IFRS and IAS Compliance Analysis of

SINGER BANGLADESH LIMITED

 UNITED INTERNATIONAL UNIVERSITY

Corporate Financial Reporting (AIS 4303)

Section - A
IFRS and IAS Compliance Analysis of
SINGER BANGLADESH LIMITED

Prepared For
James Bakul Sarker
Associate Professor
United International University

Prepared By

Name ID
Asifa Ahmed Bisme 114 171 006
M Iftekher Hossain 114 171 012
Sayma Sultana Lina 114 171 017
Faria Afroz 114 171 019
Sumaiya Hasem 114 171 022

Date of Submission: 20 May, 2020

Letter of Transmittal

Dr. James Bakul Sarkar

Associate Professor
Department of BBA
United International University
Dear Sir,

Here is the report you assigned us to prepare, on “IFRS and IAS Compliance Analysis of Singer
Bangladesh Limited” for this course. In this report we tried to show if SBL is following the
accounting standards and if they are then how they following. We have covered all the necessary
elements that should be included in this report.

Besides, we are still students and in a process of developing our skill. So, we hope that you will
be kind enough to consider the limitation of this report.

Thank you for giving us such an opportunity for working on the topic. We will be honored to
provide you any additional information, if necessary.

Sincerely yours,

Faria Afroz

On behalf of my group members.

Acknowledgment

It is a great contentment to express our deep sense of gratitude to our honorable course teacher
Dr. James Bakul Sarkar for giving us an opportunity to prepare a report on “IFRS and IAS
Compliance Analysis of Singer Bangladesh Limited” as a part of the course - “Corporate
Financial Reporting (AIS 4303)”.

Our honorable course teacher helped us on our report every way possible. He taught us the IAS
and IFRS standards and make us understand how we can implement the standards in a real case.
And is the reason we could complete our report successfully.

We are also grateful to all the people who helped us to collect the information regarding the
report.

Therefore, we want to pay our gratitude to our course teacher again for giving us the greatest
opportunity to work on such a topic that will be very helpful in our future.
Scope & Limitation

Scope:

The report contents almost all important and correct information of IAS and IFRS and also the
annual report 2018 of Singer Bangladesh Limited. We have tried to elaborate the every standard
and their implement in the company’s annual report. Hope that it will help people to know about
these standards elaborately. It will also help them-

 With elaborate explanation of standards

 With practical implementation of standards

Limitation:

Besides scopes, this report has some limitation as well. Here we enlist the limitation of the
report:

 The report contains only the basic explanation and information of standards.
 We only discuss about the implementation of standards which are available in the annual
report.
 We couldn’t completely understand some of the standard because of our lack of
knowledge.
 There may be some printing mistakes, some syntax error and other defects.

Despite of these limitations, we tried to make this report as informative and analytical as possible
and we hope that report will be able to give one a brief knowledge about IAS and IFRS and one
can get basic information of standards.
Executive Summary

Accounting standards are very important when a company is making its financial statements.
Because standards ensure that the financial statements from multiple companies are comparable.
So that users of the statements can take the effective decisions. In our report, we showed the
practical implementation of IAS and IFRS by using the annual report 2018 of Singer Bangladesh
Limited. Here, we mentioned if the company is using the standards and if they then how they are
implementing it. We mentioned the standards which are not available on the annual report or not
applicable for the company. Precise discussion of all the standards of IAS and IFRS is in the
report. And then we described how these standards effect annual report 2018 of Singer
Bangladesh Limited.
Contents
Introduction

The International Accounting Standards Committee (IASC) was established in June 1973 by
accountancy bodies representing ten countries. It devised and published International Accounting
Standards (IAS) in 1973, interpretations and a conceptual framework. These were looked to by
many national accounting standard-setters in developing national standards.

The goal of IAS is to make it easier to compare businesses around the world, increase
transparency and trust in financial reporting, and foster global trade and investment. There are 41
IAS on total. Only 29 IAS are active now.

The International Accounting Standards Committee (IASC) was established in June 1973 by
accountancy bodies representing ten countries. It devised and published International Accounting
Standards (IAS), interpretations and a conceptual framework. These were looked to by many
national accounting standard-setters in developing national standards. The IASB has continued to
develop standards calling the new standards "International Financial Reporting Standards"
(IFRS). In total 17 IFRS has been issued.

In our report we are showing how SINGER corporation compliance International Accounting
Standards and International Financial Reporting Standards for providing the information in the
Annual Report 2018.

Objectives
Major Objective:

 Discuss the standards and know the practical implementation of those on the annual
report 2018 of Singer Bangladesh Limited

Minor Objectives:

 Know which standards are suspended.

 Know how to take decision when there is both IAS and IFRS for same subject.
 Know when and how use the standards in financial statements.
 Finally know how to analysis an annual report and it notes and disclosure.
Company Overview

The singer saga began in 1851, when Sir Issac Merrit Singer with US$ 40 in the borrowed capital
began to manufacture and sell a machine to automate and assist in the making of clothing. This
revolutionary product was the first offering from the newly formed I.M Singer and company,
which has now evolved into the world leader in the manufacturing and distribution of sewing
related products. The SINGER brand name is now famous around the globe.

SINGER Corporation is an American manufacturer of domestic sewing machines. Its head

quarter is in La Vergne, Tennessee, and United States. Its first electric machine was introduced
in 1889 and by the turn of the century, annual sales had reached US$ 1.35 million.

The presence of SINGER in Bangladesh dates back to the British Colonial era when the country
was a part of the Indian subcontinent. The first operation of SINGER began in 1905. Later, in
1920, two shops were set up in Dhaka and Chittagong.

A change in investment policy in 1979 created new business opportunities and SINGER
registered as an operating company, with 80% of the share held by singer Sewing Machine
Company (SSMC), USA and 20% by local shareholders. In 1993 the company was listed with
Dhaka Stock Exchange (DSE) and offered 25% of its total capitalization- 2,565 ordinary share of
100 each. It was listed also with the Chittagong Stock Exchange. Thus, the transformation of
SINGER from a single product sewing machine company into a multiproduct consumer durable
company began in 1985 for further growth and expansion.

VISION: To be the most admired and respected family company in the country.

MISION: Our mission is to improve the Quality of life of the people by providing comforts and
conveniences at affordable.

In our report we are showing how SINGER corporation compliance International Accounting
Standards and International Financial Reporting Standards for providing the information in the
Annual Report 2018.
 International Accounting Standards

IAS 1 - Presentation of Financial Statements

IAS 1 Presentation of Financial Statements sets out the overall requirements for financial
statements, including how they should be structured, the minimum requirements for their content
and overriding concepts such as going concern, the accrual basis of accounting and the
current/non-current distinction. The standard requires a complete set of financial statements to
comprise a statement of financial position, a statement of profit or loss and other comprehensive
income, a statement of changes in equity and a statement of cash flows. [ CITATION IAS2 \l 18441 ]

Objective of financial statements

The objective of general-purpose financial statements is to provide information about the

financial position, financial performance, and cash flows of an entity that is useful to a wide
range of users in making economic decisions. To meet that objective, financial statements
provide information about an entity's: [IAS 1.9]

 Assets
 Liabilities
 Equity
 Income and expenses, including gains and losses
 Contributions by and distributions to owners (in their capacity as owners)
 Cash flows.

That information, along with other information in the notes, assists users of financial statements
in predicting the entity's future cash flows and, in particular, their timing and certainty.

Components of financial statements

A complete set of financial statements includes: [IAS 1.10]

 a statement of financial position (balance sheet) at the end of the period

  a statement of profit or loss and other comprehensive income for the period (presented as
a single statement, or by presenting the profit or loss section in a separate statement of
profit or loss, immediately followed by a statement presenting comprehensive income
beginning with profit or loss)
 a statement of changes in equity for the period
 a statement of cash flows for the period
 notes, comprising a summary of significant accounting policies and other explanatory
notes
 Comparative information prescribed by the standard.

An entity may use titles for the statements other than those stated above.  All financial statements
are required to be presented with equal prominence. [IAS 1.10] 

When an entity applies an accounting policy retrospectively or makes a retrospective restatement

of items in its financial statements, or when it reclassifies items in its financial statements, it
must also present a statement of financial position (balance sheet) as at the beginning of the
earliest comparative period.

Reports that are presented outside of the financial statements – including financial reviews by
management, environmental reports, and value-added statements – are outside the scope of
IFRSs. [IAS 1.14]

Fair presentation and compliance with IFRSs

The financial statements must "present fairly" the financial position, financial performance and
cash flows of an entity. Fair presentation requires the faithful representation of the effects of
transactions, other events, and conditions in accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses set out in the Framework. The application of
IFRSs, with additional disclosure when necessary, is presumed to result in financial statements
that achieve a fair presentation. [IAS 1.15]

IAS 1 requires an entity whose financial statements comply with IFRSs to make an explicit and
unreserved statement of such compliance in the notes. Financial statements cannot be described
as complying with IFRSs unless they comply with all the requirements of IFRSs (which includes
International Financial Reporting Standards, International Accounting Standards, IFRIC
Interpretations and SIC Interpretations). [IAS 1.16]

Inappropriate accounting policies are not rectified either by disclosure of the accounting policies
used or by notes or explanatory material. [IAS 1.18]

IAS 1 acknowledges that, in extremely rare circumstances, management may conclude that
compliance with an IFRS requirement would be so misleading that it would conflict with the
objective of financial statements set out in the Framework. In such a case, the entity is required
to depart from the IFRS requirement, with detailed disclosure of the nature, reasons, and impact
of the departure. [IAS 1.19-21]

Going concern

The Conceptual Framework notes that financial statements are normally prepared assuming the
entity is a going concern and will continue in operation for the foreseeable future. [Conceptual
Framework, paragraph 4.1]

IAS 1 requires management to make an assessment of an entity's ability to continue as a going

concern.  If management has significant concerns about the entity's ability to continue as a going
concern, the uncertainties must be disclosed. If management concludes that the entity is not a
going concern, the financial statements should not be prepared on a going concern basis, in
which case IAS 1 requires a series of disclosures. [IAS 1.25]

Accrual basis of accounting

IAS 1 requires that an entity prepare its financial statements, except for cash flow information,
using the accrual basis of accounting. [IAS 1.27]

Consistency of presentation

The presentation and classification of items in the financial statements shall be retained from one
period to the next unless a change is justified either by a change in circumstances or a
requirement of a new IFRS. [IAS 1.45]

Materiality and aggregation

Information is material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of general purpose financial statements make on the
basis of those financial statements, which provide financial information about a specific
reporting entity. [IAS 1.7]*

Each material class of similar items must be presented separately in the financial statements.
Dissimilar items may be aggregated only if they are individually immaterial. [IAS 1.29]

However, information should not be obscured by aggregating or by providing immaterial

information, materiality considerations apply to the all parts of the financial statements, and even
when a standard requires a specific disclosure, materiality considerations do apply. [IAS 1.30A-
31]

* Clarified by Definition of Material (Amendments to IAS 1 and IAS 8), effective 1 January
2020.

Offsetting

Assets and liabilities, and income and expenses, may not be offset unless required or permitted
by an IFRS. [IAS 1.32]

Comparative information

IAS 1 requires that comparative information to be disclosed in respect of the previous period for
all amounts reported in the financial statements, both on the face of the financial statements and
in the notes, unless another Standard requires otherwise. Comparative information is provided
for narrative and descriptive where it is relevant to understanding the financial statements of the
current period. [IAS 1.38]

An entity is required to present at least two of each of the following primary financial statements:
[IAS 1.38A]

 statement of financial position*

 statement of profit or loss and other comprehensive income
 separate statements of profit or loss (where presented)
 statement of cash flows
  statement of changes in equity
 related notes for each of the above items.

* A third statement of financial position is required to be presented if the entity retrospectively

applies an accounting policy, restates items, or reclassifies items, and those adjustments had a
material effect on the information in the statement of financial position at the beginning of the
comparative period. [IAS 1.40A]

Where comparative amounts are changed or reclassified, various disclosures are required. [IAS
1.41]

Structure and content of financial statements in general

IAS 1 requires an entity to clearly identify: [IAS 1.49-51]

 the financial statements, which must be distinguished from other information in a

published document
 each financial statement and the notes to the financial statements.

In addition, the following information must be displayed prominently, and repeated as necessary:
[IAS 1.51]

 the name of the reporting entity and any change in the name
 whether the financial statements are a group of entities or an individual entity
 information about the reporting period
 the presentation currency (as defined by IAS 21 The Effects of Changes in Foreign
Exchange Rates)
 the level of rounding used (e.g. thousands, millions).

Reporting period

There is a presumption that financial statements will be prepared at least annually. If the annual
reporting period changes and financial statements are prepared for a different period, the entity
must disclose the reason for the change and state that amounts are not entirely comparable. [IAS
1.36]
Statement of financial position (balance sheet)

Current and non-current classification

An entity must normally present a classified statement of financial position, separating current
and non-current assets and liabilities, unless presentation based on liquidity provides information
that is reliable. [IAS 1.60] In either case, if an asset (liability) category combines amounts that
will be received (settled) after 12 months with assets (liabilities) that will be received (settled)
within 12 months, note disclosure is required that separates the longer-term amounts from the
12-month amounts. [IAS 1.61]

 Current assets are assets that are: [IAS 1.66]

 expected to be realized in the entity's normal operating cycle
 held primarily for the purpose of trading
 expected to be realized within 12 months after the reporting period
 cash and cash equivalents (unless restricted)

All other assets are non-current. [IAS 1.66]

Current liabilities are those: [IAS 1.69]

 expected to be settled within the entity's normal operating cycle

 held for purpose of trading
 due to be settled within 12 months
 for which the entity does not have the right at the end of the reporting period to defer
settlement beyond 12 months.

Other liabilities are non-current.

When a long-term debt is expected to be refinanced under an existing loan facility, and the entity
has the discretion to do so, the debt is classified as non-current, even if the liability would
otherwise be due within 12 months. [IAS 1.73]

If a liability has become payable on demand because an entity has breached an undertaking
under a long-term loan agreement on or before the reporting date, the liability is current, even if
the lender has agreed, after the reporting date and before the authorization of the financial
statements for issue, not to demand payment as a consequence of the breach. [IAS 1.74]
However, the liability is classified as non-current if the lender agreed by the reporting date to
provide a period of grace ending at least 12 months after the end of the reporting period, within
which the entity can rectify the breach and during which the lender cannot demand immediate
repayment. [IAS 1.75]

Settlement by the issue of equity instruments does not impact classification. [IAS 1.76B]

Line items

The line items to be included on the face of the statement of financial position are: [IAS 1.54]

(a) property, plant and equipment

(b) investment property

(c) intangible assets

(d) financial assets (excluding amounts shown under (e), (h), and (i))

(e) investments accounted for using the equity method

(f) biological assets

(g) inventories

(h) trade and other receivables

(i) cash and cash equivalents

(j) assets held for sale

(k) trade and other payables

(l) provisions

(m) financial liabilities (excluding amounts shown under (k) and (l))

(n) current tax liabilities and current tax assets, as defined in IAS 12
(o) deferred tax liabilities and deferred tax assets, as defined in IAS 12

(p) liabilities included in disposal groups

(q) non-controlling interests, presented within equity

(r) issued capital and reserves attributable to owners of the parent.

Additional line items, headings and subtotals may be needed to fairly present the entity's
financial position. [IAS 1.55] 

When an entity presents subtotals, those subtotals shall be comprised of line items made up of
amounts recognized and measured in accordance with IFRS; be presented and labelled in a clear
and understandable manner; be consistent from period to period; and not be displayed with more
prominence than the required subtotals and totals. [IAS 1.55A]*

* Added by Disclosure Initiative (Amendments to IAS 1), effective 1 January 2016.

Further sub-classifications of line items presented are made in the statement or in the notes, for
example: [IAS 1.77-78]:

 classes of property, plant and equipment

 disaggregation of receivables
 disaggregation of inventories in accordance with IAS 2 Inventories
 disaggregation of provisions into employee benefits and other items
 classes of equity and reserves.

Format of statement

IAS 1 does not prescribe the format of the statement of financial position. Assets can be
presented current then non-current, or vice versa, and liabilities and equity can be presented
current then non-current then equity, or vice versa. A net asset presentation (assets minus
liabilities) is allowed. The long-term financing approach used in UK and elsewhere – fixed assets
+ current assets - short term payables = long-term debt plus equity – is also acceptable.

Share capital and reserves

Regarding issued share capital and reserves, the following disclosures are required: [IAS 1.79]

 numbers of shares authorised, issued and fully paid, and issued but not fully paid
 par value (or that shares do not have a par value)
 a reconciliation of the number of shares outstanding at the beginning and the end of the
period
 description of rights, preferences, and restrictions
 treasury shares, including shares held by subsidiaries and associates
 shares reserved for issuance under options and contracts
 a description of the nature and purpose of each reserve within equity.

Additional disclosures are required in respect of entities without share capital and where an
entity has reclassified puttable financial instruments.  [IAS 1.80-80A]

Statement of profit or loss and other comprehensive income

Concepts of profit or loss and comprehensive income

Profit or loss is defined as "the total of income less expenses, excluding the components of other
comprehensive income".  Other comprehensive income is defined as comprising "items of
income and expense (including reclassification adjustments) that are not recognised in profit or
loss as required or permitted by other IFRSs".  Total comprehensive income is defined as "the
change in equity during a period resulting from transactions and other events, other than those
changes resulting from transactions with owners in their capacity as owners". [IAS 1.7]

Comprehensive income for the period = Profit/loss + Other comprehensive

income

All items of income and expense recognized in a period must be included in profit or loss unless
a Standard or an Interpretation requires otherwise. [IAS 1.88] Some IFRSs require or permit that
some components to be excluded from profit or loss and instead to be included in other
comprehensive income.

Choice in presentation and basic requirements

An entity has a choice of presenting:

 a single statement of profit or loss and other comprehensive income, with profit or loss
and other comprehensive income presented in two sections, or
 two statements:
 a separate statement of profit or loss
 a statement of comprehensive income, immediately following the statement of profit
or loss and beginning with profit or loss [IAS 1.10A]

The statement(s) must present: [IAS 1.81A]

 profit or loss
 total other comprehensive income
 comprehensive income for the period
 an allocation of profit or loss and comprehensive income for the period between non-
controlling interests and owners of the parent.

Profit or loss section or statement

The following minimum line items must be presented in the profit or loss section (or separate
statement of profit or loss, if presented): [IAS 1.82-82A]

 revenue
 gains and losses from the derecognition of financial assets measured at amortised cost
 finance costs
 share of the profit or loss of associates and joint ventures accounted for using the equity
method
 certain gains or losses associated with the reclassification of financial assets
 tax expense
 a single amount for the total of discontinued items

Expenses recognized in profit or loss should be analyzed either by nature (raw materials, staffing
costs, depreciation, etc.) or by function (cost of sales, selling, administrative, etc). [IAS 1.99] If
an entity categorizes by function, then additional information on the nature of expenses – at a
minimum depreciation, amortization and employee benefits expense – must be disclosed. [IAS
1.104]

Other comprehensive income section

The other comprehensive income section is required to present line items which are classified by
their nature, and grouped between those items that will or will not be reclassified to profit and
loss in subsequent periods. [IAS 1.82A]

An entity's share of OCI of equity-accounted associates and joint ventures is presented in

aggregate as single line items based on whether or not it will subsequently be reclassified to
profit or loss. [IAS 1.82A]*

* Clarified by Disclosure Initiative (Amendments to IAS 1), effective 1 January 2016.

When an entity presents subtotals, those subtotals shall be comprised of line items made up of
amounts recognized and measured in accordance with IFRS; be presented and labelled in a clear
and understandable manner; be consistent from period to period; not be displayed with more
prominence than the required subtotals and totals; and reconciled with the subtotals or totals
required in IFRS. [IAS 1.85A-85B]*

* Added by Disclosure Initiative (Amendments to IAS 1), effective 1 January 2016.

Other requirements

Additional line items may be needed to fairly present the entity's results of operations. [IAS 1.85]

Items cannot be presented as 'extraordinary items' in the financial statements or in the notes.
[IAS 1.87]

Certain items must be disclosed separately either in the statement of comprehensive income or in
the notes, if material, including: [IAS 1.98]

 write-downs of inventories to net realisable value or of property, plant and equipment to

recoverable amount, as well as reversals of such write-downs
 restructurings of the activities of an entity and reversals of any provisions for the costs of
restructuring
  disposals of items of property, plant and equipment
 disposals of investments
 discontinuing operations
 litigation settlements
 other reversals of provisions

Statement of cash flows

Rather than setting out separate requirements for presentation of the statement of cash flows, IAS
1.111 refers to IAS 7 Statement of Cash Flows.

Statement of changes in equity

IAS 1 requires an entity to present a separate statement of changes in equity. The statement must
show: [IAS 1.106]

 total comprehensive income for the period, showing separately amounts attributable to
owners of the parent and to non-controlling interests
 the effects of any retrospective application of accounting policies or restatements made in
accordance with IAS 8, separately for each component of other comprehensive income
 reconciliations between the carrying amounts at the beginning and the end of the period
for each component of equity, separately disclosing:
 profit or loss
 other comprehensive income*
 transactions with owners, showing separately contributions by and distributions
to owners and changes in ownership interests in subsidiaries that do not result
in a loss of control

* An analysis of other comprehensive income by item is required to be presented either in the

statement or in the notes. [IAS 1.106A]

The following amounts may also be presented on the face of the statement of changes in equity,
or they may be presented in the notes: [IAS 1.107]

 amount of dividends recognized as distributions

  the related amount per share.

Notes to the financial statements

The notes must: [IAS 1.112]

 present information about the basis of preparation of the financial statements and the
specific accounting policies used
 disclose any information required by IFRSs that is not presented elsewhere in the
financial statements and
 provide additional information that is not presented elsewhere in the financial statements
but is relevant to an understanding of any of them

Notes are presented in a systematic manner and cross-referenced from the face of the financial
statements to the relevant note. [IAS 1.113]

IAS 1.114 suggests that the notes should normally be presented in the following order:*

 a statement of compliance with IFRSs

 a summary of significant accounting policies applied, including: [IAS 1.117]
 the measurement basis (or bases) used in preparing the financial statements
 the other accounting policies used that are relevant to an understanding of the
financial statements
 supporting information for items presented on the face of the statement of financial
position (balance sheet), statement(s) of profit or loss and other comprehensive income,
statement of changes in equity and statement of cash flows, in the order in which each
statement and each line item is presented
 other disclosures, including:
 contingent liabilities (see IAS 37) and unrecognized contractual commitments
 non-financial disclosures, such as the entity's financial risk management
objectives and policies (see IFRS 7 Financial Instruments: Disclosures)

* Disclosure Initiative (Amendments to IAS 1), effective 1 January 2016, clarifies this order just
to be an example of how notes can be ordered and adds additional examples of possible ways of
ordering the notes to clarify that understandability and comparability should be considered when
determining the order of the notes.

Other disclosures

Judgements and key assumptions

An entity must disclose, in the summary of significant accounting policies or other notes, the
judgements, apart from those involving estimations, that management has made in the process of
applying the entity's accounting policies that have the most significant effect on the amounts
recognized in the financial statements. [IAS 1.122]

Examples cited in IAS 1.123 include management's judgements in determining:

 when substantially all the significant risks and rewards of ownership of financial assets
and lease assets are transferred to other entities
 whether, in substance, particular sales of goods are financing arrangements and therefore
do not give rise to revenue.

An entity must also disclose, in the notes, information about the key assumptions concerning the
future, and other key sources of estimation uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year. [IAS 1.125] These disclosures do not involve disclosing
budgets or forecasts. [IAS 1.130]

Dividends

In addition to the distribution’s information in the statement of changes in equity (see above), the
following must be disclosed in the notes: [IAS 1.137]

 the amount of dividends proposed or declared before the financial statements were
authorised for issue but which were not recognised as a distribution to owners during the
period, and the related amount per share
 the amount of any cumulative preference dividends not recognised.

Capital disclosures
An entity discloses information about its objectives, policies and processes for managing capital.
[IAS 1.134] To comply with this, the disclosures include: [IAS 1.135]

 qualitative information about the entity's objectives, policies and processes for managing
capital, including
 description of capital it manages
 nature of external capital requirements, if any
 how it is meeting its objectives
 quantitative data about what the entity regards as capital
 changes from one period to another
 whether the entity has complied with any external capital requirements and
 if it has not complied, the consequences of such non-compliance.

Puttable financial instruments

IAS 1.136A requires the following additional disclosures if an entity has a puttable instrument
that is classified as an equity instrument:

 summary quantitative data about the amount classified as equity

 the entity's objectives, policies and processes for managing its obligation to repurchase or
redeem the instruments when required to do so by the instrument holders, including any
changes from the previous period
 the expected cash outflow on redemption or repurchase of that class of financial
instruments and
 information about how the expected cash outflow on redemption or repurchase was
determined.

Other information

The following other note disclosures are required by IAS 1 if not disclosed elsewhere in
information published with the financial statements: [IAS 1.138]

 domicile and legal form of the entity

 country of incorporation
 address of registered office or principal place of business
  description of the entity's operations and principal activities
 if it is part of a group, the name of its parent and the ultimate parent of the group
 if it is a limited life entity, information regarding the length of the life

Terminology

The 2007 comprehensive revision to IAS 1 introduced some new terminology. Consequential
amendments were made at that time to all of the other existing IFRSs, and the new terminology
has been used in subsequent IFRSs including amendments. IAS 1.8 states: "Although this
Standard uses the terms 'other comprehensive income', 'profit or loss' and 'total comprehensive
income', an entity may use other terms to describe the totals as long as the meaning is clear. For
example, an entity may use the term 'net income' to describe profit or loss." Also, IAS 1.57(b)
states: "The descriptions used and the ordering of items or aggregation of similar items may be
amended according to the nature of the entity and its transactions, to provide information that is
relevant to an understanding of the entity's financial position." [ CITATION IAS2 \l 18441 ]

position."

Term before 2007 revision of IAS 1 Term as amended by IAS 1 (2007)

balance sheet statement of financial position

cash flow statement statement of cash flows

income statement statement of comprehensive income

(income statement is retained in case of
a two-statement approach)

recognised in the income statement recognised in profit or loss

recognised [directly] in equity (only recognised in other comprehensive

for OCI components) income

recognised [directly] in equity (for recognised outside profit or loss (either

 recognition both in OCI and equity) in OCI or equity)

removed from equity and recognised in reclassified from equity to profit or loss
profit or loss ('recycling') as a reclassification adjustment

Standard or/and Interpretation IFRSs

on the face of In

equity holders owners (exception for 'ordinary equity

holders')

balance sheet date end of the reporting period

reporting date end of the reporting period

after the balance sheet date after the reporting period

Use of the respective standard in SBL annual Report

SBL have presented the financial statements of International Appliances Limited (the Company),
which comprise the statement of financial position as at 31 December 2018, and the statement of
profit or loss and other comprehensive income, statement of changes in equity and statement of
cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies. In our opinion, the accompanying financial statements give a true
and fair view of the financial position of the Company as at 31 December 2018, and its financial
performance and its cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRSs), the Companies Act 1994 and other applicable laws and
regulations. [ CITATION Sng \l 18441 ]

The financial statements of SBL have been prepared in compliance with the requirements of the
International Financial Reporting Standards (IFRS) as adopted in Bangladesh by the Institute of
Chartered Accountants of Bangladesh, the Companies Act 1994, Bangladesh Securities and
Exchange Ordinance 1969, Bangladesh Securities and Exchange Rules 1987, Listing Regulations
of Dhaka and Chittagong Stock Exchanges and other relevant local laws as applicable.

The Company has adequate resources to continue in operation for foreseeable future and hence,
the financial statements have been prepared on going concern basis. As per management
assessment there are no material uncertainties related to events or conditions which may cast
significant doubt upon the Company's ability to continue as a going concern.

The Board of Directors of your Company recommended 30% Stock dividend (3 ordinary shares
for every 10 shares) per Ordinary share of taka 10 each.

The financial period of the Company covers one year from 1 January to 31 December.

Comment

Hence, from the above discussion, it is clear that SBL follows all the rules and principles laid out
by the standard IAS 1 — Presentation of Financial Statements.

IAS 2 — Inventories
IAS 2 Inventories contains the requirements on how to account for most types of inventory. The
standard requires inventories to be measured at the lower of cost and net realizable value (NRV)
and outlines acceptable methods of determining cost, including specific identification (in some
cases), first-in first-out (FIFO) and weighted average cost.

