevocablecontractisputinplace.
Wherethereisacontractualcommitmentfortheacquisitionofproperty,plantandequipment,suchcommitmentsaredisclosed,buttheassetisnotrecogniseduntilthetransferofrisksandrewardshasoccurred.
GeneralLuxGAAPassetrecognitioncriteriaapply:tangiblefixedassetsshouldbeinitiallyrecognisedwhenthecontrol(generallythepropertyrights)overtheseitemsistransferred,i.
e.
thedatewhenthesignificantrisksandrewardsincidentaltothetangiblefixedassetsaretransferred.
Therecognitionoftangiblefixedassetsshallalsobebasedonthesubstanceoverformprinciple.
Thisprincipleshouldbecomeoptionalwiththeadoptionofthedraftbilln°6376.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP27SubjectIFRSLuxGAAPProperty,plantandequipmentInitialmeasurementPPE,atinitialmeasurement,comprisesthecostsdirectlyattributabletobringingtheassettothelocationandworkingconditionnecessaryforittobecapableofoperatinginthewaymanagementintends,includingcostsoftestingwhethertheassetisfunctioninginthewaythemanagementintends.
Start-upandpre-productioncostsarenotcapitalisedunlesstheyareanecessarypartofbringingtheassettoitsworkingcondition.
Thefollowingcostsarealsoincludedintheinitialmeasurementoftheasset:thecostsofsitepreparation;initialdeliveryandhandlingcosts;installationandassemblycosts;costsofemployeebenefitsarisingfromconstructionoracquisitionoftheasset;costsoftestingwhethertheassetisfunctioningproperly;professionalfees;fairvaluegains/lossesonqualifyingcashflowhedgesrelatingtothepurchaseofPPEinaforeigncurrency;andtheinitialestimateofthecostsofdismantlingandremovingtheitemandrestoringthesiteonwhichthePPEislocated.
GovernmentgrantsreceivedinconnectionwiththeacquisitionofaPPEmaybesetoffagainstthecosts.
Sparepartsandservicingequipmentarenormallytreatedasinventoryandexpensedasconsumed.
However,majorsparepartsandstand-byequipmentshouldbetreatedasproperty,plantandequipmentwhentheyareexpectedtobeusedduringmorethanoneperiod.
Tangiblefixedassetsmustbevaluedatpurchasepriceorproductioncost.
PurchasepriceThepurchasepriceshallbecalculatedbyaddingtothepricepaidtheexpensesincidentalthereto.
Ancillarycostsincludealldirectcostswiththeexceptionofdistributioncosts,overheadandfinancingcosts.
ProductioncostTheproductioncostshallbecalculatedbyaddingtothepurchasepriceoftherawmaterialsandconsumablesthecostsdirectlyattributabletothetangiblefixedassetsinquestion.
Areasonableproportionofthecostswhichareonlyindirectlyattributabletotheproductinquestionmaybeaddedintotheproductioncoststotheextenttowhichtheyrelatetotheperiodofproduction.
Governmentgrantsreceivedareeitherdeductedfromthebookvalueofthetangiblefixedassetconcernedorrecordedinthecaption"Capitalinvestmentsubsidies"intheliability.
Sparepartsaretreateddifferentlydependingupontheirnatureandtheiruse:mainsparepartsarerecordedastangiblefixedassetswhentheyareexpectedtobeusedduringmorethan12monthsandareamortisedovertheremaininglifeoftherelatedasset;otherwisetheyarerecordedasinventory;andothersparepartsandmaintenanceequipmentarerecordedasinventory.
Initialmeasurement–BorrowingcostsTheentityshallincludetheborrowingcostsincurredduringtheperiodofacquiring,constructingorproducingtheassetforuse(refertosection"Capitalisationofborrowingcosts").
Interestoncapitalborrowedtofinancetheproductionoftangiblefixedassetsmaybeincludedintheproductioncoststotheextentitrelatestotheperiodofproduction.
Assets,liabilitiesandequity28PwCLuxembourgSubjectIFRSLuxGAAPProperty,plantandequipmentSubsequentmeasurementPPEisaccountedforeitherunderthecostmodelortherevaluationmodel.
Underthecostmodel,PPEiscarriedatcostlessaccumulateddepreciationandimpairment.
Undertherevaluationmodel,PPEiscarriedatfairvalueatthedateofrevaluationlessdepreciationandimpairment.
Therevaluationmodelshouldbeappliedtoanentireclassofassets.
Revaluationshavetobekeptsufficientlyup-to-datetoensurethatthecarryingamountdoesnotdiffermateriallyfromfairvalue.
Theincreaseofanasset'scarryingamountasaresultofarevaluationiscreditedasothercomprehensiveincome,unlessitreversesarevaluationdecreaseforthesameassetpreviouslyrecognisedasanexpense.
Inthiscaseitisrecognisedintheincomestatement.
Arevaluationdecreaseisrecognisedasothercomprehensiveexpenseagainstanyrelatedrevaluationsurplusforthesameasset;anyexcessisrecognisedasanexpenseintheincomestatement.
Tangiblefixedassetsarecarriedathistoricalcostlessaccumulateddepreciationsandvalueadjustments.
Alternatively,tangiblefixedassetscanbefairvaluedusingthemarketvalueoranyvalueresultingfromgenerallyacceptedvaluationmodelsandtechniques(possiblemodificationcontemplatedbydraftbilln°6376,fairvalueoptionavailableiffairvaluepermittedunderIFRS).
Theunrealisedgainsorlossesfortheperiodarerecordedintheprofitandlossaccountorinarevaluationreserve.
Thecostoftheasset,orotheramountsubstitutedforcost,lessitsresidualvalueshallbedepreciatedonasystematicbasisovertheeconomicusefullifeoftheasset.
Depreciationchargedinaperiodisgenerallyrecognisedintheincomestatement(moreexactlyaspartofoperatingprofit).
Tangiblefixedassetsaredepreciatedovertheirusefuleconomiclife.
Theamounttodepreciatemust,whereappropriate,reflectthepurchasepricelesstheresidualvalue.
Depreciationoflandsisprohibited,exceptforquarriesandlandfillsites.
ImpairmentTodeterminewhetheranitemofproperty,plantandequipmentisimpaired,anentityappliesIAS36-ImpairmentofAssets.
Thatstandardexplainshowanentityreviewsthecarryingamountofitsassets,howitdeterminestherecoverableamountofanasset,andwhenitrecognisesorreversestherecognitionofanimpairmentloss.
Refertosection"Impairmentofnon-financialassets".
ValueadjustmentsValueadjustmentsmustbemadesothattheyarevaluedatthelowerfiguretobeattributedtothematthebalancesheetdateifitisexpectedthatthereductioninvaluewillbepermanent.
Valueadjustmentsmaynotbecontinuedifthereasonsforwhichthevalueadjustmentsweremadehaveceasedtoapply.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP29SubjectIFRSLuxGAAPProperty,plantandequipmentSubsequentmeasurement–SubsequentcostsOnceanitemofproperty,plantandequipmenthasbeencapitalised,anentitymayincurfurthercostsonthatassetatalaterdate.
Thedecisiontocapitaliseorexpenseinvolvesconsiderationofthefutureeconomicbenefitsoriginallyexpectedfromtheasset.
Subsequentcoststhatmerelymaintaintheeconomicbenefitsoriginallyexpectedareconsideredrepairsandmaintenanceandarerecognisedasanexpenseintheincomestatementwhenincurred.
Subsequentcostsareincludedinanasset'scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheentityandthecostoftheitemcanbemeasuredreliably.
Additionalfutureeconomicbenefitswouldnormallyariseinsituationswherethesubsequentcostsresultineitheranincreaseinproductivecapacity,anadditionalabilitytogeneratefutureeconomicbenefitsoranextensionintheexpectedusefullife.
Thecostsoftheday-to-dayservicingofanitemofproperty,plantandequipmentarenotrecognisedasanassetbecausetheydonotaddtothefutureeconomicbenefitsoftheitem.
Thesecostsmaintaintheasset'spotentialtodeliverthefutureeconomicbenefitsthatwereexpectedwhentheassetwasoriginallyacquired.
Thesesubsequentrepairandmaintenancecostsdonot,therefore,qualifyforrecognitionasanassetandarerecognisedinprofitorlossasincurred.
Day-to-dayservicingcostswouldincludecostsoflabourandconsumablesandmayincludethecostofsmallreplacementparts.
Thepurposeofthistypeofexpenditureisoftenknownas"repairsandmaintenance".
Thecostofamajorinspectionoroverhauloccurringatregularintervalsiscapitalisedwheretherecognitioncriteriaaresatisfied.
Anyremainingcarryingamountrelatingtothepreviousinspectionisderecognised.
Thistreatmentisregardlessofwhetherornotthecostofthepreviousinspectionwasseparatelyidentifiedanddepreciatedwhentheitemwasacquiredorconstructed.
Theestimatedcostofafuturesimilarinspectionmaybeusedasaproxyforthecarryingvaluethatneedstobederecognisedifthiswasnotseparatelyidentifiedpreviously.
Thesubsequentexpenseswhichenhanceorincreasetheeconomiclifeofthetangiblefixedassetshallbecapitalised.
Subsequentexpenditureswhichonlyallowkeepingtheperformanceofthetangiblefixedassetshallnotbecapitalised.
Assets,liabilitiesandequity30PwCLuxembourgSubjectIFRSLuxGAAPProperty,plantandequipmentDisclosureThedisclosuresrequiredarecomprehensiveandincludethemethodchosenforsubsequentmeasurement,theusefullife,theamortisationrates,theresidualvalueaswellasthemovementingrosscarryingamount,inaccumulateddepreciationandimpairmentwhichshallreconcilewiththenetcarryingamountanddepreciationchargeoftheperiod.
Thisinformationmustbegivenbyclasses.
TheamountofPPEpledgedshallalsobedisclosedaswellastherestrictionsontitleandcommitmentstoacquirePPE.
Forassetsmeasuredundertherevaluationmodel,itshallbedisclosed,iftheworkofanindependentvaluerwasused,thefairvaluelevel(degreeofobservableinputsusedinfairvaluedetermination),themovementinrevaluationsurplusandtherestrictiononitsdistributiontoshareholdersaswellaswhatwouldhavebeenthecarryingamounthadthecompanychosenthecostmodel.
Forfurtherdisclosuresonfairvaluation,refertosection"Fairvalue".
Thedisclosuresrequiredincludethevaluationmethod,theusefullife,theamortisationmethodandtheamortisationrate.
Inaddition,iftangiblefixedassetsaresubjecttoexceptionalvalueadjustments,theamountoftheadjustmentsandthereasonsformakingthemmustbedisclosedinthenotestotheannualaccounts.
Moreover,intheeventthatborrowingcostsareincludedintheproduction,theinclusionofsuchcostsmustbedisclosed.
Movementsintangiblefixedassetsduringtheyearhavealsotobedisclosedbycategory.
Wherevaluationatfairvaluehasbeenapplied,annualaccountsmustdisclosethefollowing:themainassumptionsinrelationtothemodelsandvaluationtechniquesused;themovementsoffairvaluebookeddirectlyintheprofitandlossaccountandinthefairvaluereserve;themovementsofthefairvaluereserve.
Small-sizedcompanies(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")areexemptedfromtheobligationtodisclosemovementsofthecategoriesoftangiblefixedassets.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP31SubjectIFRSLuxGAAPInvestmentpropertyScopeandstandardTheapplicablestandardisIAS40-InvestmentProperty.
Investmentpropertyiscoveredbythefollowingarticles:34;39;40;55;64sexies;64septiesand65.
DefinitionsInvestmentpropertiesincludelandsandbuildingsheldinordertoearnrentalsand/orforcapitalappreciation.
Thedefinitiondoesnotincludeowner-occupiedpropertyorpropertyheldforsaleintheordinarycourseofbusiness.
However,theyincludeinvestmentpropertiesbeingconstructedordeveloped.
TherearenospecificrulesanddefinitionforinvestmentpropertiesundertheAccountingLaw.
Investmentpropertiesarepartofthetangiblefixedassetsaslongastheyareintendedforuseonacontinuingbasisforthepurposeoftheundertaking'sactivity.
Rightstoimmovableandothersimilarrightsmustbeshownunderlandandbuildings.
RecognitionInvestmentpropertyshallberecognisedasanassetwhen,andonlywhen:itisprobablethatthefutureeconomicbenefitsthatareassociatedwiththeinvestmentpropertywillflowtotheentity;andthecostoftheinvestmentpropertycanbemeasuredreliably.
Anentityevaluatesunderthisrecognitionprincipleallitsinvestmentpropertycostsatthetimetheyareincurred.
Thesecostsincludecostsincurredinitiallytoacquireaninvestmentpropertyandcostsincurredsubsequentlytoaddto,replacepartof,orserviceaproperty.
Undertherecognitionprinciplementionedabove,anentitydoesnotrecogniseinthecarryingamountofaninvestmentpropertythecostsoftheday-to-dayservicingofsuchaproperty.
Rather,thesecostsarerecognisedinprofitorlossasincurred.
Costsofday-to-dayservicingareprimarilythecostoflabourandconsumables,andmayincludethecostofminorparts.
Thepurposeoftheseexpendituresisoftendescribedasforthe"repairsandmaintenance"oftheproperty.
Partsofinvestmentpropertiesmayhavebeenacquiredthroughreplacement.
Forexample,theinteriorwallsmaybereplacementsoforiginalwalls.
Undertherecognitionprinciple,anentityrecognisesinthecarryingamountofaninvestmentpropertythecostofreplacingpartofanexistinginvestmentpropertyatthetimethatcostisincurrediftherecognitioncriteriaaremet.
ThecarryingamountofthosepartsthatarereplacedisderecognisedinaccordancewiththederecognitionprovisionsofIAS40.
Investmentpropertiesshallbeinitiallyrecognisedwhenthecontrol(generallythepropertyrights)overtheseitemsistransferred,i.
e.
thedatewhenthesignificantrisksandrewardsincidentaltotheitemsaretransferred.
Therecognitionofinvestmentpropertiesshallalsobebasedonthesubstanceoverformprinciple.
Thisprincipleshouldbecomeoptionalwiththeadoptionofthedraftbilln°6376.
Thesubsequentexpenseswhichenhanceorincreasetheeconomiclifewillbecapitalised.
Subsequentexpenditureswhichonlyallowkeepingtheperformanceofanassetshouldnotbecapitalised.
Assets,liabilitiesandequity32PwCLuxembourgSubjectIFRSLuxGAAPInvestmentpropertyInitialmeasurementThesamecost-basedmeasurementisusedforacquiredandself-constructedinvestmentproperty.
Thecostofapurchasedinvestmentpropertyincludesitspurchasepriceandanydirectlyattributablecostssuchasprofessionalfeesforlegalservices,propertytransfertaxesandothertransactioncosts.
Self-constructedpropertyisdirectlyaccountedforasaninvestmentpropertyduringtheconstructionphase.
Propertyunderfinanceoroperatingleasecanalsobeclassifiedasinvestmentproperty.
Borrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarerequiredtobecapitalisedaspartofthecostofthatasset.
GeneralborrowingcostsarerequiredtobecapitalisedbasedonanallocationkeydefinedinIAS23-BorrowingCostsifusedinrelationwiththeasset.
Refertosection"Capitalisationofborrowingcosts".
Investmentpropertiesareinitiallyrecordedatpurchasepriceoratconstructioncost.
PurchasepriceThepurchasepriceshallbecalculatedbyaddingtothepricepaidtheexpensesincidentalthereto.
Ancillarycostsincludealldirectcostswiththeexceptionofdistributioncosts,overheadandfinancingcosts.
ConstructioncostTheconstructioncostshallbecalculatedbyaddingtothepurchasepriceoftherawmaterialsandconsumablesthecostsdirectlyattributabletotheconstructionoftheinvestmentproperty.
Areasonableproportionofthecostswhichareonlyindirectlyattributabletotheinvestmentpropertymaybeaddedintotheconstructioncoststotheextenttheyrelatetotheperiodofconstruction.
Interestoncapitalborrowedtofinancetheconstructionoftheinvestmentpropertymaybeincludedintheconstructioncosttotheextentitrelatestotheperiodofconstruction.
Thecostsrelatedtotheself-constructedinvestmentpropertyarerecordedasexpensesduringtheyearandarerecognisedasafixedtangibleassetunderdevelopmentattheendofthefinancialyear.
Thefixedtangibleassetunderdevelopmentistransferredtotheappropriatebalancesheetcaptionwhentheinvestmentisreadyforuse.
SubsequentmeasurementTheentitycanchoosebetweenthefairvaluemodelandthecostmodelforallinvestmentproperty.
Thecompanycanchoosebetweenthehistoricalcostmodelandthefairvaluemodel.
Subsequentmeasurement–HistoricalcostmodelThecostmodelissimilartotheonedescribedinthesection"Property,plantandequipment".
Investmentpropertiesarecarriedathistoricalcostlessaccumulateddepreciationandvalueadjustments.
Theymustbevaluedseparately.
Investmentpropertiesaredepreciatedovertheirestimatedusefuleconomiclife.
Theamounttodepreciatemust,whereappropriate,reflectthepurchasepricelesstheresidualvalue.
Depreciationoflandsisprohibited,exceptforquarriesandlandfillsites.
Fortheinvestmentpropertiesmeasuredunderhistoricalcostmodel,theimpairmentrequirementsfollowtherulesdescribedinthesection"Impairmentofnon-financialassets".
Valueadjustmentsmustbemadesothatinvestmentpropertiesarevaluedatthelowerfiguretobeattributedtothematthebalancesheetdateifitisexpectedthatthereductioninvaluewillbepermanent.
Valueadjustmentsmaynotbecontinuedifthereasonsforwhichthevalueadjustmentsweremadehaveceasedtoapply.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP33SubjectIFRSLuxGAAPInvestmentpropertySubsequentmeasurement–Fairvaluemodel–FrequencyandbasisofrevaluationsThefairvalueofinvestmentpropertyreflectsthemarketconditionsandcircumstancesasofthestatementoffinancialpositiondate.
Thestandarddoesnotrequiretheuseofanindependentandqualifiedappraiser,buttheuseisencouraged.
Revaluationsshouldbemadewithsufficientregularitythatthecarryingamountdoesnotdiffermateriallyfromfairvalue.
Investmentpropertiescanbefairvaluedusingthemarketvalueoranyvalueresultingfromgenerallyacceptedvaluationmodelsandtechniques.
Theunrealisedgainsorlossesfortheyeararerecordedintheprofitandlossaccountorinarevaluationreserveuponmanagementdecision.
Arevaluationshallbemadeatleasteachyearatclosingdate.
Subsequentmeasurement–Fairvaluemodel–InvestmentpropertyunderconstructionThefollowingfactorsshouldbetakenintoaccountinassessinghowtodetermineareliablefairvalue:theprovisionsoftheconstructioncontract;thestageofcompletion;whethertheproject/propertyisstandard(typicalforthemarket)ornon-standard;thelevelofreliablecashinflowsaftercompletion;thedevelopmentriskspecifictothepropertyandwhohastheresponsibility;pastexperiencewithsimilarconstructions;andstatusofconstructionpermits.
Thereare2modelsused:discountedfuturecashflows(i.
e.
pre-letting);andresidualvalue:fairvalueatcompletionminuscoststocomplete.
NospecificguidanceintheAccountingLaw.
IFRScanbeusedasabenchmark.
Subsequentmeasurement–Transfersto/frominvestmentpropertyWhenthereisachangeinuseoftheinvestmentproperty,thereisdetailedguidanceforsubsequentclassification.
Investmentpropertytobesoldisreclassifiedasinventoriesifthereisadevelopmentwithaviewtosale,andinvestmentpropertytobeowner-occupiedisreclassifiedasproperty,plantandequipment.
ThereisnospecificguidanceintheAccountingLawregardingthesubsequenttransferto/frominvestmentproperty.
Investmentpropertiesandpropertyplantandequipmentarepartofthetangiblefixedassets.
Whentheseinvestmentsarenolongerintendedforuseonacontinuingbasisforthepurposeoftheundertaking'sactivity,theyshallbereclassifiedascurrentassetunderthecaption"Inventories"iftheybecomepartoftheoperatingcycle.
Thetransfertoinventoriesisnotnecessarywhentheassetisintendedtobesold.
Assets,liabilitiesandequity34PwCLuxembourgSubjectIFRSLuxGAAPInvestmentpropertyDisclosureDisclosuresdescribedinthesection"Property,plantandequipment"areapplicablealsoforinvestmentproperty.
Inaddition,allthedisclosuresmentionedinthesection"Fairvalue"areapplicablefortheinvestmentpropertyunderthefairvaluemodel.
Otherdisclosuresincludealsotheamountsrecognisedinprofitorlossfor:rentalincomefrominvestmentproperty;directoperatingexpenses(includingrepairsandmaintenance)arisingfrominvestmentpropertythatgeneratedrentalincomeduringtheperiod;directoperatingexpenses(includingrepairsandmaintenance)arisingfrominvestmentpropertythatdidnotgeneraterentalincomeduringtheperiod.
Whenanassetistransferredfromapoolofassetswherecostmodelisusedintoapoolofassetswherefairvaluemodelisused,itislikelythatanimpactonprofitorlosswilloccur.
Thisshallbedisclosedinthenotes.
Ifthecompanychoosesfairvaluemodel,intheexceptionalcaseswhenanentitycannotdeterminereliablythefairvalueofsomeoftheinvestmentproperty,itshalldisclose:adescriptionoftheinvestmentproperty;anexplanationofwhyfairvaluecannotbedeterminedreliably;andifpossible,therangeofestimateswithinwhichfairvalueishighlylikelytobe.
Thenotestotheannualaccountsshallincludethevaluationmethod,theusefullife,theamortisationmethodandtheamortisationrate.
Inaddition,ifinvestmentpropertiesaresubjecttoexceptionalvalueadjustments,theamountoftheadjustmentsandthereasonsformakingthemmustbedisclosedinthenotestotheannualaccounts.
Moreover,inthateventthatborrowingcostsareincludedintheconstructioncost,theinclusionofsuchcostsmustbedisclosed.
Movementsininvestmentpropertiesduringtheperiodhavealsotobedisclosed.
Wherevaluationatfairvaluehasbeenapplied,annualaccountsmustdisclosethefollowing:themainassumptionsinrelationtothemodelsandvaluationtechniquesused;themovementsoffairvaluebookeddirectlyintheprofitandlossaccountandinthefairvaluereserve;themovementsofthefairvaluereserve.
Small-sizedcompanies(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")areexemptedfromtheobligationtodisclosemovementsofinvestmentproperty.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP35SubjectIFRSLuxGAAPCapitalisationofborrowingcostsScopeandstandardTheapplicablestandardisIAS23-BorrowingCosts.
Capitalisationofborrowingcostsiscoveredbythearticles55and61(2).
DefinitionsBorrowingcostsareinterestandothercoststhatanentityincursinconnectionwiththeborrowingoffunds.
Aqualifyingassetisanassetthatnecessarilytakesasubstantialperiodoftimetogetreadyforitsintendeduseorsale.
Thecommencementdateforcapitalisationisthedatewhentheentityfirstmeetsallofthefollowingconditions:itincursexpendituresfortheasset;itincursborrowingcosts;anditundertakesactivitiesthatarenecessarytopreparetheassetforitsintendeduseorsale.
NodefinitionintheAccountingLawofborrowingcosts,howeverborrowingcostsincludeinterestexpensesoncapitalborrowed.
RecognitionBorrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarerequiredtobecapitalisedaspartofthecostofthatasset.
Anyincomederivedfromtemporaryinvestmentoftheseborrowingsshallbedeductedfromtheamountcapitalised.
Borrowingcostsmayinclude:interestexpensecalculatedusingtheeffectiveinterestmethodasdescribedinIAS39-FinancialInstruments:RecognitionandMeasurement;financechargesinrespectoffinanceleasesrecognisedinaccordancewithIAS17-Leases;andexchangedifferencesarisingfromforeigncurrencyborrowingstotheextentthattheyareregardedasanadjustmenttointerestcosts.
Borrowingcoststhatwouldhavebeenavoidediftheexpenditureonthequalifyingassethadnotbeenmadeareeligibleforcapitalisation.
Itmaybedifficulttoidentifyadirectrelationshipbetweenparticularborrowingsandaqualifyingassetandtodeterminetheborrowingsthatcouldotherwisehavebeenavoided,thereforetheexerciseofjudgmentisrequired.
Suchadifficultyoccurs,forexample,whenthefinancingactivityofanentityiscoordinatedcentrally.
Interestexpensesoncapitalborrowedtofinancetheproductionoffixedorcurrentassetsmaybeincludedintheproductioncostasfarastheyrelatetotheperiodofproduction.
Assets,liabilitiesandequity36PwCLuxembourgSubjectIFRSLuxGAAPCapitalisationofborrowingcostsTotheextentthatanentityborrowsfundsgenerallyandusesthemforthepurposeofobtainingaqualifyingasset,theentityshalldeterminetheamountofborrowingcostseligibleforcapitalisationbyapplyingacapitalisationratetotheexpendituresonthatasset.
Thecapitalisationrateshallbetheweightedaverageoftheborrowingcostsapplicabletotheborrowingsoftheentitythatareoutstandingduringtheperiod,otherthanborrowingsmadespecificallyforthepurposeofobtainingaqualifyingasset.
Theamountofborrowingcoststhatanentitycapitalisesduringaperiodshallnotexceedtheamountofborrowingcostsitincurredduringthatperiod.
Recognition–CommencementofcapitalisationAnentityshallbegincapitalisingborrowingcostsaspartofthecostofaqualifyingassetonthecommencementdate.
Thecapitalisationofborrowingcostsstartsatthebeginningoftheproductionperiod.
Recognition–SuspensionofcapitalisationAnentitymayincurborrowingcostsduringanextendedperiodinwhichitsuspendstheactivitiesnecessarytoprepareanassetforitsintendeduseorsale.
Suchcostsarecostsofholdingpartiallycompletedassetsanddonotqualifyforcapitalisation.
However,anentitydoesnotnormallysuspendcapitalisingborrowingcostsduringaperiodwhenitcarriesoutsubstantialtechnicalandadministrativework.
Anentityalsodoesnotsuspendcapitalisingborrowingcostswhenatemporarydelayisanecessarypartoftheprocessofgettinganassetreadyforitsintendeduseorsale.
SuspensionofthecapitalisationisnotdefinedintheAccountingLaw.
Recognition–CessationofcapitalisationAnentityshallceasecapitalisingborrowingcostswhensubstantiallyalltheactivitiesnecessarytopreparethequalifyingassetforitsintendeduseorsalearecomplete.
Cessationofthecapitalisationoccurswhentheproductionoftheassetiscompleted.
DisclosureAnentityshalldisclose:theamountofborrowingcostscapitalisedduringtheperiod;andthecapitalisationrateusedtodeterminetheamountofborrowingcostseligibleforcapitalisation.
Thecapitalisationofsuchcostsmustbedisclosedinthenotestotheannualaccounts.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP37SubjectIFRSLuxGAAPLeasesScopeandstandardIAS17-Leasesshallbeappliedinaccountingforallleasesotherthan:leasestoexplorefororuseminerals,oil,naturalgasandsimilarnon-regenerativeresources;andlicensingagreementsforsuchitemsasmotionpicturefilms,videorecordings,plays,manuscripts,patentsandcopyrights.
However,thestandardshallnotbeappliedasthebasisofmeasurementfor:propertyheldbylesseesthatisaccountedforasinvestmentproperty;investmentpropertyprovidedbylessorsunderoperatingleases;biologicalassetsheldbylesseesunderfinanceleases;orbiologicalassetsprovidedbylessorsunderoperatingleases.
SIC15-OperatingLeases–Incentivessetsouttherequiredaccountingforoperatingleaseincentives.
IFRIC4-DeterminingwhetheranArrangementcontainsaLeasediscussestheanalysesifacontractisaleasecontractinsubstance.
NospecificarticleintheAccountingLawcoverstheleasing.
However,thearticle65(1)7°ondisclosureofcommitmentsinthenotestotheannualaccountsappliestoleasing.
Art.
29(6)isalsoapplicabletoleasing(principleofsubstanceoverform).
DefinitionsAleaseisanagreementwherebythelessorconveystothelesseeinreturnforapaymentoraseriesofpaymentstherighttouseanassetforanagreedperiodoftime.
Theinterestrateimplicitintheleaseisthediscountratethat,attheinceptionofthelease,causestheaggregatepresentvalueof:theminimumleasepayments;andtheunguaranteedresidualvaluetobeequaltothesumof:-thefairvalueoftheleasedasset;and-anyinitialdirectcostsofthelessor.
Grossinvestmentintheleaseistheaggregateof:theminimumleasepaymentsreceivablebythelessorunderafinancelease;andanyunguaranteedresidualvalueaccruingtothelessor.
Netinvestmentintheleaseisthegrossinvestmentintheleasediscountedattheinterestrateimplicitinthelease.
Asaleandleasebacktransactionariseswhenavendorsellsanassetandimmediatelyre-acquirestheuseoftheassetbyenteringintoaleasewiththebuyer.
LeasingisnotdefinedbytheAccountingLaw.
Assets,liabilitiesandequity38PwCLuxembourgSubjectIFRSLuxGAAPLeasesAnon-cancellableleaseisaleasethatiscancellableonly:upontheoccurrenceofsomeremotecontingency;withthepermissionofthelessor;ifthelesseeentersintoanewleaseforthesameoranequivalentassetwiththesamelessor;oruponpaymentbythelesseeofsuchanadditionalamountthat,atinceptionofthelease,continuationoftheleaseisreasonablycertain.
RecognitionAleaseisclassifiedatinceptionasafinanceleaseifittransferstothelesseesubstantiallytheentirerisksandrewardsincidentaltoownership.
Allotherleasesaretreatedasoperatingleases.
Whetheraleaseisafinanceleaseoranoperatingleasedependsonthesubstanceofthetransactionratherthanthelegalformofthecontract.
Examplesofsituationsthatwouldnormallyleadtoaleasebeingclassifiedasafinancelease:transferofownershipoftheassettakesplacebytheendoftheleaseterm;thereisabargainpurchaseoption;leasetermisforthemajorpartoftheeconomiclifeoftheasset;attheinceptionofthelease,thepresentvalueoftheminimumleasepaymentsamountstoatleastsubstantiallyallofthefairvalueoftheleasedasset;leasedassetsareofaspecialisednature.
NospecificguidanceintheAccountingLaw.
IFRScanbeusedasabenchmark.
Recognition–SaleandleasebacktransactionsAnygainrealisedbytheseller-lesseeonthetransactionisdeferredandamortisedthroughtheprofitorlossovertheleaseterm.
Separaterequirementsapplywherethetransactionresultsinanoperatinglease.
NospecificguidanceintheAccountingLaw.
IFRScanbeusedasabenchmark.
Measurement–LeasetreatmentinthefinancialstatementsofalessorFinanceleaseTheamountduefromthelesseeunderafinanceleaseshouldberecognisedinthelessor'sbalancesheetasareceivableatanamountequaltothelessor'snetinvestmentinthelease.
Overtheleaseterm,rentalsareapportionedbetweenareductioninthenetinvestmentintheleaseandfinanceincome.
IAS39-FinancialInstruments:RecognitionandMeasurementdoesnotapplytofinanceleasereceivables,exceptasregardstheirderecognitionandimpairment.
Refertosection"Financialassets".
OperatingleaseTheseassetsarerecordedaccordingtothenatureoftheassetsanddepreciatedonabasisconsistentwiththenormaldepreciationpolicyforsimilarassets.
Leaseincome(excludingreceiptsforservicesprovidedsuchasinsuranceandmaintenance)shouldberecognisedinthestatementofcomprehensiveincomeonastraightlinebasis,irrespectiveofwhenthepaymentisdue,exceptifanothersystematicbasisismorerepresentative.
LuxGAAPdoesnotmakeadistinctionbetweenfinanceandoperatingleaseandgenerallyfollowsthelegalapproach.
Assetsarerecognisedinthebalancesheetofthelessorandaredepreciatedovertheireconomiclife.
Revenuesarerecognisedintheprofitandlossaccountonanaccrualbasis.
Whentheprincipleofsubstanceoverformisfollowed,IFRScanbeusedasabenchmarkfortheaccountingoffinancelease.
Asthisprincipleshouldbecomeoptionalwiththeadoptionofthedraftbilln°6376,theaccountingtreatmentoffinanceleasemayfollowthelegalapproachratherthantheeconomicalapproach.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP39SubjectIFRSLuxGAAPLeasesMeasurement–OperatingleaseincentivesinthefinancialstatementsofalessorProspectivelesseesaresometimesgivenincentivestosignoperatingleasesforofficeorretailproperty.
ThetreatmentofoperatingleaseincentivesbylessorsinSIC15mirrorstheaccountingtreatmentbylessees.
Allincentives,regardlessoftheirnature,formortiming,beitapayment,assumptionofliabilitiesorarent-freeorreducedrentperiod,givenbylessorsforthebenefitoflesseestosignaneworrenewedoperatinglease,shouldberecognisedasanintegralpartofthenetconsiderationagreedfortheuseoftheleasedasset.
Therefore,theaggregatecostofincentivesshouldbetreatedasareductionofrentalincomeovertheleaseterm.
Thecostshouldberecognisedonastraight-linebasis,unlessanothersystematicbasisismorerepresentativeofthetimepatternoverwhichthebenefitfromtheleasedassetisdiminished.
Inpractice,theuseofanallocationbasisotherthanstraight-lineshouldberare.
Costsincurredbythelessorasincentivesfortheagreementofneworrenewedoperatingleasesarenotconsideredtobepartoftheinitialcoststhatareaddedtothecarryingamountofaleasedasset.
NospecificguidanceintheAccountingLaw.
IFRScanbeusedasabenchmark.
Incentivesareeitherrecognisedintheprofitandlossaccountofthelessoratthebeginningoftheleaseoramortisedovertheleaseterm.
Measurement–LeasetreatmentinthefinancialstatementsofalesseeFinanceleaseIAS17requiresthatafinanceleaseshouldberecordedinalessee'sbalancesheetbothasanassetandasanobligationtopayfuturerentals.
Atthecommencementoftheleaseterm,thesumtoberecognisedbothasanassetandasaliabilityshouldbethefairvalueoftheleasedassetor,iflower,thepresentvalueoftheminimumleasepaymentseachdeterminedattheinceptionofthelease.
Incalculatingthepresentvalueoftheminimumleasepayments,thediscountfactoristheinterestrateimplicitinthelease.
Anyinitialdirectcostsofthelesseeareaddedtotheamountrecognisedasanasset.
Itisnotappropriatefortheliabilitiesinrespectofleasedassetstobepresentedasadeductionfromtheleasedassetsastheyrepresentseparateassetsandliabilities.
Theinterestrateimplicitintheleaseisthelessor'sinternalrateofreturnfromtheleasetakingintoaccountthenormalcashpriceoftheleasedasset,rentalsandtheamountthelessorexpectstorecoverfromtheresidualvalue.
Inpractice,theinterestrateimplicitintheleaseisunlikelytobestipulatedintheagreementand,unlessthelessorvolunteerstheinformationtothelessee,thelesseewillneedtoderiveanestimateoftheratefromtheinformationavailable.
LuxGAAPdoesnotmakeadistinctionbetweenthefinanceleaseandtheoperatingleaseandgenerallyfollowsthelegalapproach.
Asassetsarerecognisedinthebalancesheetofthelessor,thelesseerecognisedonlytheleasepaymentsintheprofitandlossaccount.
However,whentheprincipleofsubstanceoverformisfollowed,IFRScanbeusedasabenchmarkfortheaccountingoffinancelease.
Asthisprincipleshouldbecomeoptionalwiththeadoptionofthedraftbilln°6376,theaccountingtreatmentoffinanceleasemayfollowthelegalapproachratherthantheeconomicalapproach.
Assets,liabilitiesandequity40PwCLuxembourgSubjectIFRSLuxGAAPLeasesOperatingleaseOperatingleasesshouldnotbecapitalised.
Leasepaymentsmadeunderoperatingleasesshouldberecognisedasanexpenseonastraight-linebasisovertheleaseterm,unlessanothersystematicbasisismorerepresentativeofthetimepatternoftheuser'sbenefit.
Thestartoftheleasetermisthecommencementofthelease,ratherthantheinceptionofthelease,thatis,whenthelesseeisentitledtoexerciseitsrighttousetheleasedasset.
Leasepaymentsexcludecostsforservicessuchasinsuranceandmaintenance.
Therentalexpenseunderanoperatingleaseisrecognisedonastraight-linebasisovertheleaseterm.
Measurement–OperatingleaseincentivesinthelesseefinancialstatementsTheaggregatebenefitofincentivesshouldberecognisedbythelesseeasareductionoftherentalexpenseovertheleasetermonastraight-linebasis,unlessanothersystematicbasisisrepresentativeofthetimepatternofthelessee'sbenefitfromtheuseoftheleasedasset.
