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IFRS Technical Update
Weekly Catch-Up 22th February
In the UAE IFRS 15 is causing trouble for SMEs
When IFRS 15 was published in May 2014, it significantly impacted real estate companies as they were able to recognise revenue over a construction period, as long as certain conditions were met. Although this resulted in greater transparency for real estate entities, it led to certain challenges which included volatile contract margins and data requirements.
SME’s have catching up to do in the UAE as they have yet to appreciate the impact of the new standards, implementing these standards will lead to benefits of overall revenue recognition and reduce earnings volatility.
Who has the highest operating lease obligations in the FTSE 350?
Data from LeaseAccelerator has identified the companies who will have the largest operating lease obligations to be declared under IFRS 16.
The top ten of FTSE 350 companies with the highest operating lease obligations are: Royal Dutch Shell, BP, Sainsbury’s, International Airlines Group, BT Group, IWG, Associated British Foods, Marks & Spencer, and First Group.
Thailand: Fiscal Policy Office delayed IFRS 9 adoption
The Fiscal Policy Office in Thailand has suggested that IFRS 9 for specialised financial institutions (SFIs) be pushed back. The delay is intended to give SFIs more time to prepare for the accounting standard. However SFIs could potentially be required to set aside significant additional loan-loss provisions for compliance with IFRS 9.
HSBC’s net assets to drop £1.2bn due to IFRS 9
IFRS 9 has had quite the impact as banks are publishing their 2018 annual reports, HSBC, Barclays and RBS are being impacted by the new standard.
As well as HSBC’s new assets dropping £1.2bn, Barclays stated: ‘Barclays’ estimated IFRS 9 impact, based on the portfolio as at 30 September 2017, is a decrease in shareholders’ equity of approximately £2bn post tax. This estimated reduction in shareholders’ equity equates to a decrease in tangible net asset value of 10 to 12 pence per share.’
RBS have found the transition to reduce their total equity by £1.4m to £84.8m.
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