Measurement of inventories

Cost should include all: [IAS 2.10]

 costs of purchase (including taxes, transport, and handling) net of trade discounts
received

 costs of conversion (including fixed and variable manufacturing overheads) and

 other costs incurred in bringing the inventories to their present location and condition
Inventory cost should not include: [IAS 2.16 and 2.18]

 abnormal waste

 storage costs

 administrative overheads unrelated to production

 selling costs

 foreign exchange differences arising directly on the recent acquisition of inventories

invoiced in a foreign currency

 interest cost when inventories are purchased with deferred settlement terms.

The standard cost and retail methods may be used for the measurement of cost, provided that the
results approximate actual cost. [IAS 2.21-22]

For inventory items that are not interchangeable, specific costs are attributed to the specific
individual items of inventory. [IAS 2.23]

For items that are interchangeable, IAS 2 allows the FIFO or weighted average cost formulas.
[IAS 2.25] The LIFO formula, which had been allowed prior to the 2003 revision of IAS 2, is no
longer allowed.

The same cost formula should be used for all inventories with similar characteristics as to their
nature and use to the entity. For groups of inventories that have different characteristics, different
cost formulas may be justified. [IAS 2.25]

Write-down to net realizable value

NRV is the estimated selling price in the ordinary course of business, less the estimated cost of
completion and the estimated costs necessary to make the sale. [IAS 2.6] Any write-down to
NRV should be recognized as an expense in the period in which the write-down occurs. Any
reversal should be recognized in the income statement in the period in which the reversal occurs.
[IAS 2.34]

Expense recognition
IAS 18 Revenue addresses revenue recognition for the sale of goods. When inventories are sold
and revenue is recognized, the carrying amount of those inventories is recognized as an expense
(often called cost-of-goods-sold). Any write-down to NRV and any inventory losses are also
recognized as an expense when they occur. [IAS 2.34]

Disclosure

Required disclosures: [IAS 2.36]

 accounting policy for inventories

 carrying amount, generally classified as merchandise, supplies, materials, work in

progress, and finished goods. The classifications depend on what is appropriate for the
entity

 carrying amount of any inventories carried at fair value less costs to sell

 amount of any write-down of inventories recognised as an expense in the period

 amount of any reversal of a write-down to NRV and the circumstances that led to such
reversal

 carrying amount of inventories pledged as security for liabilities

 cost of inventories recognised as expense (cost of goods sold).

IAS 2 acknowledges that some enterprises classify income statement expenses by nature
(materials, labour, and so on) rather than by function (cost of goods sold, selling expense, and so
on). Accordingly, as an alternative to disclosing cost of goods sold expense, IAS 2 allows an
entity to disclose operating costs recognised during the period by nature of the cost (raw
materials and consumables, labour costs, other operating costs) and the amount of the net change
in inventories for the period). [IAS 2.39] [ CITATION IAS2 \l 18441 ]

Use of the respective standard in SBL annual Report:

The company (SBL) measured their inventories at lower of cost and net realisable value, after
making due allowances for obsolete and slow moving items. Net realisable value is estimated
selling price in the ordinary course of business, less the estimated cost of completion and selling
expenses. The Company assesses the NRV by giving consideration to future demand and
condition of the inventory and make adjustments to the value by making required provisions.
Inventories consist of raw materials, work-in-process, goods in transit and finished goods.

Comment:

Hence, for the above discussion it is clear that SBL all the rules and principles laid out by the
standard IAS 2 — Inventories.

[ CITATION Sng \l 18441 ]

IAS 7 — Statement of Cash Flows

IAS 7 Statement of Cash Flows requires an entity to present a statement of cash flows as an
integral part of its primary financial statements. Cash flows are classified and presented into
operating activities (either using the 'direct' or 'indirect' method), investing activities or financing
activities, with the latter two categories generally presented on a gross basis.

Presentation of the Statement of Cash Flows

Cash flows must be analyzed between operating, investing and financing activities. [IAS 7.10]

Key principles specified by IAS 7 for the preparation of a statement of cash flows are as follows:

 operating activities are the main revenue-producing activities of the entity that are not
investing or financing activities, so operating cash flows include cash received from
customers and cash paid to suppliers and employees [IAS 7.14]

 investing activities are the acquisition and disposal of long-term assets and other
investments that are not considered to be cash equivalents [IAS 7.6]

 financing activities are activities that alter the equity capital and borrowing structure of
the entity [IAS 7.6]

 interest and dividends received and paid may be classified as operating, investing, or
financing cash flows, provided that they are classified consistently from period to period
[IAS 7.31]

 cash flows arising from taxes on income are normally classified as operating, unless they
can be specifically identified with financing or investing activities [IAS 7.35]

 for operating cash flows, the direct method of presentation is encouraged, but the indirect
method is acceptable [IAS 7.18]
The direct method shows each major class of gross cash receipts and gross cash
payments.

The operating cash flows section of the statement of cash flows under the direct method would
appear something like this:

Cash receipts from customers xx,xxx

 Cash paid to suppliers xx,xxx

Cash paid to employees xx,xxx

Cash paid for other operating expenses xx,xxx

Interest paid xx,xxx

Net cash from operating activities xx,xxx

The indirect method adjusts accrual basis net profit or loss for the effects of non-cash
transactions. The operating cash flows section of the statement of cash flows under the indirect
method would appear something like this:

Profit before interest and income xx,xxx

taxes

Add back depreciation xx,xxx

Add back impairment of assets xx,xxx

Increase in receivables xx,xxx

Decrease in inventories xx,xxx

Increase in trade payables xx,xxx

Interest expense xx,xxx
Less Interest accrued but not yet xx,xxx
paid
Interest paid xx,xxx
Income taxes paid xx,xxx

Net cash from operating activities xx,xxx

The exchange rate used for translation of transactions denominated in a foreign currency should
be the rate in effect at the date of the cash flows [IAS 7.25]

Cash flows of foreign subsidiaries should be translated at the exchange rates prevailing when the
cash flows took place [IAS 7.26]
As regards the cash flows of associates, joint ventures, and subsidiaries, where the equity or cost
method is used, the statement of cash flows should report only cash flows between the investor
and the investee; where proportionate consolidation is used, the cash flow statement should
include the venturer's share of the cash flows of the investee [IAS 7.37]

Aggregate cash flows relating to acquisitions and disposals of subsidiaries and other business
units should be presented separately and classified as investing activities, with specified
additional disclosures. [IAS 7.39] The aggregate cash paid or received as consideration should be
reported net of cash and cash equivalents acquired or disposed of [IAS 7.42]

cash flows from investing and financing activities should be reported gross by major class of
cash receipts and major class of cash payments except for the following cases, which may be
reported on a net basis: [IAS 7.22-24]

 cash receipts and payments on behalf of customers (for example, receipt and repayment
of demand deposits by banks, and receipts collected on behalf of and paid over to the
owner of a property)

 cash receipts and payments for items in which the turnover is quick, the amounts are
large, and the maturities are short, generally less than three months (for example, charges
and collections from credit card customers, and purchase and sale of investments)

 cash receipts and payments relating to deposits by financial institutions

 cash advances and loans made to customers and repayments thereof

investing and financing transactions which do not require the use of cash should be excluded
from the statement of cash flows, but they should be separately disclosed elsewhere in the
financial statements [IAS 7.43]

entities shall provide disclosures that enable users of financial statements to evaluate changes in
liabilities arising from financing activities [IAS 7.44A-44E]*

the components of cash and cash equivalents should be disclosed, and a reconciliation presented
to amounts reported in the statement of financial position [IAS 7.45]
the amount of cash and cash equivalents held by the entity that is not available for use by the
group should be disclosed, together with a commentary by management [IAS 7.48]

Use of the respective standard in SBL annual Report:

The company SBL their Statement of Cash Flows (Cash Flow Statement) is prepared under
direct method in accordance with IAS-7

"Statement of Cash Flows" as required by the Bangladesh Securities and Exchange Rules 1987.

In the report

Under Financial risk management SBL shows

Cash flow sensitivity analysis for variable rate instruments 2018

A change of 200 basis points in interest rates for other variable rate liabilities which comprise
the security deposit from employees and shop managers, in 2018 would have increased/
(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all
other variables remain constant.

[ CITATION Sng \l 18441 ]

Cash flow sensitivity analysis for variable rate instruments 2017

A change of 200 basis points in interest rates for other variable rate liabilities which comprise the
security deposit from employees and shop managers, in 2017 would have increased/ (decreased)
equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables remain constant.
Comment:

Hence, for the above discussion we can see SBL make IAS -7 statements of cash flow under
direct method and also available in their annual report.

IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

Accounting Policies

Accounting policies are the specific principles, bases, conventions, rules and practices applied by
an entity in preparing and presenting financial statements.

IAS 8 requires an entity to select and apply appropriate accounting policies complying with IFRS
and Interpretations to ensure that the financial statement provide information that is:

 relevant to the economic decision-making needs of users

 reliable in that the financial statements
- represent faithfully the financial position, financial performances and cash flows
of the entity
- reflect the economic substance or transactions, other events and conditions and
not merely the legal form
- are neutral
- are prudent, and
- are complete in all material respects [ CITATION IAS2 \l 18441 ]

Accounting Policies Used in the Financial Statements of Singer Bangladesh Limited:

 1. Revenue
2. Finance income and finance costs
3. Foreign currency transactions
4. Income tax
5. Inventories
6. Property, plant and equipment
7. Intangibles
8. Financial instruments
9. Impairment
10. Provisions
11. Royalty
12. Warranty costs
13. Investments
14. Worker's profit participation fund
15. Employee benefit
16. Reporting period
17. Earnings per share
18. Segment reporting
19. Statement of cash flows
20. Events after the reporting period
21. Offsetting
22. Basis of consolidation [ CITATION Sng \l 18441 ]

Changing in Accounting Policies:

 the change should be applied retrospectively, with an adjustment to the opening balance
of retained earnings in the statement of changes in equity
 comparative information should be restated unless it is impracticable to do so
 if the adjustment to opening retained earnings cannot be reasonably determined, the
change should be adjusted prospectively, i.e. included in the current period’s statement of
profit and loss.

Disclosures relating to changes in accounting policies:

Disclosures relating to changes in accounting policy caused by a new standard or interpretation
include

 the title of the standard or interpretation causing the change the nature of the change in
accounting policy a description of the transitional provisions, including those that might
have an effect on future periods for the current period and each prior period presented, to
the extent practicable, the amount of the adjustment:
 for each financial statement line item affected, and for basic and diluted earnings per
share (only if the entity is applying IAS 33)
 the amount of the adjustment relating to periods before those presented, to the extent
practicable if retrospective application is impracticable, an explanation and description of
how the change in accounting policy was applied.

Financial statements of subsequent periods need not repeat these disclosures.

Disclosures relating to voluntary changes in accounting policy include

 the nature of the change in accounting policy the reasons why applying the new
accounting policy provides reliable and more relevant information for the current period
and each prior period presented, to the extent practicable, the amount of the adjustment:
 for each financial statement line item affected, and for basic and diluted earnings per
share (only if the entity is applying IAS 33)
 the amount of the adjustment relating to periods before those presented, to the extent
practicable if retrospective application is impracticable, an explanation and description of
how the change in accounting policy was applied.

Financial statements of subsequent periods need not repeat these disclosures.

If an entity has not applied a new standard or interpretation that has been issued but is not yet
effective, the entity must disclose that fact and any and known or reasonably estimable
information relevant to assessing the possible impact that the new pronouncement will have in
the year it is applied. [IAS 8.30] [ CITATION IAS2 \l 18441 ]

Use of the Respective Standard in SBL Annual Report

The Group has initially applied IFRS 15 and IFRS 9 from 1 January 2018. These two new
standards do not have a material effect on the Group’s financial statements. Due to the transition
methods chosen by the Group in applying these standards, comparative information throughout
these financial statements has not been restated to reflect the requirements of the new standards.

Comment:

SBL follows IAS 8- Accounting Policies, Changes in Accounting Estimates and Errors.

IFRS 15 - Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when
revenue is recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related
interpretations. Under IFRS 15, revenue is recognised when a customer obtains control of the
goods or services. Determining the timing of the transfer of control – at a point in time or over
time – requires judgment.

The Group has adopted IFRS 15 using the cumulative effect method (without practical
expedients), with the effect of initially applying this standard recognised at the date of initial
application (i.e. 1 January 2018). Accordingly, the information presented for 2017 has not been
restated – i.e. it is presented, as previously reported, under IAS 18, IAS 11 and related
interpretations. Additionally, the disclosure requirements in IFRS 15 have not generally been
applied to comparative information. There was no material impact of adopting IFRS 15 on the
Group’s statement of financial position as at 31 December2018 and its statement of profit or loss
and OCI for the year ended 31 December 2018 and the statement of cash flows for the year then
ended.

IFRS 9 - Financial Instruments

IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities
and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial
Instruments: Recognition and Measurement. There was no material impact of adopting IFRS 9
on the Group’s statement of financial position as at 31 December 2018 and its statement of profit
or loss and OCI for the year ended 31 December 2018 and the statement of cash flows for the
year then ended.

IFRS 9 contains three principal classification categories for financial assets: measured at
amortized cost, FVOCI and FVTPL. The classification of financial assets under IFRS 9 is
generally based on the business model in which a financial asset is managed and its contractual
cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to maturity,
loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts
where the host is a financial asset in the scope of the standard are never separated. Instead, the
hybrid financial instrument as a whole is assessed for classification. IFRS 9 largely retains the
existing requirements in IAS 39 for the classification and measurement of financial liabilities.

The adoption of IFRS 9 has not had a significant effect on the Group’s accounting policies
related to financial liabilities and derivative financial instruments (for derivatives that are used as
hedging instruments).

IFRS 16 - Leases (Adopted but Not Yet Effective)

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee
recognises a right-of-use asset representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. There are recognition exemptions for
short-term leases and leases of low-value items. Lessor accounting remains similar to the current
standard – i.e. lessors continue to classify leases as finance or operating leases.

IFRS 16 replaces existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining
whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27
Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard is
effective for annual periods beginning on or after 1 January 2019. Although early adoption is
permitted, the Group has not early adopted IFRS 16 in preparing these financial statements. The
most significant impact identified is that, the Group will recognise new assets and liabilities for
its operating leases of retail stores / showrooms, warehouses, service centers, factories and other
offices facilities. In addition, the nature of expenses related to those leases will now change as
IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-
of-use assets and interest expense on lease liabilities. Previously, the Group recognised operating
lease expense on a straight-line basis over the term of the lease, and recognised liabilities only to
the extent that there was a timing difference between actual lease payments and the expense
recognized.

Use of the Respective Standard in SBL Annual Report

The Group has no finance leases. As a lessee, the Group plans to apply IFRS 16 initially on 1
January 2019, using the modified retrospective approach. Therefore, the cumulative effect of
adopting IFRS 16 will be recognized as an adjustment to the opening balance of retained
earnings at 1 January 2019, with no restatement of comparative information. The Group also
plans to apply IFRS 16 to all contracts entered into before 1 January 2019 and identified as
leases in accordance with IAS 17 and IFRIC 4.

The Group is currently assessing the impact of initially applying the standard on the elements of
financial statements.

Comment

As the newly applied standards have no material effect on financial statement, in annual report of
SBL not showing the restatement. For adopting IFRS 15, they showed the effect on present
year’s revenue. They currently assessing the impact of the standard that is adopted but still not
effective. So, we can say that annual report 2018 of SBL followed the rules of changing policies
according to the IAS 8.

Accounting Estimates:

An accounting estimates is a method adopted by an entity to arrive at estimated amounts for the
financial statements.

Most figures in the financial statements require some estimation:

 the exercise of judgment based on the latest information available at the time
 at a later date, estimates may have to be revised as a result of the availability of new
information, more experience or subsequent developments.

Changing in Accounting Estimates:

  The effects of the change in accounting estimates should be included in the statement of
profit or loss in the period of the change and if subsequent periods are affected, in those
subsequent periods.
 The effects of the change should be included in the same income or expense classification
as was used for the original estimation.
 If the effect of the change is material, its nature and amount must be disclosed.

Disclosures Relating to Changes in Accounting Estimates:

 the nature and amount of a change in an accounting estimate that has an effect in the
current period or is expected to have an effect in future periods
 if the amount of the effect in future periods is not disclosed because estimating it is
impracticable, an entity shall disclose that fact

Prior Period Errors:

Prior period errors are omissions from, and misstatements in, an entity's financial statements for
one or more prior periods arising from a failure to use, or misuse of, reliable information that
was available and could reasonably be expected to have been obtained and taken into account in
preparing those statements.

Such errors result from mathematical mistakes, mistakes in applying accounting policies,
oversights or misinterpretations of facts, and fraud.

Correction of Prior Period Errors:

 restating the opening balance of assets, liabilities and equity as if the error had never
occurred, and presenting the necessary adjustment to the opening balance of retained
earnings in the statement of changes in equity
 restating the comparative figures presented, as if the error had never occurred
 disclosing within the accounts a statement of financial position at the beginning of the
earliest comparative period. In effect this means that three statements of financial
position will be presented within a set of financial statements:
- at the end of the current year
 - at the end of the previous year
- at the beginning of the previous year

Disclosures Relating to Prior Period Errors:

 the nature of the prior period error for each prior period presented, to the extent
practicable, the amount of the correction:
 for each financial statement line item affected, and for basic and diluted earnings per
share (only if the entity is applying IAS 33)
 the amount of the correction at the beginning of the earliest prior period presented if
retrospective restatement is impracticable, an explanation and description of how the
error has been corrected.

Financial statements of subsequent periods need not repeat these disclosures. [ CITATION ACC1 \l
18441 ]

Comment:

Singer Bangladesh Limited applied specific accounting policies in their annual report 2018. But
measurements and disclosure for changing the estimations and correction of prior period errors
are not available in the annual report as there so no changes and errors in financial statements.

IAS 10 — Events After the Reporting Period

IAS 10 Events After the Reporting Period contains requirements for when events after the end of
the reporting period should be adjusted in the financial statements. Adjusting events are those
providing evidence of conditions existing at the end of the reporting period, whereas non-
adjusting events are indicative of conditions arising after the reporting period (the latter being
disclosed where material).

IAS 10 was reissued in December 2003 and applies to annual periods beginning on or after 1
January 2005.

Adjusting event: An event after the reporting period that provides further evidence of conditions
that existed at the end of the reporting period, including an event that indicates that the going
concern assumption in relation to the whole or part of the enterprise is not appropriate. [IAS
10.3]

Non-adjusting event: An event after the reporting period that is indicative of a condition that
arose after the end of the reporting period. [IAS 10.3]

Accounting

 Adjust financial statements for adjusting events - events after the balance sheet date that
provide further evidence of conditions that existed at the end of the reporting period,
including events that indicate that the going concern assumption in relation to the whole
or part of the enterprise is not appropriate. [IAS 10.8]
 Do not adjust for non-adjusting events - events or conditions that arose after the end of
the reporting period. [IAS 10.10]
 If an entity declares dividends after the reporting period, the entity shall not recognise
those dividends as a liability at the end of the reporting period. That is a non-adjusting
event. [IAS 10.12]

Going concern issues arising after end of the reporting period

An entity shall not prepare its financial statements on a going concern basis if management
determines after the end of the reporting period either that it intends to liquidate the entity or to
cease trading, or that it has no realistic alternative but to do so. [IAS 10.14]

Disclosure

Non-adjusting events should be disclosed if they are of such importance that non-disclosure
would affect the ability of users to make proper evaluations and decisions. The required
disclosure is (a) the nature of the event and (b) an estimate of its financial effect or a statement
that a reasonable estimate of the effect cannot be made. [IAS 10.21]

A company should update disclosures that relate to conditions that existed at the end of the
reporting period to reflect any new information that it receives after the reporting period about
those conditions. [IAS 10.19]
Companies must disclose the date when the financial statements were authorized for issue and
who gave that authorization. If the enterprise's owners or others have the power to amend the
financial statements after issuance, the enterprise must disclose that fact. [IAS 10.17]

Use of the respective standard in SBL annual Report

Events after the balance sheet date that provide additional information about the Company's
position at the balance sheet date are reflected in the financial statements. Material events after
the balance sheet date that are not adjusting events are disclosed below:
 The board of directors of the company has recommended 30% stock dividend in its 236th
board meeting dated 28 February 2019
 The proposed final dividend subsequent to the reporting date was not accounted for in the
financial statements as at 31 December 2018.
 The Company has purchased 16.1680% share of International Appliances Limited (IAL)
from Shanghai Sonlu Shangling Enterprise Group Co. Ltd. (9.9978%) and from Sunman
Corporation Limited (6.1702%). Associated call option of Sunman Corporation Limited
has been cancelled. As a result, IAL is now fully owned subsidiary of the Company.

Comment:

Hence, from the above discussion, it is clear that SBL follows all the rules and principles laid out
by the standard IAS 10 —Event after the Reporting period.

IAS 11 — Construction Contracts

IAS 11 Construction Contracts provides requirements on the allocation of contract revenue and
contract costs to accounting periods in which construction work is performed. Contract revenues
and expenses are recognized by reference to the stage of completion of contract activity where
the outcome of the construction contract can be estimated reliably, otherwise revenue is
recognized only to the extent of recoverable contract costs incurred.

Accounting
If the outcome of a construction contract can be estimated reliably, revenue and costs should be
recognized in proportion to the stage of completion of contract activity. This is known as the
percentage of completion method of accounting. [IAS 11.22]

To be able to estimate the outcome of a contract reliably, the entity must be able to make a
reliable estimate of total contract revenue, the stage of completion, and the costs to complete the
contract. [IAS 11.23-24]

If the outcome cannot be estimated reliably, no profit should be recognised. Instead, contract
revenue should be recognised only to the extent that contract costs incurred are expected to be
recoverable and contract costs should be expensed as incurred. [IAS 11.32]

The stage of completion of a contract can be determined in a variety of ways - including the
proportion that contract costs incurred for work performed to date bear to the estimated total
contract costs, surveys of work performed, or completion of a physical proportion of the contract
work. [IAS 11.30]

An expected loss on a construction contract should be recognised as an expense as soon as such

loss is probable. [IAS 11.22 and 11.36]

Disclosure

 amount of contract revenue recognised; [IAS 11.39(a)]

 method used to determine revenue; [IAS 11.39(b)]
 method used to determine stage of completion; [IAS 11.39(c)] and
 for contracts in progress at balance sheet date: [IAS 11.40]
 aggregate costs incurred and recognised profit
 amount of advances received
 amount of retentions

Presentation

 The gross amount due from customers for contract work should be shown as an asset.
[IAS 11.42]
  The gross amount due to customers for contract work should be shown as a liability. [IAS
11.42]

Use of the respective standard in SBL annual Report

SBL has initially applied IFRS 15 from 1 January 2018 which has replaced the IAS 11
Construction Contracts and related interpretations.

Comments

Hence SBL has adopted new standard IFRS 15, IAS 11- Construction Contracts is not available
in the annual report. Therefore, it is clear that it is not applicable

IAS 12 - Income Taxes

Current tax

Current tax for the current and prior periods is recognised as a liability to the extent that it has
not yet been settled, and as an asset to the extent that the amounts already paid exceed the
amount due. The benefit of a tax loss which can be carried back to recover current tax of a prior
period is recognised as an asset.

Current tax assets and liabilities are measured at the amount expected to be paid to (recovered
from) taxation authorities, using the rates/laws that have been enacted or substantively enacted
by the balance sheet date.

Deferred Tax

Deferred tax is an accounting adjustment aimed to match the tax effects of transaction to the
relevant accounting period.

The figure for tax on profits is an estimate of the amount that will be eventually paid (or
received) and will appear in current liabilities (or assets) in the statement of financial position.
Therefore, the balance on the statement of the financial position for taxation will be only the
current year’s provision.
Calculation of Deferred Taxes:

Formulas:

Deferred tax assets and deferred tax liabilities can be calculated using the following formulas:

Temporary difference = Carrying amount - Tax base

Deferred tax asset or liability = Temporary difference x Tax rate

The following formula can be used in the calculation of deferred taxes arising from unused tax
losses or unused tax credits:

Deferred tax asset = Unused tax loss or unused tax credits x Tax rate

Measurement of deferred tax

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates/laws that have been
enacted or substantively enacted by the end of the reporting period. [IAS 12.47] The
measurement reflects the entity's expectations, at the end of the reporting period, as to the
manner in which the carrying amount of its assets and liabilities will be recovered or settled.

IAS 12 provides the following guidance on measuring deferred taxes:

 Where the tax rate or tax base is impacted by the manner in which the entity recovers its
assets or settles its liabilities (e.g. whether an asset is sold or used), the measurement of
deferred taxes is consistent with the way in which an asset is recovered or liability settled
[IAS 12.51A]

 Where deferred taxes arise from revalued non-depreciable assets (e.g. revalued land),
deferred taxes reflect the tax consequences of selling the asset [IAS 12.51B]

 Deferred taxes arising from investment property measured at fair value under IAS
40 Investment Property reflect the rebuttable presumption that the investment property
will be recovered through sale
  If dividends are paid to shareholders, and this causes income taxes to be payable at a
higher or lower rate, or the entity pays additional taxes or receives a refund, deferred
taxes are measured using the tax rate applicable to undistributed profits

Deferred tax assets and liabilities cannot be discounted.

Recognition of Tax Amounts for the Period

Amount of Income Tax to Recognize

The following formula summarizes the amount of tax to be recognized in an accounting period:
Tax to recognize for the period= Current tax for the period + Movement in deferred tax balances
for the period

Where to Recognize Income Tax for the Period

Consistent with the principles underlying IAS 12, the tax consequences of transactions and other
events are recognized in the same way as the items giving rise to those tax consequences.
Accordingly, current and deferred tax is recognized as income or expense and included in profit
or loss for the period, except to the extent that the tax arises from:

 transactions or events that are recognized outside of profit or loss (other comprehensive
income or equity) - in which case the related tax amount is also recognized outside of
profit or loss

 a business combination - in which case the tax amounts are recognized as identifiable
assets or liabilities at the acquisition date, and accordingly effectively taken into account
in the determination of goodwill when applying IFRS 3 Business Combinations.

IAS 12 provides the following additional guidance on the recognition of income tax for the
period:

 Where it is difficult to determine the amount of current and deferred tax relating to
items recognized outside of profit or loss (e.g. where there are graduated rates or tax),
the amount of income tax recognized outside of profit or loss is determined on a
reasonable pro-rata allocation, or using another more appropriate method
  In the circumstances where the payment of dividends impacts the tax rate or results in
taxable amounts or refunds, the income tax consequences of dividends are considered
to be more directly linked to past transactions or events and so are recognized in
profit or loss unless the past transactions or events were recognized outside of profit
or loss
 The impact of business combinations on the recognition of pre-combination deferred
tax assets are not included in the determination of goodwill as part of the business
combination, but are separately recognized  
 The recognition of acquired deferred tax benefits subsequent to a business
combination are treated as 'measurement period' adjustments if they qualify for that
treatment, or otherwise are recognized in profit or loss
 Tax benefits of equity settled share based payment transactions that exceed the tax
effected cumulative remuneration expense are considered to relate to an equity item
and are recognized directly in equity.

Presentation

Current tax assets and current tax liabilities can only be offset in the statement of financial
position if the entity has the legal right and the intention to settle on a net basis.

Deferred tax assets and deferred tax liabilities can only be offset in the statement of financial
position if the entity has the legal right to settle current tax amounts on a net basis and the
deferred tax amounts are levied by the same taxing authority on the same entity or different
entities that intend to realise the asset and settle the liability at the same time.

The amount of tax expense (or income) related to profit or loss is required to be presented in the
statement(s) of profit or loss and other comprehensive income.

The tax effects of items included in other comprehensive income can either be shown net for
each item, or the items can be shown before tax effects with an aggregate amount of income tax
for groups of items (allocated between items that will and will not be reclassified to profit or loss
in subsequent periods).
Disclosure

IAS 12.80 requires the following disclosures:

 major components of tax expense (tax income) [IAS 12.79] Examples include:

- current tax expense (income)

- any adjustments of taxes of prior periods

- amount of deferred tax expense (income) relating to the origination and reversal
of temporary differences

- amount of deferred tax expense (income) relating to changes in tax rates or the
imposition of new taxes

- amount of the benefit arising from a previously unrecognised tax loss, tax credit
or temporary difference of a prior period

- write down, or reversal of a previous write down, of a deferred tax asset

- amount of tax expense (income) relating to changes in accounting policies and

corrections of errors.

