Singpaore listed entities: IFRS convergence - unremitted earnings

As you are aware, Singapore listed entities are required to prepare their financial statements in IFRS.
 
One difference between SFRS and IFRS relates to the accounting for deferred tax for unremitted earnings ( this unremitted earnings relates to all overseas income earned but not yet remitted to Singapore).
 
We will share with you one example below:
 
For instance, certain Singapore entities within the Group have recognized receivable from overseas entities for interest income from overseas entities not yet remitted to Singapore.
Under Recommended Accounting Practice (RAP) 8 issued by the Institute of Certified Public Accountants of Singapore (ICPAS), no deferred tax is accounted for temporary difference arising from foreign income (excluding: distributable earning) not yet remitted to Singapore if:(a) the entity is able to control the timing of the reversal of the temporary difference; and (b) it is probable that the temporary difference will not reverse in the foreseeable future.
Under IFRS, the Group no longer has the option of applying RAP 8. Hence, the Singapore entities are required to provide deferred tax for these unremitted earnings.
 
Impact:
 
For entities who have recorded overseas interest income (but not yet remitted to Singapore) in the past - please check if deferred tax has been recorded. If not, full amount of deferred tax shall be recorded.
 
Please reach us at myauditing@gmail.com if you need more clarification. Thanks.

 

Accounting for acquisitions under common control

It is common for business to carry out restructuring activities and then spin off a certain sub-group within the main group for listing purpose / disposal purpose. I come to realize recently that there are two approaches available for accounting for acquisitions under common control:

a) Acquisitions method
b) Pooling of interest method

What's the definition of common control ? Generally, common control relates to two entities controlled by a shareholder / corporate entity, for which no consolidation has been prepared. However, due to certain development, e.g. IPO, the shareholder would like to package these two entities together as a listing vehicle on a stock exchange. The financial statements would then be prepared on a common control approach.

For this post, I would like to elaborate a choice available for the accountant.

Assuming entity A was directly owned by a shareholder, who also owns entity B directly. During the year, entity A acquired entity B. Generally, entity A would account for acquisition of entity B as a common control entity based on pooling of interest method. This means that the combined financial statements would be prepared by aggregating entity A + entity B balances. This is pooling of interest method.

However, another approach available is entity A can apply acquisition method to account for acquisition entity B, this approach is similar to the acquisition of a non-related entity/ external party. A purchase price allocation review is required.

This approach is allowed for common control entity if there's a business substance to account for such acquisition.

If you need more clarification , please contact myauditing@gmail.com