E&Y - Consumer products -CP_IFRS_financial_statements_survey_Nov_2010

E&Y - Consumer products -CP_IFRS_financial_statements_survey_Nov_2010

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Consumer products IFRS fnancial statements survey November 2010
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1 Consumer products IFRS fnancial statements survey November 2010 Contents Executive summary 2 Focus of the study 4 Recession-impacted performance of consumer products entities 7 Financial performance 8 Risks and KPIs: the need for better communication 12 Intangible assets: valuing brands and goodwill is a key performance driver 18 Hedge accounting: complexity reduces applicability 24 Financial instruments: assessing fair value and sensitivity to meet IFRS 7 27 Segment reporting: linking disclosure with internal reporting 29 Other issues: 32 Advertising costs: timing is of the essence De±ned bene±t plans: the end of the corridor? Agency agreements with retailers: limited disclosure on revenue recognition 34 Leases: proposed new model to have signi±cant impact for some consumer 35 products entities Revenue from contracts with customers 36 Appendix Risks identi±ed in the surveyed ±nancial statements 40 Consumer products IFRS ±nancial statements survey November 2010
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2 Consumer products IFRS fnancial statements survey November 2010 In this third edition of our consumer products IFRS ±nancial statements survey, we have surveyed the leading consumer products (CP) entities in Europe, applying IFRS. We have updated our observations from 2008 and addressed additional issues that have arisen in 2009. While the application of IFRS is now generally well understood and embedded within entities’ operations, there are signi±cant areas of judgment that remain. Furthermore, as IFRS continues to evolve, its application will be an ongoing challenge for management. Focus o± the survey The objective of this survey is to summarise CP industry ±nancial performance and to highlight the business risks and KPIs identi±ed by survey respondents. The survey also analyses industry practice with respect to the key IFRS accounting challenges for CP entities. Our survey looked at recently published ±nancial statements of 20 leading CP entities in Europe. The survey is focused on CP-speci±c IFRS challenges rather than general IFRS topics. The CP-speci±c issues we considered relate to: Intangible assets, including goodwill Hedge accounting The survey also addresses amendments to IFRS effective in 2009 and their implications for CP entities. Therefore, the following issues are considered in this survey: Disclosures of ±nancial instruments Segment reporting Under “Other issues” we also discuss advertising costs and agency relationships as well as the proposed new approaches to revenue recognition, lease accounting and de±ned bene±t plans. Per±ormance review Given the dif±cult economic circumstances in recent years, the surveyed CP entities surveyed performed relatively strongly in 2009, although within comparable product categories, performance ±gures vary widely.
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E&Y - Consumer products -CP_IFRS_financial_statements_survey_Nov_2010

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