IAS 12.81 requires the following disclosures:

- aggregate current and deferred tax relating to items recognised directly in equity

- tax relating to each component of other comprehensive income

- explanation of the relationship between tax expense (income) and the tax that would be
expected by applying the current tax rate to accounting profit or loss (this can be
presented as a reconciliation of amounts of tax or a reconciliation of the rate of tax)

- changes in tax rates

- amounts and other details of deductible temporary differences, unused tax losses, and
unused tax credits
 - temporary differences associated with investments in subsidiaries, branches and
associates, and interests in joint arrangements

- for each type of temporary difference and unused tax loss and credit, the amount of
deferred tax assets or liabilities recognized in the statement of financial position and the
amount of deferred tax income or expense recognized in profit or loss

- tax relating to discontinued operations

- tax consequences of dividends declared after the end of the reporting period

- information about the impacts of business combinations on an acquirer's deferred tax

assets

- recognition of deferred tax assets of an acquire after the acquisition date.

Other required disclosures:

- details of deferred tax assets

- tax consequences of future dividend payments.

In addition to the disclosures required by IAS 12, some disclosures relating to income taxes are
required by IAS 1 Presentation of Financial Statements, as follows:

- Disclosure on the face of the statement of financial position about current tax assets,
current tax liabilities, deferred tax assets, and deferred tax liabilities

- Disclosure of tax expense (tax income) in the profit or loss section of the statement of
profit or loss and other comprehensive income (or separate statement if presented)
[ CITATION IAS2 \l 18441 ]

Use of the Respective Standard in SBL Annual Report

In the note number 18 of the notes and disclosure, SBL showed their advance income tax,
provision for income tax of 2018. As well as, they showed their income tax expense of 2018 in
note number 26. All the accounting treatment was done according to the IAS 12.
In note number 40(D) they stated that,

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the
statement of comprehensive income (profit and loss statement).

Current tax

The Company qualifies as a “Publicly Traded Company”, as defined in income tax law. The
applicable tax rate for the Company is 25%. Provision for taxation has been made on this basis
which is compliant with the Finance Act 2018. [ CITATION Sng \l 18441 ]

Deferred tax

Deferred tax is recognized using the balance sheet method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and
amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to
be applied to the temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are
offset if there is a legally enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable entity. The deferred
tax asset/income or liability/expense does not create a legal obligation to, or recoverability from,
the income tax authority.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will
be available against which the deductible temporary difference can be utilized. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realized. [ CITATION Sng \l 18441 ]

Comment:

SBL followed IAS 12 for the accounting treatment of income taxes.

IAS 14 - Segment Reporting

IAS 14 Segment Reporting requires reporting of financial information by business or
geographical area. It requires disclosures for 'primary' and 'secondary' segment reporting formats,
with the primary format based on whether the entity's risks and returns are affected
predominantly by the products and services it produces or by the fact that it operates in different
geographical areas.

IAS 14 was issued in August 1997, was applicable to annual periods beginning on or after 1 July
1998, and was superseded by IFRS 8 Operating Segments with effect from annual periods
beginning on or after 1 January 2009.

Applicability

IAS 14 must be applied by entities whose debt or equity securities are publicly traded and those
in the process of issuing such securities in public securities markets. [IAS 14.3]

If an entity that is not publicly traded chooses to report segment information and claims that its
financial statements conform to IFRSs, then it must follow IAS 14 in full. [IAS 14.5]

Segment information need not be presented in the separate financial statements of a (a) parent,
(b) subsidiary, (c) equity method associate, or (d) equity method joint venture that are presented
in the same report as the consolidated statements. [IAS 14.6-7]

What must be disclosed?

IAS 14 has detailed guidance as to which items of revenue and expense are included in segment
revenue and segment expense. All companies will report a standardized measure of segment
result – basically operating profit before interest, taxes, and head office expenses. For an entity's
primary segments, revised IAS 14 requires disclosure of: [IAS 14.51-67]

Sales revenue (distinguishing between external and intersegment) result assets the basis of
intersegment pricing liabilities capital additions depreciation and amortization significant
unusual items non-cash expenses other than depreciation equity method income

Segment revenue includes "sales" from one segment to another. Under IAS 14, these
intersegment transfers must be measured on the basis that the entity actually used to price the
transfers. [IAS 14.75]

For secondary segments, disclose: [IAS 14.69-72]

Revenue assets capital additions

An entity must present a reconciliation between information reported for segments and
consolidated information. At a minimum: [IAS 14.67]Segment revenue should be reconciled to
consolidated revenue segment result should be reconciled to a comparable measure of
consolidated operating profit or loss and consolidated net profit or loss segment assets should be
reconciled to entity assets segment liabilities should be reconciled to entity liabilities.
Use of the Respective Standard in SBL Annual Report

In the annual report of Singer Company, we have found the following things regarding IAS 14:
Segment reporting. Segment reporting is not applicable for the Company this year as the
Company does not meet the criteria required for segment reporting specified in IFRS 8:
"Operating Segments”. The details are described on note no. 2.5.

Comment:
Therefore, we can say that the company does not follow the rules and regulations as prescribed
by IAS 14.

IAS 16 — Property, Plant and Equipment

IAS 16 Property, Plant and Equipment outline the accounting treatment for most types of
property, plant and equipment. Property, plant and equipment is initially measured at its cost,
subsequently measured either using a cost or revaluation model, or depreciated so that its
depreciable amount is allocated on a systematic basis over its useful life.

IAS 16 was reissued in December 2003 and applies to annual periods beginning on or after 1
January 2005.

Initial measurement

An item of property, plant and equipment should initially be recorded at cost. [IAS 16.15] Cost
includes all costs necessary to bring the asset to working condition for its intended use. This
would include not only its original purchase price but also costs of site preparation, delivery and
handling, installation, related professional fees for architects and engineers, and the estimated
cost of dismantling and removing the asset and restoring the site (see IAS 37 Provisions,
Contingent Liabilities and Contingent Assets). [IAS 16.16-17]

If payment for an item of property, plant, and equipment is deferred, interest at a market rate
must be recognised or imputed. [IAS 16.23]
If an asset is acquired in exchange for another asset (whether similar or dissimilar in nature), the
cost will be measured at the fair value unless (a) the exchange transaction lacks commercial
substance or (b) the fair value of neither the asset received nor the asset given up is reliably
measurable. If the acquired item is not measured at fair value, its cost is measured at the carrying
amount of the asset given up. [IAS 16.24]

Measurement subsequent to initial recognition

IAS 16 permits two accounting models:

Cost model: The asset is carried at cost less accumulated depreciation and impairment. [IAS
16.30]

Revaluation model: The asset is carried at a revalued amount, being its fair value at the date of
revaluation less subsequent depreciation and impairment, provided that fair value can be
measured reliably. [IAS 16.31]

The revaluation model: Under the revaluation model, revaluations should be carried out
regularly, so that the carrying amount of an asset does not differ materially from its fair value at
the balance sheet date. [IAS 16.31]

If an item is revalued, the entire class of assets to which that asset belongs should be revalued.
[IAS 16.36]

Revalued assets are depreciated in the same way as under the cost model (see below).

If a revaluation results in an increase in value, it should be credited to other comprehensive

income and accumulated in equity under the heading "revaluation surplus" unless it represents
the reversal of a revaluation decrease of the same asset previously recognised as an expense, in
which case it should be recognised in profit or loss. [IAS 16.39]

A decrease arising as a result of a revaluation should be recognised as an expense to the extent

that it exceeds any amount previously credited to the revaluation surplus relating to the same
asset. [IAS 16.40]
When a revalued asset is disposed of, any revaluation surplus may be transferred directly to
retained earnings, or it may be left in equity under the heading revaluation surplus. The transfer
to retained earnings should not be made through profit or loss. [IAS 16.41]

Depreciation (cost and revaluation models)

For all depreciable assets:

The depreciable amount (cost less residual value) should be allocated on a systematic basis over
the asset's useful life [IAS 16.50].

The residual value and the useful life of an asset should be reviewed at least at each financial
year-end and, if expectations differ from previous estimates, any change is accounted for
prospectively as a change in estimate under IAS 8. [IAS 16.51]

The depreciation method used should reflect the pattern in which the asset's economic benefits
are consumed by the entity [IAS 16.60]; a depreciation method that is based on revenue that is
generated by an activity that includes the use of an asset is not appropriate. [IAS 16.62A]

Note: The clarification regarding the revenue-based depreciation method was introduced
by Clarification of Acceptable Methods of Depreciation and Amortisation, which applies to
annual periods beginning on or after 1 January 2016.

The depreciation method should be reviewed at least annually and, if the pattern of consumption
of benefits has changed, the depreciation method should be changed prospectively as a change in
estimate under IAS 8. [IAS 16.61] Expected future reductions in selling prices could be
indicative of a higher rate of consumption of the future economic benefits embodied in an asset.
[IAS 16.56]

Note: The guidance on expected future reductions in selling prices was introduced
by Clarification of Acceptable Methods of Depreciation and Amortisation, which applies to
annual periods beginning on or after 1 January 2016.

Depreciation should be charged to profit or loss, unless it is included in the carrying amount of
another asset [IAS 16.48].
Depreciation begins when the asset is available for use and continues until the asset is
derecognised, even if it is idle. [IAS 16.55]

Recoverability of the carrying amount

IAS 16 Property, Plant and Equipment requires impairment testing and, if necessary, recognition

for property, plant, and equipment. An item of property, plant, or equipment shall not be carried
at more than recoverable amount. Recoverable amount is the higher of an asset's fair value less
costs to sell and its value in use.

Any claim for compensation from third parties for impairment is included in profit or loss when
the claim becomes receivable. [IAS 16.65]

Derecognition (retirements and disposals)

An asset should be removed from the statement of financial position on disposal or when it is
withdrawn from use and no future economic benefits are expected from its disposal. The gain or
loss on disposal is the difference between the proceeds and the carrying amount and should be
recognised in profit and loss. [IAS 16.67-71]

If an entity rents some assets and then ceases to rent them, the assets should be transferred to
inventories at their carrying amounts as they become held for sale in the ordinary course of
business. [IAS 16.68A]

Disclosure

Information about each class of property, plant and equipment

For each class of property, plant, and equipment, disclose: [IAS 16.73]

 basis for measuring carrying amount

 depreciation method(s) used
 useful lives or depreciation rates
 gross carrying amount and accumulated depreciation and impairment losses
 reconciliation of the carrying amount at the beginning and the end of the period, showing:
 additions
  disposals
 acquisitions through business combinations
 revaluation increases or decreases
 impairment losses
 reversals of impairment losses
 depreciation
 net foreign exchange differences on translation
 other movements

Additional disclosures

The following disclosures are also required: [IAS 16.74]

 restrictions on title and items pledged as security for liabilities

 expenditures to construct property, plant, and equipment during the period
 contractual commitments to acquire property, plant, and equipment
 compensation from third parties for items of property, plant, and equipment that were
impaired, lost or given up that is included in profit or loss.

IAS 16 also encourages, but does not require, a number of additional disclosures. [IAS 16.79]

Revalued property, plant and equipment

If property, plant, and equipment is stated at revalued amounts, certain additional disclosures are
required: [IAS 16.77]

 the effective date of the revaluation

 whether an independent valuer was involved
 for each revalued class of property, the carrying amount that would have been recognised
had the assets been carried under the cost model
 the revaluation surplus, including changes during the period and any restrictions on the
distribution of the balance to shareholders.

Entities with property, plant and equipment stated at revalued amounts are also required to make
disclosures under IFRS 13 Fair Value Measurement. [ CITATION IAS2 \l 18441 ]
Use of the respective standard in SBL annual Report
During the year under review, SBL invested a sum of Tk 167 million in property, plant and
equipment. Movement in property, plant and equipment during the year is disclosed under note 3
and annexure-I of the financial statements

Recognition and measurement

Property, plant and equipment are stated in attached statement of financial position are measured
at cost/fair value less accumulated depreciation and any accumulated impairment losses in
accordance with IAS-16 "Property Plant and Equipment". Maintenance, renewals and
betterments that enhance the economic useful life of the property, plant and equipment or that
improve the capacity, quality or reduce substantially the operating cost or administration
expenses are capitalised by adding it to the related property, plant and equipment.

If significant parts of an item of property, plant & equipment have different useful lives, then
they are accounted for as separate items (major components) of property, plant & equipment.
Any gain or loss on disposal of an item of property, plant & equipment is recognised in profit or
loss.

Cost model: The Company applies cost model to property, plant & equipment except for land
and buildings.

Revaluation model: The company applies revaluation model to entire class of freehold land and
buildings. A revaluation is carried out when there is a substantial difference between the fair
value and the carrying amount of the property and is undertaken by professionally qualified
valuers. The company reviews its assets when deemed appropriate considering reasonable
interval of years/time.

Increase in the carrying amount on revaluation is recognised in other comprehensive income and
accumulated in equity in the revaluation reserve unless it reverses a previous revaluation
decrease relating to the same asset, which was previously recognised as an expense. In these
circumstances the increase is recognised as income to the extent of the previous write down.
Decrease in the carrying amount on revaluation that offset previous increases of the same
individual assets are charged against revaluation reserve directly in equity. All other decreases
are recognised in profit and loss.

Subsequent costs: The cost of replacing part of an item of property, plant and equipment is
recognised in the carrying amount of the item if it is probable that the future economic benefits
embodied within the part will flow to the Company and its cost can be measured reliably. The
costs of the day-to-day maintenance of property, plant and equipment are recognised in the profit
and loss account as incurred.

Depreciation: Depreciation is calculated over the depreciable amount. Depreciation is

recognised in profit and loss on a reducing balance method in case of SBL and straight-line basis
in case of IAL over each part of an item of property, plant & equipment, since this most closely
reflected the expected pattern of consumption of the future economic benefits embodied in the
asset. A change in the depreciation method is a change in a technique used to apply the entity's
accounting policy to recognise depreciation as an asset's future economic benefits are consumed.
Therefore, it is deemed to be a change in an accounting estimate.

Land is not depreciated. Depreciation is charged on property plant and equipment from the
month of acquisition and no depreciation is charged in the month of disposal.

Depreciation is charged at the rates varying from 2.5% to 25% depending on the estimated useful
lives of assets. No depreciation is charged for work-in-progress. The rates of depreciation of
SBL, applied on reducing balance method, for the current and comparative years are as follows:

Building - Office 10%

Building - Factory 20%

Comment:

Hence, from the above discussion, it is clear that SBL follows all the rules and principles laid out
by the standard IAS 16 —Property, Plant and Equipment
IAS 17 — Leases
IAS 17 Leases prescribes the accounting policies and disclosures applicable to leases, both for
lessees and lessors. Leases are required to be classified as either finance leases (which transfer
substantially all the risks and rewards of ownership, and give rise to asset and liability
recognition by the lessee and a receivable by the lessor) and operating leases (which result in
expense recognition by the lessee, with the asset remaining recognised by the lessor).

IAS 17 was reissued in December 2003 and applies to annual periods beginning on or after 1
January 2005. IAS 17 will be superseded by IFRS 16 Leases as of 1 January 2019.

Accounting by lessees

The following principles should be applied in the financial statements of lessees:

 at commencement of the lease term, finance leases should be recorded as an asset and a
liability at the lower of the fair value of the asset and the present value of the minimum
lease payments (discounted at the interest rate implicit in the lease, if practicable, or else
at the entity's incremental borrowing rate) [IAS 17.20]
 finance lease payments should be apportioned between the finance charge and the
reduction of the outstanding liability (the finance charge to be allocated so as to produce
a constant periodic rate of interest on the remaining balance of the liability) [IAS 17.25]
 the depreciation policy for assets held under finance leases should be consistent with that
for owned assets. If there is no reasonable certainty that the lessee will obtain ownership
at the end of the lease – the asset should be depreciated over the shorter of the lease term
or the life of the asset [IAS 17.27]
 for operating leases, the lease payments should be recognised as an expense in the
income statement over the lease term on a straight-line basis, unless another systematic
basis is more representative of the time pattern of the user's benefit [IAS 17.33]

Incentives for the agreement of a new or renewed operating lease should be recognised by the
lessee as a reduction of the rental expense over the lease term, irrespective of the incentive's
nature or form, or the timing of payments. [SIC-15]
Accounting by lessors

The following principles should be applied in the financial statements of lessors:

 at commencement of the lease term, the lessor should record a finance lease in the
balance sheet as a receivable, at an amount equal to the net investment in the lease [IAS
17.36]
 the lessor should recognise finance income based on a pattern reflecting a constant
periodic rate of return on the lessor's net investment outstanding in respect of the finance
lease [IAS 17.39]
 assets held for operating leases should be presented in the balance sheet of the lessor
according to the nature of the asset. [IAS 17.49] Lease income should be recognised over
the lease term on a straight-line basis, unless another systematic basis is more
representative of the time pattern in which use benefit is derived from the leased asset is
diminished [IAS 17.50]

Incentives for the agreement of a new or renewed operating lease should be recognised by the
lessor as a reduction of the rental income over the lease term, irrespective of the incentive's
nature or form, or the timing of payments. [SIC-15]

Manufacturers or dealer lessors should include selling profit or loss in the same period as they
would for an outright sale. If artificially low rates of interest are charged, selling profit should be
restricted to that which would apply if a commercial rate of interest were charged. [IAS 17.42]

Under the 2003 revisions to IAS 17, initial direct and incremental costs incurred by lessors in
negotiating leases must be recognised over the lease term. They may no longer be charged to
expense when incurred. This treatment does not apply to manufacturer or dealer lessors where
such cost recognition is as an expense when the selling profit is recognised.

Sale and leaseback transactions

For a sale and leaseback transaction that results in a finance lease, any excess of proceeds over
the carrying amount is deferred and amortised over the lease term. [IAS 17.59]

For a transaction that results in an operating lease: [IAS 17.61]

  if the transaction is clearly carried out at fair value - the profit or loss should be
recognised immediately
 if the sale price is below fair value - profit or loss should be recognised immediately,
except if a loss is compensated for by future rentals at below market price, the loss should
be amortised over the period of use
 if the sale price is above fair value - the excess over fair value should be deferred and
amortised over the period of use
 if the fair value at the time of the transaction is less than the carrying amount – a loss
equal to the difference should be recognised immediately [IAS 17.63]

Disclosure: lessees – finance leases [IAS 17.31]

 carrying amount of asset

 reconciliation between total minimum lease payments and their present value
 amounts of minimum lease payments at balance sheet date and the present value thereof,
for:
 the next year
 years 2 through 5 combined
 beyond five years
 contingent rent recognised as an expense
 total future minimum sublease income under noncancellable subleases
 general description of significant leasing arrangements, including contingent rent
provisions, renewal or purchase options, and restrictions imposed on dividends,
borrowings, or further leasing

Disclosure: lessees – operating leases [IAS 17.35]

 amounts of minimum lease payments at balance sheet date under noncancellable

operating leases for:
 the next year
 years 2 through 5 combined
 beyond five years
 total future minimum sublease income under noncancellable subleases
  lease and sublease payments recognised in income for the period
 contingent rent recognised as an expense
 general description of significant leasing arrangements, including contingent rent
provisions, renewal or purchase options, and restrictions imposed on dividends,
borrowings, or further leasing

Disclosure: lessors – finance leases [IAS 17.47]

 reconciliation between gross investment in the lease and the present value of minimum
lease payments;
 gross investment and present value of minimum lease payments receivable for:
 the next year
 years 2 through 5 combined
 beyond five years
 unearned finance income
 unguaranteed residual values
 accumulated allowance for uncollectible lease payments receivable
 contingent rent recognised in income
 general description of significant leasing arrangements

Disclosure: lessors – operating leases [IAS 17.56]

 amounts of minimum lease payments at balance sheet date under noncancellable

operating leases in the aggregate and for:
 the next year
 years 2 through 5 combined
 beyond five years
 contingent rent recognised as in income
 general description of significant leasing arrangements[ CITATION IAS2 \l 18441 ]

Use of the respective standard in SBL annual Report

As IAS 17 has been superseded by IFRS 16 Leases as of 1 January 2019, SBL follows IFRS 16.
Therefore information about IAS 17 is not available in the annual report of SBL.
COMMENT

There is no information about IAS 17 - Lease in SBL annual report. Therefore, it is clear that it is
not applicable.

IAS 18 – Revenue
Revenue is the gross inflow of economic benefits (cash, receivables, other assets) arising from
the ordinary operating activities of an entity (such as sales of goods, sales of services, interest,
royalties, and dividends).

Recognition of Revenue

Recognition, as defined in the IASB Framework, means incorporating an item that meets the
definition of revenue (above) in the income statement when it meets the following criteria:

 it is probable that any future economic benefit associated with the item of revenue will
flow to the entity, and

 the amount of revenue can be measured with reliability

Specific categories of revenue according to IAS 18 are-

1. Sale of goods
2. Rendering of services
3. Interest, royalties, and dividends

Measurement of Revenue

Revenue should be measured at the fair value of the consideration received or receivable. An
exchange for goods or services of a similar nature and value is not regarded as a transaction that
generates revenue. However, exchanges for dissimilar items are regarded as generating revenue.

If the inflow of cash or cash equivalents is deferred, the fair value of the consideration receivable
is less than the nominal amount of cash and cash equivalents to be received, and discounting is
appropriate. This would occur, for instance, if the seller is providing interest-free credit to the
buyer or is charging a below-market rate of interest. Interest must be imputed based on market
rates. [ CITATION IAS2 \l 18441 ]
Use of the Respective Standard in SBL Annual Report

SBL do not follow IAS 18.

Comment:

From 2018, SBL is following IFRS 18, instead of IAS 18. Under IFRS 15, revenue is recognised
when a customer obtains control of the goods or services.

IAS 19 — Employee Benefits

IAS 19 Employee Benefits (amended 2011) outlines the accounting requirements for employee
benefits, including short-term benefits (e.g. wages and salaries, annual leave), post-employment
benefits such as retirement benefits, other long-term benefits (e.g. long service leave) and
termination benefits. The standard establishes the principle that the cost of providing employee
benefits should be recognized in the period in which the benefit is earned by the employee, rather
than when it is paid or payable, and outlines how each category of employee benefits are
measured, providing detailed guidance in particular about post-employment benefits.

Measurement

The measurement of a net defined benefit liability or assets requires the application of an
actuarial valuation method, the attribution of benefits to periods of service, and the use of
actuarial assumptions. [IAS 19(2011).66] The fair value of any plan assets is deducted from the
present value of the defined benefit obligation in determining the net deficit or surplus. [IAS
19(2011).113]

The determination of the net defined benefit liability (or asset) is carried out with sufficient
regularity such that the amounts recognised in the financial statements do not differ materially
from those that would be determined at end of the reporting period. [IAS 19(2011).58]

The present value of an entity's defined benefit obligations and related service costs is
determined using the 'projected unit credit method', which sees each period of service as giving
rise to an additional unit of benefit entitlement and measures each unit separately in building up
the final obligation. [IAS 19(2011).67-68] This requires an entity to attribute benefit to the
current period (to determine current service cost) and the current and prior periods (to determine
the present value of defined benefit obligations). Benefit is attributed to periods of service using
the plan's benefit formula, unless an employee's service in later years will lead to a materially
higher of benefit than in earlier years, in which case a straight-line basis is used [IAS
19(2011).70]

Actuarial assumptions used in measurement

The overall actuarial assumptions used must be unbiased and mutually compatible, and represent
the best estimate of the variables determining the ultimate post-employment benefit cost. [IAS
19(2011).75-76]:

 Financial assumptions must be based on market expectations at the end of the

reporting period [IAS 19(2011).80]
 Mortality assumptions are determined by reference to the best estimate of the
mortality of plan members during and after employment [IAS 19(2011).81]
 The discount rate used is determined by reference to market yields at the end of the
reporting period on high quality corporate bonds, or where there is no deep market in
such bonds, by reference to market yields on government bonds. Currencies and
terms of bond yields used must be consistent with the currency and estimated term of
the obligation being discounted [IAS 19(2011).83]
 Assumptions about expected salaries and benefits reflect the terms of the plan, future
salary increases, any limits on the employer's share of cost, contributions from
employees or third parties*, and estimated future changes in state benefits that impact
benefits payable [IAS 19(2011).87]
 Medical cost assumptions incorporate future changes resulting from inflation and
specific changes in medical costs [IAS 19(2011).96]
 Updated actuarial assumptions must be used to determine the current service cost and
net interest for the remainder of the annual reporting period after a plan amendment,
curtailment or settlement when an entity remeasures its net defined benefit liability
(asset) [IAS 19(2011).122A] *

* Added by Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) in February

2018. The amendments are effective for annual periods beginning on or after 1 January 2019.
Past service costs

Past service cost is the term used to describe the change in a defined benefit obligation for
employee service in prior periods, arising as a result of changes to plan arrangements in the
current period (i.e. plan amendments introducing or changing benefits payable, or curtailments
which significantly reduce the number of covered employees).

Past service cost may be either positive (where benefits are introduced or improved) or negative
(where existing benefits are reduced). Past service cost is recognised as an expense at the earlier
of the date when a plan amendment or curtailment occurs and the date when an entity recognises
any termination benefits, or related restructuring costs under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets. [IAS 19(2011).103]

Gains or losses on the settlement of a defined benefit plan are recognised when the settlement
occurs. [IAS 19(2011).110]

Before past service costs are determined, or a gain or loss on settlement is recognised, the net
defined benefit liability or asset is required to be remeasured, however an entity is not required to
distinguish between past service costs resulting from curtailments and gains and losses on
settlement where these transactions occur together. [IAS 19(2011).99-100]

Recognition of defined benefit costs

The components of defined benefit cost is recognised as follows: [IAS 19(2011).120-130]

Component Recognition
Profit or loss
Service cost attributable to the current and
past periods
Net interest on the net defined benefit Profit or loss
liability or asset, determined using the
discount rate at the beginning of the period
Other comprehensive income
Remeasurements of the net defined benefit (Not reclassified to profit or loss in a
liability or asset, comprising: subsequent period)
 actuarial gains and losses
  return on plan assets
 some changes in the effect of the
asset ceiling

Other guidance

IAS 19 also provides guidance in relation to:

 when an entity should recognise a reimbursement of expenditure to settle a defined

benefit obligation [IAS 19(2011).116-119]
 when it is appropriate to offset an asset relating to one plan against a liability relating
to another plan [IAS 19(2011).131-132]
 accounting for multi-employer plans by individual employers [IAS 19(2011).32-39]
 defined benefit plans sharing risks between entities under common control [IAS
19.40-42] entities participating in state plans [IAS 19(2011).43-45]
 insurance premiums paid to fund post-employment benefit plans [IAS 19(2011).46-
49]

Disclosures about defined benefit plans

IAS 19(2011) sets the following disclosure objectives in relation to defined benefit plans [IAS
19(2011).135]:

 an explanation of the characteristics of an entity's defined benefit plans, and the

associated risks
 identification and explanation of the amounts arising in the financial statements from
defined benefit plans
 a description of how defined benefit plans may affect the amount, timing and
uncertainty of the entity's future cash flows.

Extensive specific disclosures in relation to meeting each the above objectives are specified, e.g.
a reconciliation from the opening balance to the closing balance of the net defined benefit
liability or asset, disaggregation of the fair value of plan assets into classes, and sensitivity
analysis of each significant actuarial assumption. [IAS 19(2011).136-147]

Additional disclosures are required in relation to multi-employer plans and defined benefit plans
sharing risk between entities under common control. [IAS 19(2011).148-150].

Other long-term benefits

IAS 19 (2011) prescribes a modified application of the post-employment benefit model described
above for other long-term employee benefits: [IAS 19(2011).153-154]

 the recognition and measurement of a surplus or deficit in an other long-term

employee benefit plan is consistent with the requirements outlined above
 service cost, net interest and remeasurements are all recognised in profit or loss
(unless recognised in the cost of an asset under another IFRS), i.e. when compared to
accounting for defined benefit plans, the effects of remeasurements are not recognised
in other comprehensive income.

Termination benefits

A termination benefit liability is recognised at the earlier of the following dates: [IAS
19.165-168]

 when the entity can no longer withdraw the offer of those benefits - additional
guidance is provided on when this date occurs in relation to an employee's decision to
accept an offer of benefits on termination, and as a result of an entity's decision to
terminate an employee's employment
 when the entity recognises costs for a restructuring under IAS 37 Provisions,
Contingent Liabilities and Contingent Assets which involves the payment of
termination benefits.

Termination benefits are measured in accordance with the nature of employee benefit, i.e. as an
enhancement of other post-employment benefits, or otherwise as a short-term employee benefit
or other long-term employee benefit. [IAS 19(2011).169] [ CITATION IAS2 \l 18441 ]

Use of the respective standard in SBL annual Report

The Company (SBL) has been maintaining an unfunded gratuity scheme until 16 October 2017.
The company has funded the gratuity obligation based on the approval of Board meeting held on
16 October2017, and reconstituted the Board of Trustees consisting of four members and became
functional based on the approval of the National Board of Revenue (NBR). Accordingly, the
company has transferred the required fund to the trust in December 2017.