Thisrequirementseekstoensurethattheprofitorlossaccountreflectsthetrueeffectiverentalchargeforthepropertyirrespectiveoftheparticularcashflowarrangementsagreedbetweenthetwoparties.
Incentivescanbeamortisedoverthetermoftheleaseortakenintoaccountinasingleinstalmentatthebeginningofthelease.
Measurement–SaleandleasebacktransactionsWherethesellerentersintoafinanceleaseback,thetransactionisessentiallyafinancingoperation.
Theseller/lesseeneverdisposesoftherisksandrewardsofownershipoftheassetandsoitshouldnotrecogniseaprofitorlossonthesale.
Anyapparentprofit(thatis,thedifferencebetweenthesalepriceandthepreviouscarryingvalue)shouldbedeferredandamortisedovertheleaseterm.
Thistreatmentwillhavetheeffectofadjustingtheoverallchargetotheprofitorlossaccountforthedepreciationoftheassettoanamountconsistentwiththeasset'scarryingvaluebeforetheleaseback.
Wherethesellerentersintoasaleandoperatingleaseback,heeffectivelydisposesofsubstantiallyalltherisksandrewardsofowningtheassetinthesaletransaction,andmayre-acquiresomeoftherisksandrewardsofownershipintheleaseback,butdoesnotre-acquiresubstantiallyallofthem.
Accordingly,thetransactionshouldbetreatedasadisposalandanyprofitorlossonthetransactionshouldberecognisedimmediatelyintheincomestatement.
SaleandleasebacktransactionsarenotcoveredspecificallybyLuxGAAP.
Inpractice,thegainorlossonthesaleisrecognisedintheprofitandlossaccountatthedateofthetransaction.
IFRScanbeusedasabenchmark.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP41SubjectIFRSLuxGAAPLeasesDisclosure–FinancialstatementsofalessorFinanceleaseThefollowinginformationshallbedisclosed:areconciliationbetweenthegrossinvestmentintheleaseandthepresentvalueoftheminimumleasepaymentsand,foreachofthem,thematuritybyspecifiedtimebuckets;unearnedfinanceincome;theunguaranteedresidualvaluesaccruingtothebenefitofthelessor;theaccumulatedallowanceforuncollectibleminimumleasepaymentsreceivable;thecontingentrentsrecognisedinincomeintheperiod;andageneraldescriptionofthelessor'smaterialleasingarrangements.
OperatingleaseThefollowinginformationshallbedisclosed:thetotaloffutureminimumleasepaymentsundernon-cancellableoperatingleasesforspecifiedperiods;thetotalcontingentrentsrecognisedintheincomeoftheperiod;andageneraldescriptionofthelessor'sleasingagreements.
Thecommitmentsfromthelesseeshallbedisclosedinthenotestotheannualaccounts,withaseparatedisclosureforcommitmentsfromtheaffiliatedundertakings.
Disclosure–FinancialstatementsofalesseeFinanceleaseThefollowinginformationshallbedisclosed:foreachclassofasset,thenetcarryingamountatthebalancesheetdate;areconciliationbetweenthetotaloffutureminimumleasepaymentsandtheirpresentvalueand,foreachofthem,thematuritybyspecifiedtimebuckets;thecontingentrentsrecognisedinincomefortheperiod;andthetotaloffutureminimumsubleasepaymentsexpectedtobereceivedundernon-cancellablesubleasesatthebalancesheetdate.
Ageneraldescriptionofthelessee'smaterialleasingarrangementsincluding,butnotlimitedtothefollowings,shallbedisclosed:thebasisonwhichcontingentrentpaymentsaredetermined;theexistenceandtermsofrenewalorpurchaseoptionsandescalationclauses;andtherestrictionsimposedbyleasearrangements,suchasthoseconcerningdividends,additionaldebtsandfurtherleasing.
Thecommitmentsrelatedtotheleaseshallbedisclosedinthenotestotheannualaccount.
Anycommitmentsgiventoanaffiliatedundertakingshallbedisclosedseparately.
Assets,liabilitiesandequity42PwCLuxembourgSubjectIFRSLuxGAAPLeasesOperatingleaseIAS17requiresthefollowinginformationtobedisclosed:thetotaloffutureminimumleasepaymentsundernon-cancellableoperatingleasesforspecifiedperiods;thetotaloffutureminimumsubleasepaymentsexpectedtobereceivedundernon-cancellablesubleasesatthebalancesheetdate;andtheleaseandsubleasepaymentsrecognisedasanexpensefortheperiod,withseparateamountsforminimumleasepayments,contingentrentsandsubleasepayments.
Inaddition,ifthedifferencebetweentheactualcashcommitmentsdisclosedandtheincomestatementchargeissignificantbecauseofthespreadingofincentivesorduetoprovisionsmadeforonerousleases,theeffectshouldbedisclosed.
Disclosureoftheeffectisnotrequiredbythestandardbutisconsideredtobebestpractice.
Assets,liabilitiesandequityRecentdevelopments–LeasingInanefforttoensurethatinvestorsandothershavesufficientinformationaboutacompany'sleasingactivities,theIASBisworkingonaprojectthatwouldprovideinformationabouttheamountofalesseeobligationtomakeleasepaymentsandtheassetsthatalesseehascontrolover.
Ineffect,theprojectwouldresultinoperatingleasesbeingreportedonthebalancesheet.
Theproposalswouldsignificantlychangetheaccountingforoperatingleasesofmorethan12months.
Forallpracticalpurposes,theaccountingforfinanceleaseswouldremainunchanged.
Alesseewouldrecogniseassetsandliabilitiesforallleases(ofmorethan12months)onadiscountedbasis.
Therecognitionandpresentationofleaserelatedexpensesintheincomestatementandcashpaidforleasesinthecashflowstatementwouldlargelydependonthenatureoftheassetthatisthesubjectofthelease.
Themaineffectsareasfollows:forthesubstantialmajorityofleasesofequipmentorvehicles,thebalancesheet,incomestatementandcashflowstatementwouldchange;andforthesubstantialmajorityofleasesofproperty(realestate),onlythebalancesheetwouldchange.
EffectonthebalancesheetAlesseewouldreportanasset(aright-of-useasset)andaleaseliabilityforallleasesofmorethan12monthsatthediscountedamountofleasepaymentstobemadeduringtheleaseterm.
Theassetwouldbepresentedwithinproperty,plantandequipment,andtheleaseliabilitywouldbepresentedasafinancialliability.
Alesseewouldgenerallynotincludeinthemeasurementoftheassetsandliabilitiesrentalsthatarecontingentonfuturesalesorusageandrentalspayableinoptionalextensionperiods(similarlytofinanceleaseaccountinginexistingaccountingstandards).
EffectontheincomestatementandcashflowstatementThepresentationofleaserelatedexpensesintheincomestatementandcashpaidforleaseswithinthecashflowstatementwoulddependonthenatureoftheassetbeingleasedandtheextenttowhichthelesseeconsumes(orusesup)thatasset.
Ifthelesseeisexpectedtoconsumemorethananinsignificantportionoftheleasedasset,thelesseewouldaccountfortheleasesimilarlytoafinanceleaseinexistingaccountingstandards.
Thismeansthatforthesubstantialmajorityofleasesofequipmentorvehicles(e.
g.
aircraft,ships,miningequipment,cars,trucks),alessee:intheincomestatement,wouldreportamortisation/depreciationoftheassetseparatelyfrominterestontheleaseliabilityovertheleaseterm;andinthecashflowstatement,wouldseparatethetotalamountofcashpaidintoaprincipalportion(presentedwithinfinancingactivities)andinterest(presentedwithineitheroperatingorfinancingactivities).
Ifthelesseeispayingonlyforuseoftheleasedasset(andisnotexpectedtoconsumemorethananinsignificantportionofthatasset),thelesseewouldaccountfortheleaseintheincomestatementandcashflowstatementsimilarlytoanoperatingleaseinexistingaccountingstandards.
Thismeansthatforthesubstantialmajorityofleasesofproperty(i.
e.
landand/orabuilding),althoughitwouldreportassetsandliabilitiesonadiscountedbasisonthebalancesheet,alessee:intheincomestatement,wouldreportaleaseexpenseonastraight-linebasisovertheleaseterm;andinthecashflowstatement,wouldreportthecashpaidwithinoperatingactivities.
Servicecontractsareoutsidethescopeoftheproposals.
TimetableTheIASBexpectstopublisharevisedLeasesExposureDraftinthefirstsemesterof2013,witha120-daycommentperiod.
Inadditiontothechangestolesseeaccountingpresentedabove,theExposureDraftwillalsoproposechangestolessoraccounting.
Similaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP43Assets,liabilitiesandequity44PwCLuxembourgSubjectIFRSLuxGAAPInventoriesScopeandstandardTheapplicablestandardisIAS2-Inventories.
IAS2appliestoallinventories(thatisrawmaterials,consumablesupplies,workinprogressandfinishedgoods)exceptthefollowing,whicharewhollyexcludedfromitsscope:workinprogressarisingfromconstructioncontracts,includingdirectlyrelatedservicecontracts;financialinstruments;andbiologicalassetsrelatedtoagriculturalactivityandagriculturalproduceatthepointofharvest.
Inaddition,thestandarddoesnotapplytothemeasurementofthefollowingtypesofinventories(butdoesapplyinallotherrespects,forexample,disclosure):inventoriesheldbyproducersofagriculturalandforestproducts,agriculturalproduceafterharvestandmineralsandmineralproducts,totheextentthattheyaremeasuredatnetrealisablevalueinaccordancewithwell-establishedpracticeinthoseindustries.
Wheresuchinventoriesaremeasuredatnetrealisablevalue,changesinthatvaluearerecognisedinprofitorlossintheperiodofchange;andinventoriesheldbycommoditybroker-traderswhomeasuretheirinventoriesatfairvaluelesscoststosell.
Wheresuchinventoriesaremeasuredonthatbasis,changesinvaluearealsorecognisedinprofitorlossintheperiodofchange.
Inventoriesarecoveredbythefollowingarticles:34;39;60;61;62;64sexiesand65.
DefinitionsInventoriesareassets:heldforsaleintheordinarycourseofbusiness;intheprocessofproductionforsuchsale,orintheformofmaterialsorsuppliestobeconsumedintheproductionprocessorintherenderingofservices.
Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcompletionandtheestimatedcostsnecessarytomakethesale.
Asopposedtofixedassets,inventoriesareitemswhicharenotintendedforuseonacontinuingbasisforthepurposeoftheundertaking'sactivity.
Inventoriesareassetsthatareheldforsaleintheordinarycourseofbusiness.
Inventoriesarecomposedof:rawmaterialsandconsumables;workandcontractsinprogress;finishedgoodsandmerchandises;andpaymentsonaccount.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP45SubjectIFRSLuxGAAPInventoriesRecognitionAnentityshouldinitiallyrecogniseinventorywhenithascontroloftheinventory,expectsittoprovidefutureeconomicbenefitsandthecostoftheinventorycanbemeasuredreliably.
Inventoriesincludegoodspurchasedandheldforresale,suchasmerchandisepurchasedbyaretailerorlandandotherpropertyheldforresale.
Propertyshouldberecognisedasinventoryunderthefollowingcircumstances:propertypurchasedforthespecificpurposeofresale;propertyconstructedforthespecificpurposeofresale(workinprogressunderthescopeofIAS18-Revenue);orpropertytransferredfrominvestmentpropertytoinventories.
Thisispermittedwhenanentitycommencestheproperty'sdevelopmentwithaviewtosale.
Refertosection"Investmentproperty".
Inthiscase,theproperty'scostforsubsequentrecognitionasinventoryshouldbeitscarryingvalueatthedateofchangeinuse.
Theinventoryofmanufacturingentitiesisrawmaterialsandconsumablesupplies,workinprogressandfinishedgoodsawaitingsale.
Thecostofservicesrenderedbyaserviceentityisrecognisedasinventory,wheretheentityhasnotrecognisedtherelatedrevenues.
Thisamountshould,however,beminimal,giventherequirementtorecogniseservicerevenuesonthepercentageofcompletionbasis.
GeneralLuxGAAPassetrecognitioncriteriaapply.
Inventoriesshouldbeinitiallyrecognisedwhenthecontrol(generallythepropertyrights)overtheseitemsistransferred,i.
e.
thedatewhenthesignificantrisksandrewardsincidentaltotheinventoriesaretransferred.
InitialmeasurementInventoriesareinitiallyrecognisedatcost,whichincludesallcostsofpurchase,costsofconversionandothercostsincurredinbringingtheinventoriestotheirpresentlocationandcondition.
IFRSdoesnotpermitdirectcostingmethodsthatexpensealloverheads.
Costsofpurchasecomprisethepurchasepriceincludingimportdutiesandothertaxes(sofarasnotrecoverablefromthetaxauthorities),transportandhandlingcostsandanyotherdirectlyattributablecosts,lesstradediscounts,rebatesandsimilaritems.
Initsrejections,IFRIChasconfirmedthatcashdiscountsreceivedandsettlementdiscountsshouldbedeductedfromthecostofinventories.
However,rebatesthatspecificallyandgenuinelyrefundsellingexpensesshouldnotbedeductedfromthecostofinventories.
Inventoriesareinitiallyrecognisedatcostincludingallexpensesincidentalthereto.
Costisdefinedasthepurchasepriceortheproductioncost.
Thepurchasepriceshallbecalculatedbyaddingtothepricepaidtheexpensesincidentalthereto.
Ancillarycostsincludealldirectcostswiththeexceptionofdistributioncosts,overheadandfinancingcosts.
Assets,liabilitiesandequity46PwCLuxembourgSubjectIFRSLuxGAAPInventoriesCostofconversioncomprises:coststhatarespecificallyattributabletounitsofproduction,forexample,directlabour,directexpensesandsub-contractedwork;andproductionoverheadsandotheroverheads,ifany,attributableintheparticularcircumstancesofthebusinesstobringingtheproductorservicetoitspresentlocationandcondition.
BorrowingcostsmeetingspecificcriteriaareincludedinthecostofinventoriesasidentifiedbyIAS23-BorrowingCosts.
Refertosection"Capitalisationofborrowingcosts".
ThecostofinventoriesusedisdeterminedbyusingeithertheFIFOortheweightedaveragecostformula.
LIFOisnotpermitted.
Managementexercisesjudgementtoensurethatthemethodchosentoallocatecoststostocksprovidesthefairestpossibleapproximationtocost.
Thesamecostformulaisusedforallinventoriesthathaveasimilarnatureandusetotheentity.
Anentitymayusetechniquesformeasuringthecostofinventoriesiftheresultsapproximatecost.
Acceptedtechniquesare:standardcostmethod;retailmethod;andmostrecentpurchaseprice.
Forjointproducts,thecostoftherawmaterialsisallocatedbetweentheproductsonarationalandconsistentbasis.
By-products(whenimmaterial)aremeasuredatsellingpricelesscoststocompleteandsell.
Thisamountisthendeductedfromthecostofthemainproduct.
Theproductioncostshallbecalculatedbyaddingtothepurchasepriceoftherawmaterialsandconsumablesthecostsdirectlyattributabletotheproduct.
Areasonableproportionofthecostswhichareonlyindirectlyattributabletotheproductmaybeaddedintotheproduction.
Interestoncapitalborrowedtofinancetheproductionofinventoriesmaybeincludedintheproductioncoststotheextentitrelatestotheperiodofproduction.
ThecostofinventoriesusedisdeterminedbyusingtheFIFO,theLIFO,theweightedaveragecostformulaoranyothersimilarmethod.
Thesamecostformulaisusedforallinventoriesthathaveasimilarnatureandusetotheentity.
Inventoriesaremeasuredatpurchasepriceorproductioncost.
Inpractice,standardcostmethodisalsoapplied.
NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
NotspecifiedintheAccountingLaw.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP47SubjectIFRSLuxGAAPInventoriesSubsequentmeasurementSubsequenttotheirinitialrecognition,inventoriesshouldbemeasuredatthelowerofcostandnetrealisablevalue.
Whereitemsofinventoryarenotordinarilyinterchangeable,orwheregoodsorservicesareproducedandsegregatedforspecificcontracts,theircostsshouldbeindividuallyidentified.
Theseitemsshouldbeconsideredindividually,astocomparethetotalnetrealisablevalueofsuchitemswiththetotalcostwouldresultinanunacceptablesettingoffofforeseeablelossesagainstunrealisedprofits.
However,whentherearelargenumbersofitemsofinventorythatareordinarilyinterchangeable(fungibleitems),separateidentificationofcostswouldnotbeappropriate.
Insuchcases,FIFOorweightedaveragecostmethodmaybeused.
Asstatedabove,IAS2prohibitstheuseofLIFOmethod.
Subsequenttotheirinitialrecognition,inventoriesarevaluedatlowerofcostormarketvalue.
Avalueadjustmentisrecordedwhenthepurchasepriceorproductioncostishigherthanthemarketvalue.
Thesevalueadjustmentsarenotcontinuedifthereasonsforwhichthevalueadjustmentsweremadehaveceasedtoapply.
Rawmaterialsandconsumableswhichareconstantlybeingreplacedandtheoverallvalueofwhichisofsecondaryimportancetotheundertakingmaybeshownatafixedquantityandvalue,ifthequantity,valueandcompositionthereofdonotvarymaterially.
Fairvaluecanbeused.
ThisoptionshouldbeabandonedwiththenextAccountingLawupdate.
Inventoriesarevaluedindividuallyorbycategoryeitheronthebasisofweightedaverageprices,ortheFIFOmethod,theLIFOmethod,oranyothersimilarmethod.
Exceptionalvalueadjustmentsareallowedwherethesearenecessaryonthebasisofareasonablecommercialassessment,topreventthatthevaluationofthoseitemsneedstobemodifiedinthenearfuturebecauseoffluctuationsinvalue.
DisclosureIAS2requiresalargeseriesofdisclosures,including:thecostformulaused,theamountofinventoriesmeasuredatsellingpricelesscosttosell,theamountofinventoriesrecognisedasexpenseduringtheyear,theamountofwrite-downaswellastheamountofreversalofanywrite-downincludingthecircumstancesoreventsthatledtothereversalofthewrite-down,inventoriespledged,etc.
Thestandardgivesalsoguidanceregardingtheclassesinwhichmanytypesofinventoriescanbeincluded.
Thenotestotheannualaccountsmustincludethevaluationmethodsappliedtothevariousitemsandthemethodsemployedincalculatingthevalueadjustments.
Inaddition,ifinventoriesaresubjecttoexceptionalvalueadjustments,theamountoftheadjustmentsandthereasonsformakingthemmustbedisclosedinthenotestotheannualaccounts.
Moreover,intheeventthatborrowingcostsareincludedintheproductioncost,theinclusionofsuchcostsmustbedisclosed.
Assets,liabilitiesandequity48PwCLuxembourgSubjectIFRSLuxGAAPImpairmentofnon-financialassetsScopeandstandardTheapplicablestandardisIAS36-ImpairmentofAssets.
Nearlyallassets(currentandnon-current)aresubjecttoanimpairmenttesttoensurethattheyarenotoverstatedonbalancesheets.
However,dependingonthemeasurementrulesforeachdifferenttypeofassetsundertherelevantstandard,itmightbethatsomeassetsarenotneededtobetestedforimpairment,becausethemeasurementrulesapplicablearealreadyencompassinganyimpairmentinprofitorlossaccount.
Thisisthecase,forexample,fortheinvestmentpropertiescarriedatfairvalue(refertosection"Investmentproperty").
Thissectiontreatstheimpairmentofassetswhicharenotincludedinthelistdetailedbelow:financialassets(refertosection"Financialassets");deferredtaxassets(refertosection"Deferredtaxes");employeebenefitassets(refertosection"Employeebenefits");inventories(refertosection"Inventories");non-currentassetsclassifiedasheldforsaleinaccordancewithIFRS5-Non-currentAssetsHeldforSaleandDiscontinuedOperations(refertosection"Non-currentassetsheldforsaleanddiscontinuedoperations");deferredacquisitioncosts(refertosection"Consolidatedfinancialstatements");biologicalassetscarriedatfairvaluelessestimatedcoststosell;andintangiblesarisingfromcontractualrightsunderinsurancecontracts.
TheAccountingLawforeseesinarticle55(1)c)and61thatvalueadjustmentsmustbemadeinrespectoffixedandcurrentassetswhennecessary.
DefinitionsAnimpairmentlossistheamountbywhichthecarryingamountofanassetoracash-generatingunitexceedsitsrecoverableamount.
Recoverableamountisdefinedasthehigheroftheasset'sfairvaluelesscoststosellanditsvalueinuse.
Fairvaluelesscoststosellistheamountobtainablefromasaleofanassetinanarm'slengthtransactionbetweenknowledgeable,willingparties,lesscostsofdisposal.
Thevalueinuseisdefinedasthepresentvalueofthefuturecashflowsexpectedtobederivedfromanassetorcash-generatingunit.
Acash-generatingunit("CGU")isthesmallestidentifiablegroupofassetsthatgeneratescashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets.
Avalueadjustmentistheamountbywhichthecarryingvalueexceedsanotherlowervalueattributedtothem.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP49SubjectIFRSLuxGAAPImpairmentofnon-financialassetsRecognitionThebasicprincipleofimpairmentisthatanassetmaynotbecarriedonthebalancesheetataboveitsrecoverableamount.
Allassetssubjecttotheimpairmentguidancearetestedforimpairmentwherethereisanindicationthattheassetmaybeimpaired.
IAS36requiresallassetsinitsscopetobetestedforimpairmentwherethereisanimpairmentindicator.
Anentityshouldassessateachreportingdatewhetherthereisanyindicationthatanassetmaybeimpaired.
Ifanyindicationexists,theentityshouldestimatetheasset'srecoverableamount.
Therecoverableamountshouldbecomparedwiththeasset'scarryingvalueand,ifanimpairmentlosshasarisen,itshouldberecognisedintheincomestatementimmediately.
Inassessingwhetherthereisanyindicationthatanassetmaybeimpaired,anentityshouldconsiderexternalsourcesofinformation(declineintheasset'smarketvalue,adversechangesintechnological,market,economicorlegalenvironment,etc.
),internalsourcesofinformation(obsolescenceorphysicaldamageoftheasset,deteriorationintheasset'sperformance,etc.
)orothertypesofinformation(e.
g.
actualnetcashoutflowsworsethaninitiallybudgeted).
Otherindicatorsmaybeapparentthatarerelevanttoabusiness'particularcircumstances.
Forexample,changesintaxregulations,theimpactofpublicityoverbrandnames,achangeintheproposeduseofanasset,animpairmentrecognisedbyanassociateortheentranceofanewcompetitortothemarketmayrequiretherecoverableamountofanentity'sassetstobeinvestigated.
Certainassets(goodwill,indefinitelivedintangibleassetsandintangibleassetsthatarenotyetavailableforuse)arealsotestedforimpairmentannuallyevenifthereisnoimpairmentindicator.
Inconclusion,impairmentonassetorCGUisrecognisedwhenitscarryingamountexceedsitrecoverableamount.
Animpairmentlossisrecognisedimmediatelyinprofitorlossunlesstheassetiscarriedatrevaluatedamountinaccordancewithanotherstandard.
Inthiscase,theimpairmentlossistreatedasarevaluationdecreaseinaccordancewiththatotherstandard.
Forfixedassets,avalueadjustmentisrecognisedintheprofitandlossaccountonlyifitisconsidereddurablebythemanagement.
Forcurrentassets,theimpairmentlossisrecognisedimmediatelyintheprofitandlossaccount.
Exceptionalvalueadjustmentsareallowedwherethesearenecessaryonthebasisofareasonablecommercialassessmenttopreventthatthevaluationofthoseitemsneedstobemodifiedinthenearfuturebecauseoffluctuationsinvalue.
Theassessmentshallbedoneateachbalancesheetdate.
Assets,liabilitiesandequity50PwCLuxembourgSubjectIFRSLuxGAAPImpairmentofnon-financialassetsAnimpairmentlossonanon-revaluedassetisrecognisedinprofitorloss.
However,animpairmentlossonarevaluedassetisrecognisedinothercomprehensiveincometotheextentthattheimpairmentlossdoesnotexceedtheamountintherevaluationsurplusforthatsameasset.
Suchanimpairmentlossonarevaluedassetreducestherevaluationsurplusforthatasset.
MeasurementTheimpairmenttobebookedistheexcessofthecarryingamountovertherecoverableamount.
Recoverableamountreflectsthegreatestvalueofanassetintermsofthecashflowsthatcanbederivedfromit,eitherbysellingitorbycontinuingtouseitinthebusiness.
Wheretherecoverableamountcannotbeestimatedforindividualassets,itshouldbeestimatedforgroupsofassetsthatgeneratecashflowsthatarelargelyindependentofeachother.
ThesearereferredtoasCGUs.
Thevalueadjustmenttobeaccountedforistheexcessofthecarryingamountoverthelowervalueattributedtotheasset.
Measurement–ValueinuseValueinuserequiresmanagementtoestimatethefuturecashflowstobederivedfromtheassetanddiscountthemusingapre-taxmarketratethatreflectscurrentassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.
Futurecashflowsareestimatedfortheassetinitscurrentcondition.
Cashinflowsoroutflowsfromfinancingactivitiesandincometaxreceiptsorpaymentsarenotincluded.
NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
Measurement–FairvaluelesscoststosellWhenperformingtheimpairmenttestofanasset(orCGU),theentityestimatesthefairvaluelesscoststosellbasedonahierarchyofreliabilityofevidence:apriceinabindingsaleagreementinanarm'slengthormarketpriceinanactivemarket,lesscostsofdisposal;bestavailableinformationtoreflecttheamountthatanentitycouldobtainatthereportingdatefromdisposaloftheassetinanarm'slengthtransactionbetweenknowledgeable,willingparties,lesscostsofdisposal.
Outcomeofrecenttransactionsforsimilarassetswithinthesameindustryneedtobeconsidered.
Itisnotalwaysnecessarytocalculatebothmeasureswhenperforminganimpairmentreview.
Ifanasset'sfairvaluelesscoststoselloritsvalueinuseexceedstheasset'scarryingamount,theassetisnotimpairedandthereisnoneedtoestimatetheotheramount.
NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP51SubjectIFRSLuxGAAPImpairmentofnon-financialassetsMeasurement–AllocationofgoodwillGoodwillacquiredinabusinesscombinationisallocatedtotheCGUsthatareexpectedtobenefitfromthesynergiesofthecombination.
IAS36includescomprehensiveguidanceonhowtoallocategoodwillunderseveralcircumstances.
Goodwillistestedforimpairmentatthelowestlevelatwhichitismonitoredbymanagement.
CGUsmaybegroupedfortesting,butthegroupingcannotbehigherthananoperatingsegment.
Refertosection"Segmentreporting"fordetailsonoperatingsegment.
Goodwillisamortisedoverfiveyearsunlessmanagementcanjustifyalongerusefullife.
Inaddition,goodwillisreviewedforimpairmentannually.
Measurement–ReversalofvalueadjustmentsAteachreportingdateafterrecognitionoftheimpairmentloss,anentityassesseswhetherthereisanyindicationthatanimpairmentlossmayhavedecreasedormaynolongerexist.
Theimpairmentlossisreversediftherecoverableamountofanasset(orCGU)exceedsitscarryingamount.
Theamountofthereversalissubjecttocertainlimitations.
Goodwillimpairmentcanneverbereversed.
Inaddition,IAS36includesmoredetailedguidanceanddistinctionofreversalofimpairmentforanindividualasset,aCGUandagoodwill.
Areversalofanimpairmentlossforanassetotherthangoodwillshallberecognisedimmediatelyinprofitorloss,unlesstheassetiscarriedatrevaluedamountinaccordancewithanotherIFRS(forexample,therevaluationmodelinIAS16-Property,PlantandEquipment).
Areversalofanimpairmentlossonarevaluedassetisrecognisedinothercomprehensiveincomeandincreasestherevaluationsurplusforthatasset.
However,totheextentthatanimpairmentlossonthesamerevaluedassetwaspreviouslyrecognisedinprofitorloss,areversalofthatimpairmentlossisalsorecognisedinprofitorloss.
Valueadjustmentsarenotcontinuedifthereasonsforwhichthevalueadjustmentsweremadehaveceasedtoapply.
GoodwillimpairmentcanbereversedunderLuxGAAP.
Areversalofavalueadjustmentisrecognisedintheprofitandlossaccount.
DisclosureThereareexhaustivedisclosuresregardingtheimpairmentofassets,amongthese,thefollowings:detailsaboutimpairmentlossesandreversalsimpactingprofitorlossandothercomprehensiveincome(whenreversalsrelatetoassetsrevaluedthroughreserves);movementsinassetsimpaired,writesoff,impairmentreversals;detailsabouttheassumptions,estimationsandmethodsusedtocomputetherecoverableamount;anddetailsaboutCGUandaboutmethodstoallocategoodwilltocash-generatingunitsaswellasreasonsfortheunallocatedgoodwill,ifapplicable.
Theamountsofvalueadjustmentsmustbedisclosedseparatelyinthenotestotheannualaccounts.
Assets,liabilitiesandequity52PwCLuxembourgSubjectIFRSLuxGAAPNon-currentassetsheldforsaleanddiscontinuedoperationsScopeandstandardTheapplicablestandardisIFRS5-Non-currentAssetsHeldforSaleandDiscontinuedOperations.
NotspecifiedintheAccountingLaw.
DefinitionsAnon-currentassetisclassifiedasheldforsaleifitscarryingamountwillberecoveredprincipallythroughasaletransactionratherthanthroughcontinuinguse.
Adisposalgroupisagroupofassetstobedisposedof,bysaleorotherwise,togetherasagroupinasingletransaction,andliabilitiesdirectlyassociatedwiththoseassetsthatwillbetransferredinthetransaction.
Thegroupincludesgoodwillacquiredinabusinesscombinationifthegroupisacash-generatingunittowhichgoodwillhasbeenallocatedinaccordancewiththerequirementsofIAS36-ImpairmentofAssetsorifitisanoperationwithinsuchacash-generatingunit.
Adiscontinuedoperationisacomponentofanentity(operationsandcashflowsthatcanbeclearlydistinguishedoperationallyandforfinancialreporting)thateitherhasbeendisposedoforisclassifiedasheldforsaleand:representsaseparatemajorlineofbusinessorgeographicalareaofoperations;ispartofasinglecoordinatedplantodisposeofaseparatemajorlineofbusinessorgeographicalareaofoperations;orisasubsidiaryacquiredexclusivelywithaviewtoresale.
Non-currentassetsheldforsaleanddiscontinuedoperationsarenotdefinedbytheAccountingLaw.
RecognitionInorderfortherecognitioncriteriatobemet,theasset(ordisposalgroup)mustbeavailableforimmediatesaleinitspresentconditionsubjectonlytotermsthatareusualandcustomaryforsalesofsuchassets(ordisposalgroups)anditssalemustbehighlyprobable.
Specificcriteriamustbemettodemonstratethatthesaleishighlyprobable.
TheIFRSclassifiesanoperationasdiscontinuedatthedatetheoperationmeetsthecriteriatobeclassifiedasheldforsaleorwhentheentityhasdisposedoftheoperation.
NotspecifiedintheAccountingLaw.
Therecognitioncriteriatobeconsideredasheldforsaleisthemanagementintentiontoselltheasset.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP53SubjectIFRSLuxGAAPNon-currentassetsheldforsaleanddiscontinuedoperationsMeasurementOnceclassifiedasheldforsale,theassetismeasuredatthelowerofitscarryingamountandfairvaluelesscoststosellwithanylossbeingrecognisedintheincomestatement.
Theseassetsarenotdepreciatedoramortisedduringthesellingperiod.
NotspecifiedintheAccountingLaw.
Theassetheldforsaleshallbeimpairedifthemarketvalueislowerthanthecarryingamount.
PresentationAnentityshallpresentanon-currentassetclassifiedasheldforsaleandtheassetsofadisposalgroupclassifiedasheldforsaleseparatelyfromotherassetsinthestatementoffinancialposition.
Theliabilitiesofadisposalgroupclassifiedasheldforsaleshallbepresentedseparatelyfromotherliabilitiesinthestatementoffinancialposition.
Thoseassetsandliabilitiesshallnotbeoffsetandpresentedasasingleamount.
Fordiscontinuedoperations,anentityshallpresentasingleamountinthestatementofcomprehensiveincomecomprisingthetotalof:thepost-taxprofitorlossofdiscontinuedoperations;andthepost-taxgainorlossrecognisedonthemeasurementtofairvaluelesscoststoselloronthedisposaloftheassetsordisposalgroup(s)constitutingthediscontinuedoperation.
Thenetcashflowsattributabletotheoperating,investingandfinancingactivitiesofdiscontinuedoperationsarepresentedseparatelyinthestatementofcashflows.
Thereisnorequirementtoreclassifyassetsasheldforsale.
Assetsheldforsaleremaininthefixedassetsiftheywereclassifiedinitiallyasfixedassets.
DisclosureFordiscontinuedoperations,anentityshalldisclosethefollowinginformationinthenotesintheperiodinwhichanon-currentasset(ordisposalgroup)hasbeeneitherclassifiedasheldforsaleorsold:adescriptionofthenon-currentasset(ordisposalgroup);adescriptionofthefactsandcircumstancesofthesale,orleadingtotheexpecteddisposal,andtheexpectedmannerandtimingofthatdisposal;thegainorlossrecognisedand,ifnotseparatelypresentedinthestatementofcomprehensiveincome,thecaptioninthestatementofcomprehensiveincomethatincludesthatgainorloss;ifapplicable,thereportablesegmentinwhichthenon-currentasset(ordisposalgroup)ispresentedinaccordancewithIFRS8-OperatingSegments.
NospecificdisclosurerequiredbytheAccountingLaw.
Assets,liabilitiesandequity54PwCLuxembourgSubjectIFRSLuxGAAPFinancialassetsScopeandstandardTheapplicablestandardsareIAS39-FinancialInstruments:RecognitionandMeasurementandIFRS7-FinancialInstruments:Disclosure.
Theydonotapplytothefollowingfinancialassets:interestsinsubsidiaries,associatesandjointventures;leases;employeebenefits;insurancecontracts;contractsforcontingentconsiderationinabusinesscombination;certainloancommitments;contractsinbusinesscombinations.
Forthepurposeofthispublication,derivativesarecoveredinaseparatesection"Derivativesandhedgeaccounting".
FinancialassetsarecoveredbythefollowingarticlesoftheAccountingLaw:34;39;41;55;58;61;64bis;64ter;64quater;64quinquiesand65.
Forthepurposeofthispublication,derivativesarecoveredinaseparatesection"Derivativesandhedgeaccounting".
Sharesinaffiliatedundertakingsandinundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterestsarecoveredinthesection"Investmentinsubsidiaries,associatesandjointlycontrolledentitiesinseparatefinancialstatements".
Ownsharesorowncorporateunitsarecoveredinthesection"Equity".
Underthissection,theterm"financialasset"isusedfor:amountsowedbyaffiliatedundertakings;amountsowedbyundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterests;securitiesheldasfixedassets;loansandclaimsheldasfixedassets;othertransferablesecurities;claimsresultingfromsalesandtheprovisionofservices/tradedebtors;otherreceivables;andcashatbank,cashinpostalchequeaccounts,chequesandcashinhand.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP55SubjectIFRSLuxGAAPFinancialassetsDefinitionsAfinancialinstrumentisacontractthatgivesrisetoafinancialassetofoneentityandafinancialliabilityorequityinstrumentofanotherentity.
Afinancialassetisanyassetthatis:cash;anequityinstrumentofanotherentity;acontractualright:-toreceivecashoranotherfinancialassetfromanotherentity;or-toexchangefinancialassetsorfinancialliabilitieswithanotherentityunderconditionsthatarepotentiallyfavourabletotheentity;oracontractthatwillormaybesettledintheentity'sownequityinstrumentsand:-underwhichtheentityisormaybeobligedtoreceiveavariablenumberoftheentity'sownequityinstruments;or-thatwillormaybesettledotherthanbytheexchangeofafixedamountofcashoranotherfinancialassetforafixednumberoftheentity'sownequityinstruments.
Forthispurpose,theentity'sownequityinstrumentsdonotincludeinstrumentsthatarethemselvescontractsforthefuturereceiptordeliveryoftheentity'sownequityinstruments.
Transactioncostsarecoststhatareincrementalanddirectlyattributabletotheacquisition,issueordisposalofafinancialasset.
Thereisnoprecisedefinitionoffinancialassets.
TheAccountingLawdistinguishesbetweenfinancialfixedassets,transferablesecurities(disclosedascurrentassets)andderivatives.
Inaddition,somefinancialinstrumentsarelistedinthearticle64bisoftheAccountingLaw.
TheAccountingLawsetsasfollowsthecomponentsofthefinancialfixedassets:sharesinaffiliatedundertakings;amountsowedbyaffiliatedundertakings;sharesinundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterests;amountsowedbyundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterests;securitiesheldasfixedassets;loansandclaimsheldasfixedassets;andownsharesorowncorporateunits.
TheAccountingLawsetsasfollowsthecomponentsofthetransferablesecurities:sharesinaffiliatedundertakingsandinundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterests;ownsharesorowncorporateunits;andothertransferablesecurities.
