The interpretation governs the accounting for waste removal costs incurred during the production phase of surface mining activity. It clarifies the conditions under which an asset has to be recognized for stripping activities and how such an asset must be measured.
1.3
Accounting pronouncements not yet applied
The accounting standards and interpretations, as well as amendments to existing standards and interpretations presented below, were issued but not yet required to be applied to the preparation of the IFRS consolidated financial statements as of December 31, 2013.
Unless otherwise stated, the new standards and interpretations have been endorsed by the EU.
GEA Group is currently examining the effects of the revised accounting standards on the consolidated financial statements and will determine the date of initial application. At this point in time, GEA Group does not believe that application of the new or revised pronouncements will have a material effect on its consolidated financial statements.
IFRS 9 “Financial Instruments” – recognition and measurement of financial instruments – issued by the IASB in November 2009 as well as May 2010
IFRS 9 is intended to replace the accounting treatment of financial instruments set out in IAS 39. In the future, there will only be two classification and measurement categories for financial assets: at amortized cost or at fair value. Financial assets at amortized cost comprise those financial assets that give rise solely to payments of principal and interest at specified dates and are also held within a business model for managing financial assets whose objective is to hold those financial assets and collect the associated contractual cash flows. All other financial assets are classified as at fair value. Under certain circumstances, a fair value option is available for financial assets falling under the first category, as at present.
Changes in financial assets belonging to the fair value category must generally be recognized in profit or loss. However, there is an optional right to measure certain equity instruments at fair value through other comprehensive income; in this case, dividend income from these assets is recognized in profit or loss. The provisions governing financial liabilities have basically been taken over from IAS 39. The most important difference relates to the treatment of changes in value of financial liabilities measured at fair value. In future, the amount of the change relating to changes in own credit risk must be recognized in other comprehensive income, while the remaining amount of the change in fair value is recognized in profit or loss.
IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments: Disclosures” – changes to the mandatory effective date and transition disclosures – issued by the IASB in December 2011
The amendments no longer require restatement of prior-period figures upon initial application of IFRS 9. When an entity chooses to apply this exemption, additional disclosures are required under IFRS 7 to allow for assessment of the effects of the first-time application of IFRS 9.
Subject to its endorsement by the EU, which is still outstanding, the effective date of IFRS 9 was delayed to fiscal years beginning on or after January 1, 2015; earlier application is permitted. The mandatory effective date for IFRS 9 has in the meantime been delayed again by further pronouncements outlined below.
IFRS 9 “Financial Instruments” (Hedge accounting and amendments to IFRS9, IFRS 7, and IAS 39) – issued by the IASB in November 2013
The amendments focus on the introduction of a new general hedge accounting model in IFRS 9. This is intended to align hedge accounting more closely with the risk management system. The new model opens up further options to apply hedge accounting: In particular, groups of hedged items that meet the qualifying criteria individually, as well as net positions and nil net positions, may now be designated in a hedging relationship. Generally, every financial instrument carried at fair value is suitable to be a hedged item.
New requirements are being introduced in relation to the effectiveness of hedging relationships; stipulation of the ranges for the measurement of effectiveness is being dispensed with, so that a retrospective effectiveness test no longer has to be performed. The prospective effectiveness test as well as recognition of any ineffectiveness continue to be required.
A hedging relationship may only be terminated when the defined conditions for this are met; this means that it is mandatory to continue hedging relationships if risk management objectives remain unchanged. Enhanced disclosures are required in relation to the risk management strategy, the effects of risk management on future cash flows, as well as the effects of hedge accounting on the financial statements. In addition, accounting for own credit risk for financial liabilities under the fair value option in other comprehensive income is only possible in isolated cases, i.e., without applying the other requirements in IFRS 9.
Provided the conditions and qualitative characteristics continue to be met, hedging relationships do not have to be terminated as a result of the transition from IAS 39 to IFRS 9. The existing requirements under IAS 39 may also, as an option, continue to be applied under IFRS 9.
Subject to its endorsement by the EU, which is still outstanding, the initial application of the new hedge accounting requirements follows the requirements concerning the initial application of IFRS 9.
When the new hedge accounting requirements were published, the mandatory effective date for IFRS 9 was also removed; IFRS 9 had previously been effective for fiscal years beginning on or after January 1, 2015. In addition, the IASB, at its November 2013 meeting, decided that mandatory application of IFRS 9 will at the earliest apply to fiscal years beginning on or after January 1, 2017.
IFRS 10 “Consolidated Financial Statements“, IFRS 11 “Joint Arrangements“, IFRS 12 “Disclosure of Interests in Other Entities“, consequential amendments to IAS 27 “Separate Financial Statements“, and IAS 28 “Investments in Associates” – revised standards on accounting for interests in other entities and the corresponding disclosures in the notes to the financial statements – issued by the IASB in May 2011
IFRS 10 “Consolidated Financial Statements”
The new standard replaces the consolidation requirements of IAS 27 “Consolidated and Separate Financial Statements” and SIC-12 “Consolidation – Special Purpose Entities.” The new IFRS 10 affects the definition of the basis of consolidation. As currently required by IAS 27, consolidated financial
statements must include those entities that are controlled by the parent. The definition of control in IFRS 10 differs from that used in IAS 27, where control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Under IFRS 10, control exists when an investing entity is exposed, or has rights, to variable returns from involvement with the investee on the one hand, and has the ability to affect those returns through its power over the investee on the other. The new concept of control applies to all entities, including special purpose entities. It can lead to differing assessments, especially in cases of potential voting rights, agency relationships, and in situations where substantial, but not majority voting rights are held. No material impact is expected from the new requirements, because, as a rule, GEA Group Aktiengesellschaft has control, directly or indirectly, of all voting rights in its consolidated entities.
IFRS 11 “Joint Arrangements”
The new standard supersedes IAS 31 “Interests in Joint Ventures” and SIC-13 “Jointly Controlled Entities – Nonmonetary Contributions by Venturers.” In contrast to IAS 31, accounting for joint arrangements under IFRS 11 depends not on the legal form of the arrangement but on the nature of the rights and duties arising under the arrangement. IFRS 11 makes a distinction between joint operations and joint ventures. Joint operations are joint arrangements in which the parties with joint control have rights to the assets and obligations for the liabilities relating to that arrangement. In line with this, these parties account for their shares of the respective assets, liabilities, income, and expenditure as they did previously. A joint venture exists when the parties with joint control have rights to the net assets of the arrangement. Joint ventures now have to be accounted for using the equity method. The previous option to account for joint ventures using proportionate consolidation has been removed. GEA Group does not expect the implementation of these new requirements to materially affect its financial reporting.