Transitional Provisions for the Implementation of PSAK 72

 

After discussing the differences in PSAK 72 and important things that need to be considered in their implementation in our previous article. In this article, we discuss how companies implement PSAK 72 for the first time, whether they need to restate their previous financial statements or not.

 

In accordance with PSAK 72 Paragraph C03, companies can apply PSAK 72 by using one of two methods:

1. Retrospectively with the restatement for each reporting period the previous presentation in accordance with PSAK 25: Accounting Policies, Changes in Accounting Estimates and Errors subject to guidelines (expedients).

2. Retrospectively with the cumulative effect of the initial implementation of PSAK 72 recognized at the date of initial implementation.

 

Provisions for the implementation of PSAK 72 retrospectively for each previous LK period (PSAK 72 Paragraph C03 letter a)

For retrospective implementation for each previous LK period (restatement), the transitional provisions according to PSAK 72, which is when it was first applied, companies only need to present the quantitative information required by PSAK 25 paragraph 28 (f) for the closest financial year period before the year period. book of first implementation of PSAK 72 ("closest previous period"). The company may also present this information for the current or comparative period earlier, but is not required to do so.

 

PSAK 72 provides practical guidelines that can be used by companies for retrospectively implementing PSAK 72 (PSAK 72 Paragraph C05), which is one or more of the following guidelines:

 

(a) for contracts that have completed the transfer of goods / services in accordance with PSAK 34 Construction and PSAK 23 Income and related interpretations (“Contracts for Completion”), an entity does not need to restate a contract that:

1. Begins and ends within the same annual reporting period; or

2. Represents a contract for completion at the beginning of the earliest presentation period.

 

(b) for completed contracts that have variable benefits, the company may use the transaction price at the date the contract was completed rather than estimating the amount of the variable consideration in the comparative reporting period.

 

(c) for contracts modified before the beginning of the earliest presentation period, the entity need not retrospectively restate the contract for contract modifications in accordance with paragraphs 20-21 of IAS 72. Instead, the entity shall reflect the combined effect of all modifications that occurred before the commencement of earliest serving period when:

(i) identify fulfilled and unfulfilled performance obligations;

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(ii) determine the transaction price; and

(iii) allocating transaction prices to fulfilled and unfulfilled performance obligations.

 

(d) for all reporting periods presented prior to the date of initial implementation, the entity need not disclose the amount of the transaction price allocated to the remaining performance obligation and an explanation of when the entity expects to recognize that amount as revenue (see PSAK 72 paragraph 120 regarding disclosure requirements for the remaining performance obligation. ).

 

Provisions for the retrospective implementation of PSAK 72 with adjustments for cumulative impacts (PSAK 72 Paragraph C03 letter b)

 

For retrospective implementation of PSAK 72 with adjustment for cumulative impacts, the provisions refer to PSAK 72 Paragraph C07. The requirement is that companies recognize the cumulative effect at the beginning of implementation of PSAK 72 as an adjustment to the opening retained earnings (or other component of equity, as appropriate) for the annual reporting period covering the date of first implementation.

 

Under this transitional method, the company may choose to apply PSAK 72 retrospectively only for the contracts that are not a completed contract at the initial implementation date (for example 1 January 2020 for entities with a financial year ending 31 December), that is, contracts that are still in progress (still exist). obligations that have not been fulfilled by the company) as of January 1, 2020.

 

In connection with the modification of contracts, companies that apply PSAK 72 retrospectively with adjustments for cumulative impacts can also use the practical guidance as specified in paragraph C05 (c) of article 72 for the following conditions:

 

1. For all contract modifications occurring prior to the start of the earliest presentation period; or

2. For all contract modifications that occurred prior to the date of initial implementation. When using this practical guide, an entity shall apply the guidance consistently across contracts and disclose the information required by paragraph C06.

 

Practical guidelines for implementing PSAK 72 are as follows:

 

For contracts modified before the beginning of the earliest presentation period, the entity need not retrospectively restate the contract for contract modification in accordance with paragraphs 20-21 of PSAK 72. Instead, the entity shall reflect the combined effect of all modifications that occurred before the commencement of the earliest serving period when: 

(i) identifies fulfilled and unfulfilled performance obligations;

(ii) determine the transaction price; and

(iii) allocating transaction prices to fulfilled and unfulfilled performance obligations.

 

Consistency of Practical Guidelines and Information to be Disclosed (PSAK 72 Paragraph C06)

 

For retrospective implementation of PSAK 72 with restatements of previous LKs, or retrospectively with adjustments for cumulative impact, companies must apply these practical guidelines consistently to all contracts in all reporting periods presented. In addition, the company discloses all of the following information:

(a) guidelines that have been used; and

(b) to the extent possible, a qualitative assessment of the estimated impact of the implementation of the respective guidelines.

 

Additional Disclosures for Retrospective implementation of PSAK 72 with adjustments for cumulative impacts (PSAK 72 Paragraph C08)

 

For a reporting period that includes an initial implementation date, an entity provides the following two additional disclosures:

(a) the amount in each financial statement item in the current reporting period that is affected by the implementation of PSAK 72 in comparison with PSAK 34: Construction Contracts, PSAK 23: Income, and the related Interpretations that were in effect prior to the change; and

(b) explanation of the reasons for significant changes in each item affected by the implementation of PSAK 72.

 

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This article written by Mikail Jaman, Ak, M.Ak, CPA, CA, CPI, BKP, Audit Partner, KAP Agus Ubaidillah dan Rekan, TGS Indonesia

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