New Accounting Standards
Accounting Standards Applied for the First Time in 2014
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Standard / Interpretation |
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Mandatory from |
Endorsed by EU |
Anticipated Impact on WACKER |
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IFRS 10 |
Consolidated Financial Statements |
Jan. 1, |
Dec. 11, |
IFRS 10 changes the definition of “control” so that the same criteria are applied to all companies in determining control. The standard replaces the consolidation guidelines in IAS 27 and SIC 12. The new rules may lead to major changes in the scope of consolidation compared with the method previously used pursuant to IAS 27. Application of the revised standard has no influence on the current determination of the scope of consolidation for WACKER. |
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IFRS 11 |
Joint Arrangements |
Jan. 1, |
Dec. 11, |
IFRS 11 governs the accounting of arrangements where a company exercises joint control over a joint venture or a joint operation. The standard replaces IAS 31. In the future, joint ventures will be accounted for using the equity method only. The option of proportionate consolidation has been abolished. This has no impact on WACKER’s earnings, net assets or financial position because WACKER has always accounted for joint ventures using the equity method. WACKER has examined the other effects of IFRS 11, also with respect to joint operations. The analysis did not result in any reassessment of the joint ventures accounted for up to now using the equity method. |
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IFRS 12 |
Disclosure of Interests in Other Entities |
Jan. 1, |
Dec. 11, |
IFRS 12 regulates the disclosures in the consolidated financial statements that enable readers of the financial statements to assess the nature, risk and financial effects of the entity’s involvement in subsidiaries, associates, joint arrangements and unconsolidated structured entities. Application of the revised standard leads to a broadening of the disclosures in WACKER’s consolidated financial statements. |
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Amendments to IAS 27 |
Separate Financial Statements |
Jan. 1, |
Dec. 11, |
IAS 27 now deals only with separate financial statements. The existing guidelines for separate financial statements remain unchanged. Application of the revised standard has no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 28 |
Investments in Associates and Joint Ventures |
Jan. 1, |
Dec. 11, |
IAS 28 now also governs the accounting of joint ventures using the equity method. Application of the revised standard has no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IFRS 10, IFRS 11 and IFRS 12 |
Transition Guidance |
Jan. 1, |
April 4, |
The purpose of the amendments is to clarify the transition guidance in IFRS 10. Additionally, they facilitate the transition to IFRS 10, IFRS 11 and IFRS 12. Application of the changes had no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 32 |
Offsetting Financial Assets and Financial Liabilities |
Jan. 1, |
Dec. 13, |
This amendment to IAS 32 clarifies the requirements for offsetting of financial instruments. Application of the revised standard has no substantial impact on WACKER’s earnings, net assets or financial position. |
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Amendments to IFRS 10, IFRS 12 and IAS 27 |
Investment Entity |
Jan. 1, |
Nov. 20, |
The changes focus primarily on redefinition of the term “investment entity.” In addition, investment entities are exempted from the obligation to consolidate majority-controlled subsidiaries in their consolidated financial statements. The amendments have no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 36 |
Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets |
Jan. 1, |
Dec. 19, |
IFRS 13 “Fair Value Measurement” introduced a new rule amending IAS 36 “Impairment of Assets.” It requires disclosure of the recoverable amount of every cash-generating unit (or group of cash-generating units) for which a substantial amount of goodwill or substantial intangible assets of indefinite useful life have been recognized. The change limits this disclosure requirement. This provision applies only if impairment or reversal of an impairment loss is recognized in the current period. The amendments in connection with IAS 36 have no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 39 |
Novation of Derivatives and Continuation of Hedge Accounting |
Jan. 1, |
Dec. 19, |
Due to the EU regulation on OTC derivatives, central counterparties and trade repositories (also known as EMIR), clearing via a central counterparty is planned for standardized OTC derivatives. Under the old version of IAS 39, the clearing obligation and the related novation to a central counterparty led to termination of the hedging relationship under hedge accounting and thus to ineffectiveness compared to the prior hedging relationship. The amendment states that, under certain conditions, clearing via a central counterparty shall not lead to termination of the hedging relationship, and that the hedge shall continue to qualify for hedge accounting in accordance with IAS 39. The amendments in connection with IAS 39 have no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements, since WACKER does not have any OTC derivatives that are subject to the clearingjobligation. |
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Accounting Standards/Interpretations Not Applied Prematurely
The International Accounting Standards Board (IASB) has published the following standards, interpretations, and changes to existing standards of which the application is not yet mandatory and which WACKER is not applying earlier than required. WACKER continually evaluates every new standard to determine its impact on the consolidated financial statements.