The Company maintains both defined contribution plan (provident fund) and a retirement benefit
obligation (gratuity fund) for its eligible permanent employees.

Defined contribution plan (provident fund)

It is a post-employment benefit plan under which the Company provides benefits for all of its
permanent employees. The recognized Employees' Provident Fund is being considered as
defined contribution plan as it meets the recognition criteria specified for this purpose. All
permanent employees contribute 12.5% of their basic salary to the provident fund and the
Company also makes equal contribution. This fund is recognized by the National Board of
Revenue (NBR), under the First Schedule, Part B of Income Tax Ordinance 1984. The Company
recognizes contribution to defined contribution plan as an expense when an employee has
rendered required services. The legal and constructive obligation is limited to the amount it
agrees to contribute to the fund. Obligations are created when they are due.

Retirement benefit obligation (gratuity)

The Company operates a funded gratuity scheme for its permanent employees, under which an
employee is entitled to the benefits depending on the length of services and last drawn basic
salary. Projected Unit Credit method is used to measure the present value of defined benefit
obligations and related current and past service cost and mutually compatible actuarial
assumptions about demographic and financial variables are used.

Short-term employee benefits

This relates to leave encashment and is measured on an undiscounted basis and expensed as the
related service is provided. A liability is recognized for the amount expected to be paid if the
Company has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably. Accordingly,
necessary provision is made for the amount of annual leave encashment based on the latest basic
salary. This benefit is applicable for employees as per service rules

Comment:

Hence, from the above discussion, it is clear that SBL follows all the rules and principles laid out
by the standard IAS 19 —Employee Benefit Plan (2011).

IAS 20 — Accounting for Government Grants and Disclosure of Government

Assistance
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance outlines
how to account for government grants and other assistance. Government grants are recognized in
profit or loss on a systematic basis over the periods in which the entity recognizes expenses for
the related costs for which the grants are intended to compensate, which in the case of grants
related to assets requires setting up the grant as deferred income or deducting it from the carrying
amount of the asset.

Accounting for grants

A government grant is recognized only when there is reasonable assurance that (a) the entity will
comply with any conditions attached to the grant and (b) the grant will be received. [IAS 20.7]

The grant is recognized as income over the period necessary to match them with the related
costs, for which they are intended to compensate, on a systematic basis. [IAS 20.12]

Non-monetary grants, such as land or other resources, are usually accounted for at fair value,
although recording both the asset and the grant at a nominal amount is also permitted. [IAS
20.23]

Even if there are no conditions attached to the assistance specifically relating to the operating
activities of the entity (other than the requirement to operate in certain regions or industry
sectors), such grants should not be credited to equity.

A grant receivable as compensation for costs already incurred or for immediate financial support,
with no future related costs, should be recognized as income in the period in which it is
receivable. [IAS 20.20]
A grant relating to assets may be presented in one of two ways: [IAS 20.24]

 as deferred income, or by deducting the grant from the asset's carrying amount.

 A grant relating to income may be reported separately as 'other income' or deducted from
the related expense. [IAS 20.29]

If a grant becomes repayable, it should be treated as a change in estimate. Where the original
grant related to income, the repayment should be applied first against any related unamortised
deferred credit, and any excess should be dealt with as an expense. Where the original grant
related to an asset, the repayment should be treated as increasing the carrying amount of the asset
or reducing the deferred income balance. The cumulative depreciation which would have been
charged had the grant not been received should be charged as an expense. [IAS 20.32]

Disclosure of government grants

The following must be disclosed: [IAS 20.39]

accounting policy adopted for grants, including method of balance sheet presentation nature and
extent of grants recognized in the financial statements unfulfilled conditions and contingencies
attaching to recognized grants.

Government assistance

Government grants do not include government assistance whose value cannot be reasonably
measured, such as technical or marketing advice. [IAS 20.34] Disclosure of the benefits is
required. [IAS 20.39(b)]

Use of the Respective Standard in SBL Annual Report

Information about IAS 20 — Accounting for Government Grants and Disclosure of Government
Assistance in SBL annual report is not available.

Comment
There is no information about IAS 20 — Accounting for Government Grants and Disclosure of
Government Assistance in SBL annual report. Therefore, it is clear that it is not applicable.

IAS 21 — The Effects of Changes in Foreign Exchange Rates

IAS 21 The Effects of Changes in Foreign Exchange Rates outlines how to account for foreign
currency transactions and operations in financial statements, and also how to translate financial
statements into a presentation currency. An entity is required to determine a functional currency
(for each of its operations if necessary) based on the primary economic environment in which it
operates and generally records foreign currency transactions using the spot conversion rate to
that functional currency on the date of the transaction.

Disclosure

 The amount of exchange differences recognised in profit or loss (excluding differences

arising on financial instruments measured at fair value through profit or loss in
accordance with IAS 39) [IAS 21.52(a)]
 Net exchange differences recognised in other comprehensive income and accumulated in
a separate component of equity, and a reconciliation of the amount of such exchange
differences at the beginning and end of the period [IAS 21.52(b)]
 When the presentation currency is different from the functional currency, disclose that
fact together with the functional currency and the reason for using a different presentation
currency [IAS 21.53]
 A change in the functional currency of either the reporting entity or a significant foreign
operation and the reason therefor [IAS 21.54]

When an entity presents its financial statements in a currency that is different from its functional
currency, it may describe those financial statements as complying with IFRS only if they comply
with all the requirements of each applicable Standard (including IAS 21) and each applicable
Interpretation. [IAS 21.55]

Convenience translations
Sometimes, an entity displays its financial statements or other financial information in a currency
that is different from either its functional currency or its presentation currency simply by
translating all amounts at end-of-period exchange rates. This is sometimes called a convenience
translation. A result of making a convenience translation is that the resulting financial
information does not comply with all IFRS, particularly IAS 21. In this case, the following
disclosures are required: [IAS 21.57]

 Clearly identify the information as supplementary information to distinguish it from the

information that complies with IFRS
 Disclose the currency in which the supplementary information is displayed
 Disclose the entity's functional currency and the method of translation used to determine
the supplementary information [ CITATION IAS2 \l 18441 ]
Use of the respective standard in SBL annual Report

Functional and presentational currency

These consolidated financial statements are presented in Bangladesh Taka (BDT/Taka/Tk.),

which is both functional and presentational currency of the Company

Foreign currency transactions

Foreign currency transactions are recorded in BDT at applicable rates of exchange ruling at the
dates of transactions in accordance with IAS-21 "The Effects of Changes in Foreign Exchange
Rates." Exchange rate difference at the statement of financial position date are charged/credited
to statement of profit or loss and other comprehensive income, to the extent that this treatment
does not contradict with the Schedule XI of Companies Act 1994. This Schedule requires all
exchange gains and losses arising from foreign currency borrowings, taken to finance acquisition
of construction of fixed assets, to be credited/ charged to the cost/value of such assets.

Comment
Hence, from the above discussion, it is clear that SBL follows all the rules and principles laid out
by the standard IAS-21 "The Effects of Changes in Foreign Exchange Rates.
IAS 23- Borrowing Costs
Recognition

Borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset form part of the cost of that asset and, therefore, should be capitalised. Other
borrowing costs are recognised as an expense. [IAS 23.8]

Measurement

The Rate of Interest to Be Taken

 Where funds are borrowed specifically, costs eligible for capitalisation are the actual
costs incurred less any income earned on the temporary investment of such borrowings.
[IAS 23.12]
 Where funds are part of a general pool, the eligible amount is determined by applying a
capitalisation rate to the expenditure on that asset. The capitalisation rate will be the
weighted average of the borrowing costs applicable to the general pool. [IAS 23.14]

Capitalisation should commence when

 expenditures are being incurred

 borrowing costs are being incurred and
 activities that are necessary to prepare the asset for its intended use or sale are in
progress.

Capitalisation should cease when

 substantially all of the activities necessary to prepare the asset for its intended use or sale
are complete. If only minor modifications are outstanding, this indicates that substantially
all of the activities are complete.
 construction is suspended, e.g. due to industrial disputes

Disclosure

 amount of borrowing cost capitalised during the period

 capitalisation rate used [ CITATION ACC1 \l 18441 ]
Use of the Respective Standard in SBL Annual Report

IAS 23 is not available in SBL annual report.

Comment:

IAS 23 is not available in annual report of Singer Bangladesh Limited as the company has no
borrowing cost to capitalise.

IAS 24 — Related Party Disclosures

The objective of IAS 24 is to ensure that an entity's financial statements contain the disclosures
necessary to draw attention to the possibility that its financial position and profit or loss may
have been affected by the existence of related parties and by transactions and outstanding
balances with such parties.

Disclosure

Relationships between parents and subsidiaries. Regardless of whether there have been
transactions between a parent and a subsidiary, an entity must disclose the name of its parent
and, if different, the ultimate controlling party. If neither the entity's parent nor the ultimate
controlling party produces financial statements available for public use, the name of the next
most senior parent that does so must also be disclosed. [IAS 24.16]

Management compensation. Disclose key management personnel compensation in total and for
each of the following categories: [IAS 24.17]

 short-term employee benefits

 post-employment benefits

 other long-term benefits

 termination benefits

 share-based payment benefits

Key management personnel are those persons having authority and responsibility for planning,
directing, and controlling the activities of the entity, directly or indirectly, including any directors
(whether executive or otherwise) of the entity. [IAS 24.9]

If an entity obtains key management personnel services from a management entity, the entity is
not required to disclose the compensation paid or payable by the management entity to the
management entity’s employees or directors. Instead the entity discloses the amounts incurred by
the entity for the provision of key management personnel services that are provided by the
separate management entity*. [IAS 24.17A, 18A]

* These requirements were introduced by Annual Improvements to IFRSs 2010–2012 Cycle,

effective for annual periods beginning on or after 1 July 2014.

 Related party transactions. If there have been transactions between related parties, disclose the
nature of the related party relationship as well as information about the transactions and
outstanding balances necessary for an understanding of the potential effect of the relationship on
the financial statements. These disclosures would be made separately for each category of related
parties and would include: [IAS 24.18-19]

 the amount of the transactions

 the amount of outstanding balances, including terms and conditions and guarantees

 provisions for doubtful debts related to the amount of outstanding balances

 expense recognised during the period in respect of bad or doubtful debts due from related
parties

Examples of the kinds of transactions that are disclosed if they are with a related party

 purchases or sales of goods

 purchases or sales of property and other assets

 rendering or receiving of services

 leases
  transfers of research and development

 transfers under licence agreements

 transfers under finance arrangements (including loans and equity contributions in cash or
in kind)

 provision of guarantees or collateral

 commitments to do something if a particular event occurs or does not occur in the future,
including executory contracts (recognised and unrecognised)

 settlement of liabilities on behalf of the entity or by the entity on behalf of another party
A statement that related party transactions were made on terms equivalent to those that prevail in
arm's length transactions should be made only if such terms can be substantiated. [IAS 24.21]
[ CITATION IAS2 \l 18441 ]

Use of the respective standard in SBL annual report

Information about IAS 24 — Related Party disclouser in SBL annual report is not available

Comment:

IAS 24 is not available in annual report of Singer Bangladesh Limited as the company did not do
any related parties disclosure.

IAS 26 — Accounting and Reporting by Retirement Benefit Plans

AS 26 Accounting and Reporting by Retirement Benefit Plans outlines the requirements for the
preparation of financial statements of retirement benefit plans. It outlines the financial statements
required and discusses the measurement of various line items, particularly the actuarial present
value of promised retirement benefits for defined benefit plans.

Disclosure

Statement of net assets available for benefit, showing: [IAS 26.35(a)]

 assets at the end of the period

  basis of valuation
 details of any single investment exceeding 5% of net assets or 5% of any category
of investment
 details of investment in the employer
 liabilities other than the actuarial present value of plan benefits

Statement of changes in net assets available for benefits, showing: [IAS 26.35(b)]

 employer contributions

 employee contributions
 investment income
 other income
 benefits paid
 administrative expenses
 other expenses
 income taxes
 profit or loss on disposal of investments
 changes in fair value of investments
 transfers to/from other plans

Description of funding policy [IAS 26.35(c)]

Other details about the plan [IAS 26.36]

Summary of significant accounting policies [IAS 26.34(b)]

Description of the plan and of the effect of any changes in the plan during the period [IAS
26.34(c)]

Disclosures for defined benefit plans: [IAS 26.35(d) and (e)]

 actuarial present value of promised benefit obligations

 description of actuarial assumptions

 description of the method used to calculate the actuarial present value of promised
benefit obligations [ CITATION IAS2 \l 18441 ]
Use of the respective standard in SBL annual Report

Information about IAS 26 — Accounting and Reporting by Retirement Benefit Plans in SBL
annual report is not available. [ CITATION IAS2 \l 18441 ]

Comment:

There is no information about the standard IAS 26 — Accounting and Reporting by Retirement
Benefit Plans. Therefore, it is clear that it is not applicable.

IAS 28 - Investments in Associates and Joint Ventures

IAS 28 Investments in Associates and Joint Ventures (as amended in 2011) outlines how to
apply, with certain limited exceptions, the equity method to investments in associates and joint
ventures. The standard also defines an associate by reference to the concept of "significant
influence", which requires power to participate in financial and operating policy decisions of an
investee (but not joint control or control of those polices).

IAS 28 was reissued in May 2011 and applies to annual periods beginning on or after 1 January
2013.

Disclosure

There are no disclosures specified in IAS 28. Instead, IFRS 12 Disclosure of Interests in Other
Entities outlines the disclosures required for entities with joint control of, or significant influence
over, an investee.

Use of the Respective Standard in SBL Annual Report

In the annual report of Singer Company, we have found the following things regarding IAS 28:

Investments Investment in Central Depository Bangladesh Limited (CDBL)

Investment in CDBL is recorded at cost and represents insignificant holding.

Investment in associate
An associate is an entity over which the investor has significant influence. Significant influence is
the power to participate in the financial and operating policy decisions of the investee, but is not
control or joint control over those policies. Investment in associate is accounted for using the
equity method. Under the equity method, the investment in an associate is initially recognized at
cost. The carrying amount of the investment is adjusted to recognize changes in the investor's
share of net assets of the associate since the acquisition date. The statement of profit or loss and
other comprehensive income reflects the investor's share of the results of operations of the
associate. Any change in other comprehensive income of the investee is presented as part of the
investor's other comprehensive income. In addition, when there has been a change recognized
directly in the equity of the associate, the investor recognizes its share of any changes, when
applicable, in the statement of changes in equity. Unrealized gains and losses resulting from
transactions between the investor and the associate are eliminated to the extent of the interest in
the associate. Investment in term deposit This represents investment in term deposit with
Commercial Bank of Ceylon which is renewable. Investment in short term deposit Investment in
short term deposit represents fixed deposit with maturity of three months and over.

Comment:

So, we can say that the company follows the rules and regulations as prescribed by IAS 28.

IAS 29 - Financial Reporting in Hyperinflationary Economies

IAS 29 Financial Reporting in Hyperinflationary Economies applies where an entity's functional
currency is that of a hyperinflationary economy. The standard does not prescribe when
hyperinflation arises but requires the financial statements (and corresponding figures for
previous periods) of an entity with a functional currency that is hyperinflationary to be restated
for the changes in the general pricing power of the functional currency.

Disclosure

Gain or loss on monetary items [IAS 29.9] The fact that financial statements and other prior
period data have been restated for changes in the general purchasing power of the reporting
currency [IAS 29.39] Whether the financial statements are based on an historical cost or current
cost approach [IAS 29.39] Identity and level of the price index at the balance sheet date and
moves during the current and previous reporting period [IAS 29.39]
Use of the Respective Standard in SBL Annual Report

Since Bangladesh does not fall in the jurisdictions as per hyperinflationary category, so the rules
and regulations as per IAS 29 is not applicable for Singer Company

Comment:

So, we can say that the company does not follow the rules and regulations as prescribed by IAS
29.

IAS 31 — Interests In Joint Ventures

IAS 31 Interests in Joint Ventures sets out the accounting for an entity's interests in various
forms of joint ventures: jointly controlled operations, jointly controlled assets, and jointly
controlled entities. The standard permits jointly controlled entities to be accounted for using
either the equity method or by proportionate consolidation.

IAS 31 was reissued in December 2003, applies to annual periods beginning on or after 1
January 2005, and is superseded by IFRS 11 Joint Arrangements and IFRS 12 Disclosure of
Interests in Other Entities with effect from annual periods beginning on or after 1 January 2013.

Disclosure

A venture is required to disclose:

 Information about contingent liabilities relating to its interest in a joint venture. [IAS
31.54]
 Information about commitments relating to its interests in joint ventures. [IAS 31.55]
 A listing and description of interests in significant joint ventures and the proportion of
ownership interest held in jointly controlled entities. A venturer that recognises its
interests in jointly controlled entities using the line-by-line reporting format for
proportionate consolidation or the equity method shall disclose the aggregate amounts of
each of current assets, long-term assets, current liabilities, long-term liabilities, income,
and expenses related to its interests in joint ventures. [IAS 31.56]
 The method it uses to recognise its interests in jointly controlled entities. [IAS 31.57]
  Venture capital organisations or mutual funds that account for their interests in jointly
controlled entities in accordance with IAS 39 must make the disclosures required by IAS
31.55-56. [IAS 31.1]

Use of the Respective Standard in SBL Annual Report

Information about IAS 31 — Interests in Joint Ventures in SBL annual report is not available.

Comment

There is no information about IAS 31 — Interests in Joint Ventures in SBL annual report.
Therefore, it is clear that it is not applicable.

IAS 32 - Financial Instruments: Presentation

IAS 32 Financial Instruments: Presentation outlines the accounting requirements for the
presentation of financial instruments, particularly as to the classification of such instruments into
financial assets, financial liabilities and equity instruments. The standard also provide guidance
on the classification of related interest, dividends and gains/losses, and when financial assets and
financial liabilities can be offset.

Disclosures

Financial instruments disclosures are in IFRS 7 Financial Instruments: Disclosures, and no

longer in IAS 32.

The disclosures relating to treasury shares are in IAS 1 Presentation of Financial Statements and
IAS 24 Related Parties for share repurchases from related parties. [IAS 32.34 and 39]

Use of the Respective Standard in SBL Annual Report

Similar to IAS 29, IAS 32 has yet not been applied in our companies. Therefore, the company
doesn’t apply its rules and regulations.

Comment:

So ,we can say that the company does not follow the rules and regulations as prescribed by IAS
32.
IAS 33 - Earnings Per Share

IAS 33 Earnings per share sets out how to calculate both basic earnings per share (EPS) and
diluted EPS.

Requirement to present EPS

An entity whose securities are publicly traded (or that is in process of public issuance) must
present, on the face of the statement of comprehensive income, basic and diluted EPS for: [IAS
33.66]

 profit or loss from continuing operations attributable to the ordinary equity holders of the
parent entity; and

 profit or loss attributable to the ordinary equity holders of the parent entity for the period
for each class of ordinary shares that has a different right to share in profit for the period.

If an entity presents the components of profit or loss in a separate income statement, it presents
EPS only in that separate statement.

Basic and diluted EPS must be presented with equal prominence for all periods presented

Basic and diluted EPS must be presented even if the amounts are negative (that is, a loss per
share).

If an entity reports a discontinued operation, basic and diluted amounts per share must be
disclosed for the discontinued operation either on the face of the of comprehensive income (or
separate income statement if presented) or in the notes to the financial statements.

Basic EPS

Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders of the
parent entity (the numerator) by the weighted average number of ordinary shares outstanding
(the denominator) during the period.
The earnings numerators (profit or loss from continuing operations and net profit or loss) used
for the calculation should be after deducting all expenses including taxes, minority interests, and
preference dividends.

The denominator (number of shares) is calculated by adjusting the shares in issue at the
beginning of the period by the number of shares bought back or issued during the period,
multiplied by a time-weighting factor. IAS 33 includes guidance on appropriate recognition dates
for shares issued in various circumstances.

Contingently issuable shares are included in the basic EPS denominator when the contingency
has been met.

Diluted EPS

Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of
dilutive options and other dilutive potential ordinary shares. The effects of anti-dilutive potential
ordinary shares are ignored in calculating diluted EPS. Guidance on calculating dilution are
given below-

 Convertible securities. The numerator should be adjusted for the after-tax effects of

dividends and interest charged in relation to dilutive potential ordinary shares and for any
other changes in income that would result from the conversion of the potential ordinary
shares. The denominator should include shares that would be issued on the conversion.
 Options and warrants. In calculating diluted EPS, assume the exercise of outstanding
dilutive options and warrants. The assumed proceeds from exercise should be regarded as
having been used to repurchase ordinary shares at the average market price during the
period. The difference between the number of ordinary shares assumed issued on exercise
and the number of ordinary shares assumed repurchased shall be treated as an issue of
ordinary shares for no consideration.
 Contingently issuable shares. Contingently issuable ordinary shares are treated as
outstanding and included in the calculation of both basic and diluted EPS if the
conditions have been met. If the conditions have not been met, the number of
contingently issuable shares included in the diluted EPS calculation is based on the
number of shares that would be issuable if the end of the period were the end of the
 contingency period. Restatement is not permitted if the conditions are not met when the
contingency period expires.
 Contracts that may be settled in ordinary shares or cash. Presume that the contract
will be settled in ordinary shares, and include the resulting potential ordinary shares in
diluted EPS if the effect is dilutive.

Retrospective Adjustments

The calculation of basic and diluted EPS for all periods presented is adjusted retrospectively
when the number of ordinary or potential ordinary shares outstanding increases as a result of a
capitalization, bonus issue, or share split, or decreases as a result of a reverse share split. If such
changes occur after the balance sheet date but before the financial statements are authorized for
issue, the EPS calculations for those and any prior period financial statements presented are
based on the new number of shares. Disclosure is required.

Basic and diluted EPS are also adjusted for the effects of errors and adjustments resulting from
changes in accounting policies, accounted for retrospectively.

Diluted EPS for prior periods should not be adjusted for changes in the assumptions used or for
the conversion of potential ordinary shares into ordinary shares outstanding.

Disclosure

If EPS is presented, the following disclosures are required:

- the amounts used as the numerators in calculating basic and diluted EPS, and a
reconciliation of those amounts to profit or loss attributable to the parent entity for the
period
- the weighted average number of ordinary shares used as the denominator in calculating
basic and diluted EPS, and a reconciliation of these denominators to each other
- instruments (including contingently issuable shares) that could potentially dilute basic
EPS in the future, but were not included in the calculation of diluted EPS because they
are antidilutive for the period(s) presented
- a description of those ordinary share transactions or potential ordinary share transactions
that occur after the balance sheet date and that would have changed significantly the
 number of ordinary shares or potential ordinary shares outstanding at the end of the
period if those transactions had occurred before the end of the reporting period. Examples
include issues and redemptions of ordinary shares issued for cash, warrants and options,
conversions, and exercises [IAS 34.71]

An entity is permitted to disclose amounts per share other than profit or loss from continuing
operations, discontinued operations, and net profit or loss earnings per share. Guidance for
calculating and presenting such amounts is included in IAS 33.73 and 73A.

Use of the Respective Standard in SBL Annual Report

In 2018, SBL’s profit after tax was 900,153,413 and EPS was 11.74 (statement of profit or loss
and other comprehensive income).

In note number 10 they have given the detailed information about their share.

Authorized:
100,000,000 ordinary shares of Taka 10 each 1,000,000,000

Issued, subscribed and paid up:

25,670 ordinary shares of Taka 10 each issued for cash 256,700
102,580 ordinary shares of Taka 10 each issued for consideration other than cash 1,025,800
76,566,241 ordinary shares of Taka 10 each issued as fully paid-up bonus shares 765,662,410
766,944,910

So, total Issued, subscribed and paid up share no. is (25,670+ 102,580+ 76,566,241) 76,694,491.

Basic EPS= 900,153,413/ 76,694,491= 11.74, they showed this calculation on note number 31.1
and in 31.2 they said that here was no potentially dilutive potential ordinary shares in 2018.

In the note number 40(Q), company stated that-

The Company presents basic and diluted (when dilution is applicable) earnings per share (EPS)
data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the
Company by weighted average number of ordinary shares outstanding during the period,
adjusted for the effect of change in number of shares for bonus issue, share split and reserve
split.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding, for the effects of all dilutive
potential ordinary shares. However, dilution of EPS is not applicable for these financial
statements as there was no dilutive potential ordinary shares during the relevant periods.

Comment:

SBL following IAS 33 for in recognition, measurement and disclosure of earning per share.

IAS 34 — Interim Financial Reporting

IAS 34 Interim Financial Reporting applies when an entity prepares an interim financial report,
without mandating when an entity should prepare such a report. Permitting less information to be
reported than in annual financial statements (on the basis of providing an update to those
financial statements), the standard outlines the recognition, measurement and disclosure
requirements for interim reports.

Note disclosures

The explanatory notes required are designed to provide an explanation of events and transactions
that are significant to an understanding of the changes in financial position and performance of
the entity since the last annual reporting date. IAS 34 states a presumption that anyone who reads
an entity's interim report will also have access to its most recent annual report. Consequently,
IAS 34 avoids repeating annual disclosures in interim condensed reports. [IAS 34.15]

Examples of specific disclosure requirements of IAS 34

Accounting policies

The same accounting policies should be applied for interim reporting as are applied in the entity's
annual financial statements, except for accounting policy changes made after the date of the most
recent annual financial statements that are to be reflected in the next annual financial statements.
[IAS 34.28]
A key provision of IAS 34 is that an entity should use the same accounting policy throughout a
single financial year. If a decision is made to change a policy mid-year, the change is
implemented retrospectively, and previously reported interim data is restated. [IAS 34.43]

Measurement

Measurements for interim reporting purposes should be made on a year-to-date basis, so that the
frequency of the entity's reporting does not affect the measurement of its annual results. [IAS
34.28]

Several important measurement points:

 Revenues that are received seasonally, cyclically or occasionally within a financial year
should not be anticipated or deferred as of the interim date, if anticipation or deferral
would not be appropriate at the end of the financial year. [IAS 34.37]

 Costs that are incurred unevenly during a financial year should be anticipated or deferred
for interim reporting purposes if, and only if, it is also appropriate to anticipate or defer
that type of cost at the end of the financial year. [IAS 34.39]

 Income tax expense should be recognised based on the best estimate of the weighted
average annual effective income tax rate expected for the full financial year. [IAS 34
Appendix B12]

An appendix to IAS 34 provides guidance for applying the basic recognition and measurement
principles at interim dates to various types of asset, liability, income, and expense.

Materiality

In deciding how to recognise, measure, classify, or disclose an item for interim financial
reporting purposes, materiality is to be assessed in relation to the interim period financial data,
not forecast annual data. [IAS 34.23]

Disclosure in annual financial statements

If an estimate of an amount reported in an interim period is changed significantly during the

financial interim period in the financial year but a separate financial report is not published for
that period, the nature and amount of that change must be disclosed in the notes to the annual
financial statements. [IAS 34.26]

Use of the respective standard in SBL annual Report:

The financial period of the Company covers one year from 1 January to 31 December.

Comment:

The standard IAS 34 — Interim Financial Reporting is not available in the SBL annual report as
they mentioned their financial period is from 1 January to 31 December. This means one year
where we know in Interim Financial Reporting, a financial reporting period shorter than a full
financial year (most typically a quarter or half-year).

IAS 36 — Impairment of Assets

IAS 36 Impairment of Assets seeks to ensure that an entity's assets are not carried at more than
their recoverable amount (i.e. the higher of fair value less costs of disposal and value in use).
With the exception of goodwill and certain intangible assets for which an annual impairment test
is required, entities are required to conduct impairment tests where there is an indication of
impairment of an asset, and the test may be conducted for a 'cash-generating unit' where an asset
does not generate cash inflows that are largely independent of those from other assets.

Disclosure

Disclosure by class of assets: [IAS 36.126]

 impairment losses recognised in profit or loss

 impairment losses reversed in profit or loss
 which line item(s) of the statement of comprehensive income
 impairment losses on revalued assets recognised in other comprehensive income
 impairment losses on revalued assets reversed in other comprehensive income

Disclosure by reportable segment: [IAS 36.129]

 impairment losses recognised

 impairment losses reversed
Other disclosures:

 If an individual impairment loss (reversal) is material disclose: [IAS 36.130]

 events and circumstances resulting in the impairment loss
 amount of the loss or reversal
 individual asset: nature and segment to which it relates
 cash generating unit: description, amount of impairment loss (reversal) by class of assets
and segment
 if recoverable amount is fair value less costs of disposal, the level of the fair value
hierarchy (from IFRS 13 Fair Value Measurement) within which the fair value
measurement is categorised, the valuation techniques used to measure fair value less
costs of disposal and the key assumptions used in the measurement of fair value
measurements categorised within 'Level 2' and 'Level 3' of the fair value hierarchy*
 if recoverable amount has been determined on the basis of value in use, or on the basis of
fair value less costs of disposal using a present value technique*, disclose the discount
rate

* Amendments introduced by Recoverable Amount Disclosures for Non-Financial Assets,

effective for annual periods beginning on or after 1 January 2014.

