Standards and interpretations adopted by the IASB and EU which have entered into effect
In the opinion of the Parent Company’s Management Board, the following standards have exerted a significant impact on these Consolidated Financial Statements:
IFRS 9 “Financial Instruments” – applicable to annual periods beginning on or after 1 January 2018. The key amendments introduced by the new standard pertain to:
- Changes of the rules of classification and valuation of financial assets which are based on the entity’s business model for managing the assets and the cash flow characteristics. The existing categories of financial assets have been replaced with new ones, i.e. carried out at:
- amortized cost;
- fair value through other comprehensive income;
- fair value through profit or loss.
The amended standard imposes an obligation to carry shares in unlisted companies in fair value and significantly reduces the existing possibility of carrying assets at cost.
- Introduction of a new model for assessment of impairment of financial assets which replaces the concept of incurred losses with the concept of expected credit losses.
- Hedge accounting model.
IFRS 15 “Revenue from Contracts with Customers” – applicable to annual periods beginning on or after 1 January 2018. This standard has replaced IAS 18 “Revenues” and IAS 11 “Construction Contracts” and the related interpretations. The fundamental principle of the new standard provides for recognition of the revenues in the financial statements in such a way as to show the transfer of goods or services to customers in the amount that reflects the amount of the remuneration (i.e. payment) which the Group expects to receive in return for such goods or services. In accordance with the new regulations a revenue occurs at the time when control over the goods or services passes on to the customer. The standard has introduced a 5-step approach to revenue recognition:
- Identify the contracts with customers, which are understood as parties which concluded a contract with the entity to purchase goods or services, resulting from ordinary activity of the entity, in exchange for consideration.
- Identify the performance obligations in the contract.
- Determine the transaction price. Determining the transaction price, in addition to the base consideration , one should consider such other components as: variable consideration , non-pecuniary consideration which should be carried at fair value, factors associated with financing the price (by the seller or buyer) e.g. discount resulting from a time difference between the performance of the obligation and the payment for its performance or amounts paid in connection with performance of the obligations of the contract.
- Allocate the transaction price to the performance obligations in the contract. The best basis to determine the individual price is the price for which the entity may separately sell the given good or service.
- Recognize revenue when (or as) the entity satisfies a performance obligation. The performance obligation is recognized as satisfied upon transfer of the control over the goods or services subject to the agreement to the customer.
Clarifications to IFRS 15 “Revenue from Contracts with Customers” – applicable to annual periods beginning on or after 1 January 2018. The improvement has provided additional clarifications concerning certain requirements and has introduced an additional exemption for entities introducing IFRS 15 “Revenue from Contracts with Customers”.
In the opinion of the Parent Company’s Management Board, the standards and interpretations mentioned below did not result in any major amendments to the Accounting Policy applied by the Group:
Standards and interpretations adopted by the IASB and endorsed by the EU which have not yet entered into effect
In the opinion of the Parent Company’s Management Board, IFRS 16 “Leases”, applicable to annual periods beginning on or after 1 January 2019, will have a significant impact on the Consolidated Financial Statements of the PKP CARGO Group. In accordance with the new standard, the lessee recognizes the right to use an asset and lease liability. The right to use an asset is treated like other non-financial assets and amortized accordingly. Lease liabilities are initially carried at current value of the lease payments payable during the lease term, discounted by the lease rate, if it is not difficult to determine it. If such rate cannot be easily determined the lessee applies the marginal interest rate.
In the opinion of the Parent Company’s Management Board, the standards and interpretations mentioned below will not result in any major amendments to the Accounting Policy applied by the Group:
Standards and interpretations adopted by the IASB but not yet endorsed by the EU which have not entered into effect
IFRS as approved by the EU do not currently differ materially from the regulations adopted by the International Accounting Standards Board (IASB), with the exception of the following standards, their amendments and interpretations, which as at 31 December 2018 have not yet been approved by the EU and have not entered into effect: In the opinion of the Parent Company’s Management Board, the EU’s endorsement of the following standards will not trigger the need to modify significantly the accounting policies applied by the Group: