IFRS 4 Phase II transition

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By Donna McEneaney, Michael Leitschkis | 19 June 2015
An opening balance sheet must be produced under IFRS 4 Phase II at the transition date. There is a hierarchy of three approaches (full retrospective, simplified retrospective and fair value) to be applied for determining the contractual service margin in the opening balance sheet. Each approach brings its own challenges for the company when determining discount rates, additional modelling requirements and data storage needs.