New amendments issued to accounting standards for for-profit entities
The New Zealand Accounting Standards Board (NZASB) has issued number of amendments to NZ IFRS that are effective for Tier 1 and Tier 2 for-profit entities. The amendments are all effective for periods beginning on or after 1 January 2019, with early application permitted, except for the omnibus amendment to NZ IFRS 7 which is effective for periods beginning on or after 1 January 2018, with early application permitted.
Amendment to NZ IAS 28 - Long-term Interests in Associates and Joint Ventures
This amending standard clarifies that a for-profit entity is required to apply NZ IFRS 9 Financial Instruments, including its impairment requirements, to interests in an associate or joint venture to which the equity method is not applied.
These interests include long-term interests that, in substance, form part of the net investment in the associate or joint venture. Such interests may include preference shares, and long-term receivables or loans, but do not include trade receivables, trade payables or any long-term receivables for which adequate collateral exists, such as secured loans.
Omnibus amendments to NZ IFRS
Amendments have been made to the following for-profit accounting standards.
- NZ IFRS 10 Consolidated Financial Statements and NZ IAS 28 Investments in Associates and Joint Ventures to require the ultimate New Zealand parent entity to present consolidated financial statements and to apply the equity method in accounting for interests in associates and joint ventures (except where the parent is an investment entity).
- NZ IFRS 7 Financial Instruments: Disclosures to delete most of the paragraphs in Appendix E New Zealand-specific Additional Disclosure Requirements Applicable to non-bank deposit takers that are now redundant because of NZ IFRS 9 Financial Instruments.
In addition, amendments have been made to some other standards to update terminology and to make editorial corrections.
Amendments to NZ IFRS 9 - Prepayment Features with Negative Compensation
This amending standard provides a narrow exception to NZ IFRS 9 Financial Instruments for financial assets that contain prepayment features with negative compensation.
Depending on an entity’s business model, some such instruments may now be measured at amortised cost or fair value through other comprehensive income (FVOCI) rather than at fair value through profit or loss.
For more on the above, please contact your local BDO representative.