Standards, Interpretations, and Changes to Existing Standards Already Endorsed by the EU
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Standard / Interpretation |
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Publication by IASB |
Effective Date |
Endorsed by EU |
Anticipated Impact on WACKER |
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IFRIC 21 |
Levies |
May 20, |
Jan. 1, |
June 13, |
IFRIC 21 “Levies” contains rules for the recognition of obligations to pay public levies that are not defined as taxes within the meaning of IAS 12 “Income Taxes.” Application of this interpretation may result in an obligation to pay a levy being recognized in the accounts at a different point in time than previously, especially if the obligation to pay arises only if certain circumstances occur at a certain time. The amendments in connection with IFRIC 21 have no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 19 |
Defined Benefit Plans: Employee Contributions |
Nov. 21, |
July 1, |
Dec. 17, |
The amendments clarify those regulations that concern the allocation of contributions by employees or third parties to service periods in cases where the contributions are linked to the same period of service. In addition, relief is granted in cases where the contributions are independent of the number of years of service. The amendments have no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Improvements to IFRS (2010–2012) |
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Dec. 12, |
July 1, |
Dec. 17, |
The amendments affect IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38. Their application has no substantial impact on WACKER’s earnings, net assets or financial position. |
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Improvements to IFRS (2011–2013) |
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Dec. 12, |
July 1, |
Dec. 18, |
The amendments affect IFRS 1, IFRS 3, IFRS 13 and IAS 40. Their application has no substantial impact on WACKER’s earnings, net assets or financial position. |
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Standards, Interpretations and Changes to Existing Standards Not Yet Endorsed by the EU
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Standard / Interpretation |
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Publication by IASB |
Effective Date |
Endorsed by EU |
Anticipated Impact on WACKER |
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IFRS 9 |
Financial Instruments |
July 24, |
Jan. 1, |
Expected in second half of 2015 |
In addition to the recognition and measurement of financial assets, the updated version of IFRS 9 contains new stipulations for accounting impairments of financial assets and revised requirements for the classification and measurement of financial instruments as part of hedge accounting. In the future, financial assets will be measured either at amortized cost or at fair value, depending on the business model of the company in question. The classification model for financial liabilities will be retained. The recognition of impairments will change fundamentally since credit losses will no longer be recognized when actually incurred, but as soon as they are expected to be incurred. The goal of the new hedge accounting model under IFRS 9 is to better reflect risk management activities in the financial statements. Cash flow hedge accounting, fair value hedge accounting and hedging of a net investment in a foreign operation remain admissible hedging relationships. In each case, the number of qualifying underlying and hedging transactions was extended. At the moment, WACKER cannot conclusively assess what impacts the first-time application of this standard will have on its earnings, net assets or financial position, or on the presentation of its financial statements, should it be endorsed by the EU in its current form. |
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IFRS 14 |
Regulatory Deferral Accounts |
Jan. 30, |
Jan. 1, |
To be determined |
This standard allows entities preparing IFRS statements for the first time in accordance with IFRS 1 “First-Time Adoption of the International Financial Reporting Standards” to include in these statements regulatory deferral accounts recognized under current national accounting standards for rate-regulated activities, and to allow the entities to continue to prepare their financial statements according to previously applicable accounting methods. The amendments have no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements since WACKER is not a first-time adopter in accordance with IFRS 1. |
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IFRS 15 |
Revenue from Contracts with Customers |
May 28, |
Jan. 1, |
Q2 2015 |
IFRS 15 sets out that an entity shall recognize revenue whenever the customer obtains control of, and can draw an economic benefit from, the promised goods and services. The transfer of significant risks and rewards of ownership is no longer of primary importance, as was still the case under the old IAS 18 “Revenue” rules. Revenue must be recognized in an amount that reflects the consideration to which an entity expects to be entitled. The new model provides a five-step framework for recognizing revenue, which first identifies the contract with a customer and the performance obligations it entails, and then determines and allocates the transaction price. The revenue must be recognized for each individual performance obligation when the customer obtains control of the good or service. WACKER is currently evaluating the new standard to determine its impact on the recognition of revenue. We presently expect the impact on WACKER’s earnings, net assets and financial position to be minor. The new standard will result in broader disclosure details in WACKER’s financial statements. |
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Amendments to IFRS 11 |
Accounting for Acquisitions of Interests in Joint Operations |
May 6, |
Jan. 1, |
Expected in Q1 2015 |
This amendment clarifies that the acquisition and accumulation of interests in joint operations that represent a business (as defined by IFRS 3 “Business Combinations”) should be recognized by applying the accounting principles for business combinations in IFRS 3 and other applicable IFRSs, unless these conflict with IFRS 11. This clarification currently has no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 16 and IAS 38 |
Clarification of Acceptable Methods of Depreciation and Amortization |
May 12, |
Jan. 1, |
Expected in Q1 2015 |
The amendment clarifies that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate since depreciation does not reflect consumption of the expected future economic benefits embodied in the asset. This also applies to amortization of intangible assets with a limited useful life. The presumption here, however, can be rebutted. The amendment also clarifies that a decline in sales prices of the goods produced can serve as an indicator of the commercial obsolescence of property, plant and equipment. Since WACKER uses only straight-line depreciation over the expected useful life of such assets, the clarification has no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 16 and IAS 41 |
Financial Reporting for Bearer Plants |
June 30, |
Jan. 1, |
Expected in Q1 2015 |
IAS 41 currently requires all biological assets related to Agricultural activity to be measured at fair value less estimated costs to sell. According to the amendments, bearer plants must henceforth be accounted for in the same way as property, plant and equipment in IAS 16 because they are utilized in a similar way. However, the produce growing on bearer plants will remain within the scope of IAS 41. In the absence of relevant circumstances, the amendment has no impact on WACKER’s earnings, net assets or financial position, or on the presentation of its financial statements. |
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Amendments to IAS 27 |
Separate Financial Statements (Equity Method) |
Aug. 12, |
Jan. 1, |
Expected in Q3 2015 |
In the future, this revision of IAS 27 will allow an entity to apply the equity method to account for investments in subsidiaries, joint ventures and associates in its separate IFRS financial statements. Application of the revised standard has no impact on WACKER since it does not compile separate financial statements in accordance with IFRS. |
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Amendments to IFRS 10 and IAS 28 |
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
Sept. 11, |
Jan. 1, |
Expected in Q4 2015 |
In accordance with these two revised standards, the investor’s gain or loss must always be recognized in full if a transaction constitutes a business as defined in IFRS 3. If this is not the case and the transaction concerns assets that do not constitute a business, the gain or loss is recognized only to the extent of unrelated investors’ interests in the associate or joint venture. The application of these two revised standards currently has no impact on WACKER’s earnings, net assets or financial position. |
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Improvements to IFRS (2012–2014) |
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Sept. 25, |
Jan. 1, |
Expected in Q3 2015 |
The amendments affect IFRS 5, IFRS 7, IAS 19 and IAS 34. Their application has no substantial impact on WACKER’s earnings, net assets or financial position. |
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Amendments to IFRS 10, IFRS 12 and IAS 28 |
Investment Entities – Applying the Consolidation Exception |
Dec. 18, |
Jan. 1, |
Expected in Q4 2015 |
The amendments serve to clarify various questions relating to application of the consolidation-requirement exception as per IFRS 10 should the parent company meet the definition of an “investment entity.” In the absence of relevant circumstances, these amendments have no impact on WACKER’s earnings, net assets or financial position. |
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Amendments to IAS 1 |
Disclosure Initiative |
Dec. 18, |
Jan. 1, |
Expected in Q4 2015 |
The amendments concern various reporting issues and clarify that information which is not material need not be disclosed in the notes. This explicitly also applies if an IFRS requires a list of minimal information. Additionally included are explanations of Aggregation and disaggregation of items in the balance sheet and statement of comprehensive income. The amendments additionally clarify how shares in other comprehensive income arising from equity-accounted investments are presented in the statement of comprehensive income. Furthermore, they propose changing the standard structure of the notes in order to enhance their understandability and comparability. The clarification has no impact on WACKER’s earnings, net assets or financial position, nor any substantial impact on the presentation of its financial statements. |
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