Significant events and transactions

Learning objectives

• Assess, from the facts of a case, whether an event or transaction (write-down of inventories, impairment loss, acquisition or disposal of property, plant and equipment, settlement of litigation, default on a loan, related party transactions, transfers between levels of the fair value hierarchy) is significant enough to be disclosed, the list of examples not being exhaustive.L2

Normative references

• IAS 34 §15BNon-exhaustive list of events and transactions to be disclosed when significant: write-down of inventories and its reversal; impairment losses on assets (financial assets, property, plant and equipment, intangible assets, contract assets, other assets) and their reversals; reversals of provisions for restructuring costs; acquisitions, disposals and commitments to purchase property, plant and equipment; litigation settlements; corrections of prior period errors; changes in the business or economic circumstances that affect the fair value of financial assets and financial liabilities; any loan default or breach of a loan agreement that has not been remedied; related party transactions; transfers between levels of the fair value hierarchy; changes in the classification of financial assets as a result of a change in their purpose or use; changes in contingent liabilities or contingent assets.
• IAS 34 §15CIndividual Standards provide guidance on the disclosures for many of the items listed in para. 15B; when an event is significant to an understanding of the changes since the last annual report, the interim report explains it and updates the relevant information in the last annual report.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• During the half-year, Merkan SA experienced the following events; whether each is significant to an understanding of the changes since the last annual report is indicated (case judgement). Which must the notes to the interim report explain? More than one answer is possible.L2
• Lumet SA, a listed company, is preparing its half-year report. Case data: profit for the interim period of EUR 4,100,000; an impairment loss of EUR 3,600,000 on a plant, recognised in the half-year; the settlement of a commercial dispute for EUR 85,000, with no other known consequence. Write a short note stating which of these events the notes must explain, distinguishing rule, case facts and professional judgement (the Standard sets no numerical threshold).L2