Cashandcashequivalentincludecashatbank,cashinpostalchequeaccounts,chequesandcashinhand.
DebtorsarenotclassifiedasfinancialassetsunderLuxGAAP.
ToensurecomparabilityoftheaccountingtreatmentofdebtorsbetweenIFRSandLuxGAAAP,debtorsarecoveredinthissection.
Debtorsinclude:claimsresultingfromsalesandtheprovisionofservices/tradedebtors;amountsowedbyaffiliatedundertakings;amountsowedbyundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterests;andotherreceivables.
Thepurchasepriceincludedirectexpenses(equivalenttotransactioncostsunderIFRS).
Assets,liabilitiesandequity56PwCLuxembourgSubjectIFRSLuxGAAPFinancialassetsDefinitions–CategoriesoffinancialassetsIAS39hasfourcategoriesoffinancialassets:Afinancialassetatfairvaluethroughprofitorlossisafinancialassetthatmeetseitherofthefollowingconditions:itisclassifiedasheldfortrading.
Afinancialassetisclassifiedasheldfortradingif:-itisacquiredprincipallyforthepurposeofsellingorrepurchasingitinthenearterm;-oninitialrecognition,itispartofaportfolioofidentifiedfinancialassetsthataremanagedtogetherandforwhichthereisevidenceofarecentactualpatternofshort-termprofit-taking;or-itisaderivative(exceptforderivativesdesignatedaseffectivehedginginstrument);oruponinitialrecognitionitisdesignatedbytheentityatfairvaluethroughprofitorloss;anentitymayusethisdesignationifthecontractcontainsatleastoneembeddedderivativeorwhendoingsoresultsinmorerelevantinformation,becauseeither:-iteliminatesorsignificantlyreducesameasurementorrecognitioninconsistency(sometimesreferredtoas"anaccountingmismatch");or-agroupoffinancialassets,financialliabilitiesorbothismanagedanditsperformanceisevaluatedonafairvaluebasis,inaccordancewithadocumentedriskmanagementorinvestmentstrategy.
Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket,otherthan:thosethattheentityintendstosellimmediatelyorinthenearterm,whichshallbeclassifiedasheldfortrading,andthosethattheentityuponinitialrecognitiondesignatesasatfairvaluethroughprofitorloss;thosethattheentityuponinitialrecognitiondesignatesasavailable-for-sale;orthoseforwhichtheholdermaynotrecoversubstantiallyallofitsinitialinvestment,otherthanbecauseofcreditdeterioration,whichshallbeclassifiedasavailable-for-sale.
Heldtomaturityinvestmentsarenon-derivativefinancialassetsquotedonanactivemarketwithfixedordeterminablepaymentsandfixedmaturity,thatanentityhasthepositiveintentionandabilitytoholdtomaturity.
Available-for-salefinancialassetsarefinancialassetsnotclassifiedinoneofthethreecategoriesdescribedabove.
TherearenosuchcategoriesoffinancialassetsintheAccountingLaw.
Financialassetsthatintendtoservetheactivityofthecompanyonalong-termbasis(i.
e.
morethan12months)areclassifiedasfinancialfixedassets.
Otherwise,theyshallbeconsideredascurrentassets.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP57SubjectIFRSLuxGAAPFinancialassetsReclassificationFinancialassetsmaybereclassifiedbetweencategories,albeitwithconditions.
Morespecifically,debtinstrumentsmaybereclassifiedfromheldfortradingoravailable-for-saleintoloansandreceivables,ifthedebtinstrumentmeetsthedefinitionofloansandreceivablesandtheentityhastheintentandabilitytoholdtheinstrumentfortheforeseeablefuture.
Also,afinancialassetcanbetransferredfromheldfortradingtoavailable-for-salebutonlyinrarecircumstances.
Reclassificationisprohibitedforinstrumentswherethefairvalueoptioniselected.
Reclassificationsfromtheheldtomaturitycategoryasaresultofachangeofintentorabilityaretreatedassalesand,otherthaninexceptionalcircumstances,resultinthewholecategorybeingtainted.
Assetsarereclassifiedinthebalancesheetaccordingtotheirremainingmaturity(moreorlessthanoneyear).
RecognitionAfinancialinstrumentisrecognisedonlywhentheentitybecomesapartytoitscontractualprovision.
Theterms"contacts"and"contractual"refertoanagreementbetweentwoormorepartiesthathascleareconomicconsequencesthatthepartieshavelittle,ifany,discretiontoavoid,usuallybecausetheagreementisenforceablebylaw.
Contractsdefiningfinancialinstrumentsmaytakeavarietyofformsandneednotbeinwriting.
Financialassetsandtradedebtorsarerecognisedwhentheentityhasthelegalownership.
Therecognitionoffinancialassetsandtradedebtorsshallalsobebasedonthesubstanceoverformprinciple.
Assets,liabilitiesandequity58PwCLuxembourgSubjectIFRSLuxGAAPFinancialassetsDerecognitionAnentityonlyderecognisesafinancialassetwhen:therightstothecashflowsfromtheassetshaveexpiredoraresettled;theentityhastransferredsubstantiallyalltherisksandrewardsofownershipofthefinancialasset;ortheentityhasretainedsomesignificantrisksandrewardsbuthastransferredcontroloftheassettoanotherparty.
Inthiscase,theassetisderecognised,andanyrightsandobligationcreatedorretainedarerecognised.
Inaddition,IFRSincludesadditionalguidanceonpass-througharrangements,continuinginvolvementandsomeotherrelevantaspectsrelatingtotransferofafinancialasset.
Financialassetsandtradedebtorsarederecognisedwhentheentitylosesthelegalownershipandwhentherisksand/orrewardsofownershiparetransferredtoanotherparty.
InitialmeasurementTheclassificationoffinancialassetswillimpacttheinitialandsubsequentmeasurement.
Atinitialrecognition,financialassetsaremeasuredatfairvalue,whichisnormallythefairvalueoftheconsiderationgiven.
Transactioncostsareincludedintheinitialmeasurementofallfinancialassetsexceptforfairvaluethroughprofitorlosscategory.
Transactioncostsincludefeesandcommissionspaidtoagents,advisers,brokersanddealers,leviesbyregulatoryagenciesandsecuritiesexchanges,andtransfertaxesandduties.
Theyarerecordedaspartoftheinitialmeasurementoftheassetiftheyareincrementalanddirectlyattributabletothetransaction.
Theclassificationoffinancialassetsascurrentorfixedassetswillimpactthevaluationoptionbutnottheinitialmeasurement.
Financialassetsanddebtorsareinitiallyrecordedatpurchaseprice/nominalvalue(loans,claimsanddebtors)includingtheexpensesincidentalthereto.
SubsequentmeasurementFinancialinstrumentsclassifiedasheldfortradingandtheonesdesignatedasatfairvaluethroughprofitorlossaremeasuredatfairvaluewithchangesinfairvaluerecordedinprofitorloss.
Heldtomaturityinvestmentsandloansandreceivablesaremeasuredatamortisedcost.
Available-for-saleinvestmentsarevaluedatfairvaluewithallgainsandlossesarisingfromchangesinfairvaluerecogniseddirectlyinothercomprehensiveincomeexcept:fordebtinstrumentclassifiedasavailable-for-sale,theinterestiscalculatedusingtheeffectiveinterestmethodandisrecognisedinprofitorloss.
Dividendsonanavailable-for-saleequityinstrumentarerecognisedinprofitorlosswhentheentity'srighttoreceivepaymentisestablished;forforeignexchangegainsandlossesonmonetaryfinancialassetsarerecognisedinprofitorloss;forimpairmentlossesthatarerecognisedinprofitorloss(refertosubsection"Impairmentoffinancialassets").
Reversalsofimpairmentofadebtinstrumentarealsorecognisedinprofitorloss,butreversalsofimpairmentonequityinstrumentsarenotrecognisedinprofitorlossbutinequity,asrevaluationgains.
Financialfixedassetscanbemeasuredatcostlesspermanentvaluereduction,atlowerofcostormarketvalueoratfairvaluewhenapplicable.
Transferablesecuritiesanddebtorsclassifiedascurrentassetsaremeasuredatlowerofcostormarketvalueoratfairvaluewhenapplicable.
HistoricalcostconventionValuationatpurchaseprice/nominalvaluelessimpairmentInthecaseofdurabledepreciationinvalue,valueadjustmentsaremadeinrespectoffixedassets,sothattheyarevaluedatthelowerfiguretobeattributedtothematthebalancesheetdate.
Thesevalueadjustmentsarenotcontinuedifthereasonsforwhichthevalueadjustmentsweremadehaveceasedtoapply.
Valuationatthe"lowerofcostormarketvalue"Assetsvaluedatthelowerofcostormarketvalueshallbesubjecttovalueadjustmentswithaviewtoshowingthematthelowerofcostormarketvalue.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP59SubjectIFRSLuxGAAPFinancialassetsInvestmentsinequitysecuritiesunquotedinanactivemarket,whosefairvaluecannotbemeasuredreliably,aremeasuredatcostlessimpairment.
FairvalueoptionAccordingtotheAccountingLaw,thefinancialassetsoftradingportfolioareeligibletofairvalueundercertainconditions.
FairvalueoptionunderLuxGAAPshallnotapplyto:non-derivativefinancialinstrumentsheldtomaturity;loansandreceivablesoriginatedbythecompanyandnotheldfortradingpurposes;andotherfinancialinstrumentswhichsuchspecialcharacteristicsthat,accordingtowhatisgenerallyaccepted,shouldbeaccountedfordifferentlyfromotherfinancialinstruments.
However,assetsthatarenotqualifyingforfairvalueaccordingtoLuxGAAPmayapplyfairvaluebyreferencetoIFRS.
Subsequentmeasurement–AmortisedcostTheamortisedcostofafinancialassetistheamountatwhichthefinancialassetismeasuredatinitialrecognitionminusprincipalrepayments,plusorminusthecumulativeamortisationusingtheeffectiveinterestmethodofanydifferencebetweenthatinitialamountandthematurityamount,andminusanyreduction(directlyorthroughtheuseofanallowanceaccount)forimpairmentoruncollectibility.
Theeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofafinancialassetorafinancialliability(orgroupoffinancialassetsorfinancialliabilities)andofallocatingtheinterestincomeorinterestexpenseovertherelevantperiod.
Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashpaymentsorreceiptsthroughtheexpectedlifeofthefinancialinstrumentor,whenappropriate,ashorterperiodtothenetcarryingamountofthefinancialassetorfinancialliability.
Whencalculatingtheeffectiveinterestrate,anentityshallestimatecashflowsconsideringallcontractualtermsofthefinancialinstrument(forexample,prepayment,callandsimilaroptions)butshallnotconsiderfuturecreditlosses.
AmortisedcostisnotforeseenbytheAccountingLaw.
Assets,liabilitiesandequity60PwCLuxembourgSubjectIFRSLuxGAAPFinancialassetsSubsequentmeasurement–FairvalueIFRS13-FairValueMeasurementdefinesfairvalueasthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.
Thefairvalueshallbedeterminedbyreferenceto:amarketvalue,forthosefinancialinstrumentsforwhichareliablemarketcanreadilybeidentified;whereamarketvalueisnotreadilyidentifiableforaninstrumentbutcanbeidentifiedforitscomponentsorforasimilarinstrument,themarketvaluemaybederivedfromthatofitscomponentsorofthesimilarinstrument;oravalueresultingfromgenerallyacceptedvaluationmodelsandtechniques,forthoseinstrumentsforwhichareliablemarketcannotbereadilyidentified;suchvaluationmodelsandtechniquesshallensureareasonableapproximationofthemarketvalue.
Ateachyearendclosing,thechangeinfairvalueisrecordedintheprofitandlossaccount.
However,suchchangemaybeincludeddirectlyinanequityaccount,inafairvaluereserve,wherethechangeinthevaluerelatestoanavailable-for-saleassetotherthanaderivativefinancialinstrument.
Thechangeinfairvalueshallbeincludeddirectlyinanequityaccountwheretheinstrumentaccountedforisanhedginginstrumentunderasystemofhedgeaccountingandwhenthechangeinvaluerelatestoanexchangedifferencearisingonamonetaryitemthatformspartofanundertaking'snetinvestmentinaforeignentity.
Impairmentoffinancialassets–AssetsmeasuredatcostoramortisedcostAttheendofeachreportingperiod,financialassetsmeasuredatcostoramortisedcostarereviewedforobjectiveevidenceofimpairment.
Impairmentlossesarerecognisedinprofitorlossimmediately.
Iftheobjectiveevidencereversesinasubsequentperiod,impairmentlossesarereversedintheprofitorlossofsubsequentperiods.
Theimpairmentlossisthedifferencebetweentheassetscarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedatthefinancialasset'soriginaleffectiveinterestrate.
Forfinancialassetsmeasuredatcostlessimpairment,avalueadjustmentisrecordedwherethemarketvalue(securities)/recoveryvalue(loans)islowerthanthepurchaseprice(securities)/nominalvalue(loans).
Thedepreciationshallbedurable.
Thevalueadjustmentisreversedifthereasonsforwhichitwasmadehaveceasedtoapply.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP61SubjectIFRSLuxGAAPFinancialassetsImpairmentoffinancialassets–AssetsmeasuredatfairvalueAssetsclassifiedatfairvaluethroughprofitorlossarenottestedforimpairmentasanydecreaseinvalue,evenifduetoanimpairment,isalreadyincompassedinprofitorloss.
Whenadeclineinthefairvalueofanavailable-for-salefinancialassethasbeenrecogniseddirectlyinothercomprehensiveincomeandthereisobjectiveevidencethattheassetisimpaired,thecumulativelossthathadbeenrecogniseddirectlyinothercomprehensiveincomeshallbereclassifiedfromequitytoprofitorloss.
Theamountofcumulativelossthatisrecycledtoprofitorlossisthedifferencebetweentheacquisitioncost(netofanyprincipalrepaymentandamortisation)andcurrentfairvalue,lessanyimpairmentlossonthatfinancialassetpreviouslyrecognisedinprofitorloss.
Anyportionofthecumulativenetlossthatisattributabletoforeigncurrencychangesonthatassetthathadbeenrecognisedinequityisalsorecognisedinprofitorloss.
Subsequentlosses,includinganyportionattributabletoforeigncurrencychanges,arealsorecognisedinprofitorlossuntiltheassetisderecognised.
Ifthecircumstanceschangeinasubsequentperiodsuchthatthefairvalueoftheavailable-for-salefinancialinstrumentincreases,thenthetreatmentrequiredbyIAS39forreversalsofimpairmentlossesonavailable-for-saledebtinstrumentsisdifferentfromthoseonavailable-for-saleequityinstrumentsasnotedbelow:fordebtinstruments(monetaryassets),reversalofpastimpairmentlossesshallberecordedthroughprofitorloss;forequityinvestments(non-monetaryassets),pastimpairmentlossesrecognisedinprofitorlossshallnotbereversedthroughprofitorloss.
Thismeansthatsubsequentincreasesinfairvalueincludingthosethathavetheeffectofreversingearlierimpairmentlossesareallrecognisedinequity.
Financialassetsanddebtorsvaluedatfairvaluearenottestedforimpairmentasanydecreaseinvalue,evenifduetoanimpairment,isalreadyrecorded.
Assets,liabilitiesandequity62PwCLuxembourgSubjectIFRSLuxGAAPFinancialassetsDisclosureIFRS7appliestoallrisksarisingfromallfinancialinstruments.
Itrequirescomprehensivedisclosureofthesignificanceoffinancialinstrumentsforanentity'sfinancialpositionandperformanceaswellasqualitativeandquantitativeinformationaboutexposuretorisksarisingfromfinancialinstruments,includingspecifiedminimumdisclosuresaboutcreditrisk,liquidityriskandmarketrisk.
Thequalitativedisclosuresdescribethemanagement'sobjectives,policiesandprocessesformanagingthoserisks.
Thequantitativedisclosuresprovideinformationabouttheextenttowhichtheentityisexposedtorisk,basedoninformationprovidedinternallytotheentity'skeymanagementpersonnel.
CreditRiskDisclosuresregardingcreditriskincludeinformationrelatingtocollateralandothercreditenhancementsavailable.
Thisalsocoversthenatureandcarryingamountofassetsobtainedascollateral.
Ifnon-financialassetsareobtainedthatarenotreadilyconvertibletocashandtheentitydoesnotplantousetheminitsoperations,thepolicyfordisposingofsuchassetsisdisclosed.
Therearespecificdisclosuresrelatingtoimpairedorpastdueassetsandassetsthatwouldbeeitherpastdueorimpairedabsentarenegotiationofterms.
Afinancialassetispastduewhenacounterpartyhasfailedtomakeapaymentwhencontractuallydue.
IFRS7alsorequiresdisclosuresoncreditqualityoffullyperformingassets.
Riskconcentrationdisclosureshallbepresentedaswell.
Thefollowingcaptionsmustdiscloseseparatelytheamountsbecomingdueandpayablewithinoneyearfromtheamountsbecomingdueandpayableaftermorethanoneyear:claimsresultingfromsalesandtheprovisionofservices/tradedebtors;amountsowedbyaffiliatedundertakings;amountsowedbyundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterests;andotherreceivables.
Small-sizedentities(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")maydrawuptheirbalancesheetintheformofanabridgedbalancesheetshowingintotal–forallcaptionsabovelisted–theamountsbecomingdueandpayablewithinoneyearandtheamountsbecomingdueandpayableaftermorethanoneyear.
Movementsinfinancialfixedassetsshallbedisclosedinthenotestotheannualaccounts.
Iffixedassetsarethesubjectofexceptionalvalueadjustmentsfortaxationpurposesalone,theamountoftheadjustmentsandthereasonsformakingthemshallbeindicatedinthenotestotheannualaccounts.
HistoricalcostconventionWherefinancialfixedassetsarecarriedatanamountinexcessoftheirfairvalueandwherenoimpairmentisbooked,themanagementshalldisclosethefairvalueinthenotestotheannualaccountsaswellasthereasonsfornotreducingthebookvalue,includingthenatureoftheevidencethatthebookvaluewillberecovered.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP63SubjectIFRSLuxGAAPFinancialassetsMarketRiskAsensitivityanalysisforeachcomponentofmarketrisk(currency,interestrateandotherpricerisk)towhichanentityisexposedshouldbegiven.
Thisshouldillustratehow"reasonablypossible"changesintherelevantriskvariablewouldimpactprofitorlossandequity.
Theassumptionsusedintheanalysisshouldbedisclosed,andanychangesinassumptionssincethelastperiodandthereasonsforthosechangesshouldbegiven.
LiquidityRiskForthedisclosuresregardingliquidityrisk,refertosection"Financialliabilities".
FairValueEachclassoffinancialinstrumentsthatismeasuredatfairvalueinthefinancialstatementsiscategorisedintoonelevelofthehierarchy,determinedonthebasisofthelowestlevelinputthatissignificanttothefairvaluemeasurement.
Thethreelevelsofthehierarchyare:level1:Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities;level2:Inputsotherthanquotedpricesincludedwithinlevel1thatareobservablefortheassetorliability,eitherdirectly(thatis,prices)orindirectly(thatis,derivedfromprices);andlevel3:Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata.
Thepositioninthehierarchyalsodrivesaseriesofadditionaldisclosures,namely:significanttransfersduringtheperiodbetweenlevelsoneandtwoofthefairvaluehierarchy;areconciliationofmovementsinthelevel3balance,fromthebeginningtotheendoftheperiod.
Thereconciliationshouldincludegainsandlosses,transfersinandoutoflevel3,purchases,salesandsettlements;analysesofthegainsandlossesrecognisedonfinancialinstrumentswithinlevel3,includingwhereinthestatementofcomprehensiveincometheyarerecognised;andsensitivityanalysisoftheassumptionsappliedtolevel3measurements.
OffsettingoffinancialinstrumentsRefertosection"Statementoffinancialposition-balancesheet"describedinthe"Presentationoffinancialstatements".
FairvalueoptionWherevaluationatfairvalueoffinancialinstrumentshasbeenapplied,thenotestotheannualaccountsmustdisclosethefollowing:themainassumptionsinrelationtothemodelsandvaluationtechniquesused;foreachcategoryoffinancialinstruments,thefairvalue,themovementsoffairvaluebookeddirectlyintheprofitandlossaccount,aswellasthemovementsonthefairvaluereserve;andatabledescribingthemovementsinthefairvaluereserveduringtheyear.
ForthefinancialassetsthatarenotqualifyingforfairvalueaccordingtoLuxGAAPandthatapplyfairvaluebyreferencetoIFRS,IFRSdisclosurerequirementsrelatingtothevaluationoffinancialinstrumentsapply.
Assets,liabilitiesandequityRecentdevelopments–IFRS9-FinancialInstrumentsTheIASBhasbrokendownIFRS9–theprojectofIAS39replacement–intothreedistinctstages:classificationandmeasurement,impairmentandhedging.
TheIASBhasdecidedthateachphasecanbeearlyadoptedseparately,assoonaseachoneiscompleted.
Onthecontrary,EUhasdecidedtoendorsethestandardonlyasawhole,allthephasesatonce,whenIFRS9isentirelycompleted.
StatusandtimetablePhase1:ClassificationandmeasurementIFRS9-FinancialInstrumentswaspublishedinNovember2009andcontainedrequirementsforfinancialassets(seebelow).
RequirementsforfinancialliabilitieswereaddedtoIFRS9inOctober2010(refertosection"Financialliabilities"forfurtherdetails).
On28November2012,theIASBissuedanExposureDraftClassificationandMeasurement:LimitedAmendmentstoIFRS9(ProposedamendmentstoIFRS9(2010)).
Therelatedcommentperiodendson28March2013.
Phase2:ImpairmentForthesecondphaseofthefinancialinstrumentsproject,aseparatere-ExposureDrafthasbeenissuedon7March2013.
TheIASBmodelisdesignedtorecognisecreditlossesonamoretimelybasis.
Expectedcreditlossesarerecognisedonallfinancialinstrumentswithinthescopeofthisproposalfromwhentheyareoriginatedorpurchased.
Fulllifetimeexpectedcreditlossesarerecognisedwhenafinancialinstrumentdeterioratessignificantlyincreditquality.
Thisisasignificantlylowerthresholdthanundertheincurredlossmodeltodaywhichinpracticehasresultedinprovisioningonlywhenfinancialassetsareclosetodefault.
Thepublicationofthefinalstandardisnotexpectedbefore2014.
Phase3:HedgingOn7September2012,theIASBpostedadraftoftheforthcominggeneralhedgeaccountingrequirementsthatwillbeaddedtoIFRS9.
Thefinalstandardistargetedtobepublishedinthesecondquarterof2013(refertosection"Derivativesandhedgeaccounting"forfurtherdetails).
Regardingmacro-hedgeaccounting,thediscussionpaperistargetedforthefirsthalfof2013.
EndorsementEndorsementisexpectednotearlierthan1January2015,thecurrentlyplannedeffectivedateofthestandard.
IFRS9-FinancialassetsClassificationunderIFRS9isdrivenbytheentity'sbusinessmodelformanagingthefinancialassetsandthecontractualcharacteristicsofthefinancialassets.
Afinancialassetismeasuredatamortisedcostiftwocriteriaaremet:theobjectiveofthebusinessmodelistoholdthefinancialassettocollectthecontractualcashflows;andthecontractualcashflowsundertheinstrumentsolelyrepresentpaymentsofprincipalandinterest.
Ifthelastcriteriaismet,itmeansthattheinstrumentspassthecontractualcashflowcharacteristicsassessment.
TheBoardhasclarifiedtheprimaryobjectiveof"holdtocollect"byprovidingadditionalapplicationguidanceonthetypesofbusinessactivitiesandthefrequency,volumeandnatureofsalesthatwouldallowassetstoqualifyforamortisedcostmeasurement.
Forexample,theExposureDraftclarifiesthatsalesduetodeteriorationincreditqualitywouldnotconflictwiththeobjectiveofholdingtocollectcashflows.
Inaddition,whereanentityhasaportfoliowithassetsthatitwouldonlysellinastresscasescenarioandwherethatstresscaseisexpectedtobeinfrequent,thenthatwouldalsobeconsistentwiththeamortisedcostbusinessmodel.
Ifafinancialassetisnotmeasuredatamortisedcost,itwillbemeasuredatfairvalue.
Normally,thechangesinfairvaluearerecordedinprofitorloss,fallingwithinthefairvaluethroughprofitorlosscategory,exceptiftheinstrumentiselectedandmeetstheconditionsforthefairvaluethroughothercomprehensiveincomeclassification.
64PwCLuxembourgAssets,liabilitiesandequityEquityinstrumentsIFRS9classificationprinciplesindicatethatallequityinvestmentsshouldbemeasuredatfairvalue.
However,managementhasanoptiontopresentinothercomprehensiveincomeunrealisedandrealisedfairvaluegainsandlossesonequityinvestmentsthatarenotheldfortrading.
Suchdesignationisavailableoninitialrecognitiononaninstrumentbyinstrumentbasisandisirrevocable.
Thereisnosubsequentrecyclingoffairvaluegainsandlossestoprofitorloss;however,dividendsfromsuchinvestmentswillcontinuetoberecognisedinprofitorloss;IFRS9removesthecostexemptionforunquotedequitiesandderivativesonunquotedequitiesbutprovidesguidanceonwhencostmaybeanappropriateestimateoffairvalue.
DebtinstrumentsAfairvaluethroughothercomprehensiveincomemeasurementcategoryforeligibledebtinstrumentsisproposedintheExposureDraftdatedNovember2012.
Adebtinstrumentwouldbemeasuredatfairvaluethroughothercomprehensiveincomeonlyifitpassesthesolelypaymentsofprincipalandinteresttestandisheldinabusinessmodelthatismanagedbothinordertocollectcontractualcashflowsandforsale.
Adebtinstrumentmeasuredatfairvaluethroughothercomprehensiveincomewillhavethesameimpairmentandinterestincomerecognitionasfinancialassetsmeasuredatamortisedcost.
Also,thecumulativefairvaluegainorlossrecognisedinothercomprehensiveincomewillberecycledfromothercomprehensiveincometoprofitorlosswhenthesefinancialassetsarederecognised.
ItisexpectedthatdebtinstrumentsbackinginsurancecontractsmayfallintothiscategoryandwillthereforehaveaconsistentmeasurementwithinsuranceliabilitiesundertheproposalsbeingdiscussedintheIASB'sInsuranceproject.
Similaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP65Assets,liabilitiesandequity66PwCLuxembourgSubjectIFRSLuxGAAPFinancialliabilitiesScopeandstandardTheapplicablestandardsareIAS32-FinancialInstruments:PresentationandIAS39-FinancialInstruments:RecognitionandMeasurement.
Itdoesnotapplytothefollowingfinancialliabilities:leases;employeebenefits;insurancecontracts;contractsforcontingentconsiderationinabusinesscombination;certainloancommitments;contractsinbusinesscombinations;andownusecommoditycontracts.
FinancialliabilitiesarecoveredbythefollowingarticlesoftheAccountingLaw:34;63;64bis;64ter;64quater;64quinquiesand65.
Forthepurposeofthispublication,derivativesarecoveredbysection"Derivativesandhedgeaccounting".
DefinitionsAfinancialliabilityisanyliabilitythatis:acontractualobligationtodelivercashoranotherfinancialassettoanotherentity;oracontractualobligationtoexchangefinancialassetsorfinancialliabilitieswithanotherentityunderconditionsthatarepotentiallyunfavourabletotheentity;oracontractthatwillormaybesettledintheentity'sownequityinstrumentsandis:-anon-derivativeforwhichtheentityisormaybeobligedtodeliveravariablenumberoftheentity'sownequityinstruments;or-aderivativethatwillormaybesettledotherthanbytheexchangeofafixedamountofcashoranotherfinancialassetforafixednumberoftheentity'sownequityinstruments.
Anequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsofanentityafterdeductingallofitsliabilities.
NospecificdefinitionintheAccountingLaw.
Financialliabilitiesareincludedwithinthesubordinatedandnon-subordinateddebts.
Definitions–CategoriesoffinancialliabilitiesIAS39hastwodefinedcategoriesoffinancialliabilities:financialliabilitiesatfairvaluethroughprofitorloss;andotherfinancialliabilities(measuredatamortisedcost).
Likefinancialassets,afinancialliabilitycanbeclassifiedasatfairvaluethroughprofitorlossonlyifitmeetseitherofthefollowingconditions:uponinitialrecognition,itisdesignatedbytheentityatfairvaluethroughprofitorloss(refertosection"Financialassets"forfairvalueoptionsconditions);oritisclassifiedasheldfortrading.
Financialliabilitiesareclassifiedaccordingtotheirnature:bonds;amountsowedtocreditinstitutions;paymentsreceivedonaccountofordersinsofarastheyarenotshownseparatelyasdeductionsofinventories;debtstotradecreditors;billsofexchangepayable;amountsowedtoaffiliatedundertakings;amountsowedtoundertakingswithwhichthecompanyislinkedbyvirtueofparticipatinginterests;taxandsocialsecuritydebts;andothercreditors.
RecognitionUnderIAS39,anentityisrequiredtorecogniseafinancialliabilityonitsbalancesheetwhen,andonlywhen,itbecomesapartytotheinstrument'scontractualprovisions.
ThereisnoprecisedefinitionoffinancialliabilityintheAccountingLaw.
IFRScanbeusedasabenchmarkexceptforthedifferencemadebetweenequityandliabilityclassification.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP67SubjectIFRSLuxGAAPFinancialliabilitiesDerecognitionAfinancialliability(tradingorother)isremovedfromthebalancesheetwhenitisextinguished,thatiswhentheobligationisdischarged,cancelledorexpired.
Thisconditionismetwhenthedebtoreither:dischargestheliability(orpartofit)bypayingthecreditor,normallywithcash,otherfinancialassets,goodsorservices;orislegallyreleasedfromprimaryresponsibilityfortheliability(orpartofit)eitherbyprocessoflaworbythecreditor.
Entitiesfrequentlynegotiatewithlenderstorestructuretheirexistingdebtobligations.
Inthecaseofasubstantialmodificationofthetermsofanexistingfinancialliability,thisshouldbeaccountedforasanextinguishmentoftheoriginalfinancialliabilitybesidestherecognitionofanewfinancialliability.
Thetermsaresubstantiallydifferentifthediscountedpresentvalueofthecashflowsunderthenewterms,includinganyfeespaidnetofanyfeesreceivedanddiscountedusingtheoriginaleffectiveinterestrate,isatleast10%differentfromthediscountedpresentvalueoftheremainingcashflowsoftheoriginalfinancialliability.
Afinancialliabilityisderecognisedwhentheobligationspecifiedinthecontractisdischarged,cancelled,settledorexpired;ortheprimaryresponsibilityfortheliabilityislegallytransferredtoanotherparty.
InitialmeasurementTheclassificationoffinancialliabilitieswillimpacttheinitialandsubsequentmeasurement.
Whenafinancialliabilityisrecognisedinitially,anentityshallmeasureitatitsfairvalueplus,inthecaseofafinancialliabilitynotatfairvaluethroughprofitorloss,transactioncoststhataredirectlyattributabletotheissueofthefinancialliability.
Financialliabilitiesarerecordedattheirreimbursementvalue.
Wheretheamountrepayableoncreditorsexceedstheamountreceived,thedifferencemaybeshownasanassetandshownseparatelyinthebalancesheetorinthenotestotheannualaccounts.
Theamountofthedifferencemustbewrittenoffbyreasonableyearlyamounts(basedonanactuarialorlinearmethod)andmustbecompletelywrittenoffnolaterthantherepaymentdateofthedebt.
Alternatively,thedifferenceisbookedintheprofitandlossaccountuponissuance.
Assets,liabilitiesandequity68PwCLuxembourgSubjectIFRSLuxGAAPFinancialliabilitiesSubsequentmeasurementFinancialliabilitiesaremeasuredatamortisedcostorfairvaluethroughprofitorloss.
Fordetailsonfairvalueandamortisedcost,refertosection"Financialassets".
Financialliabilitiescanbemeasuredasfollows:underthehistoricalcostconvention:reimbursementvalueoftheinstrument;underLuxGAAPwithfairvalueoption:thecompanymayusefairvaluetomeasurefinancialinstrumentliabilities.
Financialinstrumentliabilitiescanonlybevaluedatfairvalueifandonlyiftheyare:-heldaspartofatradingportfolio;or-derivativefinancialinstruments;alternatively,liabilitiesfinancialinstruments,whichcannotbefairvaluedaspertheparagraphabove,canfollowIFRSfairvaluationpolicy.
Subsequentmeasurement–Otherfinancialliabilities–AmortisedcostAfterinitialrecognition,anentityshouldmeasurefinancialliabilities,otherthanthoseclassifiedatfairvaluethroughprofitorloss,atamortisedcostusingtheeffectiveinterestmethodasdescribedinthe"Financialassets"section.
AmortisedcostisnotcontemplatedunderLuxGAAP.
Subsequentmeasurement–FinancialliabilitiesatfairvaluethroughprofitorlossAfterinitialrecognition,financialliabilitiesfallingwithinthiscategory(includingliabilitiesheldtotradingandderivativeliabilitiesnotdesignatedashedginginstruments)aremeasuredatfairvalue.
Achangeinafinancialliability'sfairvalueclassifiedinthiscategorythatisnotpartofahedgingrelationshipshouldberecognisedintheprofitorlossfortheperiod.
Ateachyearendclosing,thechangeinfairvalueisrecordedintheprofitandlossaccount.
However,suchchangemaybeincludeddirectlyinanequityaccount,inafairvaluereserve,wherethechangeinthevaluerelatestoanavailable-for-saleassetotherthanaderivativefinancialinstrument.
Thechangeoffairvalueshallbeincludeddirectlyinanequityaccountwheretheinstrumentaccountedforisanhedginginstrumentunderasystemofhedgeaccountingandwhenthechangeinvaluerelatestoanexchangedifferencearisingonamonetaryitemthatformspartofanundertaking'snetinvestmentinaforeignentity.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP69SubjectIFRSLuxGAAPFinancialliabilitiesConvertiblebond"Splitaccounting"isusedforconvertibleinstrumentswheretheconversionisafixedamountofcashforafixednumberofsharesiftheconversionoptionisthechoiceoftheholder.
Theproceedsareallocatedbetweenthetwocomponents,theequityconversionrightsarerecognisedinequityandtheliabilityisrecognisedatfairvaluecalculatedbydiscountingatamarketrateforanon-convertiblesimilardebt.
Certainembeddedderivativesmayhavetobebifurcated.
Oneexampleiswhenthereisanearlyrepaymentoptiontobemadeatanamountsignificantlydifferenttotheamortisedcostcarryingamountoftheentireinstrumentatearlyredemptiondate.
Iftheconversionoptionisthechoiceoftheissuer,thentheinstrumentasawholeisanequityinstrument.
Refertosection"Equity",subsection"Classificationdebtvsequity"forfurtherdetails.
Nospecificdefinitionbutaccountingprinciplesfollowthelegalform.
Convertiblebondsareclassifiedinfullasliabilitiesuntiltheyareconverted.
DisclosureForgeneraldisclosuresrelatedtofinancialinstruments,refertosection"Financialassets".
Oneofthemaindisclosuresregardingfinancialliabilitiesrelatestotheliquidityrisks.
Managementshalldescribehowliquidityriskismanagedandgivequantitativedetailsinaliquiditytable.
Thetableshallcontainallthefutureundiscountedcashflowsfromfinancialliabilities,presentedseparatedintotimebucketswhentheyarecontractuallyduetobepaid.
Thenumberoftimebucketsisnotdefined.
So,theentityshoulduseitsjudgementtodecidewhatisrelevantforitsbusiness.
LuxGAAPdisclosuresarenotsodetailedasIFRSandarelimitedtothefollowingones.
HistoricalcostconventionIncaseafinancialdebtisbookedaccordingtohistoricalcostconvention,disclosuresarerequiredsuchasrightsrelatedtoconvertiblebonds,detailofmaturityoverfiveyears,detailofdebtssecuredbycollateralonassets.
FairvalueoptionWhentheLuxGAAPfairvalueoptionisused,followingdisclosuresarerequiredinthenotestotheannualaccounts:themainassumptionsinrelationtothemodelsandvaluationtechniquesused;foreachcategoryoffinancialinstruments,thefairvalue,themovementsoffairvaluebookeddirectlyintheprofitandlossaccount,aswellasthemovementsonthefairvaluereserve;andatabledescribingthemovementsonthefairvaluereserveduringthefinancialyear.
FairvaluebyreferencetoIFRSForthefinancialliabilitiesthatapplyfairvaluebyreferencetoIFRS,IFRSdisclosurerequirementsrelatingtothevaluationoffinancialinstrumentsapply.
Assets,liabilitiesandequityRecentdevelopments–IFRS9-FinancialliabilitiesTheIASBhasupdatedIFRS9-FinancialInstrumentstoincludeguidanceonfinancialliabilitiesandderecognitionoffinancialinstruments(referto"Recentdevelopments–IFRS9-FinancialInstruments"inthesection"Financialassets"forinformationonotheraspectsofIFRS9,includingeffectivedateandendorsement).
