5. Effects of new accounting standards

Amendments to IFRS 3, IAS 16, 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 made from selling items produced while bringing the asset to its intended location or condition (e. g. product samples). Instead, such proceeds and 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.

• IFRS 17 Insurance Contracts including Amendments to IFRS 17
  On 23 November 2021, the European Union published and thus adopted its regulation on the amendment to IFRS 17 Insurance Contracts including the amendments dated 25 June 2020. Accordingly, entities may exempt themselves from applying IFRS 17.22 in the case of contracts with profit participation. IFRS 17 in its amended version and the associated amendments to various other IFRS are applicable to financial years beginning on or after 1 January 2023.
• 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 issued by the IASB on 12 February 2021 clarifies how entities 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 European Union published and adopted these amendments on 3 March 2022. The amendments apply to financial years beginning on or after 1 January 2023.
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies
  On 3 March 2022, the European Union published and adopted the IASB amendments from 12 February 2021 to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2. The amendments require an entity to present only its “material” accounting policies in the Notes. 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 apply to financial years beginning on or after 1 January 2023.
• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
  On 12 August 2022, the European Union published and adopted the amendments to IAS 12 that were issued by the IASB on 7 May 2021. This removed uncertainties concerning how deferred taxes are accounted for with regard to leases and decommissioning obligations. The amendments mean that deferred taxes should be recognised, for example, on leases accounted for by the lessee and on decommissioning obligations. The amendments are to be applied to reporting periods beginning on or after 1 January 2023.
• Amendments to IFRS 17 Insurance Contracts: First-time Application of IFRS 17 and IFRS 9 – Comparative Information
  On 9 September 2022, the European Union published and adopted the IASB’s amendments from 9 December 2021 to IFRS 17. The marginal amendment introduces the option to apply a classification overlay approach, provided certain conditions are met. This means that the comparative information about the financial instruments can be made more meaningful in the year prior to the first-time application of IFRS 17. The amendments apply to financial years beginning on or after 1 January 2023.

• Amendments to IAS 1 Presentation of Financial Statements: Classification of Debt with Covenants 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. In 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. On 31 October 2022, the IASB published further amendments to IAS 1 – Presentation of Financial Statements. The amendment concerns the classification of debt that is subject to covenants. The IASB clarifies that covenants which should be adhered to before or on the balance sheet date may affect whether the debt is classified as current or non-current. By contrast, covenants which should merely be adhered to after the balance sheet date have no impact on this classification and should be disclosed in the Notes to the financial statements. This amendment thus amends the two amendments to IAS 1 regarding the same issue from January and July 2020. The amendments are mandatory for financial years beginning on or after 1 January 2024. Early adoption is permitted.
• Amendments to IFRS 16 Leases: Lease Liabilities from Sale and Leaseback Transactions
  On 22 September 2022, the IASB published amendments to IFRS 16 that affect how lease liabilities from sale and leaseback transactions are accounted for. Following a sale, a lessee must now measure the lease liability in such a way that no amount relating to the retained right of use is recognised in profit or loss. The amendments apply to financial years beginning on or after 1 January 2024. Early adoption is permitted.