If impairment losses recognised (reversed) are material in aggregate to the financial statements
as a whole, disclose: [IAS 36.131]

 main classes of assets affected

 main events and circumstances

Disclose detailed information about the estimates used to measure recoverable amounts of cash
generating units containing goodwill or intangible assets with indefinite useful lives.

Use of the respective standard in SBL annual Report

The Company reviews the carrying values of tangible and intangible assets for any possible
impairment at each date of Statement of Financial Position. An impairment loss is recognized
when the carrying amount of an asset exceeds its recoverable amount. In assessing the
recoverable amount, the estimated future cash flows are discounted to their present value at
appropriate discount rates.

Trade receivable is assessed at each Reporting date of statement of financial position to

determine whether there is any objective evidence that it is impaired. Trade receivable is deemed
to be impaired if and only if, there is objective evidence of impairment as a result of one or more
events that have occurred after the initial recognition of the asset, and that the loss event had an
impact on the estimated future cash flows of that asset that can be reliably estimated. Objective
evidence that financial assets are impaired can included fault or delinquency by a debtor,
indications that a debtor or issuer will enter bankruptcy, etc. Accordingly, provision for doubtful
debts is made over the amount outstanding from customers, dealers and other debtors. For
receivables from customers, dealers and other debtors, provision for doubtful debts is made after
analyzing the recoverability of the amount from the concerned parties based on analysis of
delinquency, arrearage and past due. The provision for doubtful debts is written off when it is
proved that the debts are not recoverable at all.

Comment:

Hence, from the above discussion, it is clear that SBL follows all the rules and principles laid out
by the standard IAS 36 Impairment of Assets.

IAS 37: Provisions, Contingent Liabilities and Contingent Assets

IAS 37 covers how in financial statement we should recognize, measure and disclose the
provisions, the contingent liabilities and the contingent assets.

Provisions: Provision is a liability of uncertain timing or amount.

Recognition of a Provision

An entity must recognise a provision if, and only if:

- a present obligation (legal or constructive) has arisen as a result of a past event (the
obligating event)
- payment is probable ('more likely than not') and
- the amount can be estimated reliably
Measurement of Provisions

The amount recognised as a provision should be the best estimate of the expenditure required to
settle the present obligation at the balance sheet date, that is, the amount that an entity would
rationally pay to settle the obligation at the balance sheet date or to transfer it to a third party.
This means:

- Provisions for one-off events (restructuring, environmental clean-up, settlement of a

lawsuit) are measured at the most likely amount.
- Provisions for large populations of events (warranties, customer refunds) are measured at
a probability-weighted expected value.
- Both measurements are at discounted present value using a pre-tax discount rate that
reflects the current market assessments of the time value of money and the risks specific
to the liability.

In reaching its best estimate, the entity should take into account the risks and uncertainties that
surround the underlying events.

If some or all of the expenditure required to settle a provision is expected to be reimbursed by

another party, the reimbursement should be recognised as a separate asset, and not as a reduction
of the required provision, when, and only when, it is virtually certain that reimbursement will be
received if the entity settles the obligation. The amount recognised should not exceed the amount
of the provision.

In measuring a provision consider future events as follows:

- forecast reasonable changes in applying existing technology

- ignore possible gains on sale of assets

- consider changes in legislation only if virtually certain to be enacted

Remeasurement of Provisions

- Review and adjust provisions at each balance sheet date

 - If an outflow no longer probable, provision is reversed.

Restructuring Provision

A restructuring is a programme that is planned and controlled by management, and materiality

changes either:

- the scopes of a business undertaken by an entity, or

- the manner in which that business is conducted

Disclosures

Reconciliation for each class of provision:

- opening balance

- additions

- used (amounts charged against the provision)

- unused amounts reversed

- unwinding of the discount, or changes in discount rate

- closing balance

A prior year reconciliation is not required.

For each class of provision, a brief description of:

- nature

- timing

- uncertainties

- assumptions

- reimbursement, if any.
Use of the Respective Standard in SBL Annual Report

 Provision for doubtful debts

In the note number 8.3, under the caption “Provision for doubtful debts”, company has showed
detail measurement of their provision for doubtful debts for 2018.

Opening balance 50,312,052

Provision for the year 29,072,384

79,384,436

Written-off during the year (24,026,094)

Closing balance 55,358,342

In the note number 40 (J), company clearly spelled out that they are measuring the provision
accordingly to standard.

 Provision for warranty

A provision for warranties is recognised when the underlying products or services are sold. The
provision is based on historical warranty data and a weighing of all possible outcomes against
their associated probabilities.

Comment:

SBL followed the standard for accounting treatment of provision. As there was no need to apply
restructuring provision, company did not use it.

Contingent Liabilities: A contingent liability is:

- a possible obligation depending on whether some uncertain future event occurs, or

 - a present obligation but payment is not probable or the amount cannot be measured
reliably

Contingent Assets: A contingent asset is:

- a possible asset that arises from past events

- and whose existence will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the entity

Measurement and Disclosure of Contingent Liabilities and Contingent Assets

Contingent liability and contingent asset is disclosed as a note to the accounts only, no entries are
made into the financial statements other than disclosure. [ CITATION ACC1 \l 18441 ]

Use of the Respective Standard in SBL Annual Report

There are contingent liabilities on account of disputed bank guarantees and claims by the
customs authority. Contingent liabilities of SBL are-

1. Claims against the Company not acknowledged as debts

2. Uncalled liability on partly paid shares/ arrears of fixed cumulative dividends on
preference shares
3. Aggregate amount of contracts for capital expenditure remaining to be executed and not
provided for
4. Aggregate amount of any guarantees given by the Company on behalf of directors,
managing directors, or other officers of the company
5. Money for which the Company is contingently liable for any guarantees given by banks

Comment:

So we can say that, for the accounting treatments for Contingent Liabilities and Contingent
Assets company is following IAS 37.

IAS 38 — Intangible Assets

IAS 38 Intangible Assets outlines the accounting requirements for intangible assets, which are
non-monetary assets which are without physical substance and identifiable (either being
separable or arising from contractual or other legal rights). Intangible assets meeting the relevant
recognition criteria are initially measured at cost, subsequently measured at cost or using the
revaluation model, and amortised on a systematic basis over their useful lives (unless the asset
has an indefinite useful life, in which case it is not amortised).

Initial measurement

Intangible assets are initially measured at cost. [IAS 38.24]

Measurement subsequent to acquisition: cost model and revaluation models allowed

An entity must choose either the cost model or the revaluation model for each class of intangible
asset. [IAS 38.72]

Cost model. After initial recognition intangible assets should be carried at cost less accumulated
amortisation and impairment losses. [IAS 38.74]

Revaluation model. Intangible assets may be carried at a revalued amount (based on fair value)
less any subsequent amortisation and impairment losses only if fair value can be determined by
reference to an active market. [IAS 38.75] Such active markets are expected to be uncommon for
intangible assets. [IAS 38.78] Examples where they might exist:

 production quotas

 fishing licences

 taxi licences

Under the revaluation model, revaluation increases are recognised in other comprehensive
income and accumulated in the "revaluation surplus" within equity except to the extent that they
reverse a revaluation decrease previously recognised in profit and loss. If the revalued intangible
has a finite life and is, therefore, being amortised (see below) the revalued amount is amortised.
[IAS 38.85]

Classification of intangible assets based on useful life

Intangible assets are classified as: [IAS 38.88]

  Indefinite life: no foreseeable limit to the period over which the asset is expected to
generate net cash inflows for the entity.

 Finite life: a limited period of benefit to the entity.

Measurement subsequent to acquisition: intangible assets with finite lives

The cost less residual value of an intangible asset with a finite useful life should be amortised on
a systematic basis over that life: [IAS 38.97]

 The amortisation method should reflect the pattern of benefits.

 If the pattern cannot be determined reliably, amortise by the straight-line method.

 The amortisation charge is recognised in profit or loss unless another IFRS requires that it
be included in the cost of another asset.

 The amortisation period should be reviewed at least annually. [IAS 38.104]

Expected future reductions in selling prices could be indicative of a higher rate of consumption
of the future economic benefits embodied in an asset. [IAS 18.92]

The standard contains a rebuttable presumption that a revenue-based amortisation method for
intangible assets is inappropriate. However, there are limited circumstances when the
presumption can be overcome:

 The intangible asset is expressed as a measure of revenue; and

 it can be demonstrated that revenue and the consumption of economic benefits of the
intangible asset are highly correlated. [IAS 38.98A]

Measurement subsequent to acquisition: intangible assets with indefinite useful lives

An intangible asset with an indefinite useful life should not be amortised. [IAS 38.107]

Its useful life should be reviewed each reporting period to determine whether events and
circumstances continue to support an indefinite useful life assessment for that asset. If they do
not, the change in the useful life assessment from indefinite to finite should be accounted for as a
change in an accounting estimate. [IAS 38.109]

The asset should also be assessed for impairment in accordance with IAS 36. [IAS 38.111]

Subsequent expenditure: Due to the nature of intangible assets, subsequent expenditure will
only rarely meet the criteria for being recognised in the carrying amount of an asset. [IAS 38.20]
Subsequent expenditure on brands, mastheads, publishing titles, customer lists and similar items
must always be recognised in profit or loss as incurred. [IAS 38.63]

Disclosure

For each class of intangible asset, disclose: [IAS 38.118 and 38.122]

 useful life or amortisation rate

 amortisation method

 gross carrying amount

 accumulated amortisation and impairment losses

 line items in the income statement in which amortisation is included

 reconciliation of the carrying amount at the beginning and the end of the period showing:

o additions (business combinations separately)

o assets held for sale

o retirements and other disposals

o revaluations

o impairments

o reversals of impairments

o amortisation

o foreign exchange differences

 o other changes

 basis for determining that an intangible has an indefinite life

 description and carrying amount of individually material intangible assets

 certain special disclosures about intangible assets acquired by way of government grants

 information about intangible assets whose title is restricted

 contractual commitments to acquire intangible assets

Additional disclosures are required about:

 intangible assets carried at revalued amounts [IAS 38.124]

 the amount of research and development expenditure recognised as an expense in the

current period [IAS 38.126]

Use of the respective standard in SBL annual Report

The company SBL reported their intangible asset and also consolidated intangible assets of year
2017 and 2018:
And also in the report the company SBL said

An intangible asset is recognised if it is probable that future economic benefits will flow to the
entity and the cost of the asset can be measured reliably in accordance with IAS 38 - ‘Intangible
Assets’. Intangible assets with finite useful lives are measured at cost, less accumulated
amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Subsequent expenditure is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including expenditure on
internally-generated goodwill and brands are recognised in profit or loss as incurred.

Intangible assets with finite lives are amortised over the useful economic life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for an intangible asset with a finite useful life
are reviewed at least at each financial year-end. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset is accounted
for by changing the amortisation period or method, as appropriate, and treated as changes in
accounting estimates. Amortisation expense on intangible assets with finite lives is recognised in
profit and loss on a straight-line basis over the estimated useful lives, from the date they are
available-for-use.

Gains or losses arising from derecognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognised in
profit and loss when the asset is derecognised.

Comment:

Hence, for the above discussion it is clear that SBL all the rules and principles laid out by the
standard IAS 38 — Intangible asset.

IAS 40 - Investment Property

IAS 40 Investment Property applies to the accounting for property (land and/or buildings) held to
earn rentals or for capital appreciation (or both). Investment properties are initially measured at
cost and, with some exceptions. may be subsequently measured using a cost model or fair value
model, with changes in the fair value under the fair value model being recognised in profit or
loss.

IAS 40 was reissued in December 2003 and applies to annual periods beginning on or after 1
January 2005.

Initial measurement
Investment property is initially measured at cost, including transaction costs. Such cost should
not include start-up costs, abnormal waste, or initial operating losses incurred before the
investment property achieves the planned level of occupancy. [IAS 40.20 and 40.23]

Measurement subsequent to initial recognition

IAS 40 permits entities to choose between: [IAS 40.30]

A fair value model, and a cost model.

One method must be adopted for all of an entity's investment property. Change is permitted only
if this results in a more appropriate presentation. IAS 40 notes that this is highly unlikely for a
change from a fair value model to a cost model.

Fair value model

Investment property is premeasured at fair value, which is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. [IAS 40.5] Gains or losses arising from changes in the fair value of
investment property must be included in net profit or loss for the period in which it arises. [IAS
40.35]

Fair value should reflect the actual market state and circumstances as of the balance sheet date.
[IAS 40.38] The best evidence of fair value is normally given by current prices on an active
market for similar property in the same location and condition and subject to similar lease and
other contracts. [IAS 40.45] In the absence of such information, the entity may consider current
prices for properties of a different nature or subject to different conditions, recent prices on less
active markets with adjustments to reflect changes in economic conditions, and discounted cash
flow projections based on reliable estimates of future cash flows. [IAS 40.46]

There is a rebuttable presumption that the entity will be able to determine the fair value of an
investment property reliably on a continuing basis. However: [IAS 40.53]

If an entity determines that the fair value of an investment property under construction is not
reliably determinable but expects the fair value of the property to be reliably determinable when
construction is complete, it measures that investment property under construction at cost until
either its fair value becomes reliably determinable or construction is completed. If an entity
determines that the fair value of an investment property (other than an investment property under
construction) is not reliably determinable on a continuing basis, the entity shall measure that
investment property using the cost model in IAS 16. The residual value of the investment
property shall be assumed to be zero. The entity shall apply IAS 16 until disposal of the
investment property.

Where a property has previously been measured at fair value, it should continue to be measured
at fair value until disposal, even if comparable market transactions become less frequent or
market prices become less readily available. [IAS 40.55]

Cost model

After initial recognition, investment property is accounted for in accordance with the cost model
as set out in IAS 16 Property, Plant and Equipment – cost less accumulated depreciation and less
accumulated impairment losses. [IAS 40.56]

Transfers to or from investment property classification

Transfers to, or from, investment property should only be made when there is a change in use,
evidenced by one or more of the following: [IAS 40.57 (note that this list was changed from an
exhaustive list to an non-exhaustive list of examples by Transfers of Investment Property in
December 2016 effective 1 January 2018) ]

Commencement of owner-occupation (transfer from investment property to owner-occupied

property) commencement of development with a view to sale (transfer from investment property
to inventories) end of owner-occupation (transfer from owner-occupied property to investment
property) commencement of an operating lease to another party (transfer from inventories to
investment property) end of construction or development (transfer from property in the course of
construction/development to investment property

When an entity decides to sell an investment property without development, the property is not
reclassified as inventory but is dealt with as investment property until it is derecognised. [IAS
40.58]
The following rules apply for accounting for transfers between categories:

for a transfer from investment property carried at fair value to owner-occupied property or
inventories, the fair value at the change of use is the 'cost' of the property under its new
classification [IAS 40.60] for a transfer from owner-occupied property to investment property
carried at fair value, IAS 16 should be applied up to the date of reclassification. Any difference
arising between the carrying amount under IAS 16 at that date and the fair value is dealt with as
a revaluation under IAS 16 [IAS 40.61] for a transfer from inventories to investment property at
fair value, any difference between the fair value at the date of transfer and it previous carrying
amount should be recognised in profit or loss [IAS 40.63] when an entity completes
construction/development of an investment property that will be carried at fair value, any
difference between the fair value at the date of transfer and the previous carrying amount should
be recognised in profit or loss. [IAS 40.65]

When an entity uses the cost model for investment property, transfers between categories do not
change the carrying amount of the property transferred, and they do not change the cost of the
property for measurement or disclosure purposes.

Disposal

An investment property should be derecognised on disposal or when the investment property is

permanently withdrawn from use and no future economic benefits are expected from its disposal.
The gain or loss on disposal should be calculated as the difference between the net disposal
proceeds and the carrying amount of the asset and should be recognised as income or expense in
the income statement. [IAS 40.66 and 40.69] Compensation from third parties is recognised
when it becomes receivable. [IAS 40.72]

Disclosure

Both Fair Value Model and Cost Model [IAS 40.75]

whether the fair value or the cost model is used if the fair value model is used, whether property
interests held under operating leases are classified and accounted for as investment property if
classification is difficult, the criteria to distinguish investment property from owner-occupied
property and from property held for sale the extent to which the fair value of investment property
is based on a valuation by a qualified independent valuer; if there has been no such valuation,
that fact must be disclosed the amounts recognised in profit or loss for:

rental income from investment property direct operating expenses (including repairs and
maintenance) arising from investment property that generated rental income during the period
direct operating expenses (including repairs and maintenance) arising from investment property
that did not generate rental income during the period the cumulative change in fair value
recognised in profit or loss on a sale from a pool of assets in which the cost model is used into a
pool in which the fair value model is used restrictions on the realisability of investment property
or the remittance of income and proceeds of disposal contractual obligations to purchase,
construct, or develop investment property or for repairs, maintenance or enhancements

Additional Disclosures for the Fair Value Model [IAS 40.76]

a reconciliation between the carrying amounts of investment property at the beginning and end of
the period, showing additions, disposals, fair value adjustments, net foreign exchange
differences, transfers to and from inventories and owner-occupied property, and other changes
[IAS 40.76] significant adjustments to an outside valuation (if any) [IAS 40.77] if an entity that
otherwise uses the fair value model measures an item of investment property using the cost
model, certain additional disclosures are required [IAS 40.78]

Additional Disclosures for the Cost Model [IAS 40.79]

The depreciation methods used the useful lives or the depreciation rates used the gross carrying
amount and the accumulated depreciation (aggregated with accumulated impairment losses) at
the beginning and end of the period a reconciliation of the carrying amount of investment
property at the beginning and end of the period, showing additions, disposals, depreciation,
impairment recognised or reversed, foreign exchange differences, transfers to and from
inventories and owner-occupied property, and other changes the fair value of investment
property. If the fair value of an item of investment property cannot be measured reliably,
additional disclosures are required, including, if possible, the range of estimates within which
fair value is highly likely to lie

Use of the Respective Standard in SBL Annual Report

The company doesn’t hold any property (land and/or buildings) to earn rentals or for capital
appreciation (or both).

Since all the lands and properties the company holds are held for use in the production or supply
of goods or services or for administrative purposes, property held for sale in the ordinary course
of business or in the process of construction of development for such sale etc. , so the IAS 40 is
not applicable.

Comment:

So, we can say that the company does not follow the rules and regulations as prescribed by IAS
40.

IAS 41 — Agriculture
IAS 41 Agriculture sets out the accounting for agricultural activity – the transformation of
biological assets (living plants and animals) into agricultural produce (harvested product of the
entity's biological assets). The standard generally requires biological assets to be measured at fair
value less costs to sell.

Measurement

Biological assets within the scope of IAS 41 are measured on initial recognition and at
subsequent reporting dates at fair value less estimated costs to sell, unless fair value cannot be
reliably measured. [IAS 41.12]

Agricultural produce is measured at fair value less estimated costs to sell at the point of harvest.
[IAS 41.13] Because harvested produce is a marketable commodity, there is no 'measurement
reliability' exception for produce.

The gain on initial recognition of biological assets at fair value less costs to sell, and changes in
fair value less costs to sell of biological assets during a period, are included in profit or loss. [IAS
41.26]
A gain on initial recognition (e.g. as a result of harvesting) of agricultural produce at fair value
less costs to sell are included in profit or loss for the period in which it arises. [IAS 41.28]

All costs related to biological assets that are measured at fair value are recognised as expenses
when incurred, other than costs to purchase biological assets.

IAS 41 presumes that fair value can be reliably measured for most biological assets. However,
that presumption can be rebutted for a biological asset that, at the time it is initially recognised,
does not have a quoted market price in an active market and for which alternative fair value
measurements are determined to be clearly unreliable. In such a case, the asset is measured at
cost less accumulated depreciation and impairment losses. But the entity must still measure all of
its other biological assets at fair value less costs to sell. If circumstances change and fair value
becomes reliably measurable, a switch to fair value less costs to sell is required. [IAS 41.30]

Guidance on the determination of fair value is available in IFRS 13 Fair Value Measurement. 
IFRS 13 also requires disclosures about fair value measurements.

Government grants

Unconditional government grants received in respect of biological assets measured at fair value
less costs to sell are recognised in profit or loss when the grant becomes receivable. [IAS 41.34]

If such a grant is conditional (including where the grant requires an entity not to engage in
certain agricultural activity), the entity recognises the grant in profit or loss only when the
conditions have been met. [IAS 41.35]

Disclosure

Disclosure requirements in IAS 41 include:

 aggregate gain or loss from the initial recognition of biological assets and agricultural
produce and the change in fair value less costs to sell during the period* [IAS 41.40]

 description of an entity's biological assets, by broad group [IAS 41.41]

  description of the nature of an entity's activities with each group of biological assets and
non-financial measures or estimates of physical quantities of output during the period and
assets on hand at the end of the period [IAS 41.46]

 information about biological assets whose title is restricted or that are pledged as security
[IAS 41.49]

 commitments for development or acquisition of biological assets [IAS 41.49]

 financial risk management strategies [IAS 41.49]

 reconciliation of changes in the carrying amount of biological assets, showing separately

changes in value, purchases, sales, harvesting, business combinations, and foreign
exchange differences* [IAS 41.50]

* Separate and/or additional disclosures are required where biological assets are measured at cost
less accumulated depreciation [IAS 41.55]

Disclosure of a quantified description of each group of biological assets, distinguishing between

consumable and bearer assets or between mature and immature assets, is encouraged but not
required. [IAS 41.43]

If fair value cannot be measured reliably, additional required disclosures include: [IAS 41.54]

 description of the assets

 an explanation of why fair value cannot be reliably measured

 if possible, a range within which fair value is highly likely to lie

 depreciation method

 useful lives or depreciation rates

 gross carrying amount and the accumulated depreciation, beginning and ending.

If the fair value of biological assets previously measured at cost subsequently becomes available,
certain additional disclosures are required. [IAS 41.56]
Disclosures relating to government grants include the nature and extent of grants, unfulfilled
conditions, and significant decreases expected in the level of grants. [IAS 41.57]

Use of the Respective Standard in SBL Annual Report

Information about IAS 41 Agriculture in SBL annual report is not available

Comment:

This standard is not applicable for SBL annual report. IAS-41 deals with agriculture so there is
no relationship between agriculture and SBL company.

International Financial Reporting Standards

IFRS 1 - First-time Adoption of International Financial Reporting Standards

IFRS 1 First-time Adoption of International Financial Reporting Standards sets out the
procedures that an entity must follow when it adopts IFRSs for the first time as the basis for
preparing its general purpose financial statements. The IFRS grants limited exemptions from the
general requirement to comply with each IFRS effective at the end of its first IFRS reporting
period.

Recognition and Measurement of IFRS 1

IFRS 1 Require the following points to be implemented when an entity wants to make the
transition from current GAAP to IFRS. Here is the important requirement of IFRS 1:

 Entity requires to prepare and present the opening balance of balance sheet items at the
transitional date. This is the first thing that entity need to do in their transitional works.
Such presentation is quite an importance for users to understand how the effect of
transitional from GAAP to IFRS.
 It is required by IFRS 1 that entity shall use the same accounting policies for opening
balance items and all other items in the period. The entity should use the same accounting
policies for opening balance and these accounting policies are to be used consistently
over the next periods. All of those accounting policies must be comply with IFRS at the
time of transition.
 Transitional from one IFRS to others IFRS is not applicable for this standard. For
example, when the entity’s Financial Statements are already used IFRS. And some IFRS
require changing. Then, the application of IFRS 1 is not applicable to such a situation.
 The Transitional of GAAP to IFRS should be used the last release of IFRS.
 The entity should apply IFRS to measure all items in Financial Statements. That means
all items in Financial Statements are required to use IFRS to measures.
 Recognize all items of assets and liabilities that permit by IFRS. The entity should
recognize all assets and liabilities that permit by IFRS.
 Derecognize all items that are not permitted. The entity should also derecognize all items
of assets and liabilities if those items are not permitted per IFRS.
 The entity should perform adjustment of the effect between GAAP and IFRS is go to
retain earning. During the transitional, there are some items going to be effective by the
transition from GAAP to IFRS. All of the effects are required by IFRS 1 to be recognized
in retain earning.

Mandatory Exemption for Retrospective:

In general, the application of transitional from current GAAP to IFRS require that opening
balance need to be retrospective in Financial Statement. However, because the retrospective
costs are high for some areas; therefore, IFRS 1 provides guidance on what areas must be
retrospective and what areas that you can decide to apply or not.

Presentation and Disclosure of IFRS 1

The following are the disclosure requirement for IFRS 1:

a) For comprehensive information entity should prepare:

 Three Statements of Financial Position

 Two Statements of Profit and Loss
 Two Statements of Statement of Cash Flow
 Two Statements of Change in Equity
 Noted to Financial Statements
 All Statements are required comparative information

b) For a reconciliation of equity reported under previous accounting framework to equity under
IFRSs:

 At the date of transition to IFRSs

 At the end of the latest period presented in the entity’s most recent annual financial
statements under previous GAAP.

c) For a reconciliation of total comprehensive income reported under previous accounting:

 The framework to total comprehensive income under IFRSs for the entity’s most recent
annual
 Financial statements under previous accounting framework

d) Interim financial reports Error under previous GAAP and Additional disclosure should clearly
stated and present in the report.

Use of the Respective Standard in SBL Annual Report

We know that IFRS 1 standard is not applied to entities already reporting under IFRSs. Since
Company is already reporting under IFRSs, therefore IFRS 1 standard is not applicable for them.

Comment

So, we can say that the company does not follow the rules and regulations as prescribed by IFRS
1.

IFRS 2 - Share-based Payment

IFRS 2 Share-based Payment requires an entity to recognise share-based payment transactions
(such as granted shares, share options, or share appreciation rights) in its financial statements,
including transactions with employees or other parties to be settled in cash, other assets, or
equity instruments of the entity. Specific requirements are included for equity-settled and cash-
settled share-based payment transactions, as well as those where the entity or supplier has a
choice of cash or equity instruments.

IFRS 2 was originally issued in February 2004 and first applied to annual periods beginning on
or after 1 January 2005.

Definition of share-based payment

A share-based payment is a transaction in which the entity receives goods or services either as
consideration for its equity instruments or by incurring liabilities for amounts based on the price
of the entity's shares or other equity instruments of the entity. The accounting requirements for
the share-based payment depend on how the transaction will be settled, that is, by the issuance of
(a) equity, (b) cash, or (c) equity or cash.

Recognition and measurement

The issuance of shares or rights to shares requires an increase in a component of equity. IFRS 2
requires the offsetting debit entry to be expensed when the payment for goods or services does
not represent an asset. The expense should be recognised as the goods or services are consumed.
For example, the issuance of shares or rights to shares to purchase inventory would be presented
as an increase in inventory and would be expensed only once the inventory is sold or impaired.
The issuance of fully vested shares, or rights to shares, is presumed to relate to past service,
requiring the full amount of the grant-date fair value to be expensed immediately. The issuance
of shares to employees with, say, a three-year vesting period is considered to relate to services
over the vesting period. Therefore, the fair value of the share-based payment, determined at the
grant date, should be expensed over the vesting period.

As a general principle, the total expense related to equity-settled share-based payments will equal
the multiple of the total instruments that vest and the grant-date fair value of those instruments.
In short, there is truing up to reflect what happens during the vesting period. However, if the
equity-settled share-based payment has a market related performance condition, the expense
would still be recognised if all other vesting conditions are met. The following example provides
an illustration of a typical equity-settled share-based payment.

Measurement guidance

Depending on the type of share-based payment, fair value may be determined by the value of the
shares or rights to shares given up, or by the value of the goods or services received:

 General fair value measurement principle. In principle, transactions in which goods or

services are received as consideration for equity instruments of the entity should be
measured at the fair value of the goods or services received. Only if the fair value of the
goods or services cannot be measured reliably would the fair value of the equity
instruments granted be used.

 Measuring employee share options. For transactions with employees and others
providing similar services, the entity is required to measure the fair value of the equity
instruments granted, because it is typically not possible to estimate reliably the fair value
of employee services received.

 When to measure fair value - options. For transactions measured at the fair value of the
equity instruments granted (such as transactions with employees), fair value should be
estimated at grant date.
 When to measure fair value - goods and services. For transactions measured at the fair
value of the goods or services received, fair value should be estimated at the date of
receipt of those goods or services.