TheaccountingandpresentationforfinancialliabilitiesandforderecognisingfinancialinstrumentshasbeenrelocatedfromIAS39-FinancialInstruments:RecognitionandMeasurement,withoutchange,exceptforfinancialliabilitiesthataredesignatedatfairvaluethroughprofitorloss.
KeyprovisionsTherequirementsinIAS39regardingtheclassificationandmeasurementoffinancialliabilitieshavebeenretained,includingtherelatedapplicationandimplementationguidance.
Thismeansthattherecontinuetobetwomeasurementcategoriesforfinancialliabilities:fairvaluethroughprofitorlossandamortisedcost.
Thecriteriafordesignatingafinancialliabilityatfairvaluethroughprofitorlossalsoremainunchanged.
Entitiesarestillrequiredtoseparatederivativesembeddedinfinancialliabilitieswheretheyarenotcloselyrelatedtothehostcontract.
Theseparatedembeddedderivativecontinuestobemeasuredatfairvaluethroughprofitorloss,andtheresidualdebthostcontinuestobemeasuredatamortisedcost.
TheexistingapplicationguidancerelatingtoembeddedderivativeshasalsobeenincludedinIFRS9;itwillalsocontinuetoapplytoderivativesembeddedinnonfinancialitems,forexample,foreigncurrencyderivativesembeddedinpurchaseandsalescontracts.
TherequirementsinIAS39fordeterminingwhenfinancialinstrumentsarederecognisedfromthebalancesheethavealsobeenrelocatedtoIFRS9withoutchange.
NewmeasurementguidanceUnderthenewstandard,entitieswithfinancialliabilitiesdesignatedatfairvaluethroughprofitorlossrecognisedirectlyinothercomprehensiveincomechangesinthefairvalueduetochangesintheliability'screditrisk.
Thereisnosubsequentrecyclingoftheamountsinothercomprehensiveincometoprofitorloss,butaccumulatedgainsorlossesmaybetransferredwithinequity.
However,ifpresentingthechangeinfairvalueattributabletothecreditriskoftheliabilityinothercomprehensiveincomewouldcreateanaccountingmismatchinprofitorloss,allfairvaluemovementsarerecognisedinprofitorloss.
Anentityisrequiredtodeterminewhetheranaccountingmismatchiscreatedwhenthefinancialliabilityisfirstrecognised,andthisdeterminationisnotreassessed.
Themismatchmustariseduetoaneconomicrelationshipbetweenthefinancialliabilityandafinancialassetthatresultsintheliability'screditriskbeingoffsetbyachangeinthefairvalueoftheasset.
Financialliabilitiesthatarerequiredtobemeasuredatfairvaluethroughprofitorloss(asdistinctfromthosethattheentityhasdesignatedatfairvaluethroughprofitorloss),includingfinancialguaranteesandloancommitmentsmeasuredatfairvaluethroughprofitorloss,willcontinuetohaveallfairvaluemovementrecognisedinprofitorloss.
Derivativessuchasforeigncurrencyforwardsandinterestrateswaps,orentity'sownliabilitiesthatitholdsinitstradingportfolio,continuetohaveallfairvaluemovementsrecognisedinprofitorloss.
70PwCLuxembourgAssets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP71SubjectIFRSLuxGAAPEquityScopeandstandardTheapplicablestandardsarethefollowings:IAS1-PresentationofFinancialStatements;IAS32-FinancialInstruments:Presentation;IAS39-FinancialInstruments:RecognitionandMeasurement;andIFRS7-FinancialInstruments:Disclosures.
Equityiscoveredbythefollowingarticles:26-5*;37(2);49-2*;49-8*;55;65(1)3°,4°,5°and68(3).
DefinitionsAnequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsofanentityafterdeductingallofitsliabilities.
Aputtableinstrumentisafinancialinstrumentthatgivestheholdertherighttoputtheinstrumentbacktotheissuerforcashoranotherfinancialassetorisautomaticallyputbacktotheissuerontheoccurrenceofanuncertainfutureeventorthedeathorretirementoftheinstrumentholder.
NodefinitionaspertheAccountingLaw.
Classificationdependsonthelegalformoftheinstrument.
TheAccountingLawcategorisedthecomponentsoftheequityasfollows:subscribedcapital;sharepremiumandsimilarpremiums;revaluationreserves;reserves;resultbroughtforward;resultforthefinancialyear;interimdividends;capitalinvestmentsubsidies;andtemporarynottaxablegains.
Recognition–Classificationdebtvs.
equityAninstrumentisclassifiedasequitywhenitdoesnotcontainanobligationtotransfereconomicresources.
Forinstrumentssettledincash,ifthecashpaymentsarediscretionary–thatis,theissuerhastheabilitytoavoidmakingapayment-thentheinstrument,orthatfeatureoftheinstrumentisequity.
Theentityhasdiscretionovercashpaymentswhenithasnocontractualobligationormandatorycashflowstopay.
Thisisthekeyfeatureofequity.
Regardingtheinstrumentsthataresettledinownequityshares,onlyacontracttodeliverafixednumberofsharesortoexchangeafixedamountofcashforafixednumberofsharesisanequityinstrument.
Suchanexchangeisaforwardsaleofownshares,whichisthereforeanequitytransaction.
Thisisgenerallyknownasthe"fixedforfixed"requirement.
"Fixedforfixed"requirementcanbebrokenandtheinstrumentisstilltobeclassifiedasequityonlyinverylimitedcircumstanceslikeanti-dilutionclauses.
Preferredsharesthatarenotredeemable,orthatareredeemablesolelyattheoptionoftheissuer,andforwhichdistributionsareatthediscretionoftheissuer,areclassifiedasequity.
PreferredsharesrequiringtheissuertoredeemforafixedTheclassificationinequityorliabilityisbasedonthelegalfeaturesoftheinstrumentatthetimeofrecognition.
Thereisnosplitbetweenequityanddebtforhybridinstruments.
Assets,liabilitiesandequity72PwCLuxembourgSubjectIFRSLuxGAAPEquityordeterminableamountatafixedordeterminablefuturedateandforwhichdistributionsarenotatthediscretionoftheissuerareclassifiedasliabilities.
However,ifdividendsarediscretionary,theinstrumentistreatedasacompoundinstrumentwithadebtandequitycomponent.
Preferredshareswheretheholderhastheoptionofredemptionandforwhichdistributionsarenotatthediscretionoftheissuerarealsoclassifiedasliabilities;inadditionthereisanembeddedputoptionthatmayhavetobeaccountedforseparately.
Onlyderivativecontractsthatresultinthedeliveryofafixedamountofcash,orotherfinancialassetforafixednumberofanentity'sownequityinstruments,areclassifiedasequityinstruments.
Allotherderivativesontheentity'sownequityareaccountedforasderivatives.
Puttableinstrumentsatfairvaluemayberecognisedasequityinstrumentsundercertainstrictconditions,includingthefactthattheseinstrumentsmustbethemostsubordinatedclassoffinancialinstrumentsissuedbytheentity.
Asanexceptiontothedefinitionoffinancialliabilities,aputtableinstrumentthatmeetsthedefinitionofafinancialliabilityisclassifiedasanequityinstrumentifithasallthefeaturesandmeetsallthefollowingspecificconditions:theinstrumentmustbeinthemostsubordinatedclassofinstruments;alltheinstrumentsinthatclassmusthaveidenticalfeatures;theholderoftheputshouldreceiveaproratashareofnetassetsatliquidation;thetotalcashflowsoftheputtableinstrumentmustbesubstantiallybasedonnetearningsorchangesinfairvalueoftheentityorchangesinrecognisednetassetsaspresentedunderIFRS;theinstrumenthasaresidualreturnthatisnotfixedorrestricted;andapartfromtheputoptionoftheholder,theremustbenootherliabilityfeature.
InitialmeasurementEquityinstrumentsaremeasuredatthefairvalueoftheconsiderationreceivedorreceivable,netofdirectissuecosts.
Sharesareaccountedforattheirnominalvalueortheiraccountingparvalue.
Thesubscribedcapitalunpaidisrecognisedasanasset.
SubsequentmeasurementThereisnosubsequentremeasurementoftheequity.
Dividendsonordinaryequitysharesarerecordedwhentheyareauthorisedbytheshareholders.
SimilartoIFRS.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP73SubjectIFRSLuxGAAPEquityDisclosureAnentityshalldiscloseinformationthatenableusersoffinancialstatementstoevaluateobjectives,policiesandprocessesformanagingcapital.
IAS1requiresqualitativedisclosureabouthowanentitymanagescapital,quantitativedataaboutwhattheentityregardsascapital,whethertheentityhascompliedwithanyexternalcapitalrequirementssuchasloancovenants.
Indeed,capitalasdefinedbyIAS1mayencompassotherelementswhicharenotincludedintheentity'sequitybutareconsideredasquasi-permanentinnature(e.
g.
subordinatedlong-termdebt).
Akeyrequirementisthatifacompanyhasbreachedanexternallyimposedcapitalrequirement,consequencesofsuchnon-compliancehavetobedisclosed.
Loancovenantsareanexampleofanexternallyimposedcapitalrequirement.
Mandatoryisonlytodisclosetheconsequencesofthebreachincasethereisabreach.
Ifthereisnobreach,anentitywouldnotneedtodiscloseexactlywhatthoseloancovenantsare;thefocusisonwhattheentityregardsascapital,andhowitsmanagementofthatcapitalisaffectedbyanyexternallyimposedrequirements.
Thenotestotheannualaccountsmustatleastsetoutthefollowinginformationonthesubscribedcapital:thenumberandthenominalvalueor,intheabsenceofanominalvalue,theaccountingparvalueofthesharessubscribedforduringthefinancialyearwithinthelimitsofanauthorisedcapital;wherethereismorethanoneclassofshares,thenumberandthenominalvalueor,intheabsenceofanominalvalue,theaccountingparvalueofeachclass;andtheexistenceofanyfounders'shares,convertiblebondsorsimilarsecuritiesorrights,withanindicationoftheirnumberandtherightstheyconfer.
Small-sizedcompanies(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")areexemptedtodisclosethislatestinformation,unlesstheyissuesecuritieswhichareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion.
OwnsharesIfanentityre-acquiresitsownequityinstruments,thoseinstruments("treasuryshares")shallbedeductedfromequity.
Nogainorlossshallberecognisedinprofitorlossonthepurchase,sale,issueorcancellationofanentity'sownequityinstruments.
Suchtreasurysharesmaybeacquiredandheldbytheentityorbyothermembersoftheconsolidatedgroup.
Considerationpaidorreceivedshallberecogniseddirectlyinequity.
Ownsharesandowncorporateunitshavetobedisclosedasanassetfortheiracquisitionprice.
Anon-distributablereservehastobeset-upforanamountcorrespondingtotheacquisitionpriceor,incaseofredeemableshares,tothenominalvalueoraccountingparvalueofthoseshares.
Ownsharesaresubjecttoimpairmenttest.
Incaseofpurchaseofownshares,thefollowingdisclosureshallbeincludedinthemanagementreport(orinthenotestotheannualaccountsinabsenceofsuchreport):thereasonsforacquisitionsmadeduringthefinancialyear;thenumberandthenominalvalueor,intheabsenceofnominalvalue,theaccountingparvalueofthesharesacquiredanddisposedofduringthefinancialyearandtheproportionofthesubscribedcapitaltheyrepresent;inthecaseofacquisitionordisposalforvalue,theconsiderationfortheshares;andthenumberandnominalvalueor,intheabsenceofnominalvalue,theaccountingparvalueofallthesharesacquiredandheldinthecompany'sportfolioaswellastheproportionofthesubscribedcapitalwhichtheyrepresent.
Assets,liabilitiesandequity74PwCLuxembourgSubjectIFRSLuxGAAPDerivativesandhedgeaccountingScopeandstandardTheapplicablestandardisIAS39-FinancialInstruments:RecognitionandMeasurement.
Derivativesarecoveredbythefollowingarticles:64bis;64ter;64quater;64sexiesand64septies.
DefinitionsAfinancialinstrumentisacontractthatgivesrisetoafinancialassetofoneentityandafinancialliabilityorequityinstrumentofanotherentity.
Aderivativeisafinancialinstrument:whosevaluechangesinresponsetothechangeinaspecifiedinterestrate,financialinstrumentprice,commodityprice,foreignexchangerate,indexofpricesorrates,creditratingorcreditindex,orotheranaloguespecificvariable(sometimescalledthe"underlying");thatrequiresnoinitialnetinvestmentoraninitialnetinvestmentthatissmallerthanwouldberequiredforothertypesofcontractsthatwouldbeexpectedtohaveasimilarresponsetochangesinmarketfactors;andthatissettledatafuturedate.
Anembeddedderivativeisacomponentofahybridinstrumentthatalsoincludesanonderivativehostcontractwiththeeffectthatsomeofthecashflowsofthehybridinstrumentvaryinawaysimilartoastand-alonederivative.
Anembeddedderivativecausessomeorallofthecashflowsthatotherwisewouldberequiredbythecontracttobemodifiedaccordingtoaspecifiedinterestrate,financialinstrumentprice,commodityprice,foreignexchangerate,indexofpricesorrates,creditratingorcreditindex,orothervariable,providedinthecaseofanon-financialvariablethatthevariableisnotspecifictoapartytothecontract.
Variationofthecashflowsoverthecontract'stermisacriticalindicatorofthepresenceofoneormoreembeddedderivatives.
ThereisnodefinitionofaderivativeinLuxGAAP.
TheIFRSdefinitioncanbeusedasareference.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP75SubjectIFRSLuxGAAPDerivativesandhedgeaccountingRecognitionAderivativefollowstherecognitionrulesofanyfinancialinstrumentunderIAS39,i.
e.
arerecognisedonlywhentheentitybecomesapartytoitscontractualprovision.
Refertosection"Financialassets".
Embeddedderivativeshouldbeseparatedfromthehostcontractandaccountedforasaderivativeifallofthefollowingthreeconditionsaremet:theeconomiccharacteristicsandrisksoftheembeddedderivativearenotcloselyrelatedtotheeconomiccharacteristicsandrisksofthehostcontract;aseparateinstrumentwiththesametermsastheembeddedderivativewouldmeetthedefinitionofaderivative;andthehybridinstrumentisnotmeasuredatfairvaluewithchangesinfairvaluerecognisedinprofitorloss.
Aderivativefollowstherecognitionrulesofanyfinancialinstrument,i.
e.
arerecognisedonlywhentheentitybecomesapartytoitscontractualprovision.
Derivativeacquiredfornoconsiderationhastobedisclosedasanoff-balancesheetitem.
InitialmeasurementAllderivativesareinitiallyrecognisedatfairvalue.
Derivativesfollowthemeasurementrulesoffinancialinstrument.
Theyareinitiallyrecognisedatcost(asset)orreimbursementvalue(liability).
SubsequentmeasurementDerivativesclassifiedasheldfortradingaremeasuredatfairvaluethroughprofitorloss.
Derivativeswhicharedesignatedashedginginstrumentsunderahedgeaccountingrelationshipfollowthehedgeaccountingrulesdescribedhereunder.
However,aderivativeliabilitythatislinkedtoandmustbesettledbydeliveryofanunquotedequityinstrumentwhosefairvaluecannotreliablybemeasuredshouldbemeasuredatcost.
Generalrulesforfinancialinstrumentsapply.
Forassetderivatives,therearethreepossibleoptions:costlessimpairment,lowerofcostormarketvalueorfairvalue.
Forliabilityderivatives,accountingpolicyappliedcanbereimbursementvalueorfairvalueoption.
Whentheunderlyingcontractisnotrecordedinthebalancesheet,thecompanyhastoaccountforaprovisionifneeded.
Assets,liabilitiesandequity76PwCLuxembourgSubjectIFRSLuxGAAPDerivativesandhedgeaccountingHedgeaccountingHedgingistheprocessofusingafinancialinstrument(usuallyaderivative)tomitigateallorsomeoftheriskofahedgeditem.
Hedgeaccountingchangesthetimingofrecognitionofgainsandlossesoneitherthehedgeditemorthehedginginstrumentsothatbotharerecognisedinprofitorlossinthesameaccountingperiodinordertorecordtheeconomicsubstanceofthecombinationofthehedgeditemanditsinstrument.
Toqualifyforhedgeaccounting,anentitymust:formallydesignateanddocumentahedgerelationshipbetweenaqualifyinghedginginstrumentandaqualifyinghedgeditemattheinceptionofthehedge;andbothatinceptionandonanongoingbasis,demonstratethatthehedgeishighlyeffective,i.
e.
inarangeof80%-125%.
IAS39requiresdocumentationofahedgingrelationshipatinception.
Thisdocumentationincludesthehedgeditemandhedginginstrument,theriskmanagementobjective,thestrategyforundertakingthehedgeandtheefficiencytestperformedbothprospectivelyandretrospectively.
IAS39permitsthreetypesofhedgingrelationship:cashflowhedges;fairvaluehedges;andhedgesofanetinvestmentinaforeignoperation.
IAS39restrictstherisksorportionsinafinancialinstrumentthatcanbehedgedbasedonaprincipalthatthoserisksorportionsmustbeseparatelyidentifiablecomponentsofthefinancialinstrument,andchangesinthecashflowsorfairvalueoftheentirefinancialinstrumentarisingfromchangesinthedesignatedrisksandportionsHedgeaccountingisnotdefinedunderLuxGAAP.
RefertoIFRSforguidance.
NosuchrequirementintheAccountingLaw.
NosuchrequirementintheAccountingLaw.
NotspecifiedintheAccountingLaw.
SametypesofhedgingrelationshipthaninIFRSarepermittedunderLuxGAAP.
NotspecifiedintheAccountingLaw.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP77SubjectIFRSLuxGAAPDerivativesandhedgeaccountingmustbereliablymeasurable.
AbroaderarrayofrisksisthereforeeligibleforhedgingunderIAS39(forexample,equitypriceriskandone-sidedrisks).
IAS39allowsagroupofsimilaritemstobedesignatedasahedgeditem.
IAS39permitshedginginstrumentstobe:derivativesthatarenotnetwrittenoptions;itispermittedtoseparatelydesignatetheintrinsicvalueofanoptionorthespotcomponentofaforwardcontract;andnon-derivativeassetsorliabilitieswhenusedasahedgeofforeigncurrencyrisk.
Theentityisrequiredtoperformquantitativeretrospectiveandprospectiveeffectivenesstestsatleastonceperreportingperiod.
Aspecificmethodfortestingeffectivenessisnotdefined,buttheentitydocumentsitschosenmethodaspartofthehedgingdocumentation.
Whereanentitydesignatesacashflowhedgehedgingrelationshipanditcomplieswiththeconditionsabove,itrecognisesinprofitorlossanyexcessofthefairvalueofthehedginginstrumentoverthechangeinthefairvalueoftheexpectedcashflows(hedgeineffectiveness).
Theeffectivepartisrecognisedinothercomprehensiveincome.
Theamountrecognisedinothercomprehensiveincomeisrecognisedinprofitorlosswhenthehedgeditemaffectsprofitorlossorwhenthehedgingrelationshipends.
IAS39specifiesthattheamountsrecognisedinothercomprehensiveincomearebasedoncumulativechangesinthefairvalueofthehedginginstrumentandhedgedrisk.
Inthecaseofafairvaluehedge:thegainorlossfromremeasuringthehedginginstrumentatfairvalue(foraderivativehedginginstrument)ortheforeigncurrencycomponentofitscarryingamountmeasuredinaccordancewithIAS21-TheEffectsofChangesinForeignExchangeRates(foranon-derivativehedginginstrument)shouldberecognisedinprofitorloss;andthegainorlossonthehedgeditemattributabletothehedgedriskadjuststhecarryingamountofthehedgeditemandisrecognisedinprofitorloss.
Thisappliesevenifthehedgeditemisanavailable-for-salefinancialassetorifitisotherwisemeasuredatcost.
Hedgeaccountingisdiscontinuedwhen:thehedginginstrumentexpires,issoldorterminated;thehedgenolongermeetsthecriteriaforhedgeaccounting;ortheentityrevokesthedesignation.
NotspecifiedintheAccountingLaw.
NotspecifiedintheAccountingLaw.
Forhedginginstrumentsfollowingthelowerofcostormarketvalueaccountingpolicy,theunrealisedlossesandrealisedgainsandlossesareaccountedthroughtheprofitandlossaccount.
Forhedginginstrumentsfollowingfairvalueaccountingpolicy,theadjustmentinfairvaluehastobeaccountedforintheprofitandlossaccountifthefairvalueadjustmentofthehedgeditemisrecordedintheprofitandloss.
Incaseofcashflowhedgedandhedgeofanetinvestmentinaforeignentity,thevariationhastoberecordedintherevaluationreserve.
TheAccountingLawdoesnotforeseehowtoaccountforthehedgeditemsneitherduringtheperiodofhedgingnorwhentheunderlyingtransactionissettled.
Assets,liabilitiesandequity78PwCLuxembourgSubjectIFRSLuxGAAPDerivativesandhedgeaccountingDisclosure–DerivativesRefertosections"Financialassets"and"Financialliabilities".
HistoricalcostconventionForeachclassofderivativesthatarenotfairvalued,thefairvalueandthenatureoftheinstrumentsshallbedisclosedinthenotestotheannualaccounts.
FairvalueoptionWhenusingfairvalueaccounting,thenotestotheannualaccountsshallinclude:themainassumptionsinrelationtothemodelsandvaluationtechniquesused;foreachcategoryoffinancialinstruments,thefairvalue,themovementsoffairvaluebookeddirectlyintheprofitandlossaccountaswellasthemovementsonthefairvaluereserve;foreachclassofderivativefinancialinstruments,indicationofthevolumeandnatureoftheinstruments,andinparticular,themainmodalitiesandconditionslikelytoimpacttheamount,timetableandthecertaintyoffuturecashflows;andatabledescribingthemovementsonthefairvaluereserveduringthefinancialyear.
Disclosure–HedgeaccountingTheentityshalldisclosethefollowingseparatelyforeachtypeofhedgerelationship(i.
e.
fairvaluehedges,cashflowhedgesandhedgesofnetinvestmentsinforeignoperations):adescriptionofeachtypeofhedge;adescriptionofthefinancialinstrumentsdesignatedashedginginstrumentsandtheirfairvaluesatthereportingdate;andthenatureoftherisksbeinghedged.
Forcashflowhedges,theentityshalldisclose:theperiodswhenthecashflowsareexpectedtooccurandwhentheyareexpectedtoaffectprofitorloss;adescriptionofanyforecasttransactionforwhichhedgeaccountinghadpreviouslybeenused,butwhichisnolongerexpectedtooccur;theamountthatwasrecognisedinequityduringtheperiod;theamountthatwasremovedfromequityandincludedinprofitorlossfortheperiod,showingtheamountincludedineachlineitemintheincomestatement;andtheamountthatwasremovedfromequityduringtheperiodandincludedintheinitialcostorothercarryingamountofanon-financialassetornon-financialliabilitywhoseacquisitionorincurrencewasahedgedhighlyprobableforecasttransaction.
Theentityshalldiscloseseparately:infairvaluehedges,gainsorlosses:-onthehedginginstrument;and-onthehedgeditemattributabletothehedgedrisk;theineffectivenessrecognisedinprofitorlossthatarisesfromcashflowhedges;andtheineffectivenessrecognisedinprofitorlossthatarisesfromhedgesofnetinvestmentsinforeignoperations.
Foreachclassofderivativesthatarenotfairvalued,thefairvalueandthenatureoftheinstrumentsshallbedisclosed.
Whenusingfairvalueaccounting,thenotestotheannualaccountsshallinclude:themainassumptionsinrelationtothemodelsandvaluationtechniquesused;foreachcategoryoffinancialinstruments,thefairvalue,themovementsoffairvaluebookeddirectlyintheprofitandlossaccountaswellasthemovementsonthefairvaluereserve;foreachclassofderivativefinancialinstruments,indicationofthevolumeandnatureoftheinstruments,andinparticular,themainmodalitiesandconditionslikelytoimpacttheamount,timetableandthecertaintyoffuturecashflows;andatabledescribingthemovementsonthefairvaluereserveduringthefinancialyear.
Assets,liabilitiesandequityRecentdevelopments–IFRS9-FinaldraftonhedgeaccountingOn7September2012,theIASBpostedafinaldraftoftheforthcominggeneralhedgeaccountingrequirementsthatwillbeaddedtoIFRS9-FinancialInstruments.
Thehedgeaccountingstandardistargetedtobepublishedinthefirsthalfof2013.
EUendorsementisexpectednotearlierthan1January2015,thecurrentplannedeffectivedateofcompletionofIFRS9(referto"Recentdevelopments–IFRS9-FinancialInstruments"inthesection"Financialassets"forinformationonotheraspectsofIFRS9).
TherulesonhedgeaccountinginIAS39-FinancialInstruments:RecognitionandMeasurementhavefrustratedmanypreparers,astherequirementshavenotbeenwelllinkedwithcommonriskmanagementpractices.
Thedetailedruleshaveattimesmadeachievinghedgeaccountingimpossibleorverycostly,evenwhenthehedgehasbeenaneconomicallyrationalriskmanagementstrategy.
Usershavealsofoundthecurrentdistinctionbetweenachievinghedgeaccountingornotasmeaningless.
Theyhaveoftenstruggledtofullyunderstandanentity'sriskmanagementactivitiesbasedonitsapplicationofthehedgeaccountingrules.
TheIASBisaddressingseveraloftheseconcernsinthisthirdphaseofitseffortstoreplaceIAS39withIFRS9.
HedgeeffectivenesstestsandeligibilityforhedgeaccountingThefinaldraftproposesrelaxingtherequirementsforhedgeeffectivenessassessmentandconsequentlytheeligibilityforhedgeaccounting.
UnderIAS39today,thehedgemustbothbeexpectedtobehighlyeffective(aprospectivetest)andbedemonstratedtohaveactuallybeenhighlyeffective(aretrospectivetest)withhighlyeffectivedefinedasabrightlinequantitativetestof80-125%.
Thefinaldraftreplacesthiswitharequirementforthehedgetobedesignatedsoastobeneutralandunbiased,andinawaythatminimisesexpectedineffectiveness.
Thiscouldbedemonstratedqualitativelyorquantitatively,dependingonthecharacteristicsofthehedge.
Forexample,inasimplehedgewhereallthecriticaltermsmatch,aqualitativetestmightbesufficient.
Ontheotherhand,inhighlycomplexhedgingstrategies,sometypeofquantitativeanalysissuchasthatrequiredundercurrentruleswouldneedtobeperformed.
The80-125%brightlinerulewouldberemoved.
However,hedgeineffectivenessmuststillbemeasuredandreportedinprofitorloss.
HedgeditemsAnumberofchangesareproposedtotherulesfordeterminingwhatcanbedesignatedasahedgeditem.
Theproposedchangesprimarilyremoverestrictionsthattodaypreventsomeeconomicallyrationalhedgingstrategiesfromqualifyingforhedgeaccounting.
Forexample,theExposureDraftproposesthatriskcomponentscanbedesignatedfornon-financialhedgeditemsprovidedtheriskcomponentisseparatelyidentifiableandmeasurable.
Thisisgoodnewsforentitiesthathedgenon-financialitemsforacommoditypriceriskthatisonlyacomponentoftheoverallpriceriskoftheitem,asitislikelytoresultinmorehedgesofsuchitemsqualifyingforhedgeaccounting.
Inaddition,thefinaldraftwouldmakethehedgingofgroupsofitemsmoreflexible,althoughitdoesnotcovermacrohedging.
ThiswillbethesubjectofaseparateExposureDraft.
Treasurerscommonlygroupsimilarriskexposuresandhedgeonlythenetposition(forexample,thenetofforecastpurchasesandsalesinaforeigncurrency).
UnderIAS39today,suchanetpositioncannotbedesignatedasthehedgeditem.
Thefinaldraftproposesthatthisbepermittedifitisconsistentwithanentity'sriskmanagementstrategy.
However,ifthehedgednetpositionsconsistofforecastedtransactions,allhedgedtransactionshavetorelatetothesameperiod.
HedginginstrumentsThefinaldraftrelaxestherulesonusingpurchasedoptionsandnon-derivativefinancialinstrumentsashedginginstruments.
Forexample,underthecurrenthedgingrules,thetimevalueofpurchasedoptionsisrecognisedonmark-to-marketbasisinnetincome,whichcancreatesignificantvolatilityinprofitorloss.
Incontrast,thefinaldraftviewsapurchasedoptionassimilartoaninsurancecontractsuchthattheinitialtimevalue(thatisgenerallythepremiumpaid)willberecognisedinprofitorloss,eitherovertheperiodofthehedgeifthehedgeistimerelated,orwhenthehedgedtransactionaffectsprofitorlossifthehedgeistransactionrelated.
Anychangesintheoption'sfairvalueassociatedwithtimevaluewillonlyberecognisedinothercomprehensiveincome.
Thisshouldresultinlessvolatilityinprofitorlossforthesetypesofhedges.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP7980PwCLuxembourgSubjectIFRSLuxGAAPProvisionsandcontingencyScopeandstandardThestandardapplicableisIAS37-Provisions,ContingentLiabilitiesandContingentAssets.
Provisionsarecoveredbythefollowingarticles:34;38;44;51;64and65(1)7°.
DefinitionsAprovisionisaliabilityofuncertaintimingoramount.
Aliabilityisapresentobligationoftheentityarisingfrompastevents,thesettlementofwhichisexpectedtoresultinanoutflowfromtheentityofresourcesembodyingeconomicbenefits.
Acontingentliabilityis:apossibleobligationthatarisesfrompasteventsandwhoseexistencewillbeconfirmedonlybytheoccurrenceornon-occurrenceofoneormoreuncertainfutureeventsnotwhollywithinthecontroloftheentity;orapresentobligationthatarisesfrompasteventsbutisnotrecognisedbecause:-itisnotprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation;or-theamountoftheobligationcannotbemeasuredwithsufficientreliability.
Acontingentassetisapossibleassetthatarisesfrompasteventsandwhoseexistencewillbeconfirmedonlybytheoccurrenceornon-occurrenceofoneormoreuncertainfutureeventsnotwhollywithintheentity'scontrol.
Provisionsinclude:provisionsforpensionsandsimilarobligations;provisionsfortaxation;andotherprovisions.
Provisionsareintendedtocoverlossesordebts,thenatureofwhichisclearlydefinedandwhich,atthedateofthebalancesheet,areeitherlikelytobeincurredorcertaintobeincurredbutuncertainastotheiramountorastothedateonwhichtheywillarise.
Provisionsmayalsobecreatedinordertocoverchargeswhichhavetheirorigininthefinancialyearunderrevieworinapreviousfinancialyear,thenatureofwhichisclearlydefinedandwhich,atthedateofthebalancesheet,areeitherlikelytobeincurredorcertaintobeincurredbutuncertainastotheiramountorastothedateonwhichtheywillarise.
Provisionsmaynotbeusedtoadjustthevalueofassets.
RecognitionAprovisionisrecognisedwhen:theentityhasapresentobligationtotransfereconomicbenefitsasaresultofpastevents;itisprobable(morelikelythannot)thatsuchatransferwillberequiredtosettletheobligation;andareliableestimateoftheamountoftheobligationcanbemade.
Apresentobligationarisesfromanobligatingevent.
Itmaytaketheformofeitheralegalobligationoraconstructiveobligation.
Anobligatingeventleavestheentitynorealisticalternativetosettletheobligationcreatedbytheevent.
Iftheentitycanavoidthefutureexpenditurebyitsfutureactions,ithasnopresentobligationandaprovisionisnotrecognised.
Basedontheprudenceprinciple,companiesarerequiredtotakeintoaccountallforeseeableliabilitiesandpotentiallosses.
Itisalsoallowedtorecogniseprovisionsforfuturecosts.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP81SubjectIFRSLuxGAAPProvisionsandcontingencyRecognition–RestructuringprovisionApresentobligationexistsonlywhentheentityisdemonstrablycommittedtotherestructuring.
Anentityisusuallydemonstrablycommittedwhenthereisalegalobligationorwhentheentityhasadetailedformalplanfortherestructuring.
Theentitymustbeunabletowithdrawbecauseithasstartedtoimplementtheplanorannounceditsmainfeaturestothoseaffected(constructiveobligation).
Acurrentprovisionisunlikelytobejustifiediftherewillbeadelaybeforetherestructuringbeginsortherestructuringwilltakeanunreasonablylongtimetocomplete.
NospecificguidanceunderLuxGAAP.
Generalconditionsapply.
Inpractice,similartoIFRSbutlessrestrictive:managementapprovalandcommitmenttotherestructuringplanaresufficient.
Recognition–OnerouscontractIFRSrequiresrecognitionofanonerouslossforexecutorycontractsiftheunavoidablecostsofmeetingtheobligationsunderthecontractexceedtheeconomicbenefitsexpectedtobereceivedunderit.
Thepresentobligationunderthecontractmustberecognisedandmeasuredasaprovision.
Provisionsarerecognisedwhenacontractbecomesonerousregardlessofwhethertheentityhasceasedusingtherightsunderthecontract.
NospecificguidanceintheAccountingLaw.
Generalconditionsapply.
Inpractice,similartoIFRS.
Provisionsmustberecordedtocoverallpotentiallosses(onerouscontracts).
Recognition–ContingentassetsContingentassetsarenotrecognisedinthefinancialstatementsbecausethismayresultintherecognitionofincomethatmayneverberealised.
Iftheinflowofeconomicbenefitsisprobable,theentityshoulddiscloseadescriptionofthecontingentasset.
However,whentherealisationofincomeisvirtuallycertain,thentherelatedassetisnotacontingentasset,anditsrecognitionisappropriate.
NotdefinedintheAccountingLaw.
Recognition–ContingentliabilitiesContingentliabilitiesaredisclosedinthenotesunlesstheprobabilityofoutflowsisremote.
Allcommitmentsbywayofguaranteeofanykindmust,ifthereisnoobligationtoshowthemasliabilities,beclearlysetoutinthenotestotheannualaccounts,adistinctionbeingmadebetweenthevarioustypesofguaranteesprovidedforbytheAccountingLawandspecificdisclosurebeingmadeofanycollateralgrantedonassets(suchasguarantees,futurerentpayments,ordersofequipment,pensions,etc.
).
Assets,liabilitiesandequity82PwCLuxembourgSubjectIFRSLuxGAAPProvisionsandcontingencyRecognition–Decommissioning,restorationandsimilarliabilities(assetretirementobligations)Thepresentvalueofthecostsofdismantling,removingorrestoringasaresultofalegalorconstructiveobligationisrecognisedasaliabilityandthecorrespondingcostcapitalisedaspartoftherelatedproperty,plantorequipment(refertosection"Property,plantandequipment").
Anobligationariseseitherwhentheitemisacquiredorasaresultofusingtheitemduringaparticularperiodforpurposesotherthantoproduceinventoriesduringthatperiod.
Theaccountingforchangesinthemeasurementoftheliabilityisdifferentforthecostandtherevaluationmodel.
NotdefinedintheAccountingLaw.
MeasurementTheamountrecognisedasaprovisionisthebestestimateoftheamountrequiredtosettletheobligationatthereportingdate.
Wherematerial,theamountoftheprovisionisthepresentvalueoftheamountexpectedtoberequiredtosettletheobligation.
Wherethereisacontinuousrangeofpossibleoutcomesandeachpointinthatrangeisaslikelyasanyother,themidpointoftherangeisused.
NospecificguidanceonmeasurementintheAccountingLaw.
Theamountrecognisedasaprovisionisthebestestimateoftheamountrequiredtosettletheobligationatthereportingdate.
TheonlyspecificationintheAccountingLawisthataprovisionshallnotexceedinamountthesumswhicharenecessary.
DisclosureForeachclassofprovision,anentityshalldisclose:thecarryingamountatthebeginningandendoftheperiod;additionalprovisionsmadeintheperiod,includingincreasestoexistingprovisions;amountsused(i.
e.
incurredandchargedagainsttheprovision)duringtheperiod;unusedamountsreversedduringtheperiod;andtheincreaseduringtheperiodinthediscountedamountarisingfromthepassageoftimeandtheeffectofanychangeinthediscountrate.
Comparativeinformationisnotrequired.
Asanexceptiontothegeneralrules,comparativefiguresarenotrequiredforthesedisclosures.
Theprovisionsshowninthebalancesheetunder"OtherProvisions"mustbedisclosedinthenotestotheannualaccountsiftheyarematerial.
Thesameappliestotaxesrecordedasprovision.
Thetotalamountofanyfinancialcommitmentsthatarenotincludedinthebalancesheetmustbesetoutinthenotestotheannualaccountsinsofarasthisinformationisofassistanceinassessingthefinancialposition.
