Transitional Provisions for EAS
Transitional Provisions for EAS
The Ministry of Investment issued a decision whereby it added Standard No. 46 to the amended Egyptian Accounting Standards (“EAS”).[1] This new Standard provides transitional provisions for some of the lately amended standards by virtue of the Ministry of Investment's decision No. 110 of 2015.
The new Standard regulates the transitional period for some standards to ensure compatibility with the amended EAS. These include the standards regarding fixed assets and its depreciation, investments in sister companies, intangible assets, real estate investment, exploration and valuation of mineral resources, consolidated financial statements, and fair value measurement.
The newly issued Decree is clearly concerned with the transition toward the “cost model” in cases of different assets revaluation, all in accordance with the EAS of Decree No. 110 of 2015. The new Decree does not allow retroactive transition to the cost model. In addition, it establishes that any surpluses arising from revaluations appearing on the equity side shall be transferred to the income statement, with consideration of any arising tax implications.
Finally, the new Decree establishes that Standard 29, on business combination, and Standard 45, on fair value measurement, shall enter into force for periods that start from and after 1 January 2016.
[1] Minister of Investment's Decision No. 53/2016, Official Gazette, Issue No. 122, 28 May 2016.
The Ministry of Investment issued a decision whereby it added Standard No. 46 to the amended Egyptian Accounting Standards (“EAS”).[1] This new Standard provides transitional provisions for some of the lately amended standards by virtue of the Ministry of Investment's decision No. 110 of 2015.
The new Standard regulates the transitional period for some standards to ensure compatibility with the amended EAS. These include the standards regarding fixed assets and its depreciation, investments in sister companies, intangible assets, real estate investment, exploration and valuation of mineral resources, consolidated financial statements, and fair value measurement.
The newly issued Decree is clearly concerned with the transition toward the “cost model” in cases of different assets revaluation, all in accordance with the EAS of Decree No. 110 of 2015. The new Decree does not allow retroactive transition to the cost model. In addition, it establishes that any surpluses arising from revaluations appearing on the equity side shall be transferred to the income statement, with consideration of any arising tax implications.
Finally, the new Decree establishes that Standard 29, on business combination, and Standard 45, on fair value measurement, shall enter into force for periods that start from and after 1 January 2016.
[1] Minister of Investment's Decision No. 53/2016, Official Gazette, Issue No. 122, 28 May 2016.