5. Effects of new accounting standards

Amendments to References to the Conceptual Framework in IFRS Standards

In March 2018, the IASB published its revised conceptual framework for financial reporting. The revised version contains extensive amendments to the earlier conceptual framework. The standards affected by the amendments are IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22 and SIC-32. Amendments to the references within the IFRS listed above are particularly affected by the endorsement process, which has an editorial character. The EU enacted these amendments in its legislation with Commission Regulation (EU) 2019/2075 dated 29 November 2019. The effective date is 1 January 2020. First-time application had no impact on the Consolidated Financial Statements.

Amendments to IAS 1 and IAS 8

Definition of Material

In October 2018, the IASB published amendments with regard to the definition of the materiality of information in financial statements in IAS 1 Presentation of Financial Statements and in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. With these changes, a consistent and precisely defined understanding of the materiality of information in financial statements has been created and supplemented with examples. The EU enacted these amendments in its legislation with Commission Regulation (EU) 2019/2104 dated 29 November 2019. The effective date is 1 January 2020. First-time application resulted in no significant changes to the Consolidated Financial Statements.

Amendments to IFRS 9, IAS 39 and IFRS 7

Interest Rate
Benchmark Reform

The IASB published these amendments in September 2019 in order to dispel uncertainty surrounding the possible implications of the so-called “IBOR reform” for financial reporting. In particular, these amendments relate to certain reliefs in respect of hedge accounting regulations and must be applied to all hedging relationships that are affected by the reform of the benchmark interest rate. Further disclosures are foreseen in respect of the extent to which companies’ hedging relationships are affected by the amendments. The EU enacted these amendments in its legislation with Commission Regulation (EU) 2020/34 dated 15 January 2020. The effective date is 1 January 2020. First-time application had no impact on the Consolidated Financial Statements.

Amendments to IFRS 3

Definition of a Business

In October 2018, the IASB published an amendment to IFRS 3 Business Combinations with regard to the definition of a business. With this amendment, the IASB clarifies that a business consists of a group of activities and assets that covers at least one resource input and a substantial process that, together, result in output. Furthermore, with regard to performance (output), the definition is narrowed to focus on goods and services provided to customers and excludes the reference to cost reductions. The new provisions also include an optional “concentration test”, which aims to facilitate the identification of a business. The amendment is applicable to business combinations where the date of acquisition is either on or after 1 January 2020. First-time application had no impact on the Consolidated Financial Statements.

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

Interest Rate
Benchmark Reform –
Phase 2

The changes in the second phase of the IBOR reform are designed to help reporting parties provide useful information in respect of the upcoming changes in connection with the IBOR reform. They supplement the provisions of the first phase and generally apply in the event that a benchmark interest rate is replaced with another benchmark rate. The EU enacted these amendments in its legislation with Commission Regulation (EU) 2021/25 dated 13 January 2021. The amendments are mandatory for financial years beginning on or after 1 January 2021. Early adoption is permitted.

Amendment to IFRS 16

Covid-19-Related Rent Concessions (Amendment to IFRS 16)

In May 2020, the IASB published an amendment to IFRS 16 with regulations on Covid-19-related rent concessions. The EU enacted these amendments in its legislation with Commission Regulation (EU) 2020/1434 dated 9 October 2020. Under certain circumstances, the amendment provides lessees with a temporary exemption from assessing whether a rent concession granted in connection with the coronavirus pandemic constitutes a lease modification. This makes it possible for the lessee to recognise these rent concessions as though there were no modifications to the lease rather than in accordance with the regulations for lease modifications. This relief shall only be applicable in respect of rent concessions that reduce rent payments due in the period up to 30 June 2021. The provisions of the EU regulation are applicable by 1 June 2020 at the latest for financial years beginning on or after 1 January 2020.

Amendments to
IFRS 3, IAS 16
and
IAS 37
Annual Improvements 2018–2020

On 14 May 2020, the IASB approved a narrow set of amendments to three standards along with the annual improvements. The resulting amendments serve to clarify the wording or correct minor consequences, errors or conflicts between the requirements in the standards.

The Amendments to IFRS 3 Business Combinations update a reference within IFRS 3 to the Conceptual Framework, without changing the accounting requirements for business combinations.

The Amendments to IAS 16 Property, Plant and Equipment prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing the asset to its intended location or condition (e.g. product samples). Instead, such proceeds and the related costs are to be recognised in profit or loss.

The Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets clarify which costs an entity must consider when assessing whether a contract is onerous. They also regulate the definition of the cost of fulfilling.

The Annual Improvements result in minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases.

All amendments come into force on 1 January 2022. Early adoption is permitted.

Amendments to IAS 1
Presentation of Financial Statements:

Classification of Liabilities as Current or Non-current

On 23 January 2020, the IASB published a narrow set of amendments to IAS 1 Presentation of Financial Statements in order to clarify how debt and other liabilities should be classified as current or non-current. The amendments clarify the existing requirements but do not change them, meaning that it is not expected that they will have a significant influence on entities’ annual financial statements. They may, however, result in reclassifications. In order to give entities time to prepare for the amendments, the IASB set 1 January 2022 as the effective date. As a response to the coronavirus pandemic, the IASB deferred the effective date by one year on 15 July 2020 in order to give entities more time to implement the classification changes. The amendments are mandatory for financial years beginning on or after 1 January 2023. Early adoption is permitted.

Amendments to IAS 1
Presentation of Financial Statements and IFRS Practice Statement 2:

Disclosure of Accounting Policies

On 12 February 2021, the IASB published the amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2. The amendments will require an entity to only present its “material” accounting policies in the Notes. In order to be “material”, the accounting policy must be connected with material transactions or other events and there must be a reason for the presentation. The guidance in Practice Statement 2 has been adapted accordingly. The amendments are mandatory for financial years beginning on or after 1 January 2023. Early adoption is permitted.

Amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors:

Definition of Accounting Estimates

The amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors published by the IASB on 12 February 2021 clarifies how entitles can better distinguish between changes in accounting policies and changes in accounting estimates. It includes the definition that an accounting estimate is always related to a measurement uncertainty for a financial figure in the financial statements. The amendments are mandatory for financial years beginning on or after 1 January 2023. Early adoption is permitted.

Amendment to IFRS 16:

Covid-19-Related Rent Concessions after 30 June 2021

In February 2021, the IASB issued a proposal to extend the application period for the amendment to IFRS 16 approved in May 2020 in respect of Covid-19-related rent concessions in order to provide lessees with continued relief in terms of the accounting of concessions, such as rent deferrals or rent reductions, that have been granted as a direct result of the outbreak of the coronavirus pandemic. Due to the ongoing coronavirus pandemic, the proposal is to extend the current applicability to rental payments due on or before 30 June 2022. The amendments will be implemented shortly and are applicable to financial years beginning on or after 1 April 2021. Early adoption is permitted.

Amendments to IFRS 10 and IAS 28

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The IASB approved amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures in September 2014. These clarify how unrealised gains from transactions between an investor and a joint venture or an associate should be reported. The EFRAG announced in February 2015 that the process of endorsing these amendments had been suspended for the time being because inconsistencies had been identified between the amended standard and the existing IAS 28. The effective date – previously 1 January 2016 – has been postponed indefinitely until the inconsistencies have been resolved.