Anycommitmentsconcerningpensionsandcommitmentsexistinginrespectofaffiliatedundertakingsmustbeshownseparately.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP83SubjectIFRSLuxGAAPProvisionsandcontingencyAnentityshalldisclosethefollowingforeachclassofprovision:abriefdescriptionofthenatureoftheobligationandtheexpectedtimingofanyresultingoutflowsofeconomicbenefits;anindicationoftheuncertaintiesabouttheamountortimingofthoseoutflows.
Wherenecessarytoprovideadequateinformation,anentityshalldisclosethemajorassumptionsmadeconcerningfutureevents;andtheamountofanyexpectedreimbursement,statingtheamountofanyassetthathasbeenrecognisedforthatexpectedreimbursement.
Unlessthepossibilityofanyoutflowinsettlementisremote,anentityshalldiscloseforeachclassofcontingentliabilityattheendofthereportingperiodabriefdescriptionofthenatureofthecontingentliabilityand,wherepracticable:anestimateofitsfinancialeffect;anindicationoftheuncertaintiesrelatingtotheamountortimingofanyoutflow;andthepossibilityofanyreimbursement.
Assets,liabilitiesandequity84PwCLuxembourgSubjectIFRSLuxGAAPEmployeebenefitsScopeandstandardTheapplicablestandardisIAS19–EmployeeBenefits.
IAS19appliestoalltypesofemployeebenefits(exceptforshare-basedpayments,refertosection"Share-basedpayment"),including:short-termbenefitspayableduringemployment;long-termbenefitspayableduringemployment;terminationbenefitspayableuponterminationofemployment;andpost-employmentbenefits.
Benefitsmaybesettledbypayments(ortheprovisionofgoodsorservices)madeeitherdirectlytotheemployees,ex-employees,totheirspouses,childrenorotherdependantsortoothers,suchasinsuranceundertakings.
Thesebenefitsmaybesetupbyemployers,insurancecompanies,thegovernmentorotherinstitutionssuchasemployerassociations.
Staffexpensesarecoveredbythefollowingarticles:34;46and65.
DefinitionsShort-termemployeebenefitsrepresentemployeebenefits(otherthanterminationandequitycompensation)duewithin12monthsaftertheemployeerenderedtherelatedservice.
Examplesinclude:salaries,socialsecuritycontributions,paidsickleave,paidannualleave,bonuses,etc.
andnon-monetarybenefits(medicalcare,car,etc.
).
Post-employmentbenefitsrepresentemployeebenefits(otherthanterminationandequitycompensation)payableafterthecompletionofservice.
Itincludesretirementbenefits,suchaspensions,andotherpost-employmentbenefits,suchaspost-employmentlifeinsuranceandpost-employmenthealthcare.
Definedcontributionplansarepost-employmentbenefitplansunderwhichanentitypaysfixedcontributionsintoaseparateentity(afund)andwillhavenolegalorconstructiveobligationtopayfurthercontributionsifthefunddoesnotholdsufficientassetstopayallemployeebenefitsrelatingtoemployeeserviceinthecurrentandpriorperiods.
Definebenefitplansarepost-employmentbenefitplansunderwhichemployer'sobligationistoprovidetheagreedamountofbenefitstocurrentandformeremployees.
Thebenefitsaretypicallybasedonsuchfactorsasage,lengthofserviceandcompensation.
Theactuarialrisksandinvestmentrisksareretainedbytheemployer.
Ifactuarialorinvestmentexperienceisdifferentthanexpected,anemployer'sobligationmayincreaseordecreasethroughremeasurements.
ThereisnoprecisedefinitionintheAccountingLaw.
ReferencetoIFRSdefinitionscanbeused.
Staffexpensesincludesthefollowing:wagesandsalaries;socialsecuritycosts;supplementarypensioncosts;andmiscellaneoussocialsecuritycosts.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP85SubjectIFRSLuxGAAPEmployeebenefitsDefinedbenefitplansmaybeunfunded,ortheymaybewhollyorpartlyfunded.
Afundedplanisonewherecontributionsfromanentity,andsometimesitsemployees,arepaidintoafundthatislegallyseparatefromtheentityandfromwhichtheemployeebenefitsarepaid.
Remeasurementsofthenetdefinedbenefitliability(asset)comprise:actuarialgainsandlosses;thereturnonplanassets,excludingamountsincludedinnetinterestonthenetdefinedbenefitliability(asset);andanychangeintheeffectoftheassetceiling,excludingamountsincludedinnetinterestonthenetdefinedbenefitliability(asset).
Actuarialgainsandlossesare:pastexperienceadjustments,i.
e.
theeffectsofdifferencesbetweenthepreviousactuarialassumptionsandwhathasactuallyoccurred;andtheeffectsofchangesinactuarialassumptionsaboutfuture.
Past-servicecostistheincreaseinthepresentvalueofthedefinedbenefitobligationforemployeeserviceinpriorperiodsresultinginthecurrentperiodfromtheintroductionoforchangestopost-employmentbenefitsorotherlong-termemployeebenefitscontracts.
Past-servicecostsmaybeeitherpositiveornegative.
Acurtailmentoccurswhenanentityreducessignificantlythenumberofemployees,acurtailmentgivesrisetoapast-servicecost.
Otherlong-termemployeebenefitsincludelong-serviceleave,jubileeorotherlong-servicebenefits,long-termdisabilitybenefits,bonusifpayableafter12months,etc.
Terminationbenefitsarebenefitspayabletoemployeesuponterminationoftheiremployment.
Terminationcanoccureithervoluntarilyorinvoluntarily.
Assets,liabilitiesandequity86PwCLuxembourgSubjectIFRSLuxGAAPEmployeebenefitsRecognitionThestandardrequiresanentitytorecognise:aliabilitywhenanemployeehasprovidedserviceinexchangeforemployeebenefitstobepaidinthefuture;andanexpensewhentheenterpriseconsumestheeconomicbenefitarisingfromserviceprovidedbyanemployeeinexchangeforemployeebenefits.
Terminationbenefitsarerecognisedonceadetailedformalplanispreparedandhasbeencommunicatedtotherelevantemployeesortheirrepresentatives.
Past-servicecostsarerecognisedintheperiodofaplanamendment.
Curtailmentgains/lossesareaccountedforaspast-servicecosts.
TherecognitionoftheemploymentbenefitsasliabilityandasexpensesfollowsthesamerulesasIFRS.
TerminationbenefitsarenotspecifiedintheAccountingLaw.
Inpractice,therulesforprovisionapply.
Terminationbenefitsarerecognisedonceadetailformalplanispreparedandhasbeendulyapprovedbythemanagement.
Past-servicecostsarerecognisedimmediatelyintheprofitandlossaccount.
Curtailmentgains/lossesarenotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
Measurement–Short-termemployeebenefitsExpenseisrepresentedbytheundiscountedamountofbenefitspayableduringtheaccountingperiod.
Anyamountunpaidisaliability,anyexcesspaidisanasset.
NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
Measurement–Post-employmentbenefits–DefinedcontributionplanAccountingfordefinedcontributionplanisdeterminedbytheamountstobecontributedbytheentityforthecurrentperiod.
Forexample,ifmonthlypaymentsarerequired,thecompanyshouldrecogniseanexpenseequaltothese12monthlycontributions.
Intheeventthatonly11monthlypaymentshavebeenmade,anaccrualwillberequired.
Ifthecompanyhaspaidinadvance,aprepaymentwillbeneededtoreducetheexpense.
Obligationsaremeasuredonanundiscountedbasis,exceptwheretheydonotfallduewithin12monthsoftheemployeerenderingtheservice.
Theamountrecognisedasanexpenseshallbedisclosed.
NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
Measurement–Post-employmentbenefits–DefinedbenefitplanAccountingfordefinedbenefitplaninvolvesthefollowingsteps:theuseofactuarialtechniquesandassumptionstomakereliableestimatesoftheamountofbenefitsearnedbyemployeeinreturnforservicesrenderedincurrentandpriorperiods;thedeterminationofthepresentvalueofthedefinedbenefitobligationandcurrentservicecostusingtheprojectedunitcreditmethod;thismethodseeseachperiodofserviceasgivingrisetoanadditionalunitofbenefitentitlementandmeasureseachunitseparatelytobuildupthefinalobligation;NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP87SubjectIFRSLuxGAAPEmployeebenefitsthedeterminationofthenetinterestbymultiplyingthediscountratetothenetdefinedbenefitobligation(asset),bothasdeterminedatthebeginningoftheperiodtakingintoaccountanychangesintheperiodduetocontributionsandbenefitpayments;thecalculationofthefairvalueoftheplanassets(ifany);thedeterminationoftheactualreturnonplanassets;thedifferencebetweentheactualreturnandexpectedreturncomputedwithinnetinterestmentionedaboveispartoftheremeasurements,theoneresultingfromchangesinassumptionsonplanassets;thedeterminationoftheamountofactuarialgainsandlossesandpast-servicecoststhatshallberecognisedonthedefinedbenefitobligation;thisisthatpartofremeasurementsresultingfromchangesinassumptionsondefinedbenefitobligations;anditisestablishedwhetherasettlementhasoccurred.
Theliabilityinthebalancesheetcomprisesthedefinedbenefitobligationlesstheplanassets.
Theamountrecognisedinanemployer'sprofitorlosscomprise:currentservicecost;netinterestcost;past-servicecostsrecognisedinfullimmediately(since1January2013);andtheeffectofanysettlement.
Remeasurementsarerecognisedinfullimmediatelyintheothercomprehensiveincome(since1January2013).
Actuarialgainsandlossesarepartoftheremeasurements.
Actuarialgainsandlossesarisefromunexpectedincreasesordecreasesinthedefinedbenefitobligation,includingtheeffectsofchangesinassumptions.
Forexample,actuarialgainsandlosseswillresultfromunexpectedhighorlowratesofemployeeturnover,earlyretirements,ormortality;unexpectedchangesinsalariesormedicalcosts;andchangesinthediscountrate.
Remeasurementsincludealsodifferencesbetweentheexpectedandtheactualreturnonplanassets.
IFRScanbeusedasabenchmark.
IFRScanbeusedasabenchmark.
Gainsandlossesarefullyrecognisedintheprofitandlossaccount.
Assets,liabilitiesandequity88PwCLuxembourgSubjectIFRSLuxGAAPEmployeebenefitsMeasurement–Otherlong-termemployeebenefitsThemeasurementofotherlong-termemployeebenefitsisnotusuallysubjecttothesamedegreeofuncertaintyasthemeasurementofpost-employmentbenefits.
Thesebenefitsareseldom"funded"whereaspensionsorpost-employmenthealthcareusuallyare.
Furthermore,theintroductionof,orchangesto,otherlong-termemployeebenefitsrarelycausesamaterialamountofpast-servicecost.
Notspecified.
IFRSprinciplesareacceptableunderLuxGAAP.
Measurement–TerminationbenefitsTerminationbenefitsshallberemeasuredthroughprofitorlossbasedonthenumberofemployeesexpectedtoaccepttheoffer.
Wherebenefitsfallduemorethan12monthsafterthebalancesheetdate,theamountoftheobligationshallbediscounted.
Terminationbenefitsarerecognisedintheprofitandlossaccountwhentheplanispreparedandapprovedbythemanagement.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP89SubjectIFRSLuxGAAPEmployeebenefitsDisclosureIAS19doesnotrequireanyspecificdisclosuresofshort-termandotherlong-termbenefits.
Ifthereisuncertaintyaboutthenumberofemployeeswhowillacceptterminationbenefits,acontingentliabilityshouldbedisclosed.
TheonlyspecificdisclosurerequiredbyIAS19inrespectofdefinedcontributionplansistheamountrecognisedasanexpenseintheperiod.
Disclosuresspecifictodefinedbenefitplanincludes:ageneraldescriptionoftheplans;theprincipalactuarialassumptionsincludingdiscountrates,expectedratesofreturnonplanassets,expectedratesofsalaryincreases,medicalcosttrendrates,andanyothermaterialassumptionssuchasmortality;theexpenserecognisedfortheperiodinthestatementofcomprehensiveincome;theamountsrecognisedinthebalancesheetshouldbereconciledtothepresentvalueofthedefinedbenefitobligationlessthefairvalueoftheplanassetsandpast-servicecost;areconciliationofopeningandclosingbalancesofthepresentvalueofthedefinedbenefitobligationsshowingseparately,ifapplicable,currentservicecost,interestcost,contributionsbyplanparticipants,actuarialgainsandlosses,exchangedifferences,benefitspaid,past-servicecostandanyeffectsofabusinesscombinationorsettlement;areconciliationofopeningandclosingbalancesofthefairvalueofplanassets(ifany)showingseparately,ifapplicable,expectedreturnonplanassets,remeasurements,exchangedifferences,contributionsbytheemployerandplanparticipants,benefitspaidandanyeffectsofabusinesscombinationorsettlement;anexplanationonhowinvolvementindefinedbenefitplansaffectfutureentity'scashflowsregardingtiming,amountanduncertainty;andinformationaboutthematurityprofileofthebenefitobligation.
NospecificdisclosuresrequiredbytheAccountingLaw.
Trueandfairviewprinciplemustbemetsoanyinformationusefulforinvestorsshouldbedisclosed.
Thenotestotheannualaccountsmustatleastsetouttheamountoftheemolumentsgrantedinrespectofthefinancialyeartothemembersofthemanagementandthesupervisorybodiesinthatcapacityandanycommitmentsarisingorenteredintoinrespectofretirementpensionsforformermembersofthosebodies.
Thisinformationmustbegivenasatotalforeachcategory.
Assets,liabilitiesandequity90PwCLuxembourgSubjectIFRSLuxGAAPShare-basedpaymentScopeandstandardTheapplicablestandardisIFRS2-Share-basedPayment.
Share-basedpaymenttransactionsincludeequity-settledandcash-settledshare-basedpayments.
TheAccountingLawdoesnotdealwithshare-basedpaymentassuch.
Theonlyrequirementiscoveredbyarticle65(1)12°.
DefinitionsShare-basedpaymentsencompassallarrangementswhereanentitypurchasesgoodsorservicesinexchangefortheissueofequityinstruments(includingsharesorshareoptions),orcashpaymentsbasedontheprice(orvalue)oftheequityinstrumentsoftheentityoranothergroupentity.
Share-basedpaymenttransactionsinclude:equity-settledshare-basedpaymenttransactions(entityreceivesgoodsorservicesasconsiderationforitsownequityinstrumentsortheentityhasnoobligationtosettletheshare-basedpaymenttransaction);cash-settledshare-basedpaymenttransactions(entityacquiresgoodsorservicesbyincurringliabilities,butamountisbasedontheprice(orvalue)oftheequityinstrumentsoftheentityoranothergroupentity);andchoiceofsettlement,wherearrangementsprovideeithertheentityorthecounterpartywithachoiceofsettlementincashorequity.
ThereisnodefinitionintheAccountingLaw.
Share-basedpaymenttransactionsincludeequity-settledandcash-settledshare-basedpaymentsintheframeofincentiveplans,notablystockoptionplansorshareplans.
RecognitionAnentityrecognisesthegoodsorservicesinashare-basedpaymenttransactionwhenitobtainsthegoodsorreceivestheservices.
Stockoptionplansareonlyrecognisedinbalancesheetwhenissuedforaconsideration.
Thereforeinmostcases,optionsarenotaccountedforonthebalancesheetastheyareusuallygrantedforfreetotheemployees.
Theaccountingtreatmentoftheshareawardplansisthesameasforstockoptionplans.
Measurement–Equity-settledshare-basedtransactionsTransactionsareinitiallymeasuredatfairvalueofthegoodsorservicesreceived.
Iftheentitycannotestimatereliablythesefairvalues,whichisdeemedalwaystobethecasefortransactionswithemployees,thetransactionsareinitiallymeasuredatthefairvalueoftheequityinstrumentsgranted,ignoringanyserviceornon-marketvestingconditionsorreloadfeatures.
Subsequently,asanyotherequityinstrument,equity-settledshare-basedtransactionsarenotremeasured.
Nospecificguidance.
Optionssettledinnewlyissuedsharesonlyimpactequityfortheexercisepriceoftheoptions.
Foroptionssettledinexistingshares,thedifferencebetweenthecostofsharestodeliverandtheconsiderationtobepaidbytheoptionholderisbookedasprovision.
Thisspreadisamortisedoverthevestingperiodoftheoptionsforplansremuneratingtheemployee'sfutureservices.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP91SubjectIFRSLuxGAAPShare-basedpaymentMeasurement–Cash-settledshare-basedtransactionCash-settledshare-basedpaymenttransactionsaremeasuredatthefairvalueoftheliability.
Untiltheliabilityissettled,thefairvalueoftheliabilityisremeasuredateachreportingdateandatthedateoffinalsettlement,withanychangesinfairvaluerecognisedinprofitorloss.
Aprovisionbasedonthespreadbetweentheexercisepriceoftheoptionandthecostatclosingdateofthesharestodeliverisaccountedfor.
Asforequity-settledplans,ifthisremunerationisforconsiderationoffutureservices,thespreadisamortisedoverthevestingperiod.
Measurement–SettlementchoiceAwardsthatofferthecounterpartythechoiceofsettlementinequityinstrumentsorsettlementincashshouldbebifurcatedandtreatedasacompoundinstrument.
Iftheentitymaychoosethemethodofsettlement,itshoulddeterminewhether,insubstance,ithascreatedanobligationtosettleincash.
Thismaybeforexampleif:thechoiceofsettlementinequityinstrumentshasnocommercialsubstance(forexample,becausetheentityisprohibitedfromissuingshares);theentityhasapastpracticeorstatedpolicyofsettlingincash;ortheentitygenerallysettlesincashwheneverthecounterpartyrequestsit.
Ifobligationtosettleincashdoesexist,theentityaccountsfortransactionasacash-settledshare-basedpayment.
Otherwise,thetransactionistreatedasanequity-settledshare-basedpayment.
Forawardsthatofferthecounterpartythechoiceofsettlementinequityinstrumentsorsettlementincash,theprudenceprincipleshallbeappliedandaprovisionmightberequired.
Iftheentitymaychoosethemethodofsettlement,theaccountingtreatmentdependsonthesettlementforeseenbythemanagement.
DisclosureThedisclosuresrequiredhavethepurposeofenablingtheusersofthefinancialstatementstounderstandthenatureandextentofshare-basedpaymentarrangementsthatexistedduringtheperiod.
Thedescriptionoftheshare-basedpayment,theweightedexercisepricesoftheshareoptionsbydifferenttypeofgroups,aswellasinformationabouttheoptionsoutstandingatyearend(e.
g.
theremainingcontractuallife)areexamplesofdisclosuresrequired.
Therearealsootherspecificdisclosuresrequiredwiththepurposetoenableusersofthefinancialstatementstounderstandhowthefairvalueofthegoodsorservicesreceived,orthefairvalueoftheequityinstrumentsgrantedduringtheperiodwasdetermined.
Inaddition,theentityshalldiscloseinformationthatenableusersofthefinancialstatementstounderstandtheeffectofshare-basedpaymenttransactionsontheentity'sprofitorlossfortheperiodandonitsfinancial.
Eachshare-basedpaymentshallbedisclosedinthenotestotheannualaccountsdetailingtherightstheyconfer.
Inaddition,disclosureisrequiredforshare-basedpaymentgrantedtomanagementandsupervisorybodies.
Assets,liabilitiesandequity92PwCLuxembourgSubjectIFRSLuxGAAPDeferredtaxesScopeandstandardTheapplicablestandardisIAS12-IncomeTaxes.
Deferredtaxesarecoveredbythearticles65(1)11°and332(4)*.
DefinitionsDeferredtaxrepresentstheamountsofincometaxespayable(potentiallyrecoverable)infutureinrespectoftaxable(deductible)temporarydifferences(andthecarry-forwardofunusedtaxlossesandtaxcredits)betweenthecarryingamountandrelatedtaxbasis.
Thetaxbaseofanassetistheamountthatwillbedeductiblefortaxpurposesagainstanytaxableeconomicbenefitsthatwillflowtoanentitywhenitrecoversthecarryingamountoftheasset.
Ifthoseeconomicbenefitswillnotbetaxable,thetaxbaseoftheassetisequaltoitscarryingamount.
Thetaxbaseofaliabilityisitscarryingamount,lessanyamountthatwillbedeductiblefortaxpurposesinrespectofthatliabilityinfutureperiods.
Inthecaseofrevenuewhichisreceivedinadvance,thetaxbaseoftheresultingliabilityisitscarryingamount,lessanyamountoftherevenuethatwillnotbetaxableinfutureperiods.
Temporarydifferencesaredifferencesbetweenthetaxbasisofanassetorliabilityanditscarryingamountinthefinancialstatementsthatwillresultinataxableordeductibleamountwhenthecarryingamountoftheassetorliabilityisrecoveredorsettled.
ThedeferredtaxesarenotclearlydefinedintheAccountingLaw.
Notdefined.
IFRScanbeusedasabenchmark.
Notdefined.
IFRScanbeusedasabenchmark.
Notdefined.
IFRScanbeusedasabenchmark.
RecognitionAdeferredtaxliabilityshallberecognisedforalltaxabletemporarydifferences,excepttotheextentthatthedeferredtaxliabilityarisesfromtheexemptionsmentionedbelow.
Adeferredtaxassetshallberecognisedforalldeductibletemporarydifferences,unlessthedeferredtaxassetarisesfromtheexemptionsmentionedbelow,totheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferencecanbeutilised.
Deferredtaxmayresultfromthediscrepanciesbetweentheindividual'scommercialbalancesheetandtheindividual'staxbalancesheet.
Generally,inLuxembourg,thereisnodeferredtaxrecognisedinthestand-aloneaccountsasthetaxbalancesheetislinkedtothecommercialbalancesheet.
Adeferredtaxliabilityisrecognisedintheconsolidatedbalancesheetwithachargeintheconsolidatedprofitandlossaccountastheconsolidationresultisnotthesumoftheresultsofthecompaniesincludedintheconsolidatedaccountsasdifferentvaluationrulesmightbeappliedthaninloaclaccountsandasintercompanytransactionsareeliminatedintheconsolidatedaccounts.
Noguidance.
IFRScanbeusedasabenchmark.
However,followingtheprudenceprinciple,deferredtaxassetsarerecogniseduptotheamountofdeferredtaxliabilities.
Deferredtaxassetsarerecognisedforthepreparationoftheconsolidatedaccountswhenitisprobablethatanactualtaxchargewillarisewithintheforeseeablefutureforoneoftheundertakingsincludedintheconsolidation.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP93SubjectIFRSLuxGAAPDeferredtaxesExceptionsare:non-deductiblegoodwill(whichisnotdeductiblefortaxpurposes)andnegativegoodwill;initialrecognitionofanassetorliabilityinatransactionthat:-isnotabusinesscombination;and-affectsneitheraccountingprofitnortaxableprofitatthetimeofthetransaction;andinvestmentinsubsidiaries,branchesandassociates,andinterestsinjointventures,where:-theparent,investororventurerisabletocontrolthetimingofthereversalofthetemporarydifference;and-itisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.
Otheramountsthatdonothaveataxconsequence(commonlyreferredtoaspermanentdifferences)existanddependonthetaxrulesandjurisdictionoftheentity.
Theconceptofvaluationallowanceisnotapplicableasadeferredtaxisonlyrecognisedtotheextentthatitisprobablethattherewillbesufficientfuturetaxableprofittoenablerecoveryofthedeferredtaxasset.
Recognition–ReviewofdeferredtaxassetsThecarryingamountofthedeferredtaxassetisreviewedateachreportingdateandisreducedwhenitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowrecoveryofthedeferredtaxasset.
Thisreductionisreversedwhensubsequentlyitbecomesprobablethatsufficienttaxableprofitwillbeavailable.
NotspecifiedintheAccountingLaw.
Recognition–RecognitiondirectlyinothercomprehensiveincomeCurrentanddeferredtaxisrecognisedinprofitofloss,excepttotheextentthatthetaxarisesfromabusinesstransactionoratransactionoreventthatisrecognisedinthesameorotherperiodinothercomprehensiveincome.
Whenthecompanychoosetorecogniseatfairvaluethroughequity,thedeferredtaxesduetoadjustmentoffairvalueoffinancialinstrumentsand/orothercategoriesofassetswhichcanbeclassifiedinarevaluationreserveaccountshallbeaccountedinthesamecaption.
Whentherecognitionisatfairvaluethroughprofitandloss,thedeferredtaxcharge/incomeshallberecordedintheprofitandlossaccountincounterpartoftherelateddeferredtaxliability/asset.
Recognition–Businesscombinations–acquisitionsStep-upofacquiredassets/liabilitiestofairvalueoriginatetherecognitionofadeferredtaxunlessthetaxbaseoftheassetisalsosteppedup.
Previouslyunrecognisedtaxlossesoftheacquireroriginatetherecognitionofadeferredtaxassetiftherecognitioncriteriaforthedeferredtaxassetaremetasaresultoftheacquisition.
Offsettingcreditisrecordedinincomestatement,notgoodwill.
Taxlossesoftheacquireefollowsimilarrequirementsasfortheacquirer,excepttheoffsettingcredit,whichisrecordedagainstgoodwill.
NotspecifiedintheAccountingLaw.
Assets,liabilitiesandequity94PwCLuxembourgSubjectIFRSLuxGAAPDeferredtaxesPreviouslytaxlossesoftheacquirerthatexistedatthedateofacquisitionoriginatetherecognitionofadeferredtaxassetthatreducesgoodwillandthenreducestaxexpense.
Thereisnotimelimitforrecognitionofthisdeferredtaxasset.
Recognition–SpecificapplicationsWhilenotspecificallyaddressedwithinIFRS,anentityreflectsthetaxconsequencesthatfollowfromthemannerinwhichitexpects,atthestatementoffinancialpositiondate,tobepaidto(recoveredfrom)thetaxationauthorities.
Thetaxpositionismeasuredusingeitheranexpectedvalueapproachorasinglebestestimateofthemostlikelyoutcome.
ThecumulativeprobabilitymodelisnotpermittedunderIFRS.
NotspecifiedintheAccountingLawRecognition–Share-basedcompensationIfataxdeductionexceedscumulativeshare-basedcompensationexpense,deferredtaxcalculationsbasedontheexcessdeductionarerecordeddirectlyinequity.
Ifthetaxdeductionislessthanorequaltocumulativeshare-basedcompensationexpense,deferredtaxesarisingarerecordedinincomestatement.
Theunitofaccountingisanindividualaward.
Ifchangesinthestockpriceimpactthefuturetaxdeduction,themeasurementofthedeferredtaxassetisbasedonthecurrentstockprice.
NotspecifiedintheAccountingLaw.
MeasurementIAS12requiresdeferredtaxtobemeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealisedortheliabilityissettled,basedontaxratesandlawsthathavebeenenactedorsubstantivelyenactedbythebalancesheetdate.
Insomejurisdictions,themannerinwhichanentityrecovers/settlesthecarryingamountofanasset/liabilitymayaffecteitherorbothof:thetaxrateapplicablewhentheentityrecovers/settlesthecarryingamountoftheasset/liability;andthetaxbaseoftheasset/liability.
Insuchcases,anentitymeasuresdeferredtaxliabilitiesanddeferredtaxassetsusingthetaxrateandthetaxbasethatareconsistentwiththeexpectedmannerofrecoveryorsettlement.
Rateusedistheapplicablerateforexpectedmannerofrecovery,itmeansthatitisdependentonwhetherassetistobeusedorsoldoracombinationofthese.
Forinvestmentpropertiescarriedunderthefairvaluemodel(refertosection"Investmentproperty"),thereisarebuttablepresumptionofrecoverythroughsale.
IAS12prohibitsdiscountingofdeferredtaxassetsandliabilitiestoreflectthetimevalueofmoney.
Noguidance.
IFRScanbeusedasabenchmark.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP95SubjectIFRSLuxGAAPDeferredtaxesDisclosureOffsetofdeferredtaxassetsandliabilitiesispermittedonlywhentheentityhasalegallyenforceablerighttooffset,andthebalancerelatestotaxleviedbythesameauthority.
Deferredtaxassetsandliabilitiesareclassifiednetasnon-currentonthestatementoffinancialposition,withsupplementalnotedisclosureforthecomponentsofthetemporarydifferences,andamountsexpectedtoberecoveredwithin12monthsandmorethan12monthsofthestatementoffinancialpositiondate.
Reconciliationofactualandexpectedtaxexpenseisrequiredcalculatedbyapplyingtheapplicabletaxratestoaccountingprofit,disclosingalsothebasisonwhichtheapplicabletaxratesarecalculated.
Deferredtaxliabilitiesarerecordedinthecaption"Provisionsfortaxation".
Notdefinedfordeferredtaxassetsbuttheyaregenerallyclassifiedinthecaption"Debtors–Otherreceivables".
Thenotestotheannualaccountsmustsetoutthedifferencebetweenthetaxchargedforthefinancialyearandforearlierfinancialyearsandtheamountoftaxalreadypaidorpayableinrespectofthoseyears,totheextentthatthisdifferenceismaterialforpurposesoffuturetaxation.
Assets,liabilitiesandequity96PwCLuxembourgSubjectIFRSLuxGAAPInvestmentinsubsidiaries,associatesandjointlycontrolledentitiesinseparatefinancialstatementsScopeandstandardTheapplicablestandardisIAS27–ConsolidatedandSeparateFinancialStatements.
Investmentsinsubsidiaries,associatesandjointventuresarecoveredbythefollowingarticlesoftheAccountingLaw:34;39;41;55;58;61;64bis;64ter;64quater;64quinquiesand65.
DefinitionsRefertothevarioussubsectionsofsection"Consolidationandbusinesscombinations".
Refertothevarioussubsectionsofsection"Consolidationandbusinesscombinations".
RecognitionAsubsidiaryisrecognisedwhentheentityhascontroloverthesubsidiary.
Meaningofcontrolisdetailedinthesection"Consolidatedfinancialstatements".
Anassociateisrecognisedwhentheentityhassignificantinfluenceoverit.
Jointoperationisrecognisedwhenpartiesthathavejointcontrolofthearrangementhaverightstotheassetsandobligationsfortheliabilitiesrelatingtothearrangements.
Jointventureisrecognisedwhenthepartiesthatjointlycontrolthearrangementhaverightstothenetassetsofthearrangement.
Asubsidiaryisrecognisedwhentheentityhascontroloverthesubsidiarywhileanassociateisrecognisedwhentheentityhassignificantinfluenceoverit.
Whenjointcontrolisobtained,jointlycontrolledundertakingsarerecognised.
InitialmeasurementSubsidiaries,associatesandjointlycontrolledentitiesareinitiallyrecognisedatcostwhichisnormallythefairvalueoftheconsiderationspaidbythepurchaser.
Thereisapolicychoicetoincludetransactioncostsaspartoftheinitialmeasurementortoexpensethesecostsinprofitorloss.
Subsidiariesandparticipatinginterestsareinitiallyrecordedatpurchasepriceornetequity.
Twoaccountingtreatmentsarepossibletorecordtheseassetsunderthenetequitymethod:theyarerecordedatcostandthedifferencebetweentheproportionofcapitalplusreservesandthecostisdisclosedinthenotestotheannualaccounts;theyarerecordedattheamountcorrespondingtotheproportionofthecapitalandreservesowned.
Ifthepositivedifferencecalculatedisnotattributabletoacategoryofassetsorliabilities,itisthenaccountedforasgoodwillandamortisedoveraperiodoffiveyearsmaximumormoreprovidedthattheperiodofamortisationdoesnotexceedtheusefuleconomiclifeoftheasset.
Thepurchasepriceorthenetequityincludesallexpensesincidentaltheretoliketransactioncosts.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP97SubjectIFRSLuxGAAPInvestmentinsubsidiaries,associatesandjointlycontrolledentitiesinseparatefinancialstatementsSubsequentmeasurementAccountingforsubsidiaries,associatesandjointventuresintheseparatefinancialstatementsiseitheratcostoratfairvalueinaccordancewithIAS39-FinancialInstruments:RecognitionandMeasurement(refertosection"Financialassets").
Theaccountingpolicychosenshallbedisclosedinthenotestothefinancialstatementsandshallbeappliedconsistently.
Accountingforjointoperationsisthesameintheseparatefinancialstatementsandinconsolidatedfinancialstatementsanditisdescribedinthesection"Investmentsinjointarrangements".
Subsequently,investmentinsubsidiaries,associatesandjointlycontrolledentitiescanbemeasuredatcostlesspermanentvaluereduction,lowerofcostormarketvalue,netequityorfairvalue.
HistoricalcostconventionValuationatpurchasepriceInvestmentinsubsidiaries,associatesandjointlycontrolledundertakingsremainvaluedatpurchasepriceincludingtheexpensesincidentalthereto.
Inthecaseofdurabledepreciationinvalue,valueadjustmentsaremadeinrespectoffinancialfixedassets,sothattheyarevaluedatthelowerfiguretobeattributedtothematthebalancesheetdate.
Thesevalueadjustmentsarenotcontinuedifthereasonsforwhichthevalueadjustmentsweremadehaveceasedtoapply.
Valuationatthe"lowerofcostormarketvalue"Investmentinsubsidiaries,associatesandjointlycontrolledundertakingsarevaluedatthelowerofpurchasepriceincludingtheexpensesincidentaltheretoorthemarketvalue.
Marketvaluecorrespondsto:thelastavailablequoteonthevaluationdayforsecuritieslistedonastockexchangeortradedonanotherregulatedmarket;ortheprobablemarketestimatedwithduecareandingoodfaith,withoutsetoffofindividualgainsandlossesinvalue,forunlistedsecuritiesorsecuritiesthatarenottradedonanotherregulatedmarket,forsecuritieslistedonastockexchangeortradedonanotherregulatedmarketwherethelatestquoteisnotrepresentative.
Thevalueadjustmentisnotcontinuedifthereasonsforwhichitwasmadehaveceasedtoapply.
NetequitymethodAteachbalancesheetdate,theproportionofthenetresultattributabletothesubsidiariesandtotheparticipatinginterestscanberecorded:intheprofitandlossaccount;orinarevaluationreservenotavailablefordistribution.
FairvalueoptionAccordingtoart.
64bis(4),interestsinsubsidiaries,associatedundertakingsandjointventurescannotbevaluedatfairvalue.
Bywayofderogationtotheabovementionedarticle,theseassetscanbevaluedatfairvalueifpermittedunderIFRS.
Soifapplicable,refertoIFRSguidanceanddisclosurerequirements.
Assets,liabilitiesandequity98PwCLuxembourgSubjectIFRSLuxGAAPInvestmentinsubsidiaries,associatesandjointlycontrolledentitiesinseparatefinancialstatementsDisclosureWhenaparent,inaccordancewithIFRS10-ConsolidatedFinancialStatements,electsnottoprepareconsolidatedfinancialstatementsandinsteadpreparesseparatefinancialstatements,itshalldiscloseinthoseseparatefinancialstatements:thefactthatthefinancialstatementsareseparatefinancialstatements,thattheexemptionfromconsolidationhasbeenused,thenameandprincipalplaceofbusiness(andcountryofincorporation,ifdifferent)oftheentitywhoseconsolidatedfinancialstatementsthatcomplywithIFRShavebeenproducedforpublicuseandtheaddresswherethoseconsolidatedfinancialstatementsareobtainable;alistofsignificantinvestmentsinsubsidiaries,jointventuresandassociates,including:-thenameofthoseinvestees;-theprincipalplaceofbusiness(andcountryofincorporation,ifdifferent)ofthoseinvestees;and-itsproportionoftheownershipinterest(anditsproportionofthevotingrights,ifdifferent)heldinthoseinvestees;andadescriptionofthemethodusedtoaccountfortheinvestmentslistedabove.
Whenaparent(otherthanaparentcoveredbytheaboveparagraph)oraninvestorwithjointcontrolof,orsignificantinfluenceover,aninvesteepreparesseparatefinancialstatements,theparentorinvestorshallidentifythefinancialstatementspreparedinaccordancewithIFRStowhichtheyrelate.
Sharesinaffiliatedundertakingsandparticipatinginterestsinwhichthecompanyholdsatleast20%ofthesharecapital,shallbedescribedinthenotestotheannualaccounts,andinparticular,inrelationtothefollowing:thenameandregisteredofficeofeachoftheundertakings;theproportionofcapitalheld;andtheamountofcapitalandreservesandtheprofitandlossforthelatestfinancialyearoftheundertakingconcernedforwhichtheaccountshavebeenapproved.
Theinformationaboveprescribedmaybeincludedinaseparatestatementfiledwiththeregisterofcommerceandcompanies;thismustbedisclosedinthenotestotheannualaccounts.
Theseinformationmaybeomittedwhentheyarenegligibleasregardstothetrueandfairview,orwhenitsnatureissuchthatitwouldbeseriouslyprejudicialtoanyoftheundertakings.
Theinformationconcerningcapitalandreservesandtheprofitandlossmaybeomittedwhentheundertakingdoesnotpublishitsbalancesheetandlessthan50%ofitscapitalisheld,directlyorindirectly,bythecompany;orwhentheundertakingisincludedinconsolidatedaccounts;orwhentheparentcompanydisclosestheserightsinitsannualaccountsorinitsconsolidatedaccounts.
