Illustrative IFRS consolidated financial statements

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Illustrative IFRS consolidated financial statements Investment property ? 2017 update

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Illustrative IFRS consolidated financial statements Investment property 2017 update

PwC's Illustrative IFRS consolidated financial statements 2016 Investment property provides an illustrative set of consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS), for a fictional investment property group (IP Group). The illustratives are for a group that prepares its consolidated financial statements in accordance with IFRS as issued by the IASB (that is, it does not prepare the consolidated financial statements in accordance with IFRS as adopted by the European Union).

These illustratives continue to be a relevant source for entities with 31 December 2017 year ends with the exception of the below.

New standards and amendments not yet adopted

IFRS 9, 'Financial instruments', IFRS 15, 'Revenue from contracts with customers' and IFRS 16, 'Leases'

In relation to the impact of IFRSs 9, 15 and 16 which are not yet effective, entities should refer to the latest illustrative disclosure in PwC's VALUE IFRS Plc Illustrative IFRS consolidated financial statements December 2017. It should be emphasised that regulators expect disclosure of entityspecific quantitative and qualitative information as to the impact of applying these standards. This is particularly the case for IFRSs 9 and 15 which will already be effective at the time 2017 annual financial statements are published.

IAS 40, `Investment Property' ? transfers of investment property

The amendment clarifies that to transfer to, or from, investment properties there must be a change in use. To conclude if a property has changed use there should be an assessment of whether the property meets the definition. This change must be supported by evidence. The Board confirmed that a change in intention, in isolation, is not enough to support a transfer.

The Board provided two options for transition:

1. Prospective application. Any impact from properties that are reclassified would be treated as an adjustment to opening retained earnings as at the date of initial application. There are also special disclosure requirement if this option is selected.

2. Retrospective application. This option can only be selected without the use of hindsight.

The amendment is effective for periods beginning on or after 1 January 2018.

IP Group has determined it will apply the amendment prospectively. The group has assessed the impact of the amendment on the classification of existing property at 1 January 2018 and has concluded that no reclassifications are required and the timing of subsequent transfers is not expected to change on adoption of the amendment. As such, there will be no impact to the consolidated financial statements on application of the amendment.

PwC : Investment property ? 2017 update

November 2017 02



? 2017 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership,

PwwhiCch is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

Summer 2011 3

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Illustrative IFRS consolidated financial statements 2016

Investment property

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Illustrative IFRS consolidated financial statements 2016

Contents

Introduction

1

IP Group consolidated financial statements for the year

ended 31 December 2016

3

Consolidated statement of financial position

4

Consolidated statement of comprehensive income

7

Consolidated statement of changes in equity

14

Consolidated statement of cash flows

16

Notes to the consolidated financial statements

19

Independent auditor's report to the shareholders of IP 72

Appendix I ? Consolidated statement of comprehensive

income by function of expense

73

Appendix II ? Consolidated cash flow statement ? direct

method

74

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Illustrative IFRS consolidated financial statements 2016

Introduction

This publication provides an illustrative set of consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS), for a fictional investment property group (IP Group). The Group prepares its consolidated financial statements in accordance with IFRS as issued by the IASB (that is, it does not prepare the consolidated financial statements in accordance with IFRS as adopted by the European Union).

IP Group is an existing preparer of IFRS consolidated financial statements; IFRS 1, "First-time adoption of International Financial Reporting Standards", is not applicable. Guidance for first time adopters of IFRS is available at ifrs.

This publication is based on the requirements of IFRS standards and interpretations for financial years beginning on or after 1 January 2016.

None of the standards or interpretations that are mandatory to apply for the first time in 2016 required changes to the accounting policies or disclosures in this publication. However, we have made a number of minor improvements to existing disclosures. Readers should consider whether any of the standards that are mandatory for the first time for financial years beginning 1 January 2016 could affect their own accounting policies and disclosures.

The Group generally adopts standards early if they clarify existing practice but do not introduce substantive changes. These include standards issued by the IASB as part of the improvements program. The Group has early adopted the amendments made to IAS 7 in relation to the Disclosure Initiative and included net debt disclosures (see Note 17) to comply with the new requirements. Readers interested in new disclosures that will be required when an entity adopts IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers can refer to the Appendices in PwC's Illustrative IFRS consolidated financial statements for 2016 year ends.

