IFRIC 22, foreign currency and advance consideration, disclosure of effect of adoption

Naspers Limited – Annual report – 31 March 2019

Industry: media

(u) Recently issued accounting standards (extract)
(3) IFRIC 22 Foreign Currency Transactions and Advance Consideration
IFRIC 22 Foreign Currency Transactions and Advance Consideration (IFRIC 22) clarifies that non-monetary assets and liabilities arising from the payment/receipt of advance consideration (e.g. prepaid expenses and deferred revenue) are not retranslated to the entity’s functional currency after initial recognition. The group applied IFRIC 22 on a prospective basis, with the impact of adoption recognised as an adjustment to the opening balance of retained earnings as at 1 April 2018.

The impact of adoption was an increase in prepaid expenses of US$10m, a decrease in deferred revenue of US$4m and a corresponding increase of US$14m in retained earnings. The adoption impact related primarily to the group’s video-entertainment business, which has been presented as a discontinued operation (refer to note 4), as the application of IFRIC 22 did not have a significant impact on the group’s other operations.