Wherethecompanyhasunlimitedliabilityonitsundertaking,thename,registeredofficeandlegalformofthelatestshallbedisclosedinthenotestotheannualaccounts.
Assets,liabilitiesandequitySimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP99SubjectIFRSLuxGAAPInvestmentinsubsidiaries,associatesandjointlycontrolledentitiesinseparatefinancialstatementsTheparentorinvestorshallalsodiscloseinitsseparatefinancialstatements:thefactthatthestatementsareseparatefinancialstatementsandthereasonswhythosestatementsarepreparedifnotrequiredbylaw;alistofsignificantinvestmentsinsubsidiaries,jointventuresandassociates,including:-thenameofthoseinvestees;-theprincipalplaceofbusiness(andcountryofincorporation,ifdifferent)ofthoseinvestees;-itsproportionoftheownershipinterest(anditsproportionofthevotingrights,ifdifferent)heldinthoseinvestees;andadescriptionofthemethodusedtoaccountfortheinvestmentslistedabove.
Inaddition,movementsinfinancialfixedassetsshallbedisclosedinthenotestotheannualaccounts.
Iffinancialfixedassetsarevaluedaccordingtopurchasepricelessdurableimpairmentanditsfairvalueisbelowacquisitionpricebutnoimpairmentisbooked,themanagementshalldisclosethefairvalueinthenotestotheannualaccountsaswellasthereasonsfornotreducingthebookvalue,includingthenatureoftheevidencethatthebookvaluewillberecovered.
Iffixedassetsarethesubjectofexceptionalvalueadjustmentsfortaxationpurposesalone,theamountoftheadjustmentsandthereasonsformakingthemshallbeindicatedinthenotestotheannualaccounts.
Whentheamortisationofthegoodwillexceedsfiveyears,thisfactshallbedisclosedinthenotestotheannualaccountswiththereasonstherefore.
Assets,liabilitiesandequity100PwCLuxembourgRevenueandexpenses100PwCLuxembourgSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP101SubjectIFRSLuxGAAPRevenuerecognitionScopeandstandardTheapplicablestandardsareIAS18-RevenueandIAS11-ConstructionContracts.
Thosestandardscapturerevenuetransactionswithinfourbroadcategories:saleofgoods;renderingofservices;others'useofanentity'sassets(yieldinginterest,royalties,etc.
);andconstructioncontracts.
Revenuerecognitioniscoveredbythefollowingarticles:46;48;51(1)c);64bisand65(1)8°,14°.
DefinitionsIncomeisincreasesineconomicbenefitsduringthereportingperiodintheformofinflowsorenhancementsofassets;ordecreasesinliabilitiesthatresultinincreasesinequity,otherthanthoserelatingtocontributionsfromequityinvestors.
IncomeisdefinedintheConceptualFrameworkasincludingrevenuesandgains.
Revenueisincomethatarisesinthecourseofanentity'sordinaryactivities.
Itisreferredtobyavarietyoftermsincludingsales,fees,interest,dividends,royaltiesandrent.
Aconstructioncontractisacontractspecificallynegotiatedfortheconstructionofanassetoracombinationofassetsthatarecloselyinterrelatedorinterdependentintermsoftheirdesign,technologyandfunctionortheirultimatepurposeoruse.
Retentionsareamountsofprogressbillingsthatarenotpaiduntilthesatisfactionofconditionsspecifiedinthecontractforthepaymentofsuchamountsoruntildefectshavebeenrectified.
Progressbillingsareamountsbilledforworkperformedonacontractwhetherornottheyhavebeenpaidbythecustomer.
Advancesareamountsreceivedbythecontractorbeforetherelatedworkisperformed.
NospecificdefinitionofincomeintheAccountingLaw.
Inpractice,itincludesrevenuesandrealisedgains.
Unrealisedgainscanbeaccountedforfinancialinstrumentsandforsomeothercategoriesofassetswhenusingthefairvalueoption.
Thenetturnovershallcomprisetheamountsderivedfromthesaleofproductsandtheprovisionofservicesfallingwithinthecompany'sordinaryactivities,afterdeductionsofsalesandrebatesandofvalueaddedtaxandothertaxesdirectlylinkedtotheturnover.
RecognitionThestandardonrevenuerecognitiondescribesspecificcriteriaforthesaleofgoods,therenderingofservicesandinterest,royaltiesanddividends.
Therevenuerecognitioncriteriacommontoeachofthesearetheprobabilitythattheeconomicbenefitsassociatedwiththetransactionwillflowtotheentity,andthattherevenueandcostscanbemeasuredreliably.
Allincomerelatingtothecurrentyearmustbeaccountedforwhetherornotpaid.
Recognition–SaleofgoodsInadditiontothegeneralrevenuerecognitioncriteriaabove,revenuefromthesaleofgoodsisrecognisedwhen:theentityhastransferredtothebuyerthesignificantrisksandrewardsofownershipofgoods;andtheentityretainsneithercontinuingmanagerialinvolvementnoreffectivecontroloverthegoodssold.
IFRScanbeusedasabenchmark.
Revenueandexpenses102PwCLuxembourgSubjectIFRSLuxGAAPRevenuerecognitionRecognition–RenderingofservicesServicetransactionsareaccountedforunderthepercentageofcompletionmethodwhentheoutcomeofatransactioncanbereliablyestimated.
Revenuemayberecognisedonastraight-linebasisiftheservicesareperformedbyanindeterminatenumberofactsoveraspecifiedperiodoftime.
Whentheoutcomeofaservicetransactioncannotbeestimatedreliably,revenueisonlyrecognisedtotheextentofrecoverableexpensesincurred.
Recognitionofrevenuemayhavetobedeferredininstanceswhereaspecificactismoresignificantthananyotheractsandrecognisedwhenthesignificantactisexecuted.
NotspecifiedintheAccountingLawbutinpractice,servicetransactionsareaccountedforunderthepercentageofcompletionmethodorthecompletedcontractmethod.
Underthepercentageofcompletionmethod,costsallocatedtothecontractandincurredbeforethecloseofthefinancialyeararecomparedtothetotalestimatedcostsofthecompletedcontract.
Thatpercentageofcompletionisappliedtothegrossrevenuefromthecontracttodeterminetheamounttoberecorded.
Underthecompletedcontractmethod,revenue,expenses,andgrossprofitisdeferreduntilthecompletionofthecontract.
Ifworkonacontractremainsincompleteattheendofthefinancialyear,norevenue,expenses,andprofitonthatcontractisrecognisedinthecurrentyearontheprofitandlossaccount;allcostsareaccumulatedinrespectivebalancesheetaccounts.
Howeverforbothmethods,expectedlossshouldberecognisedfullyandimmediatelyduetoprudenceprinciple.
Themethodappliedshouldbedescribedinthenotestotheannualaccounts.
Recognition–FinancialfeeincomeIAS18(appendix)considers3typesoffinancialfeeincome:commissionswhichareanintegralpartoftheeffectiveyieldofafinancialinstrument,suchasloancommitmentfeeswhenthecreditisdrawn.
Thesecommissionsarepartofinterestincome,whichisaccruedonthebasisoftheeffectiveinterestmethod;commissionswhichareearnedwhenservicesarerendered,suchascreditmaintenancefeesorcustodianfees;andcommissionswhichareearneduponexecutionofasignificantact,suchasarrangementfees.
Theseareimmediatelyrecognisedasincomewhenthesignificantactisrenderedandtheentityhasnofurtherobligationtoserviceanassetortoprovideotherservices.
NotspecifiedintheAccountingLaw.
Recognition–InterestInterestshallberecognisedusingtheeffectiveinterestmethod.
Fordetailsregardingtheeffectiveinterestmethod,refertosection"Financialassets".
Interestrevenueisrecognisedonanaccrualbasis.
Theeffectiveinterestmethodcanbeusedasanalternative.
RevenueandexpensesSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP103SubjectIFRSLuxGAAPRevenuerecognitionRecognition–RoyaltiesRoyaltiesshallberecognisedonanaccrualbasisinaccordancewiththesubstanceoftherelevantagreement.
Royaltiesarerecognisedonanaccrualbasis.
Recognition–DividendsDividendsarerecognisedwhentheshareholder'srighttoreceivepaymentisestablished.
Dividendsarerecognisedwhentheshareholder'srighttoreceivepaymentisestablished.
Recognition–AgreementsfortheconstructionofrealestateAnentitythatundertakestheconstructionofrealestateandthatentersintoanagreementwithoneormorebuyersaccountsfortheagreementasasaleofservicesusingthepercentageofcompletionmethodif:thebuyerisabletospecifythemajorstructuralelementsofthedesignoftherealestatebeforeconstructionbeginsand/orspecifymajorstructuralchangesonceconstructionisinprogress;orthebuyeracquiresandsuppliesconstructionmaterialsandtheentityprovidesonlyconstructionservices.
NotspecifiedintheAccountingLaw.
Operationcanbeaccountedforunderthepercentageofcompletionmethodorthecompletedcontractmethod.
Recognition–ConstructioncontractsWhentheoutcomeofaconstructioncontractcanbeestimatedreliably,contractrevenueandcontractcostsassociatedwiththeconstructioncontractshallberecognisedasrevenueandexpensesrespectivelybyreferencetothestageofcompletionofthecontractactivityattheendofthereportingperiod.
Anexpectedlossshallberecognisedimmediatelyinfull.
Whentheoutcomeoftheconstructioncontractcannotbeestimatedreliably:revenueshallberecognisedonlytotheextentofcontractcostsincurredthatitisprobabletoberecovered;andcontractcostsshallberecognisedasanexpenseintheperiodinwhichtheyareincurred.
NotspecifiedintheAccountingLaw.
Thesecontractscanbeaccountedforunderthepercentageofcompletionconstructioncontractsmethodorthecompletedcontractmethod.
Recognition–WarrantyandproductmaintenancecontractsWhentheproduct'ssellingpriceincludesanidentifiablecomponentforsubsequentservicing,thelatterisdeferredandrecognisedoverthewarrantyperiod.
SimilartoIFRS.
Provisionsforprobablewarrantiescostsneedtoberecognised.
Revenueandexpenses104PwCLuxembourgSubjectIFRSLuxGAAPRevenuerecognitionRecognition–BartertransactionsAbarterarrangementexistswhentwocompaniesenterintoanon-cashtransactiontoexchangegoodsorservices.
UnderIFRS,revenuemaygenerallyberecognisedontheexchangeofdissimilargoodsandservicesiftheamountofrevenuecanbemeasuredreliably.
Thetransactionmustbemeasuredatthefairvalueofgoodsorservicesreceived;however,wherethefairvalueofgoodsorservicesreceivedcannotbereliablymeasured,thefairvalueofthegoodsandservicesgivenupisused.
Thefairvalueofadvertisingreceivedorprovidedinabartertransactionisgenerallymeasuredbyreferencetoequivalentnon-bartertransactions.
NotspecifiedintheAccountingLaw.
LuxGAAPdoesnotmakeadistinctionbetweenexchangesofsimilaranddissimilargoodsorservices.
However,therearetwopossibleoptionsthatcanbeusedatinitialrecognition:theacquisitionvalueofgoodsorservicesreceivedbyexchangeequalsthebookvalueofthegoodsorservicesexchanged;ortheacquisitionvalueofgoodsorservicesreceivedbyexchangeequalsthefairvalueofthegoodsorservicesexchanged.
Recognition–MultipleelementarrangementsTherevenuerecognitioncriteriaareusuallyappliedseparatelytoeachtransaction.
However,incertaincircumstances,itisnecessarytoseparateatransactionintoidentifiablecomponentsinordertoreflectthesubstanceofthetransaction.
Twoormoretransactionsmayneedtobegroupedtogetheriftheyarelinkedinsuchawaythatthewholecommercialeffectcannotbeunderstoodwithoutreferencetotheseriesoftransactionsasawhole.
NotspecifiedintheAccountingLaw.
MeasurementMeasurementofrevenueatthefairvalueoftheconsiderationreceivedorreceivableisrequired.
NotspecifiedintheAccountingLaw.
IFRScanbeusedasabenchmark.
DisclosureAwideseriesofdisclosureisrequired,especiallyonareaslikecontractsandworkinprogress.
Anentityshalldisclose:theamountofcontractrevenuerecognisedasrevenueintheperiod;themethodsusedtodeterminethecontractrevenuerecognisedintheperiod;andthemethodsusedtodeterminethestageofcompletionofcontractsinprogress.
Anentityshalldiscloseeachofthefollowingforcontractsinprogressattheendofthereportingperiod:theaggregateamountofcostsincurredandrecognisedprofits(lessrecognisedlosses)todate;theamountofadvancesreceived;andtheamountofretentions.
Additionalspecificpresentationanddisclosureisrequiredregardingtheretentions,progressbillingsandadvances.
Thenotestotheannualaccountsmustatleastsetoutthenetturnoverbrokendownbycategoriesofactivity,andintogeographicalmarketsinsofaras,takingaccountofthemannerinwhichthesaleofproductsandtheprovisionofservicesfallingwithintheundertaking'sordinaryactivitiesareorganised,thesecategoriesandmarketsdiffersubstantiallyfromonetoanother.
Additionallyinformationmustbegivenconcerningtheincomeinrespectofthefinancialyearwhichisreceivableaftertheendofthefinancialyearandareshownunder"Debtors",whensuchincomeismaterial.
RevenueandexpensesRecentdevelopments–ExposureDraft,RevenueRecognitionThisExposureDraftproposesanewrevenuestandardthatwillreplaceIAS11-ConstructionContractsandIAS18-Revenue.
Theproposalisasinglemodelfortherecognitionofrevenuethatshouldapplytoallcontractswithcustomers,identifyingobligationstoperform.
Therearealsoproposedchangestothemeasurementofrevenuewithcontingentfeesandcreditriskbeingtakenintoaccount.
TheIASBandFASB(together"theboards")reachedanumberofdecisionsregardingtheirprojectonrevenuerecognition.
Theboardsaddressedtwofundamentalissues:identifyingseparateperformanceobligationsanddeterminingwhencontrolovergoodsorservicesistransferred.
Theboardsalsoreacheddecisionsonotherkeyareas.
IdentifyingseparateperformanceobligationsAkeystepintherevenuerecognitionmodelisidentifyingtheseparateperformanceobligationsinacontract.
Theboardsagreedtoclarifytheprincipleforidentifyingseparateperformanceobligationsandrefinethecriteriaforidentifyingwhengoodsorservicesaredistinct.
Anentitywillaccountforapromisedgoodorservice(orabundleofgoodsorservices)asaseparateperformanceobligationifit:couldbedistinct(thecustomercanbenefitfromthegoodorserviceeitheronitsownortogetherwithotherresourcesreadilyavailabletothecustomer);andisdistinctbasedonthesubstanceofthecontract(nothighlydependentonorinterrelatedwithotherpromisedgoodsorservicesinthecontract).
PerformanceobligationssatisfiedovertimeTheboardsclarifiedthecriteriatodeterminewhenaperformanceobligationissatisfiedovertime.
Theguidancewasrefinedtobetteraddressservicecontracts.
Theindicatorsofwhenanassethasnoalternativeuseandwhentheentityhasarighttopaymentforperformancetodatewerealsorefined.
TransferofgoodsandservicesAnentitywouldrecogniserevenuewhen(oras)itsatisfiesaperformanceobligationbytransferringapromisedgoodorservicetoacustomer.
PresentationoftheeffectsofcreditriskImpairmentasaresultofcreditriskispresentedasaseparatelineitemadjacenttorevenue.
Boththeinitialimpairmentassessmentandanysubsequentchangesintheestimatearerecordedinthislineitem,suchthatthecashultimatelyreceivedfromthecustomerequalsthesumofthetwolineitemsifthecontractdoesnothaveasignificantfinancingcomponent.
ContractcostAnentitywouldrecogniseasanassettheincrementalcostsofobtainingacontractiftheentityexpectstorecoverthosecosts.
OnerousperformanceobligationsAnentityrecognisesalossforaperformanceobligationthatissatisfiedoveraperiodgreaterthanoneyeariftheperformanceobligationisonerous.
Aperformanceobligationisonerousifthelowerofthecosttosettleorfulfiltheperformanceobligationexceedsthetransactionpriceallocatedtothatperformanceobligation.
ReasonablyassuredconstraintRevenueisonlyrecognisedtotheextentthattheentityisreasonablyassuredtobeentitledtotheconsideration.
WarrantiesOnlywarrantiesthatprovideaserviceinadditiontoqualityassuranceshouldbeaccountedforasaseparateperformanceobligation.
Warrantiesforqualityassuranceshouldbeaccountedforasacostaccrualsimilartocurrentguidance.
ContractcombinationInterrelatedcontractsshouldbecombined.
Contractsmightbeinterrelatediftheyareenteredintoatornearthesametime,withthesameparty(orrelatedparties),andifoneormoreofthefollowingcriteriaaremet:thecontractsarenegotiatedasapackagewithasinglecommercialobjective;theamountofconsiderationtobepaidinonecontractdependsonthepriceorperformanceoftheothercontract;orthegoodsorservicespromisedinthecontracts(orsomegoodsorservicespromisedinthecontracts)areasingleperformanceobligation.
TimetableTheboards'timelineindicatesissuanceofafinalstandardinthesecondquarterof2013.
Thefinalstandardisexpectedtohaveaneffectivedatenoearlierthan2015andwillhavetobeendorsedbytheEU.
Similaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP105Revenueandexpenses106PwCLuxembourgSubjectIFRSLuxGAAPExpensesrecognitionScopeandstandardTheapplicableguidanceisgivenbytheConceptualFramework.
ExpensesarenotspecificallydefinedintheAccountingLaw.
DefinitionsExpensesaredecreasesineconomicbenefitsduringthereportingperiodintheformofoutflows,depletionsofassetsorincurrencesofliabilitiesthatresultindecreasesinequity,otherthanthoserelatingtodistributionstoequityinvestors.
ExpensesarenotspecificallydefinedintheAccountingLaw.
RecognitionTherecognitionofexpensesresultsdirectlyfromtherecognitionandmeasurementofassetsandliabilities.
Expensesarerecognisedinthestatementofcomprehensiveincomewhenadecreaseinfutureeconomicbenefitsrelatedtoadecreaseinanassetoranoutflowoffutureeconomicbenefitsduetoincreaseofaliabilityhasarisenthatcanbemeasuredreliably.
Expensesarerecognisedwhenincurredorwhenprobable.
Interestexpenseisrecognisedonanaccrualbasis.
Theeffectiveinterestmethodcanbeusedasanalternative.
RevenueandexpensesConsolidationandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP107108PwCLuxembourgRevenueandexpensesRecentdevelopments–ConsolidationstandardsIn2012,theIASBreleasedIFRS10,IFRS11,IFRS12andhasamendedIAS27andIAS28,thisprojectbeingknownunder"packoffive".
IFRS10-ConsolidatedFinancialStatementsisintroducingnewguidanceoncontrolandconsolidation.
BeforeissuanceofIFRS10,theapplicablestandardsforconsolidatedfinancialstatementswereIAS27-ConsolidatedandSeparateFinancialStatementsandSIC12-Consolidation–SpecialPurposeEntities.
AfterapplicationofIFRS10,IAS27continuestoexist,butunderthenewnameof:"SeparateFinancialStatements"andwiththescopereducedaccordingly.
IFRS11-JointArrangementsfocusesontherightsandobligationsofthearrangement,ratherthanitslegalform.
IAS31-InterestsinJointVentureswillbefullyreplacedbyIFRS11.
Changesinthedefinitionshavereducedthe"types"ofjointarrangementstotwo:jointoperationsandjointventures.
Theconceptof"jointventure"hadabroadermeaningunderIAS31comparedtoIFRS11;theequivalentcategoryunderIFRS11is"jointarrangement".
UnderIFRS11,theconceptof"jointventure"isnarrowerbecomingasubclasswithinthe"jointarrangement"concept;itiscomparabletotheconceptof"jointlycontrolledentities"underIAS31intermsofcomprehensiveness.
Proportionalconsolidationofjointventuresisnolongerallowed.
TheIASBissuedanewversionofIAS28-InvestmentsinAssociatesandJointVentures,nowincludestherequirementsforjointventures,aswellasassociates,tobeequityaccountedfollowingtheissueofIFRS11.
IFRS12-DisclosureofInterestsinOtherEntitiesisanewandcomprehensivestandardondisclosurerequirementsforallformsofinterestsinotherentities,includingjointarrangements,associates,specialpurposevehiclesandotheroff-balancesheetvehicles.
ThenewstandardsasissuedbytheIASBareeffectiveforannualperiodsbeginningonorafter1January2013.
TheEUhasendorsedthestandardsinDecember2012withaneffectivedateforannualperiodsbeginningonorafter1January2014;earlyapplicationispermitted.
Inconclusion,fortheannualperiodsstartingon1January2013orearlier,LuxembourgentitiescanapplytheoldversionofIAS27-ConsolidatedandSeparateFinancialStatements,SIC12-Consolidation–SpecialPurposeEntities,IAS28-InvestmentsinAssociatesandIAS31-InterestsinJointVenturesorcanearlyadopttheentirepackoffive.
SincetwoversionsoftheIFRSareapplicablein2013,theyarebothpresentedinthissection.
On31October2012,theIASBhasissuedanamendmenttoIFRS10inordertoprovideanexceptiontotheconsolidationrequirementforentitiesthatmeetthedefinitionofaninvestmententity.
Theamendmentiseffective1January2014withearlyadoptionpermitted.
However,thisamendmentisnotyetendorsedbytheEUatthedateofthispublication.
Endorsementisexpectedbeforeyearend2013.
Consequently,Luxembourgentitiescannotcurrentlyapplytheamendment.
Furtherdetailsonthisamendmentaregiveninthesection"Recentdevelopments–AmendmenttoIFRS10-InvestmentEntities".
Consolidationsandbusinesscombinations108PwCLuxembourgSubjectIFRS(IAS27/SIC12)IFRS(IFRS10)LuxGAAPConsolidatedfinancialstatementsScopeandstandardTheapplicablestandardisIAS27-ConsolidatedandSeparateFinancialStatementsandSIC12-Consolidation–SpecialPurposeEntities.
TheapplicablestandardisIFRS10-ConsolidatedFinancialStatements.
Theconsolidationiscoveredbyarticles309*to344*oftheCompanyLaw.
ThevaluationrulesaredefinedbytheAccountingLaw.
DefinitionsAsubsidiaryisanentity,includinganunincorporatedentitysuchasapartnershipthatiscontrolledbyanotherentity(knownastheparent).
Aparentisanentitythathasoneormoresubsidiaries.
Agroupisaparentandallitssubsidiaries.
Non-controllinginterestistheequityinasubsidiarynotattributable,directlyorindirectly,toaparent.
Consolidatedfinancialstatementsarethefinancialstatementsofagrouppresentedasthoseofasingleeconomicentity.
Subsidiaryisdefinedasbeinganentitythatiscontrolledbyanotherentity.
Aparentisdefinedasbeinganentitythatcontrolsoneormoreentities.
Thedefinitionsofagroupandnon-controllinginterestaresimilartoIAS27.
Consolidatedfinancialstatementsarethefinancialstatementsofagroupinwhichtheassets,liabilities,equity,income,expensesandcashflowsoftheparentanditssubsidiariesarepresentedasthoseofasingleeconomicentity.
AsubsidiaryisnotdefinedintheCommercialLaw.
Asubsidiaryisacompanythatiscontrolledbytheentity.
Aparentisanentitythathasoneormoresubsidiaries.
Agroupisaparentandallitssubsidiaries.
Non-controllinginterestistheequityinasubsidiarynotattributable,directlyorindirectly,toaparent.
Consolidatedfinancialstatementsarethefinancialstatementsofagrouppresentedasthoseofasingleeconomicentity.
RequirementtoprepareconsolidatedfinancialstatementsParententitiesprepareconsolidatedfinancialstatementsthatincludeallsubsidiaries.
Anexemptionappliestoaparententitywhenallofthefollowingconditionsapply:itisitselfawholly-ownedsubsidiary,orisapartially-ownedsubsidiaryanditsotherowners(includingthosenotentitledtovote)havebeeninformedaboutanddonotobjecttotheparentnotpresentingconsolidatedfinancialstatements;theparent'sdebtorequitysecuritiesarenotpubliclytradedandtheparentisnotintheprocessofissuingsecuritiesinpublicsecuritymarkets;andtheultimateoranyintermediateparentoftheparentproducesconsolidatedfinancialstatementsavailableforpublicusethatcomplywithIFRS.
SimilartoIAS27.
LuxGAAPrequiresthepreparationofconsolidatedfinancialstatementsforallcompaniesasdefinedintheCompanyLaw,iftheundertaking:hasamajorityofshareholders'orvotingrightsinanotherundertaking;orhastherighttoappointorremoveamajorityofthemanagementorsupervisorybodyofanotherundertakingandisatthesametimeashareholderinormemberofthatundertaking;orisashareholderinormemberofanotherundertakingandcontrolsaloneamajorityofthevotingrights,pursuanttoanagreementwithothershareholders.
Exemptionsexistundercertainconditionsfor:small-sizedgroups3.
Thisexemptionshallnotapplyto3Agroupiscategorisedasasmall-sizedgroupwhentheparentcompanydoesnot,onaconsolidatedbasis,exceedthelimitsoftwoofthethreecriteriasetoutbelowduringtwoconsecutiveyears:-totalbalancesheet:17.
5meuros;-netturnover:35meuros;-averagenumberoffull-timestaff:250.
Similaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP109Consolidationsandbusinesscombinations110PwCLuxembourgSubjectIFRS(IAS27/SIC12)IFRS(IFRS10)LuxGAAPConsolidatedfinancialstatementsthosecompanieswhereoneofthecompaniestobeconsolidatedisacompanywhosesecuritiesareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion.
financialholdingcompaniesundercertainconditions;subsidiariesofaparentcompanypreparingconsolidatedaccountsandincorporatedinoneoftheMemberStatesoftheEuropeanUnion.
Inthatcase,consolidatedfinancialstatementsoftheparentmustbepublishedinLuxembourg.
ThisexemptionshallnotapplytothecompanieswhosesecuritiesareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion;orsubsidiariesofaparentinaforeigncountryoutsidetheEuropeanUnionthatpreparesconsolidatedaccountsinaccordancewiththeLuxembourgCompanyLaworinanequivalentmanner.
Inthatcase,consolidatedfinancialstatementsoftheparentmustbepublishedinLuxembourg.
ThisexemptionshallnotapplytothecompanieswhosesecuritiesareadmittedtoofficialtradingonaregulatedmarketofanyMemberStateoftheEuropeanUnion.
ConsolidationscopeConsolidatedfinancialstatementsshallincludeallsubsidiariesoftheparent.
Asubsidiaryisnotexcludedfromconsolidationbecauseitsbusinessactivitiesaredissimilarfromthoseoftheotherentitieswithinthegroup.
Relevantinformationisprovidedbyconsolidatingsuchsubsidiariesanddisclosingadditionalinformationintheconsolidatedfinancialstatementsaboutthedifferentbusinessactivitiesofsubsidiaries.
Forexample,thedisclosuresrequiredbyIFRS8-OperatingSegmentshelptoexplainthesignificanceofdifferentbusinessactivitieswithinthegroup.
Parententitieswhichmeetthedefinitionofinvestmententityshallnotconsolidatetheirsubsidiariesbutinstead,shallaccountforthematfairvaluethroughprofitorloss(refertosection"Recentdevelopments–AmendmenttoIFRS10-InvestmentEntities").
AllothertermsaresimilartoIAS27.
Allsubsidiariesareconsolidated.
However,exclusionsexistforsubsidiaries:thatarenotmaterial;forwhichinformationcannotbeobtainedwithoutdisproportionateexpensesordelay;forwhichrestrictionsonownershiprightsexist;andthatareheldforresaleinthenearfuture.
Specificrulesappliedtoventurecapitalorprivateequitycompanieswillingtousetheheldforresaleexclusion(AccountingStandardCommittee,CNCrecommendation2-1).
Theexclusionisapplicablewhenthefollowingconditionsaremet:-theparentcompanyisaLuxembourgcommercialcompanyownedbyoneormoresophisticatedinvestors;ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP111SubjectIFRS(IAS27/SIC12)IFRS(IFRS10)LuxGAAPConsolidatedfinancialstatementsConsolidationscopeAsubsidiarythatmeets,onacquisition,thecriteriatobeclassifiedasheldforsale(refertosection"Non-currentassetsheldforsaleanddiscontinuedoperations"),appliesthepresentationforassetsheldforsale(i.
e.
separatepresentationofassetsandliabilitiestobedisposedof)ratherthannormallinebylineconsolidationpresentation.
Asubsidiaryisnotexcludedfromconsolidationsimplybecausetheinvestorisaventurecapitalorganisation,mutualfund,unittrustorsimilarentity.
-itssolepurposeistoinvestinventurecapitaltorealiseagainonthesubsequentsaleofitsinvestment;-theBoardofdirectors/managersformallydefined,ex-ante,theexitstrategyofitsinvestmentinawrittendocumentcommunicatedtotheinvestors.
Theexitstrategymustbeplannedoveramiddletermperiod(threetoeightyears);-theparentcompanyinvestsinordertoprovidetoitsinvestorsareturnoninvestmentaccordingtotherisktaken;-wheretheinvestment(s)is(are)notrecordedinthebalancesheetatthefairvalue,theparentcompanymustdisclosethisfairvalueinthenotestotheannualaccounts;and-anyevent,anywarrantyoranyuncertaintythatmayhaveasignificantimpactonthegoingconcern,onthecashposition,orontheliquidityoronthesolvencymustbeproperlydisclosedinthenotestotheannualaccounts.
ConceptofcontrolIAS27focusesontheconceptofcontrolindeterminingwhetheraparent-subsidiaryrelationshipexists.
Controlisthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.
Controlispresumedtoexistwhenaparentowns,directlyorindirectly,50percentofthevotingpower.
IFRSspecificallyrequirespotentialvotingrightstobeconsideredinassessingwhetheranentityhasthepowertogovernthefinancialandoperatingpoliciesofanotherentity.
Instrumentsthatarecurrentlyexercisableorconvertibleareincludedintheassessment,withnorequirementtoassesswhetherexerciseiseconomicallyreasonable(providedsuchrightshaveeconomicsubstance).
Thekeyprincipleinthenewstandardisthatcontrolexists,andconsolidationisrequired,onlyiftheinvestorpossessesallofthefollowingthreeelements:powerovertheinvestee;hasexposuretovariablereturnsfromitsinvolvementwiththeinvestee;andhastheabilitytouseitspowerovertheinvesteetoaffectitsreturns.
IFRS10providesguidanceonthefollowingissueswhendeterminingwhohascontrolassessmentofthepurposeanddesignofaninvestee:natureofrights,whethersubstantiveormerelyprotectiveinnature;impactofexposuretovariablereturns;Controlispresumedtoexistwhen:theparenthasthemajorityoftheshareholders'orunitholders'votingrightsinanotherundertaking;theparenthastherighttoappointorrevokethemajorityofthemembersoftheadministrative,managerialorsupervisorybodyofanotherundertakingandisatthesametimeashareholderinorunitholderofthatundertaking;ortheparentisashareholderinormemberofanundertaking,andcontrolsalone,pursuanttoanagreementwithothershareholdersin(orunitholdersof)thatundertaking,themajorityofshareholders'orunitholders'votingrightsinthatundertaking.
Consolidationsandbusinesscombinations112PwCLuxembourgSubjectIFRS(IAS27/SIC12)IFRS(IFRS10)LuxGAAPConsolidatedfinancialstatementsConceptofcontrolControlalsoexistswhenaparentownshalforlessofthevotingpower,buthaslegalorcontractualrightstocontrolthemajorityoftheentity'svotingpowerorBoardofdirectors.
Inrarecircumstances,aparentcouldalsohavecontroloveranentitywhereitholdslessthan50percentofthevotingrightsofanentityandlackslegalorcontractualrightsbywhichtocontrolthemajorityoftheentity'svotingpowerorBoardofdirectors(defactocontrol).
assessmentofvotingrightsandpotentialvotingrights;whetheraninvestorisaprincipaloranagentwhenexercisingitscontrollingpower;relationshipsbetweeninvestorsandhowtheyaffectcontrol;andexistenceofpoweroverspecifiedassetsonly.
IFRS10linkspowerandreturnsbyintroducinganadditionalrequirementthattheinvestoriscapableofwieldingthatpowertoinfluenceitsexposuretovariablereturns.
Whenassessingpower,itshallbeassessed:whataretherelevantactivitiesoftheentityi.
e.
whichactivitiesmostsignificantlyaffectreturns;howaredecisionsabouttheserelevantactivitiesmadeanddotheinvestorsrightsprovidetheinvestorthecurrentabilitytodirectthoserelevantactivitiesThereafteritshallbeassessedwhethertheinvestorhasexposuretovariablereturns.
Finally,itshallbeconsideredthelinkbetweenthepowerandreturns.
Thisinvolvesassessingprincipal-agentrelationships.
Regardingtheabilitytodirectrelevantactivities,thisarisesfromtheinvestor'srights.
Investor'srightscanbesubstantiveandprotective.
IFRS10requiresthatonlysubstantiverightsshouldbeconsideredinassessingpower.
Protectiverightsarenotconsidered.
Aninvestormusthavethepracticalabilitytoexercisethoserightsinorderforthemtobesubstantive.
Thevotingrightsandtherightsofappointmentandremovalasdescribedaboveshallbeunderstoodasdirectorindirectrights.
RecognitionAsubsidiaryisrecognisedwhentheparentobtainscontroloverit.
SimilartoIAS27.
Asubsidiaryisrecognisedwhentheentityhascontroloverit.
ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP113SubjectIFRS(IAS27/SIC12)IFRS(IFRS10)LuxGAAPConsolidatedfinancialstatementsSpecialpurposeentities("SPE")Anentitymaybecreatedtoaccomplishanarrowandwell-definedobjective(e.
g.
toeffectalease,researchanddevelopmentactivitiesorasecuritisationoffinancialassets).
Suchaspecialpurposeentitymaytaketheformofacorporation,trust,partnershiporunincorporatedentity.
SpecialpurposeentitiesareconsolidatedwhenthesubstanceoftherelationshipindicatesthatanentitycontrolstheSPE.
Indicatorsofcontrolareasfollows:theSPEconductsitsactivitiesonbehalfoftheentity;theentityhasthedecision-makingpowertoobtainthemmajorityofthebenefitsoftheSPE;theentityhasotherrightstoobtainthemajorityofthebenefitsoftheSPE;ortheentityhasthemajorityoftheresidualorownershiprisksoftheSPEoritsassets.
Post-employmentbenefitplansorotherlong-termemployeebenefitplanstowhichIAS19-EmployeeBenefitsappliesareexcludedfromthisrule.
Theguidanceappliestoactivitiesregardlessofwhethertheyareconductedbyalegalentity.
Votingrightsmaynotalwayshaveasignificanteffectonaninvestee'sreturns.
Forexample,votingrightsmightrelatetoadministrativetasksonlyandcontractualarrangementsmightdictatehowtheinvesteeshouldcarryoutitsactivities.
Wheresucharrangementsareinplace,theseentitiesaredescribedas"structuredentities".
Allsubstantivepowersinsuchentitiesmayappeartohavebeensurrenderedtocontractsthatimposerigidcontrolovertheentities'activities.
Noneofthepartiesmayappeartohavepower.
However,entitiesmaybeindirectlycontrolledbyoneofthepartiesinvolved.
Thisisahighlyjudgmentalareaandadetailedanalysisofthecontrolcriteriaisenquired.
IFRS10providesthefollowingguidancewheretheoperationsofanentityaredictatedbycontractualarrangements.
Ifthegroupiscontrollinganentitywithoutowninganysharesinitscapital,thatentitywillnotbepartoftheconsolidationscope.
Specialpurposeentities–Involvementanddecisionsmadeattheinvestee'sinceptionaspartofitsdesignMatternotspecificallyanddirectlyaddressedbySIC12.
AkeyconceptofunderstandingtheapplicationofIFRS10intermsofassessingthepurposeanddesignofanentityisthatanentitymustconsidertheinvolvementofvariousparticipantsinthedesignoftheinvesteeatitsinception.
Suchinvolvement,byaninvestor,isnotsufficienttodemonstratecontrol.
However,participantswhowereinvolvedinthedesignmayhavetheopportunitytoobtainpowerfulrightsandthereforethismaybeanindicatorofpowerandultimatelycontrol.
Decisionsmadeattheinvestee'sinceptionshouldbeevaluatedtodeterminewhetherthetransactiontermsprovideanyparticipantwithrightsthataresufficienttoconstitutepower.
NotapplicableunderLuxGAAPastheentityisnotconsolidated.
Consolidationsandbusinesscombinations114PwCLuxembourgSubjectIFRS(IAS27/SIC12)IFRS(IFRS10)LuxGAAPConsolidatedfinancialstatementsSpecialpurposeentities–Contractualarrangementsestablishedatinvestee'sinceptionMatternotspecificallyanddirectlyaddressedbySIC12.