The areas in which we have made significant changes to presentation have been highlighted in pink. The only significant changes for 2016 are in the sections titled "New and amended standards adopted by the Group", "New standards and interpretations not yet adopted" and "Borrowings".

We have attempted to create a realistic set of consolidated financial statements for an investment property group with emphasis on real estate (IAS 40, "Investment Property", and IAS 2, "Inventories"). Certain types of transaction have been excluded, as they are not relevant to the Group's operations. The illustrated Group does not have associates, joint arrangements, non-controlling interests, government grants, defined benefit plans, treasury shares, preferred shares, convertible debt or share options, nor is the Group exploring mineral resources. There were no disposals of subsidiaries, and no issue of shares in the two years presented. Please refer to PwC's Illustrative IFRS consolidated financial statements for 2016 year ends and IFRS disclosure checklist 2016 for disclosures relating to these items. Illustrative IFRS financial statements 2016 ? Investment funds and Illustrative IFRS financial statements 2016 ? Private equity may also be relevant to some real estate entities.

The shares of the parent company of the illustrated Group are publicly traded; disclosures on segments and earnings per share are therefore included.

Other items that entities may choose (or, in certain jurisdictions, be required) to include in documents containing financial statements, such as a directors' report or operating and financial review, are not illustrated here.

PwC commentary has been provided, in grey boxes, to explain the detail behind the presentation of a number of challenging areas. These commentary boxes relate to the presentation in: the consolidated statement of

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Illustrative IFRS consolidated financial statements 2016

financial position, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and the summary of significant accounting policies.

The example disclosures should not be considered the only acceptable form of presentation. The form and content of each reporting entity's consolidated financial statements are the responsibility of the entity's management. Alternative presentations to those proposed in this publication may be equally acceptable if they comply with the specific disclosure requirements prescribed in IFRS. Examples of alternative presentations of the statements of comprehensive income and cash flows have been included in Appendix I and Appendix II respectively.

Some of the disclosures in this publication would likely be immaterial if IP Group was a `real life' company. The purpose of this publication is to provide a broad selection of illustrative disclosures which cover most common scenarios encountered in practice. The underlying story of the company only provides the framework for these disclosures and the amounts disclosed are for illustration purposes only. Disclosures should not be included where they are not relevant or not material in specific circumstances.

These illustrative consolidated financial statements are not a substitute for reading the standards and interpretations themselves or for professional judgement as to fairness of presentation. They do not cover all possible disclosures that IFRS requires, nor do they take account of any specific legal framework or any stock exchange or other regulations. Further specific information may be required in order to ensure fair presentation under IFRS. We recommend that readers refer to our publication IFRS disclosure checklist 2016.

Structure

The publication consists of the IP Group consolidated financial statements and the auditor's report. There are two appendices that cover additional disclosures and alternative presentations of primary statements.

IP Group illustrative consolidated financial statements

3

Notes to the consolidated financial statements

19

Independent auditor's report

69

Appendices

Appendix I - Consolidated statement of comprehensive income by function of expense

70

Appendix II - Consolidated cash flow statement - direct method

71

Format

The references in the left-hand margin of the consolidated financial statements represent the paragraph of the IAS standard in which the disclosure appears - for example, "8p40" indicates IAS 8 paragraph 40. References to IFRSs, as opposed to IASs, appear in full - for example "IFRS2p6" indicates IFRS 2 paragraph 6. The designation "DV" (disclosure voluntary) indicates that the relevant IAS or IFRS encourages, but does not require, the disclosure. These consolidated financial statements also include additional disclosures that may represent best practice. Additional notes and explanations are shown in footnotes.

Amounts presented in brackets are negative amounts. Due to rounding, variations/differences may occur.

Abbreviations

IFRS1p37

= International Financial Reporting Standard [number], paragraph number.

7p22

= International Accounting Standards [number], paragraph number.

SIC15p5

= Standing Interpretations Committee [number], paragraph number.

DV

= Disclosure Voluntary. Disclosure is encouraged but not required and therefore represents

best practice.

IFRIC15p10 = IFRS Interpretations Committee [number], paragraph number.

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Illustrative IFRS consolidated financial statements 2016

IP Group consolidated financial statements for the year ended 31 December 2016

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