IFRS – Practical Issues Series


At our “IFRS practical issues series”, we try solving practical issues faced by the accounting and finance professionals in the industry. Anyone and everyone is welcome to share their queries for a live resolution. We keep identification information confidential.

Our upcoming session will focus on recognition of land lease rental treatment as well as discuss land costs to be capitalized and those that should be charged as expense. The standards covered are IFRS16, IFRS15 and IAS 16.

Finance and Accounting teams are faced with multiple challenges on a regular basis while accounting under complex situations and circumstances that may not be easy to interpret from the standard

Ed-Watch has started a series on IFRS – practical issues. Click here to view our previous Episodes.

Please send in your queries for resolution HERE Or email us at: contact@


Case Study:

Shakir & Sons was established by VERIZON INVESTMENTS and its shareholders, to undertake the Government obligation in developing the logistic lands within VERIZON INVESTMENTS concession area, as well as, to market and commercialize the logistic land. Further, Section 8 of the Concession agreement enables VERIZON INVESTMENTS to enjoy the access of the developed logistic land that will be provided by the Government and VERIZON INVESTMENTS shall then optimize the use of the land by leasing it to the clients. Initially, the government developed 65 hectares out 2,000 hectares that is granted as set out in the Concession Agreement. VERIZON INVESTMENTS was successfully able to lease out the developed land of 65 ha within 4 years which triggered a business demand for the Government to handover furthermore developed land to VERIZON INVESTMENTS to pursue its commercial logistic activities. The Government was not successful in fulfilling it obligation of land development due to the economic crisis experienced in 2018. Alternatively, the Government represented by FREE ZONE AUTHORITY has agreed with VERIZON INVESTMENTS to pass on its land development obligations to VERIZON INVESTMENTS or a Special Purpose Company established by VERIZON INVESTMENTS (currently being Shakir & Sons to privately fund the development works and enjoy the full rewards which goes along with the continuous development, marketing, business and financial risks that will be occurred to develop the logistic area at VERIZON INVESTMENTS Concession Area. As per article 8.3 of the Concession Agreement, the development of logistic area does not entail leveling the land only, but all works required that the Government was going to perform in order to make the logistic area marketable and leasable, throughout the Concession term. Meaning, all annual works are required such as providing utilities, construction of road and all of its relevant expenses and consumables to upkeep the logistic area in a marketable and leasable condition, throughout the term. The obligation of Shakir & Sons extends to cover all the commercial activities to market and lease the land, throughout the term. Pursuant to the Framework Agreement, VERIZON INVESTMENTS has granted Shakir & Sons an exclusive right to develop and market the logistic area under the Master Development Agreement (MDA) which reflects the stated above responsibilities. The principle of granting Shakir & Sons an exclusivity right is to ensure that the development project remains financially viable, despite the challenge of low rates that may be chargeable to clients in XErox (currently a remote area) versus the large investment cost required. Hence, an exclusivity right is granted to Shakir & Sons to secure annual sufficient monetary consideration to cover the necessary annual financing costs, commercial and marketing costs as well as the maintenance expenses that pertains to the works required in the logistic area. In light of the above, how should we recognize the following under the books of Shakir & Sons? 1)Development Expenditure incurred for land levelling, land filling works as an asset or expense under which IFRS standard? 2)Land Lease Rentals Revenue under which IFRS?

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Ms Sana is an experienced process improvement digital solution enthusiast a finance professional who is an IFRS expert She has worked with prestigious organizations in senior positions including in the role of Director Financial Reporting for Telenor Microfinance Bank and Chief Financial Officer for Lakson Investments and Next Capital and remained associated with the financial services industry for over 14 years She has worked on a wider array of projects and with major divisions throughout various sections of the banking industry, including projects on IFRS 16 IFRS 9 and IFRS 15 Based on her extensive financial reporting, presentation, and IFRS implementation experience, she is a trainer for IFRSs and Financial Storytelling techniques and runs a live program on the “IFRS Practical Issues Series” Some of the companies whose professionals she has trained are:

A few years ago, she took the role of an Entrepreneur and founded Ed Watch with a focus on the critical skills development needs of the present and future workforce Ms Sana was among the team that led the Institute of Chartered Accountants of Pakistan’s ( first ever “Women Inclusion Policy” Ms Sana is a Chartered Accountant and served her three years of article ship period in PricewaterhouseCoopers Pakistan She has been a member of ICAP’s committee on “Economic Advisory and Government Relations” for the last three years and served the “Women’s Committee” for three terms She has also been a member of ICAP’s Committee on Fiscal Laws where she had the chance to research and suggest possible solutions for “Increasing the tax net in Pakistan” Her work was published in “The Pakistan Accountant” under the title; “Time to tackle taxation Jams” in 2018

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