Tag: Label

FX on eliminated intragroup balances

The IFRS Interpretations Committee issued in September 2025 a Tentative Agenda Decision Classification of a Foreign Exchange Difference from an Intragroup Monetary Liability (or Asset). The Tentative Agenda Decision is open for comment until 25 November 2025. It is available at IFRS – Tentative Agenda Decision and comment letters: Classification of a Foreign Exchange Difference… Continue reading FX on eliminated intragroup balances

We call too many things ‘intangible assets’

The definition of an intangible asset in IAS 38 Intangible Assets is too broad, in my view.  The assets it captures do not form a single natural class of assets that all have a common feature. As a result, IAS 38 may not provide the most useful information about every type of asset captured by… Continue reading We call too many things ‘intangible assets’

Digital reporting needs context

People sometimes suggest that the need for financial statements is disappearing fast. They argue that advances in digital reporting enable investors to look directly for the information they need, without being constrained by the format of the financial statements. In my view, those suggestions couldn’t be more wrong. It is a great development that investors… Continue reading Digital reporting needs context

‘Reserves’: things we don’t know how to account for?

The word ‘reserve’ has sometimes been used to describe two items on opposite sides of the balance sheet. The first item is oil or gas reserves, which are assets. The second item is insurance ‘reserves’, which are liabilities. Coincidentally, accounting standard setters have found both items hard to deal with. I think the label ‘reserve’… Continue reading ‘Reserves’: things we don’t know how to account for?

Liability or equity?

I have submitted a comment letter to the IASB on 2 aspects of its Exposure Draft Financial Instruments with Characteristics of Equity, available at IFRS – Exposure Draft and comment letters: Financial Instruments with Characteristics of Equity—Proposed amendments to IAS 32, IFRS 7 and IAS 1 The comment deadline is 26 March 2024. The text… Continue reading Liability or equity?

Myths about deferred tax

There are many myths about what deferred tax is. As a result, many companies do not understand what information about deferred tax can tell investors. Thus, companies typically present that information in a technical way that investors find difficult to understand. Consequently, most investors dismiss that information as an uninteresting technicality and they ignore it.… Continue reading Myths about deferred tax

The ‘cash component of revenue’: a dangerous myth?

Some academics and investors often talk about ‘the cash component of revenue’. I understand why they use this shorthand label, but it risks causing misunderstanding. In this post, I examine the following: what is the ‘cash component of revenue’? an accounting identity linking revenue and cash receipts judgement in measuring trade receivables the ‘cash component… Continue reading The ‘cash component of revenue’: a dangerous myth?

Saying how likely something is: way forward

IFRS standards use too many different terms to say how likely it is that an event will occur. And different people using IFRS Standards interpret those terms in different ways. Those clear messages appeared in a research report issued in 2016 by the Korea Accounting Standards Board (KASB) and Australian Accounting Standards Board (AASB). I… Continue reading Saying how likely something is: way forward

I can’t get excited about goodwill

Many people have strong views about whether the International Accounting Standards Board (Board) should reintroduce amortisation of goodwill. But I can’t get excited about that as a topic for standard setting now, for two reasons: I think the arguments for amortisation (with impairment) and the arguments for impairment-only are quite finely balanced. I’m not sure… Continue reading I can’t get excited about goodwill