 Measurement guidance. For goods or services measured by reference to the fair value of
the equity instruments granted, IFRS 2 specifies that, in general, vesting conditions are
not taken into account when estimating the fair value of the shares or options at the
relevant measurement date (as specified above). Instead, vesting conditions are taken into
account by adjusting the number of equity instruments included in the measurement of
the transaction amount so that, ultimately, the amount recognised for goods or services
received as consideration for the equity instruments granted is based on the number of
equity instruments that eventually vest.

 More measurement guidance. IFRS 2 requires the fair value of equity instruments
granted to be based on market prices, if available, and to take into account the terms and
conditions upon which those equity instruments were granted. In the absence of market
prices, fair value is estimated using a valuation technique to estimate what the price of
those equity instruments would have been on the measurement date in an arm's length
transaction between knowledgeable, willing parties. The standard does not specify which
particular model should be used.

 If fair value cannot be reliably measured. IFRS 2 requires the share-based payment
transaction to be measured at fair value for both listed and unlisted entities. IFRS 2
permits the use of intrinsic value (that is, fair value of the shares less exercise price) in
those "rare cases" in which the fair value of the equity instruments cannot be reliably
measured. However this is not simply measured at the date of grant. An entity would
have to remeasure intrinsic value at each reporting date until final settlement.

 Performance conditions. IFRS 2 makes a distinction between the handling of market

based performance conditions from non-market performance conditions. Market
conditions are those related to the market price of an entity's equity, such as achieving a
specified share price or a specified target based on a comparison of the entity's share
price with an index of share prices of other entities. Market based performance conditions
 are included in the grant-date fair value measurement (similarly, non-vesting conditions
are taken into account in the measurement). However, the fair value of the equity
instruments is not adjusted to take into consideration non-market based performance
features - these are instead taken into account by adjusting the number of equity
instruments included in the measurement of the share-based payment transaction, and are
adjusted each period until such time as the equity instruments vest.

Modifications, cancellations, and settlements

The determination of whether a change in terms and conditions has an effect on the amount
recognised depends on whether the fair value of the new instruments is greater than the fair value
of the original instruments (both determined at the modification date).

Modification of the terms on which equity instruments were granted may have an effect on the
expense that will be recorded. IFRS 2 clarifies that the guidance on modifications also applies to
instruments modified after their vesting date. If the fair value of the new instruments is more
than the fair value of the old instruments (e.g. by reduction of the exercise price or issuance of
additional instruments), the incremental amount is recognised over the remaining vesting period
in a manner similar to the original amount. If the modification occurs after the vesting period, the
incremental amount is recognised immediately. If the fair value of the new instruments is less
than the fair value of the old instruments, the original fair value of the equity instruments granted
should be expensed as if the modification never occurred.

The cancellation or settlement of equity instruments is accounted for as an acceleration of the

vesting period and therefore any amount unrecognised that would otherwise have been charged
should be recognised immediately. Any payments made with the cancellation or settlement (up
to the fair value of the equity instruments) should be accounted for as the repurchase of an equity
interest. Any payment in excess of the fair value of the equity instruments granted is recognised
as an expense

New equity instruments granted may be identified as a replacement of cancelled equity

instruments. In those cases, the replacement equity instruments are accounted for as a
modification. The fair value of the replacement equity instruments is determined at grant date,
while the fair value of the cancelled instruments is determined at the date of cancellation, less
any cash payments on cancellation that is accounted for as a deduction from equity.

Disclosure

Required disclosures include:

 the nature and extent of share-based payment arrangements that existed during the period

 how the fair value of the goods or services received, or the fair value of the equity
instruments granted, during the period was determined

 the effect of share-based payment transactions on the entity's profit or loss for the period
and on its financial position.

Use of the respective standard in SBL annual Report

IFRS 2 — Share-based Payment is not applicable for SBL annual report.

Comment:

We saw there is two exemptions for IFRS 2. First, the issuance of shares in a business
combination should be accounted for under IFRS 3 Business Combinations. However, care
should be taken to distinguish share-based payments related to the acquisition from those related
to continuing employee services. So, we can find it in IFRS 3 so in the SBL report IFRS 2 is not
present.

IFRS 3 - Business Combinations

IFRS 3 Business Combinations outlines the accounting when an acquirer obtains control of a
business such as an acquisition or merger. Such business combinations are accounted for using
the acquisition method which generally requires assets acquired and liabilities assumed to be
measured at their fair values at the acquisition date.

Determining whether a transaction is a business combination

IFRS 3 provides additional guidance on determining whether a transaction meets the definition
of a business combination and so accounted for in accordance with its requirements. This
guidance includes:

 Business combinations can occur in various ways, such as by transferring cash, incurring
liabilities, issuing equity instruments (or any combination thereof) or by not issuing
consideration at all (i.e. by contract alone)
 Business combinations can be structured in various ways to satisfy legal, taxation or other
objectives including one entity becoming a subsidiary of another, the transfer of net assets
from one entity to another or to a new entity
 The business combination must involve the acquisition of a business which generally has
three elements:
 Inputs – an economic resource (e.g. non-current assets, intellectual property) that
creates outputs when one or more processes are applied to it
 Process – a system, standard, protocol, convention or rule that when applied to an
input or inputs, creates outputs (e.g. strategic management, operational processes,
resource management)
 Output – the result of inputs and processes applied to those inputs.

Disclosure

Disclosure of information about current business combinations: An acquirer is required to

disclose information that enables users of its financial statements to evaluate the nature and
financial effect of a business combination that occurs either during the current reporting period
or after the end of the period but before the financial statements are authorized for issue.

Among the disclosures required to meet the foregoing objective are the following:

 name and a description of the acquire

 acquisition date
 percentage of voting equity interests acquired
 primary reasons for the business combination and a description of how the acquirer
obtained control of the acquiree
 description of the factors that make up the goodwill recognized
  qualitative description of the factors that make up the goodwill recognized such as
expected synergies from combining operations and intangible assets that do not qualify
for separate recognition
 acquisition-date fair value of the total consideration transferred and the acquisition-date
fair value of each major class of consideration
 details of contingent consideration arrangements and indemnification assets
 details of acquired receivables
 the amounts recognized as of the acquisition date for each major class of assets acquired
and liabilities assumed
 details of contingent liabilities recognized
 total amount of goodwill that is expected to be deductible for tax purposes
 details about any transactions that are recognized separately from the acquisition of assets
and assumption of liabilities in the business combination
 information about a bargain purchase
 information about the measurement of non-controlling interests
 details about a business combination achieved in stages
 information about the acquiree's revenue and profit or loss
 information about a business combination whose acquisition date is after the end of the
reporting period but before the financial statements are authorized for issue.

Disclosure of information about adjustments of past business combinations: An acquirer is

required to disclose information that enables users of its financial statements to evaluate the
financial effects of adjustments recognized in the current reporting period that relate to business
combinations that occurred in the period or previous reporting periods.

Among the disclosures required to meet the foregoing objective are the following:

 details when the initial accounting for a business combination is incomplete for particular
assets, liabilities, non-controlling interests or items of consideration (and the amounts
recognized in the financial statements for the business combination thus have been
determined only provisionally) follow-up information on contingent consideration
 follow-up information about contingent liabilities recognized in a business combination
  a reconciliation of the carrying amount of goodwill at the beginning and end of the
reporting period, with various details shown separately
 the amount and an explanation of any gain or loss recognized in the current reporting
period that both:
 relates to the identifiable assets acquired or liabilities assumed in a business
combination that was affecting in the current or previous reporting period, and
 is of such a size, nature or incidence that disclosure is relevant to understanding the
combined entity's financial statements.

Use of the respective standard in SBL annual report

On 16October 2017, SBL acquiredfurther3, 186,920shares out of3, 789,653shares newly issued
by IAL. The acquisition of new shares entitled SBL to 83.8319% shareholding in IAL including
the 33.8500% call option of Sunman. The new shareholding structure gave SBL the power to
direct IAL's relevant activities, the ability to use its power over IAL to affect the amount of
SBL's returns and gave SBL the rights to variable returns from its involvement with IAL.
Therefore, as per IFRS 10 paragraph7, SBL obtained the control of IAL and was assessed to be
the parent company of IAL from the acquisition date, i.e. 16 October 2017.

SBL's interest in IAL shall reduceto49.9819% if Sunman exercises its call option within1
March2023. The Company shall still preserve its control over IAL without having majority of
shareholdings.

The following judgements were made in determining that SBL has obtained control over IAL:

(i) SBL currently holds 83.8319% of total shares; (ii) Majority of the board members of
IAL are employees of SBL; and
(ii) (II) IAL cannot do any business except for selling its products to SBL without having
written approval from SBL
As IAL was equity accounted investee of SBL so this was a step acquisition as per of IFRS 3 "an
acquirer sometimes obtains control of an acquiring which it held an equity interest immediately
before the acquisition date. This IFRS refers to such a transaction as a business combination
achieved in stages, sometimes also referred to as a step acquisition
Basis of consolidation

The Group account for business combination using the acquisition method when control is
transferred to the Group

(i)). The consideration transferred in the acquisition are generally measured at fair value, as are
the identifiable net asset acquired. Any goodwill that arises is tested annually for impairment.
Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are
expensed as incurred, except if related to the issue of debt or equity securities.

(i) Subsidiaries Subsidiaries are the entities controlled by the Group. The Group controls an
entity when it is exposed to, or has the rights to variable returns from its involvement with the
entity and has the ability to affects those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date on
which control commences until the date on which control ceases.

(ii) Non-controlling interests Non-controlling Interest (NCI) are measured initially at their
proportionate share of the acquiree’s identifiable net assets at the date of acquisition.

(iii) Loss of control When the Group loses control over a subsidiary, it derecognizes the assets
and liabilities of the subsidiary, and any related NCI and other components of equity. Any
resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary
is measured at fair value when control is lost.

(iii) Transactions eliminated on consolidation Intra-group balances and transactions, and

any unrealized income and expenses arising from intra-group transactions, are
eliminated. Unrealized gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent of the Group’s interest in
the investee. Unrealized losses are eliminated in the same way as unrealized gains,
but only to the extent that there is no evidence of impairment.

Comment:

Hence, from the above discussion, it is clear that SBL follows all the rules and principles laid out
by the standard IFRS 3- Business Combinations.
IFRS 4 - Insurance Contracts
IFRS 4 Insurance Contracts applies, with limited exceptions, to all insurance contracts (including
reinsurance contracts) that an entity issues and to reinsurance contracts that it holds. In light of
the IASB's comprehensive project on insurance contracts, the standard provides a temporary
exemption from the requirements of some other IFRSs, including the requirement to consider
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors when selecting
accounting policies for insurance contracts.

Accounting policies

The IFRS exempts an insurer temporarily (until completion of Phase II of the Insurance Project)
from some requirements of other IFRSs, including the requirement to consider IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors in selecting accounting policies for
insurance contracts. However, the standard: [IFRS 4.14]

 prohibits provisions for possible claims under contracts that are not in existence at the
reporting date (such as catastrophe and equalisation provisions)

 requires a test for the adequacy of recognised insurance liabilities and an impairment test
for reinsurance assets

 requires an insurer to keep insurance liabilities in its balance sheet until they are
discharged or cancelled, or expire, and prohibits offsetting insurance liabilities against
related reinsurance assets and income or expense from reinsurance contracts against the
expense or income from the related insurance contract.

Changes in accounting policies

IFRS 4 permits an insurer to change its accounting policies for insurance contracts only if, as a
result, its financial statements present information that is more relevant and no less reliable, or
more reliable and no less relevant. [IFRS 4.22] In particular, an insurer cannot introduce any of
the following practices, although it may continue using accounting policies that involve them:
[IFRS 4.25]
  measuring insurance liabilities on an undiscounted basis

 measuring contractual rights to future investment management fees at an amount that

exceeds their fair value as implied by a comparison with current market-based fees for
similar services

 using non-uniform accounting policies for the insurance liabilities of subsidiaries.

Remeasuring insurance liabilities

The IFRS permits the introduction of an accounting policy that involves remeasuring designated
insurance liabilities consistently in each period to reflect current market interest rates (and, if the
insurer so elects, other current estimates and assumptions). Without this permission, an insurer
would have been required to apply the change in accounting policies consistently to all similar
liabilities. [IFRS 4.24]

Prudence

An insurer need not change its accounting policies for insurance contracts to eliminate excessive
prudence. However, if an insurer already measures its insurance contracts with sufficient
prudence, it should not introduce additional prudence.

Future investment margins: There is a rebuttable presumption that an insurer's financial

statements will become less relevant and reliable if it introduces an accounting policy that
reflects future investment margins in the measurement of insurance contracts.

Asset classifications

When an insurer changes its accounting policies for insurance liabilities, it may reclassify some
or all financial assets as 'at fair value through profit or loss'. [IFRS 4.45]

Other issues

The standard:
  clarifies that an insurer need not account for an embedded derivative separately at fair
value if the embedded derivative meets the definition of an insurance contract [IFRS 4.7-
8]

 requires an insurer to unbundle (that is, to account separately for) deposit components of
some insurance contracts, to avoid the omission of assets and liabilities from its balance
sheet [IFRS 4.10]

 clarifies the applicability of the practice sometimes known as 'shadow accounting' [IFRS
4.30]

 permits an expanded presentation for insurance contracts acquired in a business

combination or portfolio transfer [IFRS 4.31-33]

 addresses limited aspects of discretionary participation features contained in insurance

contracts or financial instruments. [IFRS 4.34-35]

Disclosures

The standard requires disclosure of:

 information that helps users understand the amounts in the insurer's financial statements
that arise from insurance contracts: [IFRS 4.36-37]

o accounting policies for insurance contracts and related assets, liabilities, income,
and expense

o the recognised assets, liabilities, income, expense, and cash flows arising from
insurance contracts

o if the insurer is a cedant, certain additional disclosures are required

o information about the assumptions that have the greatest effect on the
measurement of assets, liabilities, income, and expense including, if practicable,
quantified disclosure of those assumptions

o the effect of changes in assumptions

 o reconciliations of changes in insurance liabilities, reinsurance assets, and, if any,
related deferred acquisition costs

 Information that helps users to evaluate the nature and extent of risks arising from
insurance contracts: [IFRS 4.38-39]

o risk management objectives and policies

o those terms and conditions of insurance contracts that have a material effect on
the amount, timing, and uncertainty of the insurer's future cash flows

o information about insurance risk (both before and after risk mitigation by
reinsurance), including information about:

 the sensitivity to insurance risk

 concentrations of insurance risk

 actual claims compared with previous estimates

o the information about credit risk, liquidity risk and market risk that IFRS 7 would
require if the insurance contracts were within the scope of IFRS 7

o information about exposures to market risk arising from embedded derivatives

contained in a host insurance contract if the insurer is not required to, and does
not, measure the embedded derivatives at fair value.

Interaction with IFRS 9

On 12 September 2016, the IASB issued amendments to IFRS 4 providing two options for
entities that issue insurance contracts within the scope of IFRS 4:

 an option that permits entities to reclassify, from profit or loss to other comprehensive
income, some of the income or expenses arising from designated financial assets; this is
the so-called overlay approach;
  an optional temporary exemption from applying IFRS 9 for entities whose predominant
activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral
approach.

An entity choosing to apply the overlay approach retrospectively to qualifying financial assets
does so when it first applies IFRS 9. An entity choosing to apply the deferral approach does so
for annual periods beginning on or after 1 January 2018. The application of both approaches is
optional and an entity is permitted to stop applying them before the new insurance contracts
standard is applied.

Use of the respective standard in SBL annual Report

IFRS 4: insurance contract is not applicable for SBL annual report.

Comment:

We know that IFRS 4 applies to all insurance contracts (including reinsurance contracts) that an
entity issues and to reinsurance contracts that it holds, except for specified contracts covered by
other Standards. It does not apply to other assets and liabilities of an insurer, such as financial
assets and financial liabilities within the scope of IFRS 9. Furthermore, it does not address
accounting by policyholders. Since Singer company did not issue any such insurance contract so
the IFRS 4 is not applicable".

IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations outlines how to account
for non-current assets held for sale. In general terms, assets held for sale are not depreciated and
are measured at the lower of carrying amount and fair value less costs to sell and are presented
separately in the statement of financial position. Specific disclosures are also required for
discontinued operations and disposals of non-current assets.

Held-for-sale classification

In general, the following conditions must be met for an asset or disposal group to be classified as
held for sale:

 management is committed to a plan to sell

  the asset is available for immediate sale
 an active programmed to locate a buyer is initiated
 the sale is highly probable within 12 months of classification as held for sale
 the asset is being actively marketed for sale at a sales price reasonable in relation to its
fair value
 actions required to complete the plan indicate that it is unlikely that plan will be
significantly changed or withdrawn

The assets need to be disposed of through sale. Therefore, operations that are expected to be
wound down or abandoned would not meet the definition (but may be classified as discontinued
once abandoned).

An entity that is committed to a sale involving loss of control of a subsidiary that qualifies for
held-for-sale classification under IFRS 5 classifies all of the assets and liabilities of that
subsidiary as held for sale even if the entity will retain a non-controlling interest in its former
subsidiary after the sale.

Held for distribution to owner’s classification

The classification, presentation and measurement requirements of IFRS 5 also apply to a non-
current asset (or disposal group) that is classified as held for distribution to owners. The entity
must be committed to the distribution and the assets must be available for immediate distribution
and the distribution must be highly probable.

Disposal group concept

A 'disposal group' is a group of assets, possibly with some associated liabilities which an entity
intends to dispose of in a single transaction. The measurement basis required for non-current
assets classified as held for sale is applied to the group as a whole and any resulting impairment
loss reduces the carrying amount of the non-current assets in the disposal group in the order of
allocation required by IAS 36.

Measurement

The following principles apply:

 At the time of classification as held for sale. Immediately before the initial classification
of the asset as held for sale, the carrying amount of the asset will be measured in
accordance with applicable IFRSs. Resulting adjustments are also recognized in
accordance with applicable IFRSs.
 After classification as held for sale. Non-current assets or disposal groups that are
classified as held for sale are measured at the lower of carrying amount and fair value less
costs to sell (fair value less costs to distribute in the case of assets classified as held for
distribution to owners).
 Impairment must be considered both at the time of classification as held for sale and
subsequently:
 At the time of classification as held for sale. Immediately prior to classifying an
asset or disposal group as held for sale, impairment is measured and recognized in
accordance with the applicable IFRSs (generally IAS 16 Property, Plant and
Equipment, IAS 36 Impairment of Assets, IAS 38 Intangible Assets, and IAS 39
Financial Instruments: Recognition and Measurement/IFRS 9 Financial
Instruments). Any impairment loss is recognized in profit or loss unless the asset
had been measured at revalued amount under IAS 16 or IAS 38 in which case the
impairment is treated as a revaluation decrease.
 After classification as held for sale. Calculate any impairment loss based on the
difference between the adjusted carrying amounts of the asset/disposal group and
fair value less costs to sell. Any impairment loss that arises by using the
measurement principles in IFRS 5 must be recognized in profit or loss, even for
assets previously carried at revalued amounts. This is supported by IFRS 5 BC.47
and BC.48, which indicate the inconsistency with IAS 36.
 Assets carried at fair value prior to initial classification. For such assets, the
requirement to deduct costs to sell from fair value may result in an immediate
charge to profit or loss.
 Subsequent increases in fair value. A gain for any subsequent increase in fair
value less costs to sell of an asset can be recognized in the profit or loss to the
extent that it is not in excess of the cumulative impairment loss that has been
recognized in accordance with IFRS 5 or previously in accordance with IAS 36.
  No depreciation. Non-current assets or disposal groups that are classified as held
for sale are not depreciated.

*The measurement provisions of IFRS 5 do not apply to deferred tax assets, assets arising from
employee benefits, financial assets within the scope of IFRS 9 Financial Instruments, non-current
assets measured at fair value in accordance with IAS 41 Agriculture, and contractual rights under
insurance contracts.

Presentation

Assets classified as held for sale and the assets and liabilities included within a disposal group
classified as held for sale must be presented separately on the face of the statement of financial
position.

Disclosures

IFRS 5 requires the following disclosures about assets (or disposal groups) that are held for sale:

 description of the non-current asset or disposal group.

 description of facts and circumstances of the sale (disposal) and the expected timing.
 impairment losses and reversals, if any, and where in the statement of comprehensive
income they are recognized.
 if applicable, the reportable segment in which the non-current asset (or disposal group) is
presented in accordance with IFRS 8 Operating Segments.

*Disclosures in other IFRSs do not apply to assets held for sale (or discontinued operations,
discussed below) unless those other IFRSs require specific disclosures in respect of such
assets or in respect of certain measurement disclosures where assets and liabilities are outside
the scope of the measurement requirements of IFRS 5.

Classification as discontinuing

A discontinued operation is a component of an entity that either has been disposed of or is

classified as held for sale and:
  represents either a separate major line of business or a geographical area of operations
 is part of a single coordinated plan to dispose of a separate major line of business or
geographical area of operations, or
 is a subsidiary acquired exclusively with a view to resale and the disposal involves loss
of control?

IFRS 5 prohibits the retroactive classification as a discontinued operation, when the discontinued
criteria are met after the end of the reporting period.

Disclosure in the statement of comprehensive income

The sum of the post-tax profit or loss of the discontinued operation and the post-tax gain or loss
recognized on the measurement to fair value less cost to sell or fair value adjustments on the
disposal of the assets (or disposal group) is presented as a single amount on the face of the
statement of comprehensive income. If the entity presents profit or loss in a separate statement, a
section identified as relating to discontinued operations is presented in that separate statement.

Detailed disclosure of revenue, expenses, pre-tax profit or loss and related income taxes is
required either in the notes or in the statement of comprehensive income in a section distinct
from continuing operations. Such detailed disclosures must cover both the current and all prior
periods presented in the financial statements.

Cash flow information

The net cash flows attributable to the operating, investing, and financing activities of a
discontinued operation is separately presented on the face of the cash flow statement or disclosed
in the notes.

Disclosures

The following additional disclosures are required:

 adjustments made in the current period to amounts disclosed as a discontinued

operation in prior periods must be separately disclosed
 if an entity ceases to classify a component as held for sale, the results of that
component previously presented in discontinued operations must be reclassified and
 included in income from continuing operations for all periods presented. [ CITATION
IAS2 \l 18441 ]

Use of the respective standard in SBL annual report

Information about IFRS 5 Non-current Assets Held for Sale and Discontinued Operations in SBL
annual report is not available

Comment

There is no information about IFRS 5 Non-current Assets Held for Sale and Discontinued in
SBL annual report. Therefore, it is clear that it is not applicable.

IFRS 6 - Exploration for and Evaluation of Mineral Resources

IFRS 6 Exploration for and Evaluation of Mineral Resources has the effect of allowing entities
adopting the standard for the first time to use accounting policies for exploration and evaluation
assets that were applied before adopting IFRSs. It also modifies impairment testing of
exploration and evaluation assets by introducing different impairment indicators and allowing
the carrying amount to be tested at an aggregate level (not greater than a segment).

Accounting policies for exploration and evaluation

IFRS 6 permits an entity to develop an accounting policy for recognition of exploration and
evaluation expenditures as assets without specifically considering the requirements of paragraphs
11 and 12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. [IFRS
6.9] Thus, an entity adopting IFRS 6 may continue to use the accounting policies applied
immediately before adopting the IFRS. This includes continuing to use recognition and
measurement practices that are part of those accounting policies.

Impairment

IFRS 6 effectively modifies the application of IAS 36 Impairment of Assets to exploration and

evaluation assets recognised by an entity under its accounting policy. Specifically:
  Entities recognising exploration and evaluation assets are required to perform an
impairment test on those assets when specific facts and circumstances outlined in the
standard indicate an impairment test is required. The facts and circumstances outlined in
IFRS 6 are non-exhaustive, and are applied instead of the 'indicators of impairment' in
IAS 36 [IFRS 6.19-20]
 Entities are permitted to determine an accounting policy for allocating exploration and
evaluation assets to cash-generating units or groups of CGUs. [IFRS 6.21] This
accounting policy may result in a different allocation than might otherwise arise on
applying the requirements of IAS 36
 If an impairment test is required, any impairment loss is measured, presented and
disclosed in accordance with IAS 36. [IFRS 6.18]

Presentation and disclosure

An entity treats exploration and evaluation assets as a separate class of assets and make the
disclosures required by either IAS 16 Property, Plant and Equipment or IAS 38 Intangible
Assets consistent with how the assets are classified. [IFRS 6.25]

IFRS 6 requires disclosure of information that identifies and explains the amounts recognised in
its financial statements arising from the exploration for and evaluation of mineral resources,
including: [IFRS 6.23–24]

 its accounting policies for exploration and evaluation expenditures including the
recognition of exploration and evaluation assets

 the amounts of assets, liabilities, income and expense and operating and investing cash
flows arising from the exploration for and evaluation of mineral resources.

Use of the respective standard in SBL annual Report

SBL annual report doesn’t contain any information about IFRS 6.

Comment

As any information about IFRS 6 is not available in the annual report therefore, it is clear that it
is not applicable.

IFRS 7 — Financial Instruments: Disclosures

IFRS 7 Financial Instruments: Disclosures requires disclosure of information about the
significance of financial instruments to an entity, and the nature and extent of risks arising from
those financial instruments, both in qualitative and quantitative terms. Specific disclosures are
required in relation to transferred financial assets and a number of other matters.

IFRS 7-

- adds certain new disclosures about financial instruments to those previously required by
IAS 32 Financial Instruments: Disclosure and Presentation (as it was then cited)
- replaces the disclosures previously required by IAS 30 Disclosures in the Financial
Statements of Banks and Similar Financial Institutions
- puts all of those financial instruments disclosures together in a new standard on Financial
Instruments: Disclosures. The remaining parts of IAS 32 deal only with financial
instruments presentation matters.

Disclosure requirements of IFRS 7

IFRS requires certain disclosures to be presented by category of instrument based on the IAS 39
measurement categories. Certain other disclosures are required by class of financial instrument.
For those disclosures an entity must group its financial instruments into classes of similar
instruments as appropriate to the nature of the information presented. [IFRS 7.6]

The two main categories of disclosures required by IFRS 7 are:

1. information about the significance of financial instruments. 

