RBS 2004 Annual Report Download - page 67

section
01
Operating and
financial review
65
Annual Report and Accounts 2004
Operating and financial review
•Fair value or revaluation as deemed cost – the fair value of
an item of property, plant or equipment, or a previous GAAP
revaluation (that approximates fair value) of such an item,
may be treated as though it were the cost basis for the
asset, with subsequent depreciation and impairment based
on that amount.
•Employee benefits – under IAS 19 ‘Employee Benefits’,
actuarial gains and losses on pension schemes may be
unrecognised if they fall within a ‘corridor’. On first time
application, an entity may determine the unrecognised gains
and losses from inception of the pension scheme and
recognise only those that would be recognised under IAS
19, or alternatively recognise all cumulative gains and losses
at the transition date.
•Cumulative translation differences – cumulative translation
differences on the net investment in a foreign operation prior
to the transition date need not be calculated but set at zero.
•Compound financial instruments – split accounting required
by IAS 39 need not be applied for a compound financial
instrument if the liability component is no longer outstanding
at the date of transition.
•Designation of financial instruments – an entity is allowed to
designate a financial instrument as financial asset or
financial liability at fair value through profit or loss on the
date of transition rather than on initial recognition as
required by IAS 39.
•Share-based payment transactions – IFRS 2 ‘Share-based
Payment’ must be applied to equity instruments granted on
or after 7 November 2002 that had not vested before the
later of the transition date and 1 January 2005.
IFRS 1 prohibits retrospective application of some aspects
of IFRS:
•Derecognition of financial assets and financial liabilities –
the derecognition requirements of IAS 39 are to be applied
prospectively for transactions occurring on or after 1 January
2004. However, an entity is permitted to apply the derecognition
requirements retrospectively from a date of its choice.
•Hedge accounting – at the transition date, all derivatives
must be measured at fair value. Gains and losses deferred
under previous accounting must be eliminated. Hedge
accounting for relationships that do not qualify under IAS 39
must be discontinued in accordance with the hedge
termination rules in IAS 39.
•Assets classified as held for sale and discontinued
operations – entities with a transition date before 1 January
2005 must apply the transition rules in IFRS 5 ‘Non-current
Assets Held for Sale and Discontinued Operations’.
IFRS require at least one year of comparative data. However
this data need not comply with IAS 32, IAS 39 and IFRS 4
‘Insurance Contracts’. If comparatives that do not comply with
IAS 32, IAS 39 and IFRS 4 are presented, then the date of
transition for these standards will be the beginning of the first
IFRS reporting period.
US GAAP
For a discussion of recent developments in US GAAP relevant
to the Group, see Note 53 on the accounts.