In October 2009, the IASB issued an amendment to IAS 32 “Financial Instruments: Presentation.” The European Union endorsed this amendment in December 2009. This amendment clarifies the classification of rights issues as equity or liabilities when the rights are denominated in a currency other than the issuer’s functional currency. Previously, such rights issues had been accounted for as derivative liabilities. The amendment requires that if such rights are issued pro rata to an entity’s shareholders for a fixed amount of currency, they are to be classified as equity regardless of the currency in which the exercise price is denominated. The amendment is effective for financial years beginning on or after February 1, 2010. The amendment is not expected to have a material impact on the presentation of Deutsche Telekom’s results of operations, financial position or cash flows. In November 2009, the IASB issued IFRS 9 “Financial Instruments.” The European Union has not yet endorsed the amendments. The standard is the result of the first of three phases of the project to replace IAS 39 “Financial Instruments: Recognition and Measurement” with IFRS 9. IFRS 9 governs the classification and measurement of financial assets. The rules for impair- ment of financial instruments and hedge accounting are currently being revised by the IASB. IFRS 9 requires financial assets to be assigned to one of the following two measurement categories: “at amortized cost” or “at fair value.” IFRS 9 also grants a fair value option which allows financial assets that would normally be assigned to the “at amortized cost” category to be designated as “at fair value” if the fair value designation would eliminate or significantly reduce measurement or recognition inconsistency.
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Consolidated financial statements Notes
It is mandatory to assign equity instruments to the “at fair value” category. If, however, the equity instrument is not held for trading, the standard allows an irrevocable option to be made at initial recognition to designate it as “at fair value” through other comprehensive income. Dividend income resulting from the equity instrument is recognized in profit or loss. IFRS 9 is effective for financial years beginning on or after January 1, 2013. The provisions are to be applied retrospectively. Deutsche Telekom is analyzing the result- ing effects on the presentation of results of operations, financial position or cash flows.
In November 2009, the IASB issued an amendment to its requirements on accounting for pension plans. The European Union endorsed the amend- ment in July 2010. The amendment is to IFRIC 14 “Prepayments of a Minimum Funding Requirement,” which is an interpretation of IAS 19 “Employee Benefits.” The amendment applies in limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover these requirements. The amend- ment permits such an entity to treat the benefit of such an early payment as an asset. The amendment has an effective date for mandatory adoption of January 1, 2011. Retrospective adoption is required. Deutsche Telekom is analyzing the resulting effects on the presentation of results of operations, financial position or cash flows.
In November 2009, the IASB issued the interpretation IFRIC 19 “Extinguish- ing Financial Liabilities with Equity Instruments.” The European Union endorsed IFRIC 19 in July 2010. The interpretation provides guidance on how to interpret IFRS when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept equity instruments to settle the financial liabilities fully or partially. IFRIC 19 clarifies that the entity’s equity instruments issued to a creditor are part of the consideration paid to extinguish the financial liability fully or partially. In addition, these equity instruments are measured at their fair value. If their fair value cannot be reliably measured, the equity instruments shall be measured to reflect the fair value of the financial liability extinguished. Any difference between the carrying amount of the financial liability and the initial measurement amount of the equity instruments issued is included in the entity’s profit or loss for the period. The interpretation is effective for financial years begin- ning on or after July 1, 2010. The adoption of IFRIC 19 is not expected to have a material impact on the presentation of Deutsche Telekom’s results of operations, financial position or cash flows.
In May 2010, the IASB published pronouncements as part of its third Annual Improvements Project containing amendments to six standards and one interpretation. The European Union has not yet endorsed the amendments. The amendments do not have a material impact on the presentation of Deutsche Telekom’s results of operations, financial position or cash flows and are effective for financial years beginning on or after January 1, 2011.
In October 2010, the IASB issued the pronouncement “Disclosures – Transfers of Financial Assets” as an amendment to IFRS 7 “Financial Instruments: Disclosures.” The amendment requires quantitative and qualitative disclosures to be made for transfers of financial assets where the transferred assets are not derecognized in their entirety or the trans- feror retains continuing involvement. The amendment is intended to pro- vide greater transparency around such transactions (e.g., securitizations) and help users understand the possible effects of any risks that may remain with the entity that transferred the assets. The amendment also requires supplementary information to be disclosed if a substantial proportion of the total amount of transfer activity takes place in the closing days of a report- ing period. The amendments are applicable for financial years beginning on or after July 1, 2011. The European Union has not yet endorsed this pronouncement. Deutsche Telekom is analyzing the resulting effects on the presentation of results of operations, financial position or cash flows. Also in October 2010, the IASB issued requirements on accounting for financial liabilities. These are integrated into IFRS 9 “Financial Instruments” and replace the existing provisions on this subject in IAS 39 “Financial Instruments: Recognition and Measurement.” In the new pronouncement, the requirements relating to recognition and derecognition as well as most of the requirements for classification and measurement are carried forward unchanged from IAS 39. However, the requirements related to the fair value option for financial liabilities are changed in the new IFRS 9 to address own credit risk and the prohibition of fair value measurement is eliminated for derivative liabilities that are linked to an unquoted equity instrument and must be settled by delivery of an unquoted equity instrument. The pro- nouncement is effective for financial years beginning on or after January 1, 2013. The European Union has not yet endorsed this pronouncement. Deutsche Telekom is analyzing the resulting effects on the presentation of results of operations, financial position or cash flows.
In December 2010, the IASB issued the pronouncements “Deferred Tax: Recovery of Underlying Assets – Amendments to IAS 12.” The amend- ment sets presumptions for the recovery of certain assets. This is relevant in those cases where different tax consequences can arise depending on how the carrying amounts are recovered. The pronouncement introduces a rebuttable presumption that the carrying amount of an investment property that is measured using the fair value model in IAS 40 “Investment Property” will be recovered through sale. In any case, there is also a non-rebuttable presumption that the carrying amount of a non-depreciable asset that is measured using the fair value model in IAS 16 “Property, Plant and Equip- ment” will be recovered through sale. Inter pretation SIC 21 “Income Taxes – Recovery of Revalued Non-Depreciable Assets” was replaced by the new pronouncement. The pronouncement is effective for financial years beginning on or after January 1, 2012 and has not yet been endorsed by the European Union. Deutsche Telekom is analyzing the resulting effects on the presentation of results of operations, financial position or cash flows.