2. The Third Schedule to the Companies (Accounting Standards) Regulations (Rg 6) is amended —| (a) | by deleting the words “(revised 2002) (Amendment December 2004)” in the second column of the item relating to FRS 19 and substituting “(2005)”; | | (b) | by deleting paragraphs (iii) to (xvi) in the third column of the item relating to FRS 19 and substituting the following paragraph:“ | | | | | (iii) | Delete “2003” wherever it appears in paragraph 93B of, and paragraphs A1 and A2 of Appendix F to, IAS 19 and substitute “2004”. |
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| | (c) | by deleting the words “(March 2004) (Amendment December 2004)” in the second column of the item relating to FRS 39 and substituting “(2005)”; | | (d) | by deleting paragraph (ii) in the third column of the item relating to FRS 39 and substituting the following paragraph:“ | | | | | (ii) | Delete paragraph 80 of IAS 39 and substitute the following paragraph:| “80. For hedge accounting purposes, only assets, liabilities, firm commitments or highly probable forecast transactions that involve a party external to the entity can be designated as hedged items. It follows that hedge accounting can be applied to transactions between entities or segments in the same group only in the individual or separate financial statements of those entities or segments and not in the consolidated financial statements of the group. As an exception, the foreign currency risk of an intragroup monetary item (e.g. a payable/receivable between two subsidiaries) may qualify as a hedged item in the consolidated financial statements if it results in an exposure to foreign exchange rate gains or losses that are not fully eliminated on consolidation in accordance with FRS 21 The Effects of Changes in Foreign Exchange Rates. In accordance with FRS 21, foreign exchange rate gains and losses on intragroup monetary items are not fully eliminated on consolidation when the intragroup monetary item is transacted between two group entities that have different functional currencies. In addition, the foreign currency risk of a highly probable forecast intragroup transaction may qualify as a hedged item in consolidated financial statements provided that the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and he foreign currency risk will affect consolidated profit or loss.”. |
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| | (e) | by inserting, immediately after paragraph (vii) in the third column of the item relating to FRS 39, the following paragraphs:“ | | | | | (viii) | Insert, immediately after paragraph 108 of IAS 39, the following paragraphs:| “108A. An entity shall apply the last sentence of paragraph 80, and paragraphs AG99A and AG99B, for annual periods beginning on or after 1 January 2006. Earlier application is encouraged. If an entity has designated as the hedged item an external forecast transaction that (a) is denominated in the functional currency of the entity entering into the transaction, (b) gives rise to an exposure that will have an effect on consolidated profit or loss (i.e. is denominated in a currency other than the group’s presentation currency), and (c) would have qualified for hedge accounting had it not been denominated in the functional currency of the entity entering into it, it may apply hedge accounting in the consolidated financial statements in the period(s) before the date of application of the last sentence of paragraph 80, and paragraphs AG99A and AG99B. |
| 108B. An entity need not apply paragraph AG99B to comparative information relating to periods before the date of application of the last sentence of paragraph 80 and paragraph AG99A.”; |
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| | | | | | (ix) | Re-number paragraphs AG99A and AG99B in Appendix A of IAS 39 as paragraphs AG99C and AG99D, respectively. |
| | | | | | (x) | Insert, immediately after paragraph AG99 in Appendix A of IAS 39, the following paragraphs:“AG99A. Paragraph 80 states that in consolidated financial statements the foreign currency risk of a highly probable forecast intragroup transaction may qualify as a hedged item in a cash flow hedge, provided the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and the foreign currency risk will affect consolidated profit or loss. For this purpose an entity can be a parent, subsidiary, associate, joint venture or branch. If the foreign currency risk of a forecast intragroup transaction does not affect consolidated profit or loss, the intragroup transaction cannot qualify as a hedged item. This is usually the case for royalty payments, interest payments or management charges between members of the same group unless there is a related external transaction. However, when the foreign currency risk of a forecast intragroup transaction will affect consolidated profit or loss, the intragroup transaction can qualify as a hedged item. An example is forecast sales or purchases of inventories between members of the same group if there is an onward sale of the inventory to a party external to the group. | Similarly, a forecast intragroup sale of plant and equipment from the group entity that manufactured it to a group entity that will use the plant and equipment in its operations may affect consolidated profit or loss. This could occur, for example, because the plant and equipment will be depreciated by the purchasing entity and the amount initially recognised for the plant and equipment may change if the forecast intragroup transaction is denominated in a currency other than the functional currency of the purchasing entity. |
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| AG99B. If a hedge of a forecast intragroup transaction qualifies for hedge accounting, any gain or loss that is recognised directly in equity in accordance with paragraph 95 (a) shall be reclassified into profit or loss in the same period or periods during which the foreign currency risk of the hedged transaction affects consolidated profit or loss.”.”. |
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| | | | | | (xi) | Insert, immediately after paragraph AG132 in Appendix A of IAS 39, the following paragraph:| “Transition (paragraphs 103-108A) |
| AG133. An entity may have designated a forecast intragroup transaction as a hedged item at the start of an annual period beginning on or after 1 January 2005 (or, for the purpose of restating comparative information, the start of an earlier comparative period) in a hedge that would qualify for hedge accounting in accordance with this Standard (as amended by the last sentence of paragraph 80). Such an entity may use that designation to apply hedge accounting in consolidated financial statements from the start of the annual period beginning on or after 1 January 2005 (or the start of the earlier comparative period). Such an entity shall also apply paragraphs AG99A and AG99B from the start of the annual period beginning on or after 1 January 2005. However, in accordance with paragraph 108B, it need not apply paragraph AG99B to comparative information for earlier periods.”. |
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| | (f) | by inserting, immediately after the words “IFRS 1 First-time Adoption of International Financial Reporting Standards” in the second column of the item relating to FRS 101, “(2005)”; | | (g) | by deleting paragraphs (i), (iii) and (iv) in the third column of the item relating to FRS 101; and | | (h) | by inserting, immediately after the item relating to FRS 105, the following item:“| Exploration for and Evaluation of Mineral Resources |
| | | Exploration for and Evaluation of Mineral Resources |
| | | Delete reference to “2003” in paragraph B2 of Appendix B to IFRS 6 and substitute “2004”. |
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[G.N. Nos. S 401/2004; S 412/2004; S 521/2004; S 561/2004; S124/2005; S326/2005] |
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