Astructuredentityisoftengovernednotonlybyitsconstitutiondocuments,butbycontractsthatbindthestructuredentitytoitsoriginalpurpose.
Theseincludecallrights,putrights,liquidationrights,orothercontractualarrangementsthatmayprovideinvestorswithpower.
Whenthesecontractualarrangementsinvolveactivitiesthatarecloselyrelatedtotheinvestee,theseareconsideredrelevantactivities.
Thisistrueeveniftheactivitiesdonotoccurwithinthestructuredentityitself,butoccursinanotherentityrightstodirectrelevantactivitiesthatariseupontheoccurrenceofcertainevents.
IFRS10statesthatitisnecessarytoconsiderdecisionrightsthattakeeffectonlywhenparticularcircumstancesariseoreventsoccur.
Aninvestorwiththeserightscanhavepowerevenifthosecircumstanceshavenotyetarisen.
NotapplicableunderLuxGAAPastheentityisnotconsolidated.
Specialpurposeentities–CommitmenttoensurethatinvesteeoperatesasdesignedMatternotspecificallyanddirectlyaddressedbySIC12.
Anexplicitorimplicitcommitmentbyaninvestortoensurethataninvesteecontinuestooperateasdesignedmayincreaseexposuretovariabilityofreturnsandheightenthelikelihoodofcontrol.
However,onitsown,thisfactorisinsufficienttodemonstratepowerorpreventotherpartiesfromhavingpower.
NotapplicableunderLuxGAAPastheentityisnotconsolidated.
UniformaccountingpoliciesConsolidatedfinancialstatementsarepreparedusinguniformaccountingpoliciesforallentitiesinagroup.
SimilartoIAS27.
SimilartoIFRS,valuationrulesforconsolidatedcompaniesshouldbethesameasfortheparententity.
Wheretherearespecialcircumstances,differentpoliciesmaybeusedwithdisclosureofthedistinctivefeaturesandtheeffectinthenotestotheconsolidatedaccounts.
ReportingperiodsTheconsolidatedfinancialstatementsoftheparentandthesubsidiariesareusuallydrawnupatthesamereportingdate.
However,theconsolidationofsubsidiariesaccountscanbedrawnupatadifferentreportingSimilartoIAS27.
Consolidatedaccountsmustbedrawnupasatthesamedateastheannualaccountsoftheparentcompany.
However,consolidatedaccountsmaybedrawnupasatanotherdateinordertotakeaccountConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP115SubjectIFRS(IAS27/SIC12)IFRS(IFRS10)LuxGAAPConsolidatedfinancialstatementsReportingperiodsdateprovidedthedifferencebetweenthereportingdatesofthesubsidiariesisnotmorethanthreemonths.
Adjustmentsaremadeforsignificanttransactionsthatoccurinthegapperiod.
ofthebalancesheetdatesofthelargestnumberorthemostimportantundertakingsincludedintheconsolidation.
Whereuseismadeofthisderogation,thefollowingpointsneedtoberespected:theuseofanotherclosingdatethantheyearendoftheparentcompanyneedstobeproperlydisclosedinthenotestotheconsolidatedaccounts;andimportanteventsoccurredintheinterimperiodhavetoberecordedordisclosedinthenotestotheconsolidatedaccountsforcompanieswhoseyearendisbeforetheconsolidatedaccountsyearend.
Theannualaccountsofallthecompaniesincludedintheconsolidationmustbeestablishedmaximumthreemonthsbeforetheconsolidatedbalancesheetdate.
Iftheyareestablishedmorethanthreemonthsbeforetheconsolidatedbalancesheetdate,theundertakingsshallbeconsolidatedonthebasisofinterimaccountsestablishedattheconsolidatedbalancesheetdateTransactionswithminorityshareholders,partialdisposalsandlossofcontrolTheadoptionoftheeconomicentitymodel,whichtreatsallprovidersofequitycapitalastheentity'sshareholders,evenwhentheyarenotshareholdersintheparentcompany,ismandatory.
Consequently,partialdisposalofaninterestinasubsidiarywithoutlosingcontroldoesnotresultinagainorlossbutinanincreaseordecreaseinequity.
Purchaseofnon-controllinginterestsistreatedasatreasurytransactionandaccountedforinequitywithnoeffectonexistinggoodwill.
Apartialdisposalofaninterestinasubsidiaryinwhichtheparentlosescontrolbutretainsaninteresttriggersrecognitionofagainorlossontheentireinterest.
Againorlossonthedisposalisrecordedandthenewinvestmentisrecognisedatfairvalue.
SimilartoIAS27.
NospecificguidanceintheAccountingLaw.
InLuxGAAP,partialdisposalofaninterestinasubsidiarywithoutlosingcontroldoesnotresultinagainorlossbutinanincreaseordecreaseinequity.
Purchaseofnon-controllinginterestsisnotspecificallytreatedunderLuxGAAP.
IFRScanbeusedasabenchmark.
Apartialdisposalofaninterestinasubsidiaryinwhichtheparentlosescontrolbutretainsaninteresttriggersrecognitionofagainorlossforthedisposalpart.
Consolidationsandbusinesscombinations116PwCLuxembourgRecentdevelopments–AmendmenttoIFRS10-InvestmentEntitiesOn31October2012,theIASBhasissuedanamendmenttoIFRS10inordertoprovideanexceptiontotheconsolidationrequirementforentitiesthatmeetthedefinitionofaninvestmententity.
Theamendmentiseffective1January2014withearlyadoptionpermitted.
However,thisamendmentwasnotyetendorsedbyEU.
Endorsementisexpectedtotakeplacebeforeendof2013.
Consequently,Luxembourgentitiescannotapplytheamendmentuntiltheendorsementdate.
ManyfundsandsimilarentitieswillbeexemptedfromconsolidatingcontrolledinvesteesasaresultofIASBissuingamendmentstoIFRS10,IFRS12-DisclosureofInterestsinOtherEntitiesandIAS27-SeparateFinancialStatements.
Theseamendmentswillparticularlybenefitfunds,asthosethatqualifywillbeabletofairvaluecontrolledinvestments,ratherthanhavingtoconsolidatethem.
TheamendmenttoIFRS10definesaninvestmententityandintroducesanexceptiontoconsolidation.
TheamendmentstoIFRS12introducedisclosuresthataninvestmententityneedstomake.
DefinitionofaninvestmententityFirstitshallbeassessedwhethertheentitymeetstheinvestmententitydefinition.
Aninvestmententityisanentitythat:obtainsfundsfromoneormoreinvestorsforthepurposeofprovidingthoseinvestor(s)withinvestmentmanagementservices;commitstoitsinvestor(s)thatitsbusinesspurposeistoinvestfundssolelyforreturnsfromcapitalappreciation,investmentincomeorboth;andmeasuresandevaluatestheperformanceofsubstantiallyallofitsinvestmentsonafairvaluebasis.
Inaddition,thereisasetoftypicalcharacteristicsthatshallbetakenintoconsideration.
Thecharacteristicsare:holdingmorethanoneinvestment;havingmorethanoneinvestor;havinginvestorsthatarenotentity'srelatedparties;andhavingownershipinterestsintheformofequityorsimilarinterests.
Theabsenceofoneormoreofthesetypicalcharacteristicsdoesnotpreventtheentityfromqualifyingasaninvestmententitybutitisneededtodeterminewhyitisaninvestmententityeventhoughitdoesnotmeetatleastoneofthetypicalcharacteristics;disclosuresshallbegiveninthenotes.
Anentitywillnotbedisqualifiedfrombeinganinvestmententitywhereitalsocarriesoutanyofthefollowingactivities:providinginvestment-relatedservicestothirdpartiesandtoitsinvestors,evenwhensubstantial;providingmanagementservicesandfinancialsupporttoitsinvestees,butonlywhenthesedonotrepresentaseparatesubstantialbusinessactivityandarecarriedoutwiththeobjectiveofmaximisingtheinvestmentreturnfromtheentity'sinvestees.
AccountingbyaninvestmententityanddisclosuresInsteadofconsolidatingtheentity'ssubsidiaries,theseareaccountedforatfairvaluethroughprofitorloss.
Theonlyexceptionisforsubsidiariesprovidingservicesthatarerelatedtotheentity'sinvestmentactivity,whichshouldbeconsolidated.
IFRS12requiresadditionaldisclosures,including:thefacttheentityisaninvestmententity;informationaboutsignificantjudgmentsandassumptionsithasmadeindeterminingthatitisaninvestmententity,andspecificallywheretheentitydoesnothaveoneormoreofthe"typicalcharacteristics"ofaninvestmententity;detailsofsubsidiariesthathavenotbeenconsolidated(name,placeofbusiness,ownershipinterestsheld);detailsoftherelationshipandcertaintransactionsbetweentheinvestmententityandthesubsidiary(e.
g.
restrictionsontransferoffunds,commitments,supportarrangements,contractualarrangements);andinformationwhereanentitybecomes,orceasestobe,aninvestmententity.
Accountingbyanon-investmententityparentforinvestmentsofaninvestmententitysubsidiaryTheconcernedentitymightbeaninvestmententitybutitsparentmightnotbeaninvestmententity.
Anon-investmententityparentisrequiredtoconsolidatelinebylineallentitiesitcontrolsincludingthosecontrolledthroughaninvestmententity.
ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP117SubjectIFRSLuxGAAPInvestmentsinassociatesScopeandstandardTheapplicablestandardisIAS28-InvestmentsinAssociates.
VenturecapitalorganisationsandmutualfundsareexemptedtoapplyIAS28fortheinvestmentsinassociatesandcandesignatethoseinvestmentsatfairvaluethroughprofitorlossinaccordancewithIAS39-FinancialInstruments:RecognitionandMeasurement(refertosection"Financialassets").
Investmentsinassociatesarecoveredbyarticle336*.
DefinitionsAnassociateisanentityoverwhichtheinvestorhassignificantinfluence-thatis,thepowertoparticipatein,butnotcontrolorjointlycontrol,anassociate'sfinancialandoperatingpolicies.
Participationbyaninvestorintheentity'sfinancialandoperatingpoliciesviarepresentationontheentity'sBoarddemonstratessignificantinfluence.
A20%ormoreinterestbyaninvestorinanentity'svotingrightsleadstoapresumptionofsignificantinfluence.
SimilartoIFRS.
CostmodelNotpermittedexceptinseparatefinancialstatements.
Notpermittedexceptinseparatefinancialstatements.
EquitymethodInitialrecognitionisatcost.
CostisnotdefinedinIAS28.
Inotherstandards,itisdefinedasincludingtransactioncosts,exceptinIFRS3-BusinessCombinationswhichrequirestransactioncostsinabusinesscombinationtobeexpensed.
Entitieshavethereforeapolicychoice:toexpensetransactionscostsortoincludetheminthecostofinvestment.
Onacquisitionoftheinvestment,theacquireraccountsforthedifferencebetweencostofinvestmentandtheinvestor'sshareofthenetassetatfairvalueasgoodwill.
Thegoodwillisincludedinthecarryingamountoftheinvestment.
Initialrecognitionisatpurchasepriceoratthenetequityoftheassociate.
Thepurchasepriceshallbecalculatedbyaddingtothepricepaidtheexpensesincidentalthereto.
Ifthepurchasepriceisused,thedifferencebetweenthatvalueandtheamountcorrespondingtotheproportionofcapitalandreservesrepresentedbytheparticipatinginterestshallbedisclosedseparatelyinthenotestotheconsolidatedaccounts.
Thatdifferenceshallbecalculatedasatthedateasatwhichthatmethodisusedforthefirsttime.
Consolidationsandbusinesscombinations118PwCLuxembourgSubjectIFRSLuxGAAPInvestmentsinassociatesSubsequently,theinvestorremeasuresitsinvestmentintheassociateaddingtothecost:theshareofpost-transactionprofitsandlossesthroughthestatementofcomprehensiveincome;theshareofchargeintheassociate'sequitythroughequity;andtheshareoftheassociate'sothercomprehensiveincomethroughothercomprehensiveincome.
Theamountof(dividend)distributionreceivedfromtheassociateisaccountedforasadecreaseinthevalueoftheinvestmentintheassociateonthebalancesheet.
Lossesthatreducetheinvestmenttobelowzeroareappliedagainstanylong-termintereststhat,insubstance,formpartoftheinvestor'snetinvestmentintheassociate–forexample,preferencesharesandlong-termreceivablesandloans.
Lossesrecognisedinexcessoftheinvestor'sinvestmentinordinarysharesappliedtotheothercomponentsinreverseorderofpriorityinawindingup.
Furtherlossesareprovidedforasaliabilityonlytotheextentthattheinvestorhasincurredlegalorconstructiveobligationstomakepaymentsonbehalfoftheassociate.
Forsubsequentmeasurement,thebookvalueortheamountcorrespondingtotheproportionoftheassociatedundertaking'scapitalandreservesshallbeincreasedorreducedbytheamountofanyvariationwhichhastakenplaceduringthefinancialyearintheproportionoftheassociatedundertaking'scapitalandreservesrepresentedbythatparticipatinginterest;itshallbereducedbytheamountofthedividendsrelatingtotheparticipatinginterest.
Moreover,theAccountingLawrequiresthedisclosureofgoodwillseparatelyinthenotestotheconsolidatedaccounts.
Informationaboutthenameandproportionoftheinterestintheassociatemustbepresentedinthenotestotheconsolidatedaccounts.
Ifthenetequitymethodisused,thedifferencebetweentheamountcorrespondingtotheproportionoftheassociatedundertaking'scapitalandreservesrepresentedbytheparticipatinginterestandthebookvalueshallbedisclosedseparatelyintheconsolidatedbalancesheetorinthenotestotheconsolidatedaccounts.
Thatdifferenceshallbecalculatedasatthedateatwhichthatmethodisusedforthefirsttime.
ImpairmentIftheinvestorhasobjectiveevidenceofoneoftheindicatorsofimpairmentsetoutinIAS39-FinancialInstruments:RecognitionandMeasurement–forexample,significantfinancialdifficulty–theinvestmentistestedforimpairmentasprescribedunderIAS36-ImpairmentofAssets.
Theentirecarryingamountoftheinvestmentistestedbycomparingitsrecoverableamount(higherofvalueinuseandfairvaluelesscoststosell)withitscarryingamount.
Intheestimationoffuturecashflowsforvalueinuse,theinvestormayuseeitheritsshareoffuturenetcashflowsexpectedtobegeneratedbytheinvestment(includingthecashflowsfromitsoperations)togetherwiththeproceedsonultimatedisposaloftheinvestmentorthecashflowsexpectedtoarisefromdividendstobereceivedfromtheassociatetogetherwiththeproceedsonultimatedisposaloftheinvestment.
NotrequiredinLuxGAAP.
ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP119SubjectIFRS(IAS31)IFRS(IFRS11)LuxGAAPInvestmentsinjointarrangementsScopeandstandardTheapplicablestandardisIAS31-InterestsinJointVentures.
VenturecapitalorganisationsandmutualfundsareexemptedtoapplyIAS31fortheinvestmentsinjointventuresandcandesignatethoseinvestmentsatfairvaluethroughprofitorlossinaccordancewithIAS39-FinancialInstruments:RecognitionandMeasurement(refertosection"Financialassets").
TheapplicablestandardisIFRS11-JointArrangements.
TheBoarddecidedtomaintaintheoptionthatpermitsventurecapitalorganisationsandmutualfundstomeasuretheirinterestsinjointventuresatfairvaluethroughprofitorlossinaccordancewithIFRS9-FinancialInstruments,butclarifiedthatthisisanexemptionfromtherequirementtomeasureinterestsinjointventuresusingtheequitymethod,ratherthananexceptiontothescopeofIFRS11forjointventuresinwhichtheseentitieshaveinterests.
Jointlycontrolledundertakingsarecoveredbyarticle335*.
DefinitionsAjointventureisdefinedasacontractualarrangementwherebytwoormoreparties(theventurers)undertakeaneconomicactivitythatissubjecttojointcontrol.
Jointcontrolisthecontractuallyagreedsharingofcontroloveraneconomicactivity;itexistsonlywhenthestrategicfinancialandoperatingdecisionsrelatingtotheactivityrequiretheunanimousconsentofthepartiessharingthecontrol.
Ajointarrangementisdefinedasanarrangementofwhichtwoormorepartieshavejointcontrol.
Alljointarrangementshaveacontractualarrangementthat:bindstheparties;andprovidestwoormoreofthosepartieswithjointcontrolofthearrangement.
Jointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequiretheunanimousconsentofthepartiessharingthecontrol.
Thecontractualarrangementisusuallyestablishedinwritingintheformofacontractbetweentheparties;itcanalsotaketheformofadocumenteddiscussion,althoughthisisunusual.
ThereisnodefinitionintheCommercialLaw.
Jointlycontrolledundertakingisanundertakingwherebytwoormorepartiesjointlycontroltheundertaking.
Consolidationsandbusinesscombinations120PwCLuxembourgSubjectIFRS(IAS31)IFRS(IFRS11)LuxGAAPInvestmentsinjointarrangementsJointcontrolcanalsobeestablishedthroughlocallegislation,otherstatutorymechanismsoraspartofthegoverningrulesoftheentity,eitherindividuallyorinconjunctionwithothercontractualagreementsbetweentheparties.
Jointcontrolisakeydefinitionunderthestandard.
Itisdefinedasthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequiretheunanimousconsentofthepartiessharingthecontrol.
Jointcontrolandcontrolaremutuallyexclusive.
Atleasttwopartiesmusthavejointcontrol,andthismustbeacontractuallyagreedsharingofcontrolrequiringunanimousconsentoveractivitiesthatsignificantlyaffectreturnsofarrangement.
Typesofjointventures(IAS31)/jointarrangements(IFRS11)IAS31distinguishesbetweenthreetypesofjointventures:jointlycontrolledentities–thearrangementiscarriedonthroughaseparateentity(companyorpartnership);jointlycontrolledoperations–eachventurerusesitsownassetsforaspecificproject;andjointlycontrolledassets–aprojectiscarriedonwithassetsthatarejointlyowned.
Thestandarddistinguishesbetweentwotypesofjointarrangements:jointoperations;andjointventures.
Jointoperationisajointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverightstotheassetsandobligationsfortheliabilitiesrelatingtothearrangement.
Jointventureisajointarrangementwherebythepartiesthatjointcontrolofthearrangementhaverightstothenetassetsofthearrangement.
Forexample,thecontractualarrangementonlygivesthepartiesrightstoashareofthenetoutcomegeneratedbytheeconomicactivity.
Thedistinctionbetweenthetwotypesofarrangementsisnotdrivenbythelegalform.
NodistinctionismadeintheCompanyLaw.
ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP121SubjectIFRS(IAS31)IFRS(IFRS11)LuxGAAPInvestmentsinjointarrangementsAccountingforjointlycontrolledentities(IAS31)/forjointventures(IFRS11)Aventureshallaccountforallofitsinterestsinjointlycontrolledentitiesusingoneofthefollowing:proportionateconsolidationmethod;orequitymethod.
Proportionateconsolidationrequirestheventurer'sshareoftheassets,liabilities,incomeandexpensestobecombinedonalinebylinebasiswithsimilaritemsintheventurer'sfinancialstatements,orreportedasaseparatelineitemintheventurer'sfinancialstatements.
Gainsandlossesoncontributionorsalesofassetstoajointventurebyaventurerarerecognisedtothesameextentasthatoftheinterestsoftheotherventurersprovidedtheassetsareretainedbythejointventureandsignificantrisksandrewardsofownershipofthecontributedassetshavebeentransferred.
Theventurerecognisesthefullamountofanylosswhenthereisevidenceofimpairmentlossfromthecontributionorsale.
Inconsolidatedfinancialstatements,jointventuresareaccountedforinaccordancewiththeequitymethod(refertosection"Investmentsinassociates").
Ajointlycontrolledentitycanbeeitherproportionallyconsolidatedorequityaccountedintheconsolidatedaccounts.
AccountingforjointoperationsRequirementsaresimilartojointlycontrolledentitieswithoutanincorporatedstructure.
Aventurerrecognisesinitsfinancialstatements:theassetsthatitcontrols;theliabilitiesitincurs;theexpensesitincurs;anditsshareofincomefromthesaleofgoodsorservicesbythejointventure.
Jointoperatorsrecognisetheirinterestinthedirectrightsandobligationsofthearrangement,andtheirshareofthoseassets,liabilitiesandtransactionsincurredjointly.
NotspecifiedintheCompanyLaw.
IFRScanbeusedasabenchmark.
Accountingforjointlycontrolledassets(IAS31)Aventureraccountsforitsshareofthejointlycontrolledassetsandanyliabilitiesithasincurred.
Notapplicable.
NotspecifiedintheCompanyLaw.
IFRScanbeusedasabenchmark.
Consolidationsandbusinesscombinations122PwCLuxembourgSubjectIFRS(IAS31)IFRS(IFRS11)LuxGAAPInvestmentsinjointarrangementsDisclosuresThefollowingdisclosuresarerequiredbyIAS27-ConsolidatedandSeparateFinancialStatementstobegiveninthegroup'sconsolidatedfinancialstatements:thenatureoftherelationshipbetweenaparentanditssubsidiarywhentheparentdoesnotown,directlyorindirectlythroughsubsidiaries,morethan50%ofthesubsidiary'svotingpower;inasituationwhereaparentanditssubsidiariesown,directlyorindirectlymorethan50%ofthevotingorpotentialvotingpowerofaninvesteeanddoesnotconsolidatetheentity,whythatdoesnotconstitutecontrol;asupplementalschedulethatshowstheeffectsthattransactionswiththenon-controllinginterestshaveontheequityattributabletotheparentforeachperiodthatanincomestatementispresented;ifanentitylosescontrolofasubsidiary,itshoulddisclosethetotalamountofgainorlossrecognisedthroughsaleorthroughothermeans.
Ifcontrolislost,butthereisaretainedinvestment,theentityshoulddisclosetheamountofgainorlossrelatedtothefairvalueremeasurementofthatretainednon-controllingequityinvestmentintheformersubsidiaryseparatelyfromthetotalgainorlossrecognised.
Entitiesmustalsodisclosethelineiteminthestatementofcomprehensiveincomewherethegainorlossisrecognised.
ThefollowingdisclosuresarerequiredbyIAS28-InvestmentsinAssociatesregardinganassociate:thefairvalueofinvestmentsinassociatesforwhichtherearepublishedpricequotations;summarisedfinancialinformationofassociates,includingtheaggregatedamountsofassets,liabilities,revenuesandprofitorloss;IFRS12-DisclosureofInterestsinOtherEntitiesshallbeappliedbyanentitythathasaninterestinanyofthefollowing:subsidiaries;jointarrangements(i.
e.
jointoperationsorjointventures);associates;andunconsolidatedstructuredentities.
IFRS12doesnotapplyto:post-employmentbenefitplansorotherlong-termemployeebenefitplans;anentity'sseparatefinancialstatements;however,ifanentitypreparesseparatefinancialstatementsasitsonlyfinancialstatements,itshallpresentdisclosuresrelatedtoitsinterestsinunconsolidatedstructuredentities;aninterestheldbyanentitythatparticipatesin,butdoesnothavejointcontrolof,ajointarrangementunlessthatinterestresultsinsignificantinfluenceoverthearrangementorisaninterestinastructuredentity.
Anentityshoulddisclosethefollowing:significantjudgmentsandassumptionsithasmadeindeterminingthenatureofitsinterestinanotherentityorarrangement;andinformationaboutitsinterestsinsubsidiariesandunconsolidatedstructuredentities.
Inparticular,anentityshoulddisclosesignificantjudgmentsandassumptionsmadeindeterminingthat:itholdsmorethanhalfofthevotingrightsofanotherentitywhereitdoesnothavecontrol;itholdslessthanhalfofthevotingrightsofanotherentitywhereithascontrol;anditisanagentoraprincipal.
Regardinginterestinsubsidiaries,itshallbedisclosed:thegroup'scomposition;Inadditiontothedisclosuresrequiredforthestand-aloneaccounts,thefollowingadditionaldisclosuresarerequiredbytheCommercialLaw:thenamesandregisteredofficesoftheundertakingsincludedintheconsolidation,aswellasthoseexcludedfromtheconsolidation;theproportionofthecapitalandthepourcentageofthevotingrightsheldinundertakingsincludedintheconsolidation,aswellasthoseexcludedfromtheconsolidation;thenamesandregisteredofficesofundertakingsnotincludedintheconsolidationinwhichanundertakingincludedintheconsolidationexercisesasignificantinfluenceandtheproportionoftheircapitalheldbyundertakingsincludedintheconsolidation;thenamesandregisteredofficesofundertakingsproportionallyconsolidated,thefactorsonwhichjointarrangementisbasedandtheproportionoftheircapitalheldbyundertakingsincludedintheconsolidation;andthenameandregisteredofficeofeachoftheundertakingsinwhichundertakingsincludedintheconsolidationholdatleast20%ofthecapital,showingtheproportionofthecapitalheld,theamountofthecapitalandreserves,andtheprofitandlossforthelatestfinancialyearoftheundertakingsconcerned.
Thisinformationmaybeomittedwhereitisofnegligibleimportancewithrespecttothetrueandfairview.
Theinformationconcerningcapitalandreservesandtheprofitandlossmayalsobeomittedwheretheundertakingconcerneddoesnotpublishitsbalancesheetandwherelessthan50%ofitscapitalisheldbytheundertakingsincludedintheconsolidation.
ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP123SubjectIFRS(IAS31)IFRS(IFRS11)LuxGAAPInvestmentsinjointarrangementsthereasonswhythepresumptionthataninvestordoesnothavesignificantinfluenceisovercomeiftheinvestorholds,directlyorindirectlythroughsubsidiaries,lessthan20percentofthevotingorpotentialvotingpoweroftheinvesteebutconcludesthatithassignificantinfluence;thereasonswhythepresumptionthataninvestorhassignificantinfluenceisovercomeiftheinvestorholds,directlyorindirectlythroughsubsidiaries,20percentormoreofthevotingorpotentialvotingpoweroftheinvesteebutconcludesthatitdoesnothavesignificantinfluence;andsummarisedfinancialinformationofassociates,eitherindividuallyoringroups,thatarenotaccountedforusingtheequitymethod,includingtheamountsoftotalassets,totalliabilities,revenuesandprofitorloss.
IAS31-InterestsinJointVenturerequiresthataventurershalldisclosetheaggregateamountofthefollowingcontingentliabilities,unlesstheprobabilityoflossisremote,separatelyfromtheamountofothercontingentliabilities:anycontingentliabilitiesthattheventurerhasincurredinrelationtoitsinterestsinjointventuresanditsshareineachofthecontingentliabilitieswhichhavebeenincurredjointlywithotherventurers;itsshareofthecontingentliabilitiesofthejointventuresthemselvesforwhichitiscontingentlyliable;andthosecontingentliabilitiesthatarisebecausetheventureriscontingentlyliablefortheliabilitiesoftheotherventurersofajointventure.
theinterestthatnon-controllinginterestshaveinthegroup'sactivitiesandcashflows;thenatureandextentofsignificantrestrictionsonitsabilitytoaccessoruseassets,andsettleliabilities,ofthegroup;thenatureof,andchangesin,therisksassociatedwithitsinterestsinconsolidatedstructuredentities;theconsequencesofchangesinitsownershipinterestinasubsidiarythatdonotresultinalossofcontrol;andtheconsequencesoflosingcontrolofasubsidiaryduringthereportingperiod.
IFRS12requiresthefollowingadditionaldisclosuresforeachofanentity'ssubsidiariesthathavematerialnon-controllinginterests:thesubsidiary'sname;itsprincipalplaceofbusiness(andcountryofincorporationifdifferent);theproportionofownershipinterestsheldbynon-controllinginterests;theproportionofvotingrightsheldbynon-controllinginterests,ifdifferentfromtheproportionofownershipinterestsheld;theprofitorlossallocatedtonon-controllinginterestsofthesubsidiaryduringthereportingperiod;theaccumulatednon-controllinginterestsofthesubsidiaryattheendofthereportingperiod;andsummarisedfinancialinformationaboutthesubsidiary.
Theabovementioneddisclosuresmaybeomittedwhentheirnatureissuchthattheywouldbeseriouslyprejudicialtoanyoftheundertakingsconcernedbytheseprovisions.
Anysuchomissionmustbedisclosedinthenotestotheaccounts.
Whentheparentcompanyusethederogationtodrawupitsconsolidatedaccountsatananotherdatethantheoneusedtodrawupitsannualaccounts,theuseofthisderogationshallbedisclosedinthenotestotheconsolidatedaccountstogetherwiththereasonsthereof.
Inaddition,accountmustbetakenordisclosuremadeofimportanteventsconcerningtheassetsandliabilities,thefinancialpositionortheprofitandlossofanundertakingincludedinaconsolidationwhichhaveoccurredbetweentheundertaking'sbalancesheetdateandtheconsolidatedbalancesheetdate.
AssetsandliabilitiesincludedintheconsolidatedaccountsshallbevaluedaccordingtouniformmethodsandinaccordancewiththevaluationrulesasdefinedintheAccountingLaw.
Theparentcompanywhichdrawsupconsolidatedaccountsmustapplythesamemethodsofvaluationasinitsannualaccounts.
However,othermethodsofvaluationcomplyingwiththevaluationrulesdefinedintheAccountingLawmaybeused.
Whereuseismadeofthisderogation,thefactshallbedisclosedinthenotestotheconsolidatedaccountstogetherwiththereasonsthereof.
Consolidationsandbusinesscombinations124PwCLuxembourgSubjectIFRS(IAS31)IFRS(IFRS11)LuxGAAPInvestmentsinjointarrangementsAventurershalldisclosetheaggregateamountofthefollowingcommitmentsinrespectofitsinterestsinjointventuresseparatelyfromothercommitments:anycapitalcommitmentsoftheventurerinrelationtoitsinterestsinjointventuresanditsshareinthecapitalcommitmentsthathavebeenincurredjointlywithotherventurers;itsshareofthecapitalcommitmentsofthejointventuresthemselves.
BothIAS27andIAS28arerequiringthefollowingdisclosures:thesubsidiary's/theassociate'sreportingdatewhereitsfinancialstatementsusedintheconsolidation/inapplyingequitymethodarenon-coterminouswiththoseoftheparent/investororareforadifferentreportingperiod,andthereasonforusingadifferentreportingdateorperiod;andthenatureandextentofanysignificantrestrictions(forexample,thatresultfromborrowingarrangementsorregulatoryrequirements)onthesubsidiary's/associate'sabilitytotransferfundstoitsparent/investorintheformofcashdividendsortorepayloansoradvances.
IAS28andIAS31donotapplytotheaccountingforassociatesandrespectivelytotheinvestmentsinjointlycontrolledentitiesheldbyventurecapitalorganisationsormutualfunds,unittrustsandsimilarentitiesincludinginvestmentlinkedinsurancefundswhentheentitiesusethefairvalueoptioninIAS39-FinancialInstrumentsRecognitionandMeasurementtoaccountfortheirinterestsinjointlycontrolledentities.
However,thedisclosurerequirementsmentionedabovearerequiredinadditiontothedisclosurerequirementsofIFRS7-FinancialInstruments:Disclosures.
InaccordancewithIFRS10-ConsolidatedFinancialStatements,aninvestmententityisrequiredtoapplytheexceptiontoconsolidationandinsteadaccountforitsinvestmentinasubsidiaryatfairvaluethroughprofitorloss.
Anentityshalldiscloseinformationthatenablesusersofitsfinancialstatementstoevaluate:thenature,extentandfinancialeffectsofitsinterestsinjointarrangementsandassociates,includingthenatureandeffectsofitscontractualrelationshipwiththeotherinvestorswithjointcontrolof,orsignificantinfluenceover,jointarrangementsandassociates;andthenatureof,andchangesin,therisksassociatedwithitsinterestsinjointventuresandassociates.
Anentityshalldiscloseinformationthatenablesusersofitsfinancialstatementsto:understandthenatureandextentofitsinterestsinunconsolidatedstructuredentities;andevaluatethenatureof,andchangesin,therisksassociatedwithitsinterestsinunconsolidatedstructuredentities.
Whereassetsandliabilitiesincludedinconsolidatedaccountshavebeenvaluedbyundertakingsbymethodsdifferingfromthoseusedfortheconsolidation,theymustberevaluedinaccordancewiththemethodsusedfortheconsolidation,unlesstheresultsofsuchrevaluationarenotmaterialforthepurposesofthetrueandfairview.
Departuresfromthisprincipleshallbepermittedinexceptionalcases.
Suchdeparturesshallbedisclosedinthenotestotheconsolidatedaccountstogetherwiththereasonstherefor.
ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP125SubjectIFRSLuxGAAPBusinesscombinationsScopeandstandardTheapplicablestandardisIFRS3-BusinessCombinations.
Combinationsincludingentitiesorbusinessesundercommoncontrolorformationofajointventureareexcludedfromthescope.
NotspecifiedintheAccountingLaw.
DefinitionsAbusinessisdefinedasanintegratedsetofactivitiesandassetsthatiscapableofbeingconductedandmanagedforthepurposeofprovidingareturnintheformofdividends,lowercosts,increasedsharepricesorothereconomicbenefitstoinvestors.
Abusinessgenerallyconsistsofinputs,processesappliedtothoseinputs,andresultingoutputsthatare,orwillbe,usedtogeneraterevenues.
Ifgoodwillispresentinatransferredsetofactivitiesandassets,thetransferredsetispresumedtobeabusiness.
Ifagroupofacquiredassetsisnotaccompaniedbyanyassociatedprocessesandoutputs,theacquiredgroupisnotabusinessandshallberecognisedasagroupofassets.
NotdefinedassuchintheAccountingLaw.
AcquisitiondateTheacquisitiondatecorrespondstothedateatwhichtheacquirerobtainscontrolovertheacquiree.
Notspecified.
IFRSmaybeusedasabenchmark.
Inpractice,theacquisitiondatecorrespondstothedateofexercisingcontroltogetherwithatransferofownership.
IdentificationoftheacquirerAllbusinesscombinationswithinthescopeofIFRS3areaccountedforasacquisitionsandpurchasemethodofaccountingapplies.
Theacquireristhecombiningentitythatobtainscontroloftheacquiree.
GuidanceinIAS27-ConsolidatedandSeparateFinancialStatementsshallbeused.
Insomebusinesscombinations,theacquireristheentitywhoseentityinterestshavebeenacquired,andtheissuingentityistheacquiree(reverseacquisitions).
Inreverseacquisitions,consolidatedfinancialstatementsareissuedunderthenameofthelegalparentbutdescribedinthenotesasacontinuationofthelegalsubsidiary'sfinancialstatements.
NotspecifiedintheAccountingLaw.
PurchaseaccountingThefairvalueofacquiredassetsandliabilities(withsomeexceptions)iscomparedtothefairvalueoftheconsiderationtodeterminegoodwill.
IFRS3definesnegativegoodwillasbargainpurchase.
Inaddition,thestep-basedaccountingforabusinesscombinationincludesanadditionalstepthatconsistsofreamesuringthepreviouslyheldequityinterestintheacquireeatitsfairvalueattheacquisitiondate.
Gainsorlossesarerecordedinprofitorloss.
Thefairvalueofacquiredassetsandliabilitiesiscomparedtothefairvalueoftheconsiderationtodeterminegoodwill.
Thiscomparisonisdoneatthetimeofthefirstconsolidation.
Inthiscase,thedifferencebetweenconsiderationpaidandthebalancesheetitemsisallocatedtotheextentpossible.
Alternatively,thecomparisoncanbedoneatthetimeofacquisitionofthesubsidiaryusingthefairvalueoftheassetsandliabilitiesatthattime.
Theremainingdifferenceisthegoodwill.
Consolidationsandbusinesscombinations126PwCLuxembourgSubjectIFRSLuxGAAPBusinesscombinationsConsiderationtransferredConsiderationtransferredisthesumoftheacquisitiondatefairvaluesoftheassetstransferred,theliabilitiesincurredbytheacquirertotheformerownersoftheacquireeandtheequityinterestsissuedbytheacquirertotheformerowners.
Itshallincludeallformsofconsideration(transferred)suchascash,otherassets,businessorsubsidiariesoftheacquirer,deferredandcontingentconsiderations,equityinstruments,options,warrantsandreplacementshare-basedawards.
IFRS3listssomeelementsthatshallbeexcludedfromtheconsiderationtransferred,suchaspaymentsmadeatthetimeofacquisitionfortransactioncostsandcoststoissuedebtorequity,settlementofpre-existingrelationships(exceptforthecasedescribedbelow),remunerationforfutureemployeeservicesortransactionsforpayingtheacquirer'sacquisitionincosts.
Theseelementsshallbeexpensedasincurred.
NotspecificallyaddressedbytheAccountingLaw.
Inpractice,transactioncostsareincludedintheacquisitioncostsothattheymayberecognisedaspartoftheinitialgoodwill.
ThereisnoguidanceoncontingentconsiderationorotherconsiderationtransferredsothatIFRStreatmentmaybeusedasabenchmark.
RecognitionandmeasurementofidentifiableassetsandliabilitiesacquiredIFRSrequiresseparaterecognition,bytheacquirer,oftheacquiree'sidentifiableassets,liabilitiesandcontingentliabilitiesthatexistedatthedateofacquisition.
Theseassetsandliabilitiesarerecognisedatfairvalueatthedateofacquisition.
Specificcriteriaapplytotherecognitionofintangibleassetsandrestructuringprovisions.
Someexceptionstotheserecognitionandmeasurementrulesalsoapplytocontingentliabilities(recognisedatfairvaluealthoughnotmeetingallrecognitioncriteriaforliabilities),incometaxes(measuredinaccordancewithIAS12-IncomeTaxes),employeebenefits(measuredinaccordancewithIAS19-EmployeeBenefits),indemnificationassets(recognisedbytheacquireratthesametimeandonthesamebasisastheindemnifieditemisrecognisedasaliabilityoftheacquiree),re-acquiredrightspreviouslygrantedtotheacquireetouseanassetsuchasfranchiseagreements(measuredbasedonmarketratesandconditionsattheacquisitiondate),share-basedpaymentawardsoftheacquiree(measuredinaccordancewithIFRS2-Share-basedPayment)andassetsheldforsale(measuredinaccordancewithIFRS5-Non-currentAssetsHeldforSaleandDiscontinuedOperations).
Contractsshouldbere-assessedforconditionsexistingatacquisitiondateexceptforinsuranceandleasesforwhichclassificationismadeonthebasisofthecontractualtermsandotherfactorsattheinceptionofthecontract.
NotspecifiedinLuxGAAP.
IFRScanbeusedasabenchmark.
ConsolidationsandbusinesscombinationsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP127SubjectIFRSLuxGAAPBusinesscombinationsRestructuringprovisionsTheacquirermayrecogniserestructuringprovisionsaspartoftheacquiredliabilitiesonlyiftheacquireehasattheacquisitiondateanexistingliabilityforarestructuringrecognisedinaccordancewiththeguidanceforprovisions.
Inaddition,IFRS3includesfurtherguidancethatarestructuringplanconditionalonthecompletionofthebusinesscombinationisnotrecognisedintheaccountingoftheacquisition.
Theseexpensesarerecognisedpost-acquisition.
IFRScanbeusedasabenchmark.
Non-controllinginterestsWhereaninvestoracquireslessthan100%ofasubsidiary,thenon-controllinginterestsinanacquireethatarepresentownershipinterestsandentitletheirholderstoaproportionateshareoftheentity'snetassetsintheeventofliquidationaremeasuredateitherfairvalueorattheproportionateshareinthenetidentifiableassetsoftheacquiree.
Whereaninvestoracquireslessthan100%ofacompany,theminorityinterestsinasubsidiarythatentitletheirholderstoaproportionateshareoftheentity'snetassetsintheeventofliquidationaremeasuredattheproportionateshareinthenetidentifiableassetsofthesubsidiary.
GoodwillGoodwillisrecognisedatcostandnotamortisedbutreviewedforimpairmentannually,andwhenindicatorsofimpairmentarise.
Goodwillcanbeeithertreatedasanintangibleassetandthenamortisedthroughprofitandlossordirectlydeductedfromthereserves.
Amortisationisoverfiveyearsunlessmanagementcanjustifyalongerusefullife.
ImpairmentAsstatedinthesection"Impairmentofnon-financialassets",theimpairmenttobebookedistheexcessofthecarryingamountoftherespectiveassetsoveritsrecoverableamount.
Therecoverableamountcannotbeestimatedindividuallyforthegoodwill;thereforeitshouldbeestimatedforgroupsofassetsthatgeneratecashflowsthatarelargelyindependentofeachother.
Thesearereferredtoascash-generatingunits("CGUs").
GoodwillacquiredinabusinesscombinationisallocatedtotheCGUsthatareexpectedtobenefitfromthesynergiesofthecombination.
IAS36-ImpairmentofAssetsincludescomprehensiveguidanceonhowtoallocategoodwillunderseveralcircumstances.
Goodwillistestedforimpairmentatthelowestlevelatwhichitismonitoredbymanagement.
CGUsmaybegroupedfortesting,butthegroupingcannotbehigherthananoperatingsegmentasdefinedinIFRS8-OperatingSegments(beforeaggregation).
Refertosection"Segmentreporting"fordetailsonoperatingsegment).
Inadditiontotheannualamortisation,goodwillisreviewedforimpairmentannually.
Negativegoodwill(gainorbargainpurchase)Ifanyexcessoffairvalueoverthepurchasepricearises,theacquirerreassessestheidentificationandmeasurementoftheacquiree'sidentifiableassets,liabilitiesandcontingentliabilitiesandthemeasurementofthecostofthecombination.
Anyexcessremainingafterreassessmentisrecognisedimmediatelyintheincomestatement.
Negativegoodwillisrecognisedintheprofitandlossaccountifitcorrespondstotheexpectationofunfavourablefutureresultsoftherelevantundertaking,tocoststhatcouldincurortoarealisedgain.
Otherwise,itisrecordedintheequity.
Consolidationsandbusinesscombinations128PwCLuxembourgSubjectIFRSLuxGAAPBusinesscombinationsSubsequentadjustmentstoassetsandliabilitiesAdjustmentsagainstgoodwilltotheprovisionalfairvaluesrecognisedatacquisitionarepermittedprovidedthoseadjustmentsaremadewithin12monthsoftheacquisitiondate.
Adjustmentsmadeafter12monthsarerecognisedintheincomestatement.
NoadjustmentforeseenbytheAccountingLaw.
Ifthepriceisadjusted,itisaccountedforasacorrectionoferror.
BusinesscombinationsachievedinstagesWhenabusinesscombinationisachievedinstages,theacquirerremeasuresitspreviouslyheldinterestsintheacquireeatitsfairvalueatthedatecontrolisobtained,recognisingaresultinggainorlossinprofitorloss.
Thepriorinterestheldisdeemedtobepartoftheconsiderationpaidinexchangeforthecontrollinginterest.
Whentheacquisitionisdoneintwoormorestages,theset-offbetweentheacquisitionpriceandtheproportionofcapitalandreservesacquiredisdoneatthedateonwhichtheundertakingbecomesasubsidiary.
DisclosureIFRS3requiresextensivedisclosuresaboutbusinesscombinationseffectedduringaperiod.
Themaindisclosuresare:namesanddescriptionsoftheacquirees;theacquisitiondate;thepercentageofvotingequityinstrumentsacquired;theprimaryreasonsforthebusinesscombinationandadescriptionofhowtheacquirerobtainedcontroloftheacquire;thequalitativedescriptionsofthefactorscomprisinggoodwill;andthetotalamountofgoodwillexpectedtobetaxdeductible.
Foreachbusinesscombinationoftheperiod(orinaggregateforbusinesscombinationsthatareindividuallyimmaterialbutcollectivelymaterial),themaindisclosuresare:grossamountofgoodwillandaccumulatedimpairmentlossesatthebeginningoftheperiod;additionalgoodwillrecognisedduringtheperiod;goodwillincludedinadisposalgroupclassifiedasheldforsaleinaccordancewithIFRS5-Non-currentAssetsHeldforSaleandDiscontinuedOperations;goodwillderecognisedduringtheperiod;impairmentlossesrecognisedduringtheperiod;netexchangedifference;anyotherchangesinthecarryingamount;andgrossamountofgoodwillandaccumulatedimpairmentattheendoftheperiod.
Nospecificdisclosurerequiredforacquisitionoftheyear.
Disclosureisrequirediftheinformationisrelevanttounderstandthefinancialsituationofthegroup.
ConsolidationsandbusinesscombinationsOtheraccountingandreportingtopicsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP129SubjectIFRSLuxGAAPFairvalueScopeandstandardThestandardapplicableisIFRS13-FairValueMeasurement.
TheguidanceinIFRS13doesnotapplytotransactionswithinthescopeofIFRS2-Share-basedPayment,orIAS17-Leases,ortocertainothermeasurementsthatarerequiredbyotherstandardsandaresimilarto,butarenot,fairvalue(forexample,valueinuseinIAS36-ImpairmentofAssets).
Fairvalueiscoveredbythearticles64bisto64septies.
DefinitionsFairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate(exitprice).
Thefairvalueofaliabilitythereforereflectsnon-performancerisk(thatis,owncreditrisk).
ThefairvalueisnotdefinedunderLuxGAAP.
Measurement–PrincipalormostadvantageousmarketAfairvaluemeasurementassumesthatthetransactiontoselltheassetortransfertheliabilitytakesplaceintheprincipalmarketfortheassetorliabilityor,intheabsenceofaprincipalmarket,inthemostadvantageousmarketfortheassetorliability.
Theprincipalmarketisthemarketwiththegreatestvolumeandlevelofactivityfortheassetorliabilitythatcanbeaccessedbytheentity.
Thefairvalueshallbedeterminedbyreferenceto:amarketvalue,forthosefinancialinstrumentsforwhichareliablemarketcanreadilybeidentified;whereamarketvalueisnotreadilyidentifiableforaninstrumentbutcanbeidentifiedforitscomponentsorforasimilarinstrument,themarketvaluemaybederivedfromthatofitscomponentsorofthesimilarinstrument;oravalueresultingfromgenerallyacceptedvaluationmodelsandtechniques,forthoseinstrumentsforwhichareliablemarketcannotbereadilyidentified;suchvaluationmodelsandtechniquesshallensureareasonableapproximationofthemarketvalue.
Measurement–MarketparticipantassumptionsFairvalueismeasuredusingthesameassumptionsandtakingintoaccountthesamecharacteristicsoftheassetorliabilityasmarketparticipantswould.
Fairvalueisamarket-based,notentity-specificmeasurement.
NotdefinedinLuxGAAP.
Measurement–HighestandbestuseFornon-financialassetsonly,fairvalueisdeterminedbasedonthehighestandbestuseoftheassetasdeterminedbymarketparticipants.
NotforseeninLuxGAAP.
Measurement–BidandaskpricesTheuseofbidpricesforassetpositionsandaskpricesforliabilitypositionsispermittedifthosepricesaremostrepresentativeoffairvalueinthecircumstances,butitisnotrequired.
NotforeseeninLuxGAAP.
IFRScanbeusedasabenchmark.
130PwCLuxembourgOtheraccountingandreportingtopicsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP131OtheraccountingandreportingtopicsSubjectIFRSLuxGAAPFairvalueMeasurement–FairvaluehierarchyFairvaluemeasurementsarecategorisedintoathreelevelhierarchy,basedonthetypeofinputstothevaluationtechniquesused,asfollows:level1inputsarequotedpricesinactivemarketsforitemsidenticaltotheassetorliabilitybeingmeasured.
ConsistentwithcurrentIFRS,ifthereisaquotedpriceinanactivemarket(thatis,alevel1input),anentityusesthatpricewithoutadjustmentwhenmeasuringfairvalue;level2inputsareotherobservableinputs;andlevel3inputsareunobservableinputs,butthatneverthelessmustbedevelopedtoreflecttheassumptionsthatmarketparticipantswouldusewhendetermininganappropriatepricefortheassetorliability.
Eachfairvaluemeasurementiscategorisedbasedonthelowestlevelinputthatissignificanttoit.
NofairvaluehierarchyunderLuxGAAP.
DisclosureTheguidanceincludesenhanceddisclosurerequirementsthatcouldresultinsignificantlymoreworkforreportingentities.
TheserequirementsaresimilartothoseinIFRS7-FinancialInstruments:Disclosures,butapplytoallassetsandliabilitiesmeasuredatfairvalue,notjustfinancialones.
Therequireddisclosuresinclude:informationaboutthehierarchylevelintowhichfairvaluemeasurementsfall;transfersbetweenlevels1and2;methodsandinputstothefairvaluemeasurementsandchangesinvaluationtechniques;andadditionaldisclosuresforlevel3measurementsthatincludeareconciliationofopeningandclosingbalances,quantitativeinformationaboutunobservableinputsandassumptionsused,adescriptionofthevaluationprocessesinplace,andqualitativediscussionaboutthesensitivityofrecurringlevel3measurements.
Wherevaluationatfairvalueoffinancialinstrumentshasbeenapplied,thenotestotheannualaccountsmustdisclosethefollowing:themainassumptionsinrelationtothemodelsandvaluationtechniquesused,inthecaseswherefairvaluewasdeterminedso;foreachcategoryoffinancialinstruments,thefairvalue,themovementsoffairvaluebookeddirectlyintheprofitandlossaccount,aswellasthemovementsonthefairvaluereserve;andatabledescribingthemovementsinthefairvaluereserveduringtheperiod.
ForthefinancialassetsthatarenotqualifyingforfairvalueaccordingtoLuxGAAPandthatapplyfairvaluebyreferencetoIFRS,IFRSdisclosurerequirementsrelatingtothevaluationoffinancialinstrumentsapply.
132PwCLuxembourgOtheraccountingandreportingtopicsRecentdevelopments–FairvalueunderIFRSIFRS13-FairValueMeasurementdefinesfairvalue,providesguidancerelatedtoitsmeasurementandliststhedisclosuresthatshallbeincludedinthefinancialstatementsinrelationtofairvalue.
ItisnotwithinthescopeofIFRS13tostatewhenitisrequiredforfairvaluetobeused.
Forthisinformation,usersshallrefertoeachrelevantstandard.
Forexample,regardingitemsofproperty,plantandequipmenttheusersshallrefertoIAS16-Property,PlantandEquipment,regardingfinancialinstrumentstheusersshallrefertoIAS39-FinancialInstruments:RecognitionandMeasurement.
Thesestandardsincludeinformationaboutwhenthefairvaluemayorshallbeusedinrelationtotherespectiveitems.
IFRS13iseffectivefrom1January2013,earlyapplicationispermittedandhasbeenendorsedbyEUinDecember2012.
IFRS13consolidatesfairvaluemeasurementguidancefromacrossvariousIFRSsintoasinglestandard(IAS16-Property,PlantandEquipment,IAS38-IntangibleAssets,IAS39-FinancialInstruments:RecognitionandMeasurement,IAS40-InvestmentProperty,IAS41-Agriculture,IFRS3-BusinessCombinations,IFRS5-Non-currentAssetsHeldforSaleandDiscontinuedOperations).
DisclosuresarecomprehensiveandincludetheonesrelatedtofairvaluehierarchycurrentlywithinIFRS7-FinancialInstruments:Disclosures.
Refertosection"Financialassets",sub-section"Disclosure".
Similaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP133SubjectIFRSLuxGAAPForeigncurrencytranslationScopeandstandardTheapplicablestandardisIAS21-TheEffectsofChangesinForeignExchangeRates.
TheAccountingLawdoesnotcoverexchangetranslationrules.
DefinitionsFunctionalcurrencyisdefinedasthecurrencyoftheprimaryeconomicenvironmentinwhichanentityoperates.
IFRSprovidesalistofprimaryandsecondaryindicatorstoconsiderwhendeterminingfunctionalcurrency.
Iftheindicatorsaremixedandthefunctionalcurrencyisnotobvious,managementshoulduseitsjudgementtodeterminethefunctionalcurrencythatmostfaithfullyrepresentstheeconomicresultsoftheentity'soperations.
Thisisdrivenbythecurrencyoftheeconomicthatdeterminesthepricingoftransactions(notthecurrencyinwhichtransactionsaredenominated)andthecurrencythatmostinfluenceslabour,material,andothercostsofprovidinggoodsandservices.
Additionalevidence(secondaryinpriority)maybeprovidedfromthecurrencyinwhichfundsfromfinancingactivitiesaregeneratedorreceiptsfromoperatingactivitiesareusuallyretained,aswellasthenatureofactivitiesandextentoftransactionsbetweentheforeignoperationandthereportingentity.
Thepresentationcurrencyisthecurrencyinwhichthefinancialstatementsarepresented.
FunctionalcurrencyisnotdefinedbytheAccountingLaw.
Presentationoffinancialstatements'currencyisgenerallyestablishedbasedonthecurrencyinwhichthesharecapitalisexpressed.
Anothercurrencycanbechosen.
ReportingforforeigncurrencytransactionsintothefunctionalcurrencyAforeigncurrencytransactionisexpressedinthefunctionalcurrencyusingtheexchangerateatthetransactiondate.
Foreigncurrencybalancesrepresentingcashoramountstobereceivedorpaidincash("monetaryitems")arereportedattheendofthereportingperiodusingtheexchangerateonthatdate.
Non-monetarybalancesthatarenotremeasuredatfairvalueandaredenominatedinaforeigncurrencyareexpressedinthefunctionalcurrencyusingtheexchangerateatthetransactiondate.
Whereanon-monetaryitemisremeasuredatfairvalueinthefinancialstatements,theexchangerateatthedatewhenfairvaluewasdeterminedisused.
Incomestatementamountsaretranslatedusinghistoricalratesofexchangeasatdateofthetransactionsorattheaverageratefortheperiodasapracticalalternative.
ThereisnoruledefinedintheAccountingLawforthetranslationofitemsdenominatedinforeigncurrency.
Translationoftransactionsdenominatedinforeigncurrencyisconvertedattheexchangerateprevailingonthedateofthetransaction.
Short-term/monetaryitemsaretranslatedattheclosingrate.
Realisedgainsandlossesarerecordedintheprofitandlossaccounttogetherwithunrealisedlosses.
Unrealisedgainsareeitherignoredorrecordedintheregularisationaccount.
Long-term/monetaryitemsremainatthehistoricalrate.
Non-monetary/long-termitemsatfairvaluearereportedusingtheexchangeratethatexistedwhenthefairvaluewasdetermined.
Thevariationofexchangerateisgenerallyrecordedwiththefairvalueadjustment.
Wherethereisaneconomiclinkbetweenanassetandaliability,thesecanbevaluedintotalaccordingtothemethoddescribedabove.
Otheraccountingandreportingtopics134PwCLuxembourgSubjectIFRSLuxGAAPForeigncurrencytranslationExchangegainsandlossesarisingfromanentity'sownforeigncurrencytransactionsarereportedaspartoftheprofitorlossfortheyear.
Whenagainorlossonanon-monetaryitemisrecogniseddirectlyinequity,anyexchangecomponentofthatgainorlossisrecogniseddirectlyinequity.
Anychangesinfairvaluethatarerecogniseddirectlyinequitythroughthestatementofchangesinequityalsoincludeanyrelatedforeignexchangeelement.
TranslationfromthefunctionalcurrencyintopresentationcurrencyAssetsandliabilitiesaretranslatedfromthefunctionalcurrencytothepresentationcurrencyattheclosingrateattheendofthereportingperiod.
Theincomestatementistranslatedatexchangeratesatthedatesofthetransactionsorattheaveragerateifthatapproximatestheactualrates.
Allresultingexchangedifferencesarerecognisedinothercomprehensiveincomeandaccumulateinacurrencytranslationreserveinanequity.
Theappropriateamountofcumulativetranslationdifferencerelatingtoaforeignoperationistransferredtotheincomestatementondisposalofaforeignoperationandincludedintheprofitorlossonsale.
Forapartialdisposal,theproportionateshareoftherelatedcumulativetranslationdifferenceisincludedinthegainorloss.
NotapplicableinLuxGAAP.
DisclosureAsperIAS21,anentityshalldisclose:theamountofexchangedifferencesrecognisedinprofitorlossexceptforthosearisingonfinancialinstrumentsmeasuredatfairvaluethroughprofitorlossinaccordancewithIAS39-FinancialInstruments:RecognitionandMeasurements;andnetexchangedifferencesrecognisedinothercomprehensiveincomeandaccumulatedinaseparatecomponentofequity,andareconciliationoftheamountofsuchexchangedifferencesatthebeginningandendoftheperiod.
Whenthepresentationcurrencyisdifferentfromthefunctionalcurrency,thatfactshallbestated,togetherwithdisclosureofthefunctionalcurrencyandthereasonforusingadifferentpresentationcurrency.
Whenthereisachangeinthefunctionalcurrencyofeitherthereportingentityorasignificantforeignoperation,thatfactandthereasonforthechangeinfunctionalcurrencyshallbedisclosed.
Theaccountingpolicyrelatingtoforeignexchangetranslationsshallbedisclosedinthenotestotheannualaccounts.
OtheraccountingandreportingtopicsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP135SubjectIFRSLuxGAAPEarningspershareScopeandstandardTheapplicablestandardisIAS33-EarningsPerShare("EPS").
Earningsattributabletoordinaryshareholdersarethereforedeterminedbydeductingfromnetincometheearningsattributabletoholdersofmoreseniorequityinstruments.
AnentitywhoseordinarysharesarelistedonarecognisedstockexchangeorareotherwisepubliclytradedisrequiredtodisclosebothbasicanddilutedEPSwithequalprominenceinitsseparateorindividualfinancialstatements,orinitsconsolidatedfinancialstatementsifitisaparent.
Furthermore,entitiesthatfileorareintheprocessoffilingfinancialstatementswithasecuritiescommissionorotherregulatorybodyforthepurposesofissuingordinaryshares(thatis,notaprivateplacement)arealsorequiredtocomplywithIAS33.
PresentationofearningspershareisnotrequiredbytheAccountingLaw.
DefinitionsEarningspershareisaratiothatiswidelyusedbyfinancialanalysts,investorsandotherstogaugeanentity'sprofitabilityandtovalueitsshares.
EPSisnormallycalculatedinthecontextofordinarysharesoftheentity.
Notapplicable.
BasicanddilutedEPSBasicEPSiscalculatedbydividingtheprofitorlossfortheperiodattributabletotheequityholdersoftheparentbytheweightedaveragenumberofordinarysharesoutstanding(includingadjustmentsforbonusandrightsissues).
Whereanentityissuesnewsharesbywayofabonusissueorstockdividendduringaperiod,theeffectistoincreaseonlythenumberofsharesoutstandingaftertheissue.
Thereisnoeffectonearningsasthereisnoflowoffundsasaresultoftheissue.
Consequently,thesharesshouldbetreatedasoutstandingasiftheissuehadoccurredatthebeginningoftheearliestperiodreported.
DilutedEPSiscalculatedbyadjustingtheprofitorlossandtheweightedaveragenumberofordinarysharesbytakingintoaccounttheconversionofanydilutivepotentialordinaryshares.
Potentialordinarysharesarethosefinancialinstrumentsandcontractsthatmayresultinissuingordinarysharessuchasconvertiblebondsandoptions(includingemployeeshareoptions).
PotentialordinarysharesshouldbeincludedinthecalculationofdilutedEPSfortheperiodinwhichtheywereoutstanding.
Notapplicable.
Otheraccountingandreportingtopics136PwCLuxembourgSubjectIFRSLuxGAAPEarningspershareDisclosureBasicanddilutedEPSforbothcontinuingandtotaloperationsarepresentedwithequalprominenceinthestatementofcomprehensiveincomeorintheseparateincomestatementwhereoneispresentedforeachclassofordinaryshares.
SeparateEPSfiguresfordiscontinuedoperationsaredisclosedinthesamestatementsorinthenotes.
Notapplicable.
OtheraccountingandreportingtopicsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP137SubjectIFRSLuxGAAPRelatedpartytransactionsScopeandstandardTheapplicablestandardisIAS24-RelatedPartyDisclosures.
Relatedpartytransactionsarecoveredbythefollowingarticles:65(1)7°,7bis°,12°,13°,14°.
DefinitionsRelatedpartyrelationshipsaregenerallydeterminedbyreferencetothecontrolorindirectcontrolofonepartybyanotherorbytheexistenceofjointcontrolorsignificantinfluencebyonepartyoveranother.
Relatedpartiesinclude:parents;subsidiaries;fellowsubsidiaries;associatesoftheentityandothermembersofthegroup;jointventuresoftheentityandothermembersofthegroup;membersofkeymanagementpersonneloftheentityorofaparentoftheentity(andclosemembersoftheirfamilies);personswithcontrol,jointcontrolorsignificantinfluenceovertheentity(andclosemembersoftheirfamilies);andpost-employmentbenefitplans.
Financeprovidersarenotrelatedpartiessimplybecauseoftheirnormaldealingswiththeentity.
RelatedpartiesaredefinedinLuxGAAPbyreferencetoIFRS.
DisclosureIAS24requiresentitiestodisclosetransactionswithrelatedparties.
Theobjectiveofthedisclosuresrequiredistoensurethatusersoffinancialstatementsaremadeawareoftheextenttowhichthefinancialpositionandresultsofoperationsmayhavebeeninfluencedbytheexistenceofrelatedparties.
Certaindisclosuresarealwaysrequired,regardlessofwhethertransactionsbetweenthepartieshavetakenplace.
Theseincludetheexistenceoftherelatedpartyrelationship,thenameoftherelatedpartyandthenameoftheultimatecontrollingparty.
TherearesomeexemptionsfromdisclosureavailableforcertainsubsidiariesandtransactionsunderIFRS.
Managementdisclosesthenameoftheentity'sparentand,ifdifferent,theultimatecontrollingparty(whichcouldbeaperson).
Relationshipsbetweenaparentanditssubsidiariesaredisclosedirrespectiveofwhethertherehavebeentransactionswiththem.
Disclosuresonrelatedpartiesarelimitedtothesignificanttransactionsnotconcludedundernormalconditionsandtocertaintransactionswithmanagementandsupervisorybodies.
Transactionsbetweengroupmembersheldentirelyareoutofscopeforthedisclosurerequirements.
Possiblemodificationcontemplatedbydraftbilln°6376:exemptionextendedtomedium-sizednon-listedentitiesnotorganisedasanS.
A.
Allentitiesexceptsmall-sizednon-listedentities(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")notorganisedasanS.
A.
shalldisclose:thenatureofthetransaction;thenatureoftherelation;theamountofthetransaction;andallotherinformationneededtobetterassessthefinancialsituationofthecompany.
Otheraccountingandreportingtopics138PwCLuxembourgSubjectIFRSLuxGAAPRelatedpartytransactionsDisclosureWheretherehavebeenrelatedpartytransactionsduringtheperiod,managementdisclosesthenatureoftherelationshipandinformationaboutthetransactionsandoutstandingbalancesincludingcommitmentsnecessaryforuserstounderstandthepotentialimpactoftherelationshiponthefinancialstatements.
Disclosureismadebycategoryofrelatedpartyandbymajortypeoftransaction.
Itemsofasimilarnaturemaybedisclosedinaggregate,exceptwhenseparatedisclosureisnecessaryforanunderstandingoftheeffectsofrelatedpartytransactionsontheentity'sfinancialstatements.
Managementonlydisclosesthatrelatedpartytransactionsweremadeontermsequivalenttothosethatprevailinarm'slengthtransactionsifsuchtermscanbesubstantiated.
Anentityisexemptfromthedisclosureoftransactions(andoutstandingbalances)witharelatedpartythatiseitheragovernmentthathascontrol,jointcontrolorsignificantinfluenceovertheentity,orisanotherentitythatisunderthecontrol,jointcontrolorsignificantinfluenceofthesamegovernmentastheentity.
Wheretheentityappliestheexemption,itdisclosesthenameofthegovernmentandthenatureofitsrelationshipwiththeentity.
Italsodisclosesthenatureandamountofeachindividuallysignificanttransactionandthequalitativeorquantitativeextentofanycollectivelysignificanttransactions.
Moreover,disclosureonthefollowingrelatedpartiesshallalsobedisclosed:receivables/payablesfrom/tosubsidiariesandassociates;incomeandexpensesfromsubsidiariesandassociates;financialcommitments;andamountoftheemoluments,advancesandloansgrantedtomanagementpersonnelandcommitmentsarisingorenteredintoinrespectofretirementpensionsforformermembersofthemanagement,aswellasindicationofinterestrates,mainconditionsandtheamountswhichmayhavebeenrepaid,aswellthecommitmentsenteredintoontheirbehalfbywayofguaranteesofanykind(givenasatotalforeachcategory).
OtheraccountingandreportingtopicsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP139SubjectIFRSLuxGAAPSegmentreportingScopeandstandardTheapplicablestandardisIFRS8-OperatingSegments.
Thestandardismandatoryonlyforentitieswhoseequityordebtinstrumentsarepubliclytraded(orthatareintheprocessofissuingequityordebtinstrumentsinapublicmarket).
IFRS8alignstheidentificationandreportingofoperatingsegmentswithinternalmanagementreporting.
SegmentreportingunderIFRS8shouldhighlighttheinformationandmeasuresthatmanagementbelievesareimportantandareusedtomakekeydecisions.
Itshouldalsoprovideabetterlinkbetweenthefinancialstatementsandtheinformationreportedinmanagementaccounts.
IFRSrequirementsarereflectedbelow.
Segmentreportingiscoveredbythefollowingarticles:65and67(2).
Thesegmentationisonlyapplicabletotheturnover.
DefinitionsAnoperatingsegmentisacomponentofanentity:thatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses;whoseoperatingresultsareregularlyreviewedbytheentity'sChiefOperatingDecisionMaker("CODM")tomakedecisionsaboutresourcestobeallocatedtothesegmentandassessitsperformance;andforwhichdiscretefinancialinformationisavailable.
TheCODMisafunctionandnotnecessarilyaperson.
Thatfunctionistoallocateresourcesto,andassesstheperformanceof,theoperatingsegments.
Itislikelytovaryfromentitytoentity–itmaybethechiefexecutiveofficer,thechiefoperatingofficer,theseniormanagementteamortheBoardofdirectors.
Thetitleortitlesoftheperson(s)identifiedasCODMisnotrelevant,aslongasitistheperson(s)responsibleformakingstrategicdecisionsabouttheentity'ssegments.
ThereisnodefinitionofasegmentintheAccountingLaw.
IdentificationofsegmentsTherearefourkeystepstoidentifytheoperatingsegments.
Entitieswillneedto:identifytheCODM;identifytheirbusinessactivities(whichmaynotnecessarilyearnrevenueorincurexpenses);determinewhetherdiscretefinancialinformationisavailableforthebusinessactivities;anddeterminewhetherthatinformationisregularlyreviewedbytheCODM.
Notalloperatingsegmentsneedtobeseparatelyreported.
Operatingsegmentsareonlyrequiredtobereportableiftheyexceedquantitativethresholds(suchas10%ofthecombinedrevenueofalloperatingsegments).
Twoormoreoperatingsegmentsmaybecombinedasasinglereportablesegmentunderspecificconditions.
NotspecifiedbytheAccountingLaw,butsegmentsshallbedonebyactivitiesandgeographicalmarketstotheextentthatthesemarketsdiffersubstantiallyfromonetoanother.
Otheraccountingandreportingtopics140PwCLuxembourgSubjectIFRSLuxGAAPSegmentreportingAfterdeterminingthereportablesegments,theentityshouldensurethatthetotalexternalrevenueattributabletothosereportablesegmentsisatleast75%oftheentity'stotalrevenue.
Whenthe75%thresholdisnotmet,additionalreportablesegmentsshouldbeidentified(eveniftheydonotmeetthe10%thresholds),untilatleast75%oftheentity'stotalexternalrevenueisincludedinitsreportablesegments.
DisclosureThefollowinginformationisrequiredtobedisclosed:factorsusedtoidentifythereportablesegments;typesofproduct/servicefromwhicheachreportablesegmentderivesitsrevenue;ameasureofprofitorlossandtotalassets;anumberofspecificdisclosures,suchasrevenuesfromexternalcustomersiftheyareincludedinsegmentprofitorlossandpresentedregularlytotheCODM;explanationofthemeasurementofthesegmentdisclosures;thebasisofaccountingfortransactionsbetweenreportablesegments;thenatureofdifferencesbetweenthemeasurementsofsegmentdisclosuresandcomparableitemsintheentity'sfinancialreport(forexample,accountingpolicydifferencesandasymmetricalallocations);totalsofsegmentrevenue,segmentprofitorloss,segmentassetsandsegmentliabilitiesandanyothermaterialsegmentitemstocorrespondingtotalswithinthefinancialstatements;revenuesfromexternalcustomersforeachproductandservice,oreachgroupofsimilarproductsandservices;revenuesfromexternalcustomersattributedtotheentity'scountryofdomicileandattributedtoallforeigncountriesfromwhichtheentityderivesrevenues;revenuesfromexternalcustomersattributedtoanindividualforeigncountry,ifmaterial;non-currentassets(otherthanfinancialinstruments,deferredtaxassets,post-employmentbenefitassets,andrightsarisingunderinsurancecontracts)locatedintheentity'scountryofdomicileandinallforeigncountriesinwhichtheentityholdsassets;non-currentassetsinanindividualforeigncountry,ifmaterial;andextentofrelianceonmajorcustomers,includingdetailsifanycustomer'srevenueisgreaterthan10%oftheentity'srevenue.
TheAccountingLawonlyrequiresdisclosuresofthenetturnoverbycategoriesofactivitiesandundergeographicalmarkets,totheextentthatthesemarketsdiffersubstantiallyfromonetoanother.
Small-sizedandmedium-sizedcompanies(refertosizecriteriamentionedinthesection"TheLuxembourgregulatoryframework")areexemptfromthisrequirement.
OtheraccountingandreportingtopicsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP141SubjectIFRSLuxGAAPPostbalancesheeteventsScopeandstandardTheapplicablestandardisIAS10-EventsAftertheReportingPeriod.
Postbalancesheeteventsarecoveredbyarticles51and68.
AdjustingeventsafterthestatementoffinancialpositiondateAdjustingeventsthatoccurafterthestatementoffinancialpositiondatearedefinedaseventsthatprovideadditionalevidenceofconditionsthatexistedatthestatementoffinancialpositiondateandmateriallyaffecttheamountsincluded.
Theamountsrecognisedinthefinancialstatementsareadjustedtoreflectadjustingeventsafterthestatementoffinancialpositiondate.
Allliabilitieswhichhaveariseninthecourseofthefinancialyearorinapreviousfinancialyearhavetobetakenintoaccount,eveniftheliabilitiesbecomeapparentonlybetweenthedateofthebalancesheetandthedateonwhichitisdrawnup.
Inaddition,companieshavetheoptiontotakeintoaccountallforeseeableliabilitiesandpotentiallosseswhichhaveariseninthefinancialyearconcernedorinapreviousfinancialyear,eveniftheliabilitiesorlossesbecomeapparentonlybetweenthedateofthebalancesheetandthedateonwhichitisdrawnup.
Non-adjustingeventsafterthestatementoffinancialpositiondateNon-adjustingeventsthatoccurredafterthestatementoffinancialpositiondatearedefinedaseventsthatareindicativeofconditionsthataroseafterthestatementoffinancialpositiondate.
Thenatureandestimatedfinancialeffectsofsucheventsaredisclosedtopreventthefinancialstatementsbeingmisleading.
NotdefinedintheAccountingLaw,butthepracticeissimilartoIFRS.
Non-adjustingpostbalancesheeteventshavetobedescribedinthemanagement'sreportandinthenotestotheannualaccounts.
AnnouncementofadividendrelatingtothefinancialyearjustendedThisisanon-adjustingevent.
SimilartoIFRS.
Annualaccountsarepresentedbeforeprofitallocation.
Profitallocationisdisclosedinaseparatestatementwhichisfiledwiththeannualaccounts.
Otheraccountingandreportingtopics142PwCLuxembourgYourcontactsSimilaritiesanddifferences–AcomparisonofIFRSandLuxembourgGAAP143MarcMinetPartner,IFRSLeader+3524948486113marc.
minet@lu.
pwc.
comAnne-SophiePreud'hommeLuxGAAPAccountingPartner+3524948485788anne.
sophie.
preudhomme@lu.
pwc.
comVéroniqueTinelLuxGAAPAccountingPartner+3524948485704veronique.
tinel@lu.
pwc.
comFabriceGoffinIFRSBankingPartner+3524948485735fabrice.
goffin@lu.
pwc.
comNotes146PwCLuxembourgPwCLuxembourg(www.
pwc.
lu)isthelargestprofessionalservicesfirminLuxembourgwith2,200peopleemployedfrom57differentcountries.
Itprovidesaudit,taxandadvisoryservicesincludingmanagementconsulting,transaction,financingandregulatoryadvicetoawidevarietyofclientsfromlocalandmiddlemarketentrepreneurstolargemultinationalcompaniesoperatingfromLuxembourgandtheGreaterRegion.
Ithelpsitsclientscreatevaluetheyarelookingforbygivingcomforttothecapitalmarketsandprovidingadvicethroughanindustryfocusedapproach.
TheglobalPwCnetworkisthelargestproviderofprofessionalservicesinaudit,taxandadvisory.
We'reanetworkofindependentfirmsin158countriesandemploymorethan180,000people.
Telluswhatmatterstoyouandfindoutmorebyvisitingusatwww.
pwc.
comandwww.
pwc.
lu.
2013PricewaterhouseCoopers,Sociétécoopérative.
Allrightsreserved.
Inthisdocument,"PwCLuxembourg"referstoPricewaterhouseCoopers,Sociétécoopérative(Luxembourg)whichisamemberfirmofPricewaterhouseCoopersInternationalLimited("PwCIL"),eachmemberfirmofwhichisaseparateandindependentlegalentity.
PwCILcannotbeheldliableinanywayfortheactsoromissionsofitsmemberfirms.
www.
pwc.
lu