2015 TFRS Updates
The Federation of Accounting Professions (FAP) represented by the Accounting Standards Board Committee has adopted Thai Financial Reporting Standards (TFRS) revised edition for 2014 which are translated from International Financial Reporting Standards (IFRS) blue book, bound volume for 2013.
As the transactions and the complexity of the systems of finance and accounting are developing continuously, FAP board has again improved all TFRSs in order to match standards of international financial reporting for 2015. This revision is translated from the IFRS blue book, bound volume for 2015 and shall be effective from 1 January 2016 onwards.
The main essence of the changes in the revised version for 2015 include an exception to not prepare consolidated financial statements for investment entities which are specified in the accounting standards of “Consolidated Financial Statements” (TFRS10) and “Separate Financial Statements” (TAS27). The key condition is that a business which is established for the main purpose of managing an investment and to measure performance from a fair value of the investment will not be required to prepare consolidated financial statements for their investment in subsidiaries. However, there is a requirement to measure the investment at a fair value, with all gains and losses recognized in the profits or losses in accordance with TFRS9 (Financial Instruments) when this is adopted.
In addition, there is no requirement to comply with business combination under TFRS3 or to disclose related party transactions under TAS24, but there is a requirement to include additional disclosures in relation to an investment business under TFRS12.
The remaining updates should not have an affect on the financial statements and include:
- Revised wording for the adjusted book value for property, plant and equipment, and revalued intangible assets (TAS16 and TAS38)
- Adding definition for the conditions of work and service (TFRS2)
- Requiring additional disclosures for judgements made by management for the purpose of aggregation of operating segments in case that the segments share similar economic characteristics (TFRS8)
- Adding scope of related parties including business management and business presentation (TAS24)
- Requiring disclosure in respect of fair value measurement (TFRS13)
- Assessment for impairment of assets (TAS36)
- The consideration transferred in a business combination is measured at fair value. Any change in fair value is recognized in the profit or loss (TFRS3)
- Requiring entities to recognise contributions from employees or 3rd parties which are independent for the number of service years as a discount in service cost only in the period of service rendered without allocation to each period of service (TAS19)
In addition, accounting standards to be adopted in Thailand from 2016 for the first time include TFRS No.41 “Agriculture” which specifies the accounting practice in relation to biological assets, whether plant or animal. This accounting standard will be adopted along with the announcement of FAP with respect to the accounting practices for the measurement and recognition of the bearer plant. As a result, agricultural businesses need to prepare measure and disclose biological assets. There is also a new interpretation of IFRS No. 21 “Taxation”, which specifies the practice for the recognition of a company’s obligations and tax liabilities in its annual financial statements and interim financial statements.
TFRS No.4 “Insurance Contracts”, will be effective from 2016. Life insurance and non-life insurance business need to disclose and present details of insurance contracts in the financial statement.
In the future, FAP Board will adopt IFRS No.15 “Revenue from contracts with customers” and IFRS No.9 “Financial instruments” by the year 2019.