2. information about the nature and extent of risks arising from financial instruments

Information about the significance of financial instruments

Statement of financial position

 - Disclose the significance of financial instruments for an entity's financial position and
performance. [IFRS 7.7] This includes disclosures for each of the following categories:
[IFRS 7.8]
 financial assets measured at fair value through profit and loss, showing separately
those held for trading and those designated at initial recognition
 held-to-maturity investments
 loans and receivables
 available-for-sale assets
 financial liabilities at fair value through profit and loss, showing separately those held
for trading and those designated at initial recognition
 financial liabilities measured at amortised cost
- Other balance sheet-related disclosures:
 special disclosures about financial assets and financial liabilities designated to be
measured at fair value through profit and loss, including disclosures about credit risk and
market risk, changes in fair values attributable to these risks and the methods of
measurement.[IFRS 7.9-11]
 reclassifications of financial instruments from one category to another (e.g. from fair
value to amortised cost or vice versa) [IFRS 7.12-12A]
 information about financial assets pledged as collateral and about financial or non-
financial assets held as collateral [IFRS 7.14-15]
 reconciliation of the allowance account for credit losses (bad debts) by class of financial
assets[IFRS 7.16]
 information about compound financial instruments with multiple embedded derivatives
[IFRS 7.17]
 breaches of terms of loan agreements [IFRS 7.18-19]

Statement of comprehensive income

 - Items of income, expense, gains, and losses, with separate disclosure of gains and losses
from: [IFRS 7.20(a)]
 financial assets measured at fair value through profit and loss, showing separately those
held for trading and those designated at initial recognition.
 held-to-maturity investments
 loans and receivables
 available-for-sale assets
 financial liabilities measured at fair value through profit and loss, showing separately
those held for trading and those designated at initial recognition
 financial liabilities measured at amortised cost.
- Other income statement-related disclosures:
 total interest income and total interest expense for those financial instruments that are not
measured at fair value through profit and loss [IFRS 7.20(b)]
 fee income and expense [IFRS 7.20(c)]
 amount of impairment losses by class of financial assets [IFRS 7.20(e)]
 interest income on impaired financial assets [IFRS 7.20(d)]

Other disclosures

- Accounting policies for financial instruments [IFRS 7.21]

- Information about hedge accounting, including: [IFRS 7.22]
 description of each hedge, hedging instrument, and fair values of those instruments,
and nature of risks being hedged
 for cash flow hedges, the periods in which the cash flows are expected to occur, when
they are expected to enter into the determination of profit or loss, and a description of
any forecast transaction for which hedge accounting had previously been used but
which is no longer expected to occur
 if a gain or loss on a hedging instrument in a cash flow hedge has been recognised in
other comprehensive income, an entity should disclose the following: [IAS 7.23]
 the amount that was so recognised in other comprehensive income during the period
 the amount that was removed from equity and included in profit or loss for the period
  the amount that was removed from equity during the period and included in the initial
measurement of the acquisition cost or other carrying amount of a non-financial asset
or non- financial liability in a hedged highly probable forecast transaction
- For fair value hedges, information about the fair value changes of the hedging instrument
and the hedged item [IFRS 7.24(a)]
- Hedge ineffectiveness recognised in profit and loss (separately for cash flow hedges and
hedges of a net investment in a foreign operation) [IFRS 7.24(b-c)]
- Uncertainty arising from the interest rate benchmark reform [IFRS 7.24H]
- Information about the fair values of each class of financial asset and financial liability,
along with: [IFRS 7.25-30]
 comparable carrying amounts
 description of how fair value was determined
 the level of inputs used in determining fair value
 reconciliations of movements between levels of fair value measurement hierarchy
additional disclosures for financial instruments whose fair value is determined using
level 3 inputs including impacts on profit and loss, other comprehensive income and
sensitivity analysis
 information if fair value cannot be reliably measured

Transfers of financial assets [IFRS 7.42A-H]

An entity shall disclose information that enables users of its financial statements:

1. to understand the relationship between transferred financial assets that are not
derecognised in their entirety and the associated liabilities; and
2. to evaluate the nature of, and risks associated with, the entity's continuing involvement in
derecognised financial assets. [IFRS 7 42B]

Transferred financial assets that are not derecognised in their entirety

- Required disclosures include description of the nature of the transferred assets, nature of
risk and rewards as well as description of the nature and quantitative disclosure depicting
 relationship between transferred financial assets and the associated liabilities. [IFRS
7.42D]

Transferred financial assets that are derecognised in their entirety

- Required disclosures include the carrying amount of the assets and liabilities recognised,
fair value of the assets and liabilities that represent continuing involvement, maximum
exposure to loss from the continuing involvement as well as maturity analysis of the
undiscounted cash flows to repurchase the derecognised financial assets. [IFRS 7.42E]
- Additional disclosures are required for any gain or loss recognised at the date of transfer
of the assets, income or expenses recognise from the entity's continuing involvement in
the derecognised financial assets as well as details of uneven distribution of proceed from
transfer activity throughout the reporting period. [IFRS 7.42G]

Use of the Respective Standard in SBL Annual Report

The Company initially recognises receivables and deposits on the date that they are originated.
All other financial assets are recognised initially on the date at which the Company becomes a
party to the contractual provisions of the transaction. The Company derecognises a financial
asset when the contractual rights or probabilities of receiving the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred.

Financial assets include cash and cash equivalents, accounts receivable, and long term
receivables and deposits.

Determination of fair value is not required as per the requirements of IFRS 7 and the fair value
was not that much significant. That’s why they did not showed their fair value.

Comment:

Singer Bangladesh Limited follows IFRS 7 as per annual report 2018.

 IFRS 8 - Operating Segments

Overview

IFRS 8 Operating Segments requires particular classes of entities (essentially those with publicly
traded securities) to disclose information about their operating segments, products and services,
the geographical areas in which they operate, and their major customers. Information is based on
internal management reports, both in the identification of operating segments and measurement
of disclosed segment information.

IFRS 8 was issued in November 2006 and applies to annual periods beginning on or after 1
January 2009.

Scope

IFRS 8 applies to the separate or individual financial statements of an entity (and to the
consolidated financial statements of a group with a parent):

 whose debt or equity instruments are traded in a public market or

 that files, or is in the process of filing, its (consolidated) financial statements with a
securities commission or other regulatory organisation for the purpose of issuing any
class of instruments in a public market [IFRS 8.2]

However, when both separate and consolidated financial statements for the parent are presented
in a single financial report, segment information need be presented only on the basis of the
consolidated financial statements [IFRS 8.4]

Operating segments

IFRS 8 defines an operating segment as follows. An operating segment is a component of an

entity: [IFRS 8.2]

 that engages in business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the
same entity)
  whose operating results are reviewed regularly by the entity's chief operating decision
maker to make decisions about resources to be allocated to the segment and assess its
performance and
 for which discrete financial information is available

Reportable segments

IFRS 8 requires an entity to report financial and descriptive information about its reportable
segments. Reportable segments are operating segments or aggregations of operating segments
that meet specified criteria: [IFRS 8.13]

 its reported revenue, from both external customers and intersegment sales or transfers, is
10 per cent or more of the combined revenue, internal and external, of all operating
segments, or
 the absolute measure of its reported profit or loss is 10 per cent or more of the greater, in
absolute amount, of (i) the combined reported profit of all operating segments that did not
report a loss and (ii) the combined reported loss of all operating segments that reported a
loss, or
 its assets are 10 per cent or more of the combined assets of all operating segments.

Two or more operating segments may be aggregated into a single operating segment if
aggregation is consistent with the core principles of the standard, the segments have similar
economic characteristics and are similar in various prescribed respects. [IFRS 8.12]

If the total external revenue reported by operating segments constitutes less than 75 per cent of
the entity's revenue, additional operating segments must be identified as reportable segments
(even if they do not meet the quantitative thresholds set out above) until at least 75 per cent of
the entity's revenue is included in reportable segments. [IFRS 8.15]

Disclosure requirements

Required disclosures include:

  general information about how the entity identified its operating segments and the types
of products and services from which each operating segment derives its revenues [IFRS
8.22]
 judgements made by management in applying the aggregation criteria to allow two or
more operating segments to be aggregated [IFRS 8.22(aa)]#
 information about the profit or loss for each reportable segment, including certain
specified revenues* and expenses* such as revenue from external customers and from
transactions with other segments, interest revenue and expense, depreciation and
amortisation, income tax expense or income and material non-cash items [IFRS 8.21(b)
and 23]
 a measure of total assets* and total liabilities* for each reportable segment, and the
amount of investments in associates and joint ventures and the amounts of additions to
certain non-current assets ('capital expenditure') [IFRS 8.23-24]
 an explanation of the measurements of segment profit or loss, segment assets and
segment liabilities, including certain minimum disclosures, e.g. how transactions between
segments are measured, the nature of measurement differences between segment
information and other information included in the financial statements, and asymmetrical
allocations to reportable segments [IFRS 8.27]
 reconciliations of the totals of segment revenues, reported segment profit or loss, segment
assets*, segment liabilities* and other material items to corresponding items in the
entity's financial statements [IFRS 8.21(b) and 28]
 some entity-wide disclosures that are required even when an entity has only one
reportable segment, including information about each product and service or groups of
products and services [IFRS 8.32]
 analyses of revenues and certain non-current assets by geographical area – with an
expanded requirement to disclose revenues/assets by individual foreign country (if
material), irrespective of the identification of operating segments [IFRS 8.33]
 information about transactions with major customers [IFRS 8.34]

# This disclosure requirement was added by Annual Improvements to IFRSs 2010–2012 Cycle,
effective for annual periods beginning on or after 1 July 2014.
* This disclosure is required only if such amounts are regularly provided to the chief operating
decision maker, or in the case of specific items of revenue and expense or asset-related items, if
those specified amounts are included in the relevant measure (segment profit or loss or segment
assets). Considerable segment information is required at interim reporting dates by IAS 34.

Use of the respective standard in SBL annual Report

IFRS 8 defines an operating segment as a component of an entity that engages in revenue earning
business activities, whose operating results are regularly reviewed by the chief operating
decision maker and for which discrete financial information is available. In view of the standard,
the company has two identified segments namely i. Appliances and ii. Furniture. The furniture
segment of the Company does not qualify to be a reportable segment as per the quantitative
thresholds of IFRS 8. Therefore, the entity-wide disclosures required by the standard for the only
reportable segment i.e. appliances segment are disclosed.

Comment

Segment reporting is not applicable for the Company this year as the Company does not meet the
criteria required for segment reporting specified in IFRS 8: "Operating Segments”.

IFRS 9 - Financial Instruments

IFRS 9 Financial Instruments issued on 24 July 2014 is the IASB's replacement of IAS 39
Financial Instruments: Recognition and Measurement. The Standard includes requirements for
recognition and measurement, impairment, derecognition and general hedge accounting. The
IASB completed its project to replace IAS 39 in phases, adding to the standard as it completed
each phase.

Initial measurement of financial instruments

All financial instruments are initially measured at fair value plus or minus, in the case of a
financial asset or financial liability not at fair value through profit or loss, transaction costs.
[IFRS 9, paragraph 5.1.1]

Subsequent measurement of financial assets

IFRS 9 divides all financial assets that are currently in the scope of IAS 39 into two
classifications - those measured at amortised cost and those measured at fair value.

Where assets are measured at fair value, gains and losses are either recognised entirely in profit
or loss (fair value through profit or loss, FVTPL), or recognised in other comprehensive income
(fair value through other comprehensive income, FVTOCI).

The classification of a financial asset is made at the time it is initially recognised, namely when
the entity becomes a party to the contractual provisions of the instrument. [IFRS 9, paragraph
4.1.1] If certain conditions are met, the classification of an asset may subsequently need to be
reclassified.

Debt instruments

A debt instrument that meets the following two conditions must be measured at amortised cost
(net of any write down for impairment) unless the asset is designated at FVTPL under the fair
value option (see below):

Business model test: The objective of the entity's business model is to hold the financial asset
to collect the contractual cash flows (rather than to sell the instrument prior to its contractual
maturity to realise its fair value changes).

Cash flow characteristics test: The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.

Financial liabilities

All financial liabilities are measured at amortised cost, except for financial liabilities at fair value
through profit or loss. Such liabilities include derivatives (other than derivatives that are financial
guarantee contracts or are designated and effective hedging instruments), other liabilities held for
trading, and liabilities that an entity designates to be measured at fair value through profit or loss
(see ‘fair value option’ below). After initial recognition, an entity cannot reclassify any financial
liability.

Fair value option

An entity may, at initial recognition, irrevocably designate a financial asset or liability that would
otherwise have to be measured at amortised cost or fair value through other comprehensive
income to be measured at fair value through profit or loss if doing so would eliminate or
significantly reduce a measurement or recognition inconsistency (sometimes referred to as an
‘accounting mismatch’) or otherwise results in more relevant information.

Impairment

Impairment of financial assets is recognised in stages:

 Stage 1—as soon as a financial instrument is originated or purchased, 12-month expected

credit losses are recognised in profit or loss and a loss allowance is established. This
serves as a proxy for the initial expectations of credit losses. For financial assets, interest
revenue is calculated on the gross carrying amount (ie without deduction for expected
credit losses).
 Stage 2—if the credit risk increases significantly and is not considered low, full lifetime
expected credit losses are recognised in profit or loss. The calculation of interest revenue
is the same as for Stage 1.
 Stage 3—if the credit risk of a financial asset increases to the point that it is considered
credit-impaired, interest revenue is calculated based on the amortised cost (ie the gross
carrying amount less the loss allowance). Financial assets in this stage will generally be
assessed individually. Lifetime expected credit losses are recognised on these financial
assets.

Hedge accounting

The objective of hedge accounting is to represent, in the financial statements, the effect of an
entity’s risk management activities that use financial instruments to manage exposures arising
from particular risks that could affect profit or loss or other comprehensive income.

Hedge accounting is optional. An entity applying hedge accounting designates a hedging

relationship between a hedging instrument and a hedged item. For hedging relationships that
meet the qualifying criteria in IFRS 9, an entity accounts for the gain or loss on the hedging
instrument and the hedged item in accordance with the special hedge accounting provisions of
IFRS 9.

IFRS 9 identifies three types of hedging relationships and prescribes special accounting
provisions for each:

 fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or
liability or an unrecognised firm commitment, or a component of any such item, that is
attributable to a particular risk and could affect profit or loss.
 cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to
a particular risk associated with all, or a component of, a recognised asset or liability
(such as all or some future interest payments on variable-rate debt) or a highly probable
forecast transaction, and could affect profit or loss.
 hedge of a net investment in a foreign operation as defined in IAS 21.

When an entity first applies IFRS 9, it may choose to continue to apply the hedge accounting
requirements of IAS 39, instead of the requirements in IFRS 9, to all of its hedging relationships

Use of the Respective Standard in SBL Annual Report

Regarding IFRS 9 we have found the following information in the Annual Report:

IFRS 9 Financial Instruments

IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities
and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial
Instruments: Recognition and Measurement. There was no material impact of adopting IFRS 9
on the Group’s statement of financial position as at 31 December 2018 and its statement of profit
or loss and OCI for the year ended 31 December 2018 and the statement of cash flows for the
year then ended. IFRS 9 contains three principal classification categories for financial assets:
measured at amortised cost, FVOCI and FVTPL. The classification of financial assets under
IFRS 9 is generally based on the business model in which a financial asset is managed and its
contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to
maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in
contracts where the host is a financial asset in the scope of the standard are never separated.
Instead, the hybrid financial instrument as a whole is assessed for classification. IFRS 9 largely
retains the existing requirements in IAS 39 for the classification and measurement of financial
liabilities. The adoption of IFRS 9 has not had a significant effect on the Group’s accounting
policies related to financial liabilities and derivative financial instruments (for derivatives that are
used as hedging instruments). For additional information about the Group’s accounting policies
relating to financail instruments, see Note 40(H).

Comment:

So we can say that the company follows the rules and regulations as prescribed by IFRS 9.

IFRS 10 — Consolidated Financial Statements

IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and
presentation of consolidated financial statements, requiring entities to consolidate entities it
controls. Control requires exposure or rights to variable returns and the ability to affect those
returns through power over an investee.

Accounting requirements

Preparation of consolidated financial statements

A parent prepares consolidated financial statements using uniform accounting policies for like
transactions and other events in similar circumstances. [IFRS 10:19]

However, a parent need not present consolidated financial statements if it meets all of the
following conditions: [IFRS 10:4(a)]

 it is a wholly-owned subsidiary or is a partially-owned subsidiary of another entity and its

other owners, including those not otherwise entitled to vote, have been informed about,
and do not object to, the parent not presenting consolidated financial statements

 its debt or equity instruments are not traded in a public market (a domestic or foreign
stock exchange or an over-the-counter market, including local and regional markets)
  it did not file, nor is it in the process of filing, its financial statements with a securities
commission or other regulatory organization for the purpose of issuing any class of
instruments in a public market, and

 its ultimate or any intermediate parent of the parent produces financial statements
available for public use that comply with IFRSs, in which subsidiaries are consolidated or
are measured at fair value through profit or loss in accordance with IFRS 10.*

* Fair value measurement clause added by Investment Entities: Applying the Consolidation
Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) amendments, effective 1 January
2016.

Investment entities are prohibited from consolidating particular subsidiaries.

Consolidation procedures

Consolidated financial statements:

 combine like items of assets, liabilities, equity, income, expenses and cash flows of the
parent with those of its subsidiaries

 offset (eliminate) the carrying amount of the parent's investment in each subsidiary and
the parent's portion of equity of each subsidiary

 eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between entities of the group (profits or losses resulting from
intragroup transactions that are recognised in assets, such as inventory and fixed assets,
are eliminated in full).

A reporting entity includes the income and expenses of a subsidiary in the consolidated financial
statements from the date it gains control until the date when the reporting entity ceases to control
the subsidiary. Income and expenses of the subsidiary are based on the amounts of the assets and
liabilities recognized in the consolidated financial statements at the acquisition date.

The parent and subsidiaries are required to have the same reporting dates, or consolidation based
on additional financial information prepared by subsidiary, unless impracticable. Where
impracticable, the most recent financial statements of the subsidiary are used, adjusted for the
effects of significant transactions or events between the reporting dates of the subsidiary and
consolidated financial statements. The difference between the date of the subsidiary's financial
statements and that of the consolidated financial statements shall be no more than three months

Non-controlling interests (NCIs)

A parent presents non-controlling interests in its consolidated statement of financial position

within equity, separately from the equity of the owners of the parent.

A reporting entity attributes the profit or loss and each component of other comprehensive
income to the owners of the parent and to the non-controlling interests. The proportion allocated
to the parent and non-controlling interests are determined on the basis of present ownership
interests.

The reporting entity also attributes total comprehensive income to the owners of the parent and
to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.

Changes in ownership interests

Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing
control of the subsidiary are equity transactions (i.e. transactions with owners in their capacity as
owners). When the proportion of the equity held by non-controlling interests changes, the
carrying amounts of the controlling and non-controlling interests area adjusted to reflect the
changes in their relative interests in the subsidiary. Any difference between the amount by which
the non-controlling interests are adjusted and the fair value of the consideration paid or received
is recognized directly in equity and attributed to the owners of the parent.

If a parent loses control of a subsidiary, the parent [IFRS 10:25]:

 derecognizes the assets and liabilities of the former subsidiary from the consolidated
statement of financial position

 recognizes any investment retained in the former subsidiary when control is lost and
subsequently accounts for it and for any amounts owed by or to the former subsidiary in
accordance with relevant IFRSs. That retained interest is premeasured and the
 premeasured value is regarded as the fair value on initial recognition of a financial asset
in accordance with IFRS 9 Financial Instruments or, when appropriate, the cost on initial
recognition of an investment in an associate or joint venture

 recognises the gain or loss associated with the loss of control attributable to the former
controlling interest.

If a parent loses control of a subsidiary that does not contain a business in a transaction with an
associate or a joint venture gains or losses resulting from those transactions are recognised in the
parent's profit or loss only to the extent of the unrelated investors' interests in that associate or
joint venture.*

* Added by Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture amendments, effective 1 January 2016, however, the effective date of the amendment
was later deferred indefinitely.

Investment entities consolidation exemption

[Note: The investment entity consolidation exemption was introduced by Investment Entities,
issued on 31 October 2012 and effective for annual periods beginning on or after 1 January
2014.]

IFRS 10 contains special accounting requirements for investment entities. Where an entity meets
the definition of an 'investment entity' , it does not consolidate its subsidiaries.

An entity is required to consider all facts and circumstances when assessing whether it is an
investment entity, including its purpose and design.  IFRS 10 provides that an investment entity
should have the following typical characteristics [IFRS 10:28]:

 it has more than one investment

 it has more than one investor

 it has investors that are not related parties of the entity

 it has ownership interests in the form of equity or similar interests.

The absence of any of these typical characteristics does not necessarily disqualify an entity from
being classified as an investment entity.

An investment entity is required to measure an investment in a subsidiary at fair value through

profit or loss in accordance with IFRS 9 Financial Instruments or IAS 39 Financial Instruments:
Recognition and Measurement. [IFRS 10:31]

However, an investment entity is still required to consolidate a subsidiary where that subsidiary
provides services that relate to the investment entity’s investment activities.

* Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12
and IAS 28) clarifies, effective 1 January 2016, that this relates to a subsidiary that is not itself an
investment entity and whose main purpose and activities are providing services that relate to the
investment entity's investment activities.

Because an investment entity is not required to consolidate its subsidiaries, intragroup related
party transactions and outstanding balances are not eliminated [IAS 24.4, IAS 39.80].

Special requirements apply where an entity becomes, or ceases to be, an investment entity.

The exemption from consolidation only applies to the investment entity itself.  Accordingly, a
parent of an investment entity is required to consolidate all entities that it controls, including
those controlled through an investment entity subsidiary, unless the parent itself is an investment
entity. [IFRS 10:33]

Disclosure

There are no disclosures specified in IFRS 10. Instead, IFRS 12 Disclosure of Interests in Other
Entities outlines the disclosures required.

Use of the respective standard in SBL annual Report:

Consolidated financial statement from SBL report

Basis of consolidation

The Group account for business combination using the acquisition method when control is
transferred to the Group

The consideration transferred in the acquisition are generally measured at fair value, as are the
identifiable net asset acquired. Any goodwill that arises is tested annually for impairment. Any
gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are
expensed as incurred, except if related to the issue of debt or equity securities.

(i) Subsidiaries: Subsidiaries are the entities controlled by the Group. The Group controls an
entity when it is exposed to, or has the rights to variable returns from its involvement with the
entity and has the ability to affects those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date on
which control commences until the date on which control ceases.

(ii) Non-controlling interests: Non-controlling Interest (NCI) are measured initially at their
proportionate share of the acquirer’s identifiable net assets at the date of acquisition.

(iii) Loss of control: When the Group loses control over a subsidiary, it derecognizes the assets
and liabilities of the subsidiary, and any related NCI and other components of equity. Any
resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary
is measured at fair value when control is lost.

(iv) Transactions eliminated on consolidation : Intra-group balances and transactions, and any
unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised
gains arising from transactions with equity accounted investees are eliminated against the
investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated
in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.

Comment:

As we know consolidated financial statements when an entity controls one or more other entities.
Here we know SBL company maintain the consolidation.

The standard IFRS 10 available in the SBL annual report as they shows their consolidated
financial statement in the report in every aspect.

IFRS 11 - Joint Arrangements

IFRS 11 Joint Arrangements outlines the accounting by entities that jointly control an
arrangement. Joint control involves the contractually agreed sharing of control and arrangements
subject to joint control are classified as either a joint venture (representing a share of net assets
and equity accounted) or a joint operation (representing rights to assets and obligations for
liabilities, accounted for accordingly).

Disclosure
There are no disclosures specified in IFRS 11. Instead, IFRS 12 Disclosure of Interests in Other
Entities outlines the disclosures required.

Applicability and early adoption

Note: This section has been updated to reflect the amendments to IFRS 11 made in June 2012.

IFRS 11 is applicable to annual reporting periods beginning on or after 1 January 2013.

[IFRS 11:Appendix C1]

When IFRS 11 is first applied, an entity need only present the quantitative information required
by paragraph 28(f) of IAS 8 for the annual period immediately preceding the first annual period
for which the standard is applied [IFRS 11:C1B]

Special transitional provisions are included for: [IFRS 11.Appendix C2-C13]

 transition from proportionate consolidation to the equity method for joint ventures
 transition from the equity method to accounting for assets and liabilities for joint
operations
 transition in an entity's separate financial statements for a joint operation previously
accounted for as an investment at cost.

In general terms, the special transitional adjustments are required to be applied at the beginning
of the immediately preceding period (rather than the the beginning of the earliest period
presented).  However, an entity may choose to present adjusted comparative information for
earlier reporting periods, and must clearly identify any unadjusted comparative information and
explain the basis on which the comparative information has been prepared [IFRS 11.C12A-
C12B].

An entity may apply IFRS 11 to an earlier accounting period, but if doing so it must disclose the
fact that is has early adopted the standard and also apply: [IFRS 11.Appendix C1]

 IFRS 10 Consolidated Financial Statements

 IFRS 12 Disclosure of Interests in Other Entities
 IAS 27 Separate Financial Statements (as amended in 2011)
 IAS 28 Investments in Associates and Joint Ventures (as amended in 2011).
Use of the respective standard in SBL annual Report

SBL annual report doesn’t contain any information about IFRS 11.

Comment

As any information about IFRS 11 is not available in the annual report therefore, it is clear that it
is not applicable.

IFRS 12 — Disclosure of Interests in Other Entities

IFRS 12 Disclosure of Interests in Other Entities is a consolidated disclosure standard requiring a
wide range of disclosures about an entity's interests in subsidiaries, joint arrangements, associates
and unconsolidated 'structured entities'. Disclosures are presented as a series of objectives, with
detailed guidance on satisfying those objectives.

Disclosures required

Significant judgements and assumptions

An entity discloses information about significant judgements and assumptions it has made (and
changes in those judgements and assumptions) in determining: [IFRS 12:7]

- that it controls another entity

- that it has joint control of an arrangement or significant influence over another entity
- the type of joint arrangement (i.e. joint operation or joint venture) when the arrangement
has been structured through a separate vehicle.

Interests in subsidiaries

An entity shall disclose information that enables users of its consolidated financial statements to:
[IFRS 12:10]

- understand the composition of the group

- understand the interest that non-controlling interests have in the group's activities and
cash flows
 - evaluate the nature and extent of significant restrictions on its ability to access or use
assets, and settle liabilities, of the group
- evaluate the nature of, and changes in, the risks associated with its interests in
consolidated structured entities
- evaluate the consequences of changes in its ownership interest in a subsidiary that do not
result in a loss of control
- evaluate the consequences of losing control of a subsidiary during the reporting period.

Interests in unconsolidated subsidiaries

In accordance with IFRS 10 Consolidated Financial Statements, an investment entity is required

to apply the exception to consolidation and instead account for its investment in a subsidiary at
fair value through profit or loss. [IFRS 10:31].

Where an entity is an investment entity, IFRS 12 requires additional disclosure, including:

- the fact the entity is an investment entity [IFRS 12:19A]

- information about significant judgements and assumptions it has made in determining
that it is an investment entity, and specifically where the entity does not have one or more
of the 'typical characteristics' of an investment entity [IFRS 12:9A]
- details of subsidiaries that have not been consolidated (name, place of business,
ownership interests held) [IFRS 12:19B]
- details of the relationship and certain transactions between the investment entity and the
subsidiary (e.g. restrictions on transfer of funds, commitments, support arrangements,
contractual arrangements) [IFRS 12: 19D-19G]
- information where an entity becomes, or ceases to be, an investment entity [IFRS 12:9B]

An entity making these disclosures are not required to provide various other disclosures required
by IFRS 12 [IFRS 12:21A, IFRS 12:25A].

Interests in joint arrangements and associates

An entity shall disclose information that enables users of its financial statements to evaluate:
[IFRS 12:20]
 - the nature, extent and financial effects of its interests in joint arrangements and
associates, including the nature and effects of its contractual relationship with the other
investors with joint control of, or significant influence over, joint arrangements and
associates
- the nature of, and changes in, the risks associated with its interests in joint ventures and
associates.

Interests in unconsolidated structured entities

An entity shall disclose information that enables users of its financial statements to: [IFRS 12:24]

- understand the nature and extent of its interests in unconsolidated structured entities
- evaluate the nature of, and changes in, the risks associated with its interests in
unconsolidated structured entities. [ CITATION IAS2 \l 18441 ]

Use of the Respective Standard in SBL Annual Report

IFRS 12 is not available in SBL annual report.

Comment:

IFRS 12 is not available in annual report of Singer Bangladesh Limited.

IFRS 13 - Fair Value Measurement

IFRS 13 Fair Value Measurement applies to IFRSs that require or permit fair value
measurements or disclosures and provides a single IFRS framework for measuring fair value and
requires disclosures about fair value measurement. The Standard defines fair value on the basis
of an 'exit price' notion and uses a 'fair value hierarchy', which results in a market-based, rather
than entity-specific, measurement.

Measurement of fair value

The objective of a fair value measurement is to estimate the price at which an orderly transaction
to sell the asset or to transfer the liability would take place between market participants at the
measurement date under current market conditions. A fair value measurement requires an entity
to determine all of the following: [IFRS 13:B2]
 the particular asset or liability that is the subject of the measurement (consistently with its
unit of account)
 for a non-financial asset, the valuation premise that is appropriate for the measurement
(consistently with its highest and best use)
 the principal (or most advantageous) market for the asset or liability
 the valuation technique(s) appropriate for the measurement, considering the availability of
data with which to develop inputs that represent the assumptions that market participants
would use when pricing the asset or liability and the level of the fair value hierarchy within
which the inputs are categorised.

Guidance on measurement

IFRS 13 provides the guidance on the measurement of fair value, including the following:

 An entity takes into account the characteristics of the asset or liability being measured that a
market participant would take into account when pricing the asset or liability at measurement
date (e.g. the condition and location of the asset and any restrictions on the sale and use of
the asset) [IFRS 13:11]
 Fair value measurement assumes an orderly transaction between market participants at the
measurement date under current market conditions [IFRS 13:15]
 Fair value measurement assumes a transaction taking place in the principal market for the
asset or liability, or in the absence of a principal market, the most advantageous market for
the asset or liability [IFRS 13:24]
 A fair value measurement of a non-financial asset takes into account its highest and best use
[IFRS 13:27]
 A fair value measurement of a financial or non-financial liability or an entity's own equity
instruments assumes it is transferred to a market participant at the measurement date, without
settlement, extinguishment, or cancellation at the measurement date [IFRS 13:34]
 The fair value of a liability reflects non-performance risk (the risk the entity will not fulfil an
obligation), including an entity's own credit risk and assuming the same non-performance
risk before and after the transfer of the liability [IFRS 13:42]
 An optional exception applies for certain financial assets and financial liabilities with
offsetting positions in market risks or counterparty credit risk, provided conditions are met
(additional disclosure is required). [IFRS 13:48, IFRS 13:96]

Valuation techniques

An entity uses valuation techniques appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs. [IFRS 13:61, IFRS 13:67]

The objective of using a valuation technique is to estimate the price at which an orderly
transaction to sell the asset or to transfer the liability would take place between market
participants and the measurement date under current market conditions. Three widely used
valuation techniques are: [IFRS 13:62]

 market approach – uses prices and other relevant information generated by market
transactions involving identical or comparable (similar) assets, liabilities, or a group of assets
and liabilities (e.g. a business)
 cost approach – reflects the amount that would be required currently to replace the service
capacity of an asset (current replacement cost)
 income approach – converts future amounts (cash flows or income and expenses) to a single
current (discounted) amount, reflecting current market expectations about those future
amounts.

