RBS 2011 Annual Report Download - page 328

326 RBS Group 2011
The IASB issued an amendment to IAS 12 ‘Income Taxes’ in December
2010 to clarify that recognition of deferred tax should have regard to the
expected manner of recovery or settlement of the asset or liability. The
amendment and consequential withdrawal of SIC 21 ‘Deferred Tax:
Recovery of Underlying Assets’, effective for annual periods beginning on
or after 1 January 2012, is not expected to have a material effect on the
Group or the company.
In May 2011, the IASB issued six new or revised standards:
IFRS 10 ‘Consolidated Financial Statements’ which replaces SIC-12
‘Consolidation - Special Purpose Entities’ and the consolidation elements
of the existing IAS 27 ‘Consolidated and Separate Financial Statements’.
The new standard adopts a single definition of control: a reporting entity
controls another entity when the reporting entity has the power to direct
the activities of that other entity to generate returns for the reporting
entity.
IAS 27 ‘Separate Financial Statements’ which comprises those parts of
the existing IAS 27 that dealt with separate financial statements.
IFRS 11 ‘Joint Arrangements’, which supersedes IAS 31’ Interests in
Joint Ventures’, distinguishes between joint operations and joint ventures.
Joint operations are accounted for by the investor recognising its assets
and liabilities including its share of any assets held and liabilities incurred
jointly and its share of revenues and costs. Joint ventures are accounted
for in the investor’s consolidated accounts using the equity method.
IAS 28 ‘Investments in Associates and Joint Ventures’ covers joint
ventures as well as associates; both must be accounted for using the
equity method. The mechanics of the equity method are unchanged.
IFRS 12 ‘Disclosure of Interests in Other Entities’ covers disclosures for
entities reporting under IFRS 10 and IFRS 11 replacing those in IAS 28
and IAS 27. Entities are required to disclose information that helps
financial statement readers evaluate the nature, risks and financial effects
associated with an entity’s interests in subsidiaries, in associates and
joint arrangements and in unconsolidated structured entities.
IFRS 13 ‘Fair Value Measurement’ which sets out a single IFRS
framework for defining and measuring fair value and requiring disclosures
about fair value measurements.
The standards are effective for annual periods beginning on or after 1
January 2013. Earlier application is permitted. The Group is reviewing the
standards to determine their effect on the Group’s financial reporting.
In June 2011, the IASB issued amendments to two standards:
Amendments to IAS 1 ‘Presentation of Items of Other Comprehensive
Income’ require items that will never be recognised in profit or loss to be
presented separately in other comprehensive income from those that are
subject to subsequent reclassification. The amendments are effective for
annual periods beginning on or after 1 July 2012. Earlier application is
permitted.
Amendments IAS 19 ‘Employee Benefits’ require the immediate
recognition of all actuarial gains and losses eliminating the ‘corridor
approach’; interest cost to be calculated on the net pension liability or
asset at the appropriate corporate bond rate; and all past service costs to
be recognised immediately when a scheme is curtailed or amended.
These amendments are effective for annual periods beginning on or after
1January 2013. Earlier application is permitted. The Group is reviewing
the amendments to determine their effect on the Group’s financial
reporting.
In December 2011, the IASB issued ’Offsetting Financial Assets and
Financial Liabilities (Amendments to IAS 32)’ and ‘Disclosures-Offsetting
Financial Assets and Financial Liabilities (Amendments to IFRS 7)’. The
amendment to IAS 32 adds application guidance on the meaning of ‘a
legally enforceable right to set off’ and on simultaneous settlement.
IFRS 7 is amended to require disclosures facilitating comparisons
between those entities reporting under IFRS and those reporting under
US GAAP. The amendments are effective for annual periods beginning
on or after 1 January 2014 and are required to be applied retrospectively.
Accounting policies continued