What is an investment entity?
The Accounting Standards Board of South Africa (ASB) issued various amendments to GRAP Standards of which the Minister of Finance approved some to be effective in Government Gazette No.44881 on 13 August 2021. Entities applying GRAP are required1 to disclose the impact of these in their financial statements.
Cash comprises cash on hand and demand deposits.
Entities in a group often provide financing to each other. This financing could be at market-terms or at non-market terms. In this month’s tip we will discuss those loans with a low credit risk at the reporting date. A loan is determined to have low credit risk if:
An entity’s document retention and destruction policy is entity-specific based on the laws and regulations applicable to that entity. Based on the different types of documents that an entity has and the different rules governing the retention of these documents, the process can be very daunting. However it is crucial for any business to have these policies in place due to the implications of not having the documents available e.g. whether due to legal repercussions or due to conflicts with clients and/or suppliers and/or employees.
Amended IAS 8 removes the definition of a change in accounting estimates and replaced it with a new definition for Accounting Estimates. Entities often struggle to differentiate between changes in accounting policies and changes in accounting estimates. Diversity in practice has been noted in this regard. The amendment aims to reduce the diversity.
New Amendments will come into effect 1 January 2022, with regards to:
Entities in a group often provide financing to each other. This financing could be at market terms or at non-market terms. Those loans which are entered into at market terms do not result in significant accounting considerations. This month our focus is on how to calculate the expected credit loss (ECL) on intercompany loans which are repayable on demand.
As intercompany loans are eliminated on consolidation for subsidiaries, no financial assets or liabilities related to intercompany loans are recorded in the consolidated financial statements. This negates the requirement to consider impairment of these financial assets in respect of consolidated financial statements. However, the implications of impairment on intercompany loans should still be considered when separate financial statements are prepared.
The right to privacy is constitutionally entrenched in the South African Bill of Rights. In this regard, section 14 of the Constitution of the Republic of South Africa Act, No. 108 of 1996 provides as follows:
Amendments were made to the definition of a ‘business’, with the aim of helping entities to determine whether a transaction should be accounted for as an asset acquisition or a business combination in terms of IFRS 3.
The Minister of Finance delivered his budget speech on 24 February 2021. Due to Covid pandemic, tax relief were provided mainly for individual tax to assist in the recovery of the economy.