In some cases, a single valuation technique will be appropriate, whereas in others multiple
valuation techniques will be appropriate. [IFRS 13:63]

Disclosure

Disclosure objective

IFRS 13 requires an entity to disclose information that helps users of its financial statements
assess both of the following: [IFRS 13:91]
 for assets and liabilities that are measured at fair value on a recurring or non-recurring basis
in the statement of financial position after initial recognition, the valuation techniques and
inputs used to develop those measurements
 for fair value measurements using significant unobservable inputs (Level 3), the effect of the
measurements on profit or loss or other comprehensive income for the period.

Disclosure exemptions

The disclosure requirements are not required for: [IFRS 13:7]

 plan assets measured at fair value in accordance with IAS 19 Employee Benefits

 retirement benefit plan investments measured at fair value in accordance with IAS
26 Accounting and Reporting by Retirement Benefit Plans
 assets for which recoverable amount is fair value less costs of disposal in accordance
with IAS 36 Impairment of Assets.

Use of the respective standard in SBL annual Report

SBL annual report doesn’t contain any information about IFRS 13.

Comment

As any information about IFRS 13 is not available in the annual report therefore, it is clear that it
is not applicable.

IFRS 14 - Regulatory Deferral Accounts

IFRS 14 Regulatory Deferral Accounts permits an entity which is a first-time adopter of
International Financial Reporting Standards to continue to account, with some limited changes,
for 'regulatory deferral account balances' in accordance with its previous GAAP, both on initial
adoption of IFRS and in subsequent financial statements. Regulatory deferral account balances,
and movements in them, are presented separately in the statement of financial position and
statement of profit or loss and other comprehensive income, and specific disclosures are
required.

Accounting policies for regulatory deferral account balances

IFRS 14 provides an exemption from paragraph 11 of IAS 8 Accounting Policies, Changes in

Accounting Estimates and Errors when an entity determines its accounting policies for regulatory
deferral account balances. [IFRS 14.9] Paragraph 11 of IAS 8 requires an entity to consider the
requirements of IFRSs dealing with similar matters and the requirements of the Conceptual
Framework when setting its accounting policies.

The effect of the exemption is that eligible entities can continue to apply the accounting policies
used for regulatory deferral account balances under the basis of accounting used immediately
before adopting IFRS ('previous GAAP') when applying IFRSs, subject to the presentation
requirements of IFRS 14 [IFRS 14.11].

Entities are permitted to change their accounting policies for regulatory deferral account balances
in accordance with IAS 8, but only if the change makes the financial statements more relevant
and no less reliable, or more reliable and not less relevant, to the economic decision-making
needs of users of the entity's financial statements. However, an entity is not permitted to change
accounting policies to start to recognise regulatory deferral account balances. [IFRS 14.13]

Deferred tax assets and liabilities arising from regulatory deferral account balances are
presented separately from total deferred tax amounts and movements in those deferred tax
balances are presented separately from tax expense (income)

IAS 33 Earnings Per Share

Entities applying IFRS 14 are required to present an additional basic and diluted earnings per
share that excludes the impacts of the net movement in regulatory deferral account balances

Presentation in financial statements

The impact of regulatory deferral account balances are separately presented in an entity's
financial statements. This requirements applies regardless of the entity's previous presentation
policies in respect of regulatory deferral balance accounts under its previous GAAP.
Accordingly:

Separate line items are presented in the statement of financial position for the total of all
regulatory deferral account debit balances, and all regulatory deferral account credit balances
[IFRS 14.20] Regulatory deferral account balances are not classified between current and non-
current, but are separately disclosed using subtotals [IFRS 14.21] The net movement in
regulatory deferral account balances are separately presented in the statement of profit or loss
and other comprehensive income using subtotals [IFRS 14.22-23]

The Illustrative examples accompanying IFRS 14 set out an illustrative presentation of financial
statements by an entity applying the Standard.

Disclosures

IFRS 14 sets out disclosure objectives to allow users to assess: [IFRS 14.27]

The nature of, and risks associated with, the rate regulation that establishes the price(s) the entity
can charge customers for the goods or services it provides - including information about the
entity's rate-regulated activities and the rate-setting process, the identity of the rate regulator(s),
and the impacts of risks and uncertainties on the recovery or reversal of regulatory deferral
balance accounts the effects of rate regulation on the entity's financial statements - including the
basis on which regulatory deferral account balances are recognised, how they are assessed for
recovery, a reconciliation of the carrying amount at the beginning and end of the reporting
period, discount rates applicable, income tax impacts and details of balances that are no longer
considered recoverable or reversible. [ CITATION IAS2 \l 18441 ]

Use of the Respective Standard in SBL Annual Report

In the Annual Report of Singer Company, we did not find any information regarding the
regulatory deferral accounts or any other things related to IFRS 14.

Comment:
So, we can say that the company doesn’t follow the rules and regulations as prescribed by IFRS
14.

IFRS 15 — Revenue from Contracts with Customers

IFRS 15 specifies how and when an IFRS reporter will recognise revenue as well as requiring
such entities to provide users of financial statements with more informative, relevant disclosures.
The standard provides a single, principles based five-step model to be applied to all contracts
with customers.

An entity recognizes revenue but applying the following five steps:

1. Identify the contract

2. Identify the separate performance obligations within a contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when (or as ) a performance obligation is satisfied

Step 1: Identify the contract with the customer

A contract with a customer will be within the scope of IFRS 15 if all the following conditions are
met:

- the contract has been approved by the parties to the contract

- each party’s rights in relation to the goods or services to be transferred can be identified
- the payment terms for the goods or services to be transferred can be identified
- the contract has commercial substance; and
- it is probable that the consideration to which the entity is entitled to in exchange for the
goods or services will be collected

Step 2: Identify the performance obligations in the contract

Performance obligations are promises to transfer distinct goods or services to a customer. Some
contracts contain more than one performance obligation. The distinct performance obligations
within a contract must be identified.
Performance obligation may not be limited to the goods or services that are explicitly stated in
the contract. An entity’s customary business practices, published policies or specific statements
may create an expectation that the entity will transfer good or service to the customer.

An entity must decide if the nature of a performance obligation is:

- to provide the specified goods or services itself

- to arrange for another party to provide the goods or service

If an entity is an agent, then revenue is recognized based on the fee or commission to which it is
entitled.

Step 3: Determine the transaction price

The transaction price is the amount of consideration to which an entity expects to be entitled in
exchange for transferring promised goods or service to a customer.

Amounts collected on behalf of third parties (such as sales tax) are excluded.

The consideration promised in a contract with a customer may include fixed amounts, variable
amounts or both.

When determining the transaction price, an entity shall consider the effects of all the following:

- variable consideration
- the existence of a significant financing component in the contract
- non-cash consideration
- consideration payable to a customer

Step 4: Allocate the transaction price

The total transaction price should be allocated to each performance obligation in proportion to
stand-alone selling prices.

The best evidence of a stand-alone selling price is the observable price of a good or service when
the entity sells that good or service separately in similar circumstanced and to similar customers.
If a stand-alone selling price is not directly observable, then the entity estimates the stand-alone
selling price.

Discounts:

In relation to a bundle sale, any discount should generally be allocated across each component in
the transaction. A discount should only be allocated to a specific component of the transaction if
that component is regularly sold separately at a discount.

Step 5: Recognise revenue

Revenue is recognized when (or as) the entity satisfies a performance obligation be transferring a
promised good or service to a customer.

For each performance obligation identified, an entity must determine at contract inception
whether it satisfies the performance obligation over time or satisfies the performance obligation
at a point in time. [ CITATION ACC1 \l 18441 ]

Use of the Respective Standard in SBL Annual Report

The Group has initially applied IFRS 15 from 1 January 2018.

The Group has adopted IFRS 15 using the cumulative effect method (without practical
expedients), with the effect of initially applying this standard recognised at the date of initial
application (i.e. 1 January 2018). Accordingly, the information presented for 2017 has not been
restated – i.e. it is presented, as previously reported, under IAS 18, IAS 11 and related
interpretations. Additionally, the disclosure requirements in IFRS 15 have not generally been
applied to comparative information. There was no material impact of adopting IFRS 15 on the
Group’s statement of financial position as at 31 December 2018 and its statement of profit or loss
and OCI for the year ended 31 December 2018 and the statement of cash flows for the year then
ended.

Revenue is measured based on the consideration specified in a contract with a customer. The
Group recognizes revenue when it transfers control over a good or service to a customer.

Comment:
SBL follow IFRS 15 to recognize their revenue from customers.

IFRS 16 – Leases
IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases.
The standard provides a single lessee accounting model, requiring lessees to recognise assets and
liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a
low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach
to lessor accounting substantially unchanged from its predecessor, IAS 17.

Accounting by lessees

Upon lease commencement a lessee recognises a right-of-use asset and a lease liability. [IFRS
16:22]

The right-of-use asset is initially measured at the amount of the lease liability plus any initial
direct costs incurred by the lessee. Adjustments may also be required for lease incentives,
payments at or prior to commencement and restoration obligations or similar. [IFRS 16:24]

After lease commencement, a lessee shall measure the right-of-use asset using a cost model,
unless: [IFRS 16:29, 34, 35]

i) the right-of-use asset is an investment property and the lessee fair values its investment
property under IAS 40; or

ii) the right-of-use asset relates to a class of PPE to which the lessee applies IAS 16’s revaluation
model, in which case all right-of-use assets relating to that class of PPE can be revalued.

Under the cost model a right-of-use asset is measured at cost less accumulated depreciation and
accumulated impairment. [IFRS 16:30(a)]

The lease liability is initially measured at the present value of the lease payments payable over
the lease term, discounted at the rate implicit in the lease if that can be readily determined. If that
rate cannot be readily determined, the lessee shall use their incremental borrowing rate. [IFRS
16:26]
Variable lease payments that depend on an index or a rate are included in the initial measurement
of the lease liability and are initially measured using the index or rate as at the commencement
date. Amounts expected to be payable by the lessee under residual value guarantees are also
included. [IFRS 16:27(b),(c)]

Variable lease payments that are not included in the measurement of the lease liability are
recognised in profit or loss in the period in which the event or condition that triggers payment
occurs, unless the costs are included in the carrying amount of another asset under another
Standard. [IFRS 16:38(b)

The lease liability is subsequently remeasured to reflect changes in: [IFRS 16:36]

The lease term (using a revised discount rate); the assessment of a purchase option (using a
revised discount rate); the amounts expected to be payable under residual value guarantees
(using an unchanged discount rate); or future lease payments resulting from a change in an index
or a rate used to determine those payments (using an unchanged discount rate).

The remeasurements are treated as adjustments to the right-of-use asset. [IFRS 16:39]

Lease modifications may also prompt remeasurement of the lease liability unless they are to be
treated as separate leases. [IFRS 16:36(c)]

Accounting by lessors

Lessors shall classify each lease as an operating lease or a finance lease. [IFRS 16:61]

A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to ownership of an underlying asset. Otherwise a lease is classified as an operating
lease. [IFRS 16:62]

Examples of situations that individually or in combination would normally lead to a lease being
classified as a finance lease are: [IFRS 16:63]

The lease transfers ownership of the asset to the lessee by the end of the lease term the lessee has
the option to purchase the asset at a price which is expected to be sufficiently lower than fair
value at the date the option becomes exercisable that, at the inception of the lease, it is
reasonably certain that the option will be exercised the lease term is for the major part of the
economic life of the asset, even if title is not transferred at the inception of the lease, the present
value of the minimum lease payments amounts to at least substantially all of the fair value of the
leased asset the leased assets are of a specialised nature such that only the lessee can use them
without major modifications being made

Upon lease commencement, a lessor shall recognise assets held under a finance lease as a
receivable at an amount equal to the net investment in the lease. [IFRS 16:67]

A lessor recognises finance income over the lease term of a finance lease, based on a pattern
reflecting a constant periodic rate of return on the net investment. [IFRS 16:75]

At the commencement date, a manufacturer or dealer lessor recognises selling profit or loss in
accordance with its policy for outright sales to which IFRS 15 applies. [IFRS 16:71c)]

A lessor recognises operating lease payment as income on a straight-line basis or, if more
representative of the pattern in which benefit from use of the underlying asset is diminished,
another systematic basis. [IFRS 16:81]

Sale and leaseback transactions

To determine whether the transfer of an asset is accounted for as a sale an entity applies the
requirements of IFRS 15 for determining when a performance obligation is satisfied. [IFRS
16:99]

If an asset transfer satisfies IFRS 15’s requirements to be accounted for as a sale the seller
measures the right-of-use asset at the proportion of the previous carrying amount that relates to
the right of use retained. Accordingly, the seller only recognises the amount of gain or loss that
relates to the rights transferred to the buyer. [IFRS 16:100a)]

If the fair value of the sale consideration does not equal the asset’s fair value, or if the lease
payments are not market rates, the sales proceeds are adjusted to fair value, either by accounting
for prepayments or additional financing. [IFRS 16:101]

Disclosure
The objective of IFRS 16’s disclosures is for information to be provided in the notes that,
together with information provided in the statement of financial position, statement of profit or
loss and statement of cash flows, gives a basis for users to assess the effect that leases have.
Paragraphs 52 to 60 of IFRS 16 set out detailed requirements for lessees to meet this objective
and paragraphs 90 to 97 set out the detailed requirements for lessors. [IFRS 16:51, 89]

Use of the Respective Standard in SBL Annual Report

Regarding IFRS 16 we have found the following information in the Annual Report:

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee
recognises a right-of-use asset representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. There are recognition exemptions for
short-term leases and leases of low-value items. Lessor accounting remains similar to the current
standard – i.e. lessors continue to classify leases as finance or operating leases. IFRS 16 replaces
existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease. The standard is effective for
annual periods beginning on or after 1 January 2019. Although early adoption is permitted, the
Group has not early adopted IFRS 16 in preparing these financial statements. The most
significant impact identified is that, the Group will recognise new assets and liabilities for its
operating leases of retail stores / showrooms, warehouses, service centers, factories and other
offices facilities. In addition, the nature of expenses related to those leases will now change as
IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-
of-use assets and interest expense on lease liabilities. Previously, the Group recognised operating
lease expense on a straight-line basis over the term of the lease, and recognised liabilities only to
the extent that there was a timing difference between actual lease payments and the expense
recognised. The Group has no finance leases. As a lessee, the Group plans to apply IFRS 16
initially on 1 January 2019, using the modified retrospective approach. Therefore, the cumulative
effect of adopting IFRS 16 will be recognised as an adjustment to the opening balance of
retained earnings at 1 January 2019, with no restatement of comparative information. The Group
also plans to apply IFRS 16 to all contracts entered into before 1 January 2019 and identified as
leases in accordance with IAS 17 and IFRIC 4. The Group is currently assessing the impact of
initially applying the standard on the elements of financial statements. [ CITATION Sng \l 18441 ]

Comment:

So, we can say that the company follows the rules and regulations as prescribed by IFRS 16.

IFRS 17 - Insurance Contracts

IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure
of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that
an entity provides relevant information that faithfully represents those contracts. This
information gives a basis for users of financial statements to assess the effect that insurance
contracts have on the entity's financial position, financial performance and cash flows.

IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or after 1
January 2021.

Measurement

On initial recognition, an entity shall measure a group of insurance contracts at the total of:

 the fulfilment cash flows (FCF) which comprise:

(i) estimates of future cash flows
(ii) an adjustment to reflect the time value of money (TVM) and the financial
risks associated with the future cash flows and
(iii) a risk adjustment for non-financial risk
 the contractual service margin (CSM).

An entity shall include all the future cash flows within the boundary of each contract in the
group. The entity may estimate the future cash flows at a higher level of aggregation and then
allocate the resulting fulfilment cash flows to individual groups of contracts.

The estimates of future cash flows shall be current, explicit, unbiased, and reflect all the
information available to the entity without undue cost and effort about the amount, timing and
uncertainty of those future cash flows. They should reflect the perspective of the entity, provided
that the estimates of any relevant market variables are consistent with observable market prices.
Discount rates

The discount rates applied to the estimate of cash flows shall:

 reflect the time value of money (TVM), the characteristics of the cash flows and the liquidity
characteristics of the insurance contracts
 be consistent with observable current market prices (if any) of those financial instruments
whose cash flow characteristics are consistent with those of the insurance contracts and
 exclude the effect of factors that influence such observable market prices but do not affect
the future cash flows of the insurance contracts.

Risk adjustment for non-financial risk

The estimate of the present value of the future cash flows is adjusted to reflect the compensation
that the entity requires for bearing the uncertainty about the amount and timing of future cash
flows that arises from non-financial risk.

Contractual service margin

The CSM represents the unearned profit of the group of insurance contracts that the entity will
recognize as it provides services in the future. This is measured on initial recognition of a group
of insurance contracts at an amount that, unless the group of contracts is onerous, results in no
income or expenses arising from:

 the initial recognition of an amount for the FCF

 the derecognition at that date of any asset or liability recognized for insurance
acquisition cash flows and
 any cash flows arising from the contracts in the group at that date.

Subsequent measurement

On subsequent measurement, the carrying amount of a group of insurance contracts at the end of
each reporting period shall be the sum of:

 the liability for remaining coverage comprising:

 the FCF related to future services and;
  the CSM of the group at that date;
 the liability for incurred claims, comprising the FCF related to past service
allocated to the group at that date.

Onerous contracts

An insurance contract is onerous at initial recognition if the total of the FCF, any previously
recognized acquisition cash flows and any cash flows arising from the contract at that date is a
net outflow. An entity shall recognize a loss in profit or loss for the net outflow, resulting in the
carrying amount of the liability for the group being equal to the FCF and the CSM of the group
being zero.

On subsequent measurement, if a group of insurance contracts becomes onerous (or more

onerous) that excess shall be recognized in profit or loss. Additionally, the CSM cannot increase
and no revenue can be recognized until the onerous amount previously recognized has been
reversed in profit or loss as part of a service expense.

Premium allocation approach

An entity may simplify the measurement of the liability for remaining coverage of a group of
insurance contracts using the Premium Allocation Approach (PAA) on the condition that, at the
inception of the group:

 the entity reasonably expects that this will be a reasonable approximation of the
general model, or
 the coverage period of each contract in the group is one year or less.

Where, at the inception of the group, an entity expects significant variances in the FCF during
the period before a claim is incurred such contracts are not eligible to apply the PAA.

Using the PAA, the liability for remaining coverage shall be initially recognized as the
premiums, if any, received at initial recognition, minus any insurance acquisition cash flows.
Subsequently the carrying amount of the liability is the carrying amount at the start of the
reporting period plus the premiums received in the period, minus insurance acquisition cash
flows, plus amortization of acquisition cash flows, minus the amount recognized as insurance
revenue for coverage provided in that period and minus any investment component paid or
transferred to the liability for incurred claims.

Practical expedients available under the PAA:

If insurance contracts in the group have a significant financing component, the liability for
remaining coverage needs to be discounted, however, this is not required if, at initial recognition,
the entity expects that the time between providing each part of the coverage and the due date of
the related premium is no more than a year.

In applying PAA, an entity may choose to recognize any insurance acquisition cash flows as an
expense when it incurs those costs, provided that the coverage period at initial recognition is no
more than a year.

The simplifications arising from the PAA do not apply to the measurement of the group’s
liability for incurred claims, measured under the general model. However, there is no need to
discount those cash flows if the balance is expected to be paid or received in one year or less
from the date the claims are incurred.

Investment contracts with a DPF

An investment contract with a DPF is a financial instrument and it does not include a transfer of
significant insurance risk. It is in the scope of the standard only if the issuer also issues insurance
contracts. The requirements of the Standard are modified for such investment contracts.

Reinsurance contracts held

The requirements of the standard are modified for reinsurance contracts held.

In estimating the present value of future expected cash flows for reinsurance contracts, entities
use assumptions consistent with those used for related direct insurance contracts. Additionally,
estimates include the risk of reinsurer’s non-performance.

The risk adjustment for non-financial risk is estimated to represent the transfer of risk from the
holder of the reinsurance contract to the reinsurer.
On initial recognition, the CSM is determined similarly to that of direct insurance contracts
issued, except that the CSM represents net gain or loss on purchasing reinsurance. On initial
recognition, this net gain or loss is deferred unless the net loss relates to events that occurred
before purchasing a reinsurance contract (in which case it is expensed immediately).

Subsequently, reinsurance contracts held are accounted similarly to insurance contracts under the
general model. Changes in reinsurer’s risk of non-performance are reflected in profit or loss and
do not adjust the CSM.

Modification and derecognition

Modification of an insurance contract

If the terms of an insurance contract are modified, an entity shall derecognize the original
contract and recognize the modified contract as a new contract if there is a substantive
modification, based on meeting any of the specified criteria.

The modification is substantive if any of the following conditions are satisfied:

 if, had the modified terms been included at contract’s inception, this would have led to:
(i) exclusion from the Standard’s scope
(ii) unbundling of different embedded derivatives
(iii) redefinition of the contract boundary or
(iv) the reallocation to a different group of contracts or
 if the original contract met the definition of a direct par insurance contracts, but the
modified contract no longer meets that definition, or vice versa or
 the entity originally applied the PAA, but the contract’s modifications made it no longer
eligible for it.

Derecognition

An entity shall derecognize an insurance contract when it is extinguished, or if any of the

conditions of a substantive modification of an insurance contract are met.

Presentation in the statement of financial position

An entity shall present separately in the statement of financial position the carrying amount of
groups of:

 insurance contracts issued that are assets

 insurance contracts issued that are liabilities
 reinsurance contracts held that are assets and
 reinsurance contracts held that are liabilities

Recognition and presentation in the statement(s) of financial performance

An entity shall disaggregate the amounts recognized in the statement(s) of financial performance
into: [IFRS 17:80]

 an insurance service result, comprising insurance revenue and insurance service expenses;
and
 insurance finance income or expenses.

Income or expenses from reinsurance contracts held shall be presented separately from the
expenses or income from insurance contracts issued.

Insurance service result

An entity shall present in profit or loss revenue arising from the groups of insurance contracts
issued, and insurance service expenses arising from a group of insurance contracts it issues,
comprising incurred claims and other incurred insurance service expenses. Revenue and
insurance service expenses shall exclude any investment components. An entity shall not present
premiums in the profit or loss, if that information is inconsistent with revenue presented.

Insurance finance income or expenses

Insurance finance income or expenses comprises the change in the carrying amount of the group
of insurance contracts arising from:

 the effect of the time value of money and changes in the time value of money and
 the effect of changes in assumptions that relate to financial risk but
 excluding any such changes for groups of insurance contracts with direct participating
insurance contracts that would instead adjust the CSM.
An entity has an accounting policy choice between including all of insurance finance income or
expense for the period in profit or loss or disaggregating it between an amount presented in profit
or loss and an amount presented in other comprehensive income (“OCI”).

Under the general model, disaggregating means presenting in profit or loss an amount
determined by a systematic allocation of the expected total insurance finance income or expenses
over the duration of the group of contracts. On derecognition of the groups amounts remaining in
OCI are reclassified to profit or loss.

Under the VFA, for direct par insurance contracts, only where the entity holds the underlying
items, disaggregating means presenting in profit or loss as insurance finance income or expenses
an amount that eliminates the accounting mismatches with the finance income or expenses
arising on the underlying items. On derecognition of the groups, the amounts previously
recognized in OCI remain there.

Disclosures

An entity shall disclose qualitative and quantitative information about:

 the amounts recognized in its financial statements that arise from insurance contracts
 the significant judgements and changes in those judgements made when applying IFRS 17
and
 the nature and extent of the risks that arise from insurance contracts.

Effective date

IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. Earlier
application is permitted if both IFRS 15 Revenue from Contracts with Customers and IFRS 9
Financial Instruments have also been applied.

Transition
An entity shall apply the standard retrospectively unless impracticable, in which case entities
have the option of using either the modified retrospective approach or the fair value approach.

Under the modified retrospective approach, an entity shall utilize reasonable and supportable
information and maximize the use of information that would have been used to apply a full
retrospective approach, but need only use information available without undue cost or effort.
Under this approach the use of hindsight is permitted, if that is the only practical source of
information for the restatement of prior periods.

Under the fair value approach, an entity determines the CSM at the transition date as the
difference between the fair value of a group of insurance contracts at that date and the FCF
measured at that date. Using this approach, on transition there is no need for annual groups.

At the date of initial application of the Standard, those entities already applying IFRS 9 may
retrospectively re-designate and reclassify financial assets held in respect of activities connected
with contracts within the scope of the Standard.

Entities can choose not to restate IFRS 9 comparatives with any difference between the previous
carrying amount of those financial assets and the carrying amount at the date of initial
application recognized in the opening equity at the date of initial application. Any restatements
of prior periods must reflect all the requirements of IFRS 9.

Use of the respective standard in SBL annual report

Though there is no information about the use of IFRS 17- insurance contract, there is information
available about the applicability of IFRS 15 and IFRS 9.

Initial application of new standards

The Group has initially applied IFRS 15 (see A) and IFRS 9 (see B) from 1 January 2018. These
two new standards do not have a material effect on the Group’s financial statements. Due to the
transition methods chosen by the Group in applying these standards, comparative information
throughout these financial statements has not been restated to reflect the requirements of the new
standards.

A. IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when
revenue is recognized. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related
interpretations. Under IFRS 15, revenue is recognized when a customer obtains control of the
goods or services. Determining the timing of the transfer of control – at a point in time or over
time – requires judgement. The Group has adopted IFRS 15 using the cumulative effect method
(without practical expedients), with the effect of initially applying this standard recognized at the
date of initial application (i.e. 1 January 2018). Accordingly, the information presented for 2017
has not been restated – i.e. it is presented, as previously reported, under IAS 18, IAS 11 and
related interpretations. Additionally, the disclosure requirements in IFRS 15 have not generally
been applied to comparative information.

There was no material impact of adopting IFRS 15 on the Group’s statement of financial position
as at 31 December 2018 and its statement of profit or loss and OCI for the year ended 31
December 2018 and the statement of cash flows for the year then ended.

B. IFRS 9 Financial Instruments

IFRS 9 sets out requirements for recognizing and measuring financial assets, financial liabilities
and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial
Instruments: Recognition and Measurement. There was no material impact of adopting IFRS 9
on the Group’s statement of financial position as at 31 December 2018 and its statement of profit
or loss and OCI for the year ended 31 December 2018 and the statement of cash flows for the
year then ended. IFRS 9 contains three principal classification categories for financial assets:
measured at amortized cost, FVOCI and FVTPL. The classification of financial assets under
IFRS 9 is generally based on the business model in which a financial asset is managed and its
contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to
maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in
contracts where the host is a financial asset in the scope of the standard are never separated.
Instead, the hybrid financial instrument as a whole is assessed for classification. IFRS 9 largely
retains the existing requirements in IAS 39 for the classification and measurement of financial
liabilities.
The adoption of IFRS 9 has not had a significant effect on the Group’s accounting policies
related to financial liabilities and derivative financial instruments (for derivatives that are used as
hedging instruments). For additional information about the Group’s accounting policies relating
to financial instruments.

Comment

IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. Earlier
application is permitted if both IFRS 15 Revenue from Contracts with Customers and IFRS 9
Financial Instruments have also been applied. Though there is information available about the
applicability of IFRS 15 and IFRS 9, there is no information about the applicability of IFRS 17-
insurance contract in SBL annual report.

Conclusion
From the analysis of annual report 2018 of Singer Bangladesh, we can say that SBL is following
most of the standards of accounting. That makes their annual report more transparent. Users can
take more effective decisions as the information on the report are very clear and can be compare
with the other companies. Company is trying to adopt the other standards too.

Reference

ACCA. (n.d.). ACCA Applied Skills Financial Reporting. KAPLAN PUBLISHING.

IAS PLUS. (n.d.). Retrieved from www.iasplus.com/: https://www.iasplus.com/en/standards

Snger Bangladesh Ltd. (n.d.). Annual Report 2018.