Changes in accounting policies (Tables)

12 Months Ended

Dec. 31, 2018

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Summary of Impact of Transition to IFRS 9 on Opening Balance of Reserves and Retained Earnings

The following table explains the impact of transition to IFRS 9 on the opening balance of reserves and retained earnings as at January 1, 2018.

(In millions of won)
	Reserves			Retained earnings
Reclassification of available-for-sale financial assets to financial assets at fair value through profit or loss(“FVTPL”)	￦	(5,336	)		947
Reclassification of available-for-sale financial assets to financial assets at fair value through other comprehensive income (“FVOCI”)		(84,881	)		90,322
Recognition of loss allowances on accounts receivable — trade and others		—			(13,049	)
Related income tax		21,413			(18,194	)
	￦	(68,804	)		60,026

Summary of Effects Resulting from Classification and Measurement of Financial Instruments

The following table explains the original measurement categories under IAS 39 and the changes in measurement categories under IFRS 9 for each class of the Group’s financial assets as at the date of initial application, January 1, 2018:

(In millions of won)
	Original classification under IAS 39		New classification under IFRS 9		Original carrying amount under IAS 39		New carrying amount under IFRS 9		Difference
Short-term financial assets:
Cash and cash equivalents		Amortized cost		Amortized cost	￦	1,457,735		1,457,735		—
Short-term financial instruments		Amortized cost		Amortized cost		616,780		616,780		—
Short-term investment securities(*1)		Available-for-sale		FVTPL		47,383		47,383		—
Short-term investment securities		Designated as at FVTPL		FVTPL		97,003		97,003		—
Accounts receivable — trade		Amortized cost		Amortized cost		2,126,007		2,113,057		(12,950	)
Short-term loans		Amortized cost		Amortized cost		62,830		62,830		—
Accounts receivable — other(*3)		Amortized cost		FVTPL		830,321		830,321		—
Accounts receivable — other		Amortized cost		Amortized cost		430,514		430,415		(99	)
Accrued revenue		Amortized cost		Amortized cost		3,979		3,979		—
Guarantee deposits		Amortized cost		Amortized cost		3,927		3,927		—
						5,676,479		5,663,430		(13,049	)
Long-term financial assets:
Long-term financial instruments		Amortized cost		Amortized cost		1,222		1,222		—
Long-term investment securities(*1)		Available-for-sale		FVTPL		173,394		169,005		(4,389	)
Long-term investment securities(*2)		Available-for-sale		FVOCI		713,613		719,054		5,441
Long-term accounts receivable — trade		Amortized cost		Amortized cost		12,748		12,748		—
Long-term loans		Amortized cost		Amortized cost		50,874		50,874		—
Long-term accounts receivable — other(*3)		Amortized cost		FVTPL		243,742		243,742		—
Long-term accounts receivable — other		Amortized cost		Amortized cost		43,306		43,306		—
Guarantee deposits		Amortized cost		Amortized cost		292,590		292,590		—
Derivative financial assets		Derivatives hedging instrument		Derivatives hedging instrument		21,902		21,902		—
Derivative financial assets(*1)		Designated as at FVTPL		FVTPL		231,311		9,054		(222,257	)
Long-term investment securities(*1)		Designated as at FVTPL		FVTPL		—		222,257		222,257
						1,784,702		1,785,754		1,052
					￦	7,461,181		7,449,184		(11,997	)

(*1) As of January 1, 2018, available-for-sale financial assets such as beneficiary certificates and equity investments amounting to ￦205,435 million were reclassified to financial assets measured at FVTPL. In addition, as derivatives embedded in contracts where the host is a financial asset in the scope of IFRS 9 are never separated, the available-for-sale financial assets related to the redeemable convertible preferred shares of ￦15,342 million and the related derivative financial assets of ￦222,257 million were reclassified to financial assets measured at FVTPL which were not designated as financial assets measured at amortized cost as the contractual terms of these assets do not give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. As a result of this reclassification, as at January 1, 2018, accumulated OCI of ￦5,336 million was reclassified to retained earnings, and due to its reclassification to financial assets measured at FVTPL, retained earnings was decreased by ￦4,389 million in relation to fair value measurement. In addition, change in the fair value of these financial assets of ￦1,984 million was recognized in profit before income tax during the year ended December 31, 2018.

(*2) As of January 1, 2018, available-for-sale financial assets such as marketable equity instruments amounting to ￦713,613 million were reclassified to equity investments at FVOCI and debt instrument at FVOCI of ￦713,399 million and ￦214 million, respectively. As a result of this reclassification, as at January 1, 2018, retained earnings of ￦ (-)90,322 million was reclassified to accumulated OCI and accumulated OCI was increased by ￦5,441 million due to the fair value measurement of financial assets which were stated at cost under IAS 39. The Group designated equity instruments that are not held for trading as FVOCI on initial application of IFRS 9 with no subsequent recycling of amounts from OCI to profit and loss.

(*3) As of January 1, 2018, accounts receivable — other of ￦1,074,063 million were reclassified to financial assets at FVTPL. Upon the initial application of IFRS 9, the Group reclassified the debt instruments to financial assets at FVTPL whose objectives of the business model are not achieved both by collecting contractual cash flows and selling financial assets. There was no material impact on retained earnings as at January 1, 2018 as the fair values of these debt instruments were not significantly different from the carrying amounts as of December 31, 2017.

Summary of Impacts of Adopting IFRS 15 and 9 on Statement of Financial Position

(3)    The following table explains the impacts of adopting IFRS 15 and 9 on the Group’s statement of financial position as of January 1, 2018.

(In millions of won)
	December 31, 2017			Adjustments						January 1, 2018
	As reported			IFRS 15			IFRS 9			Restated
Current Assets:	￦	6,201,799			1,804,080			(13,049	)		7,992,830
Accounts receivable — trade, net		2,126,007			(4,314	)		(12,950	)		2,108,743
Accounts receivable — other, net		1,260,835			—			(99	)		1,260,736
Prepaid expenses		197,046			1,695,704			—			1,892,750
Contract assets		—			112,690			—			112,690
Others		2,617,911			—			—			2,617,911
Non-Current Assets:		27,226,870			718,898			1,052			27,946,820
Long-term investment securities		887,007			—			223,309			1,110,316
Long-term prepaid expenses		90,834			693,393			—			784,227
Long-term contract assets		—			30,363			—			30,363
Deferred tax assets		88,132			(4,858	)		—			83,274
Long-term derivative financial assets		253,213			—			(222,257	)		30,956
Others		25,907,684			—			—			25,907,684
Total Assets	￦	33,428,669			2,522,978			(11,997	)		35,939,650
Current Liabilities:		7,109,123			12,485			—			7,121,608
Provisions		52,057			(215	)		—			51,842
Contract liabilities		—			114,284			—			114,284
Receipts in advance		161,266			(161,266	)		—			—
Unearned revenue		175,732			(175,732	)		—			—
Withholdings		961,501			235,414			—			1,196,915
Others		5,758,567			—			—			5,758,567
Non-Current Liabilities:		8,290,351			610,444			(3,219	)		8,897,576
Long-term contract liabilities		—			19,100			—			19,100
Long-term unearned revenue		7,052			(7,052	)		—			—
Other non-current liabilities		44,094			(919	)		—			43,175
Deferred tax liabilities		978,693			599,315			(3,219	)		1,574,789
Others		7,260,512			—			—			7,260,512
Total Liabilities	￦	15,399,474