New Accounting Standards

Accounting Standards Applied for the First Time in 2015

 

Standard / Interpretation

 

 

 

Mandatory from

 

Endorsed by EU

 

Anticipated Impact on WACKER

 

 

 

 

 

 

 

 

 

IFRIC 21

 

Levies

 

Jan. 1,
2015

 

June 13, 2014

 

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 the earnings, net assets or financial position presented in WACKER’s consolidated financial statements.

Improvements to IFRS (2011 – 2013)

 

 

 

July 1,
2014

 

Dec. 18, 2014

 

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.

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. Only those standards that are relevant to WACKER are mentioned. 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

 

Standard / Interpretation

 

 

 

Publication by IASB

 

Mandatory from

 

Endorsed by EU

 

Anticipated Impact on WACKER

 

 

 

 

 

 

 

 

 

 

 

Amendments
to IFRS 11

 

Accounting for Acquisitions of Interests in Joint Operations

 

May 6, 2014

 

Jan. 1, 2016

 

Nov. 24, 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.

Amendments to IAS 1

 

Disclosure Initiative

 

Dec. 18, 2014

 

Jan. 1, 2016

 

Dec. 18, 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 minimum information. Additionally included are explanations of aggregation and disaggregation of items in the balance sheet and statement of comprehensive income. The amendments also 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.

Improvements to IFRS (2010 – 2012)

 

 

 

Dec. 12, 2013

 

Feb. 1, 2015

 

Dec. 17, 2014

 

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.

Improvements to IFRS (2012 – 2014)

 

 

 

Sept. 25, 2014

 

Jan. 1, 2016

 

Dec. 15, 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.

Standards, Interpretations and Changes to Existing Standards Not Yet Endorsed by the EU

 

Standard / Interpretation

 

 

 

Publication by IASB

 

Effective Date

 

Endorsed by EU

 

Anticipated Impact on WACKER

 

 

 

 

 

 

 

 

 

 

 

IFRS 9

 

Financial Instruments

 

July 24, 2014

 

Jan. 1, 2018

 

Expected in first half of 2016

 

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; not only will it be necessary to recognize credit losses actually incurred, but also those 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.

IFRS 16

 

Leases

 

Jan. 13, 2016

 

Jan. 1, 2019

 

tbc

 

In accordance with this standard, almost all lease contracts and the associated contractual rights and liabilities are recognized in the statement of financial position. A lease liability is to be recognized for the payment obligations associated with every lease. At the same time, a right of use for the leased asset is capitalized in an amount corresponding to the present value of the future lease payments. This right is amortized while the lease liability is reduced over the lease term by repayments and accrued interest. Accounting relief is granted for short-term leases and assets of low value. WACKER has not yet evaluated the impact of the new standard, but we assume that lease liabilities will rise considerably. That will lead to an increase in financial liabilities and the amount of intangible assets recognized.

Amendments to IAS 12

 

Income Taxes

 

Jan. 19, 2016

 

Jan. 1, 2017

 

tbc

 

The amendment contains details on deductible temporary differences and their assessment. This amendment also clarifies how to estimate future taxable profits for the measurement of deferred tax assets. It has no impact on WACKER’s earnings, net assets or financial position. The clarifications will, however, be relevant when the asset value of deferred tax assets is being assessed in WACKER’s consolidated financial statements.

Amendments to IAS 7

 

Statement of Cash Flows

 

Jan. 29, 2016

 

Jan. 1, 2017

 

tbc

 

The amendments are intended to improve the presentation of the company’s changes in net debt. These amendments propose a reconciliation between the opening and closing balances for liabilities arising from financing activities. WACKER expects a more detailed disclosure of information in the statement of cash flows. There will be no major changes in the Group’s earnings, net assets or financial position.

IFRS 15

 

Revenue from Contracts with Customers

 

May 28, 2014

 

Jan. 1, 2018

 

Expected in Q2 2016

 

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 will evaluate the new standard to determine its impact on the recognition of revenue in 2016. The effects cannot be assessed at present. The new standard will result in broader disclosure details in WACKER’s financial statements.

Amendments to IFRS 10 and IAS 28

 

Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture

 

Sept. 11, 2014

 

Postponed

 

Postponed – awaiting IASB exposure draft

 

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.