TD Bank 2010 Annual Report Download - page 81

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TD BANK GROUP ANNUAL REPORT 2010 MANAGEMENT’S DISCUSSION AND ANALYSIS 79
AREA OF IFRS SIGNIFICANT EXEMPTION OPTIONS AND DECISIONS
Employee Future
Benefits
The Bank may elect under IFRS 1to recognize any unamortized actuarial gains or losses in its IFRS opening retained
earnings. The Bank will elect to use this exemption option. Unamortized actuarial losses under Canadian GAAP
(measured as at July 31, 2010) for 2010 were approximately $1.2 billion pre-tax ($880 million after-tax), as indicated
in Note 24 to the Bank’s 2010 annual Consolidated Financial Statements. This item will reduce Tier 1 capital. The
unamortized actuarial loss that the Bank will recognize in its IFRS opening retained earnings may differ from this
amount when the measurement completed as at November 1, 2010 is received and analyzed.
Business
Combinations
The Bank may elect not to apply IFRS 3, Business Combinations (IFRS 3) to all business combinations that occurred
before the date of transition to IFRS, or select a date prior to the date of transition and apply IFRS 3 to all business
combinations occurring after that date. The Bank is considering the use of this exemption option and may select a
date prior to the date of transition and apply IFRS 3 to all business combinations occurring after that date. Should the
Bank apply this exemption option, there may be a difference in the purchase price as determined under IFRS versus
that as previously determined under Canadian GAAP due to certain differences such as the measurement of share
consideration and in the accounting for intangible assets, transaction costs and restructuring charges as further
discussed below. These differences will result in a potential reduction to goodwill and shareholders’ equity. This reduction
is solely related to accounting differences between IFRS and Canadian GAAP and is not expected to result in a material
impact to net Tier 1 capital.
Designation of
Financial Instruments
Under IAS 39, Financial Instruments: Recognition and Measurement, entities are permitted to make certain designations
only upon initial recognition. IFRS 1 provides entities with an opportunity to make these designations on the date of
transition to IFRS. Specifically, on transition, IFRS 1 permits the Bank to a) make an available-for-sale designation for
financial assets and, b) designate any financial asset or financial liability as at fair value through profit or loss provided
the asset or liability meets certain criteria specified under IFRS at that date. The Bank has determined that it will
re-designate certain of its financial assets to available-for-sale or fair value through profit or loss on transition.
Currency Translation
The Bank may elect to reclassify all cumulative translation differences in accumulated other comprehensive income
into retained earnings on transition. The Bank will elect to use this exemption option, however the amount to be
reclassified will not be known with certainty until all adjustments for initial elections on adoption of IFRS and for
differences between Canadian GAAP and IFRS are recorded in the IFRS opening retained earnings.
The Bank’s cumulative translation difference recorded in accumulated other comprehensive income as at October
31,
2010 under Canadian GAAP is approximately $2.9 billion, which would be a reclassification within sharehold-
ers’
equity that has no impact on the Bank’s Tier 1 capital.
The significant exemption options are summarized in the table below: