Sun Life 2010 Annual Report Download - page 35

Explanation of Significant Adjustments from Canadian GAAP to IFRS
1. Reclassification
These adjustments represent changes in presentation in the Consolidated Balance Sheets as prescribed by IFRS. The significant
changes include:
(i) Reinsurance assets and insurance contracts
Canadian GAAP allows reinsurance assets, representing the portion of the insurance contract liabilities covered by
reinsurance arrangements, to be netted against actuarial and other policy liabilities. Under IFRS, this netting is not permitted,
resulting in the establishment of a reinsurance asset and an increase in the insurance contract liability.
(ii) Investments for account of segregated fund holders, and Insurance contracts and Investment contracts for account of
segregated fund holders
Under Canadian GAAP, assets held to cover liabilities related to segregated funds are required to be reported separately from
the general fund assets and liabilities of the Company. IFRS requires these balances be included in total assets and total
liabilities. Segregated fund liabilities that are classified as investment contracts are presented separately from insurance
contract liabilities.
2. Consolidation
We have changed our accounting and measurement for certain investments in joint ventures and special purpose entities under IFRS.
Under Canadian GAAP, our investments in joint ventures are reported using the proportionate consolidation method. Under IFRS we
have chosen to account for these investments using the equity method. In addition, under IFRS, we are required to consolidate certain
special purpose entities (“SPEs”) where we have a controlling interest, based on the substance of the relationship between the
Company and the SPE. We have also consolidated the innovative capital instruments, SLEECS, which were issued through Sun Life
Capital Trust. These adjustments do not have a significant impact on our total equity or net income on a go forward basis.
3. Assets and Contract Remeasurement
These adjustments reflect differences in measurement and classification under IFRS, which are primarily related to assets, insurance
contracts and investment contracts. The most significant change relates to debt instruments not quoted in an active market that are
designed as HFT or AFS and measured at fair value under Canadian GAAP. These instruments are classified as loans and receivables
under IFRS and as a result have been recorded as mortgages and loans and measured at amortized cost. The impact from this
measurement difference in retained earnings is significantly offset as these assets support insurance contract liabilities.
4. IFRS 1 Exemptions and Other
IFRS 1, First time adoption, (“IFRS 1”) is a financial reporting standard that stipulates the requirements for an entity that is preparing
IFRS compliant statements for the first time, and applies at the time of changeover. Adjustments in this column reflect the optional
exemptions and mandatory exceptions available under IFRS 1 and other differences in measurement, which include adjustments
related to employee benefits, goodwill impairment, share based payments and the related income tax amounts.
Opening Equity Reconciliation
The following table provides a reconciliation between the total equity reported under Canadian GAAP as at the Transition Date to
opening equity under IFRS. The adjustments are presented net of tax and relate to optional elections made under IFRS 1, mandatory
accounting policy differences and certain policy choices made upon transition to IFRS. The adjustments to our opening equity position
have been identified, analyzed and represent our estimate of the impacts to our opening equity position based on current policy
choices. These estimates and current policy choices may be subject to change until the issuance of our 2011 Annual Consolidated
Financial Statements.
IFRS Opening Equity Reconciliation – January 1, 2010
($ millions) Item
Capital,
Non-controlling
Interests and
Contributed
Surplus
Accumulated
OCI
Retained
Earnings
Estimated
Total
Equity
Total as reported under Canadian GAAP 9,000 (2,545) 10,882 17,337
Adjustments to total equity (net of tax):
IFRS 1 Optional Exemptions
Cumulative foreign currency translation adjustments 1 – 2,637 (2,637) –
Recognition of deferred actuarial losses on defined
benefit plans 1 – – (329) (329)
Accounting Policy Differences
Impairment of goodwill 2 – – (1,768) (1,768)
Share-based compensation (52) – (76) (128)
Remeasurement of assets 3 – – (234) (234)
Remeasurement of insurance contracts 4 – – 254 254
Remeasurement of investment contracts – – (36) (36)
Consolidation of special purpose entities 5––2121
Derivatives and hedge accounting – 40 (40) –
Reclassification of non-controlling interests 24 – – 24
Total adjustments to equity under IFRS (28) 2,677 (4,845) (2,196)
Total as reported under IFRS 8,972 132 6,037 15,141
Management’s Discussion and Analysis Sun Life Financial Inc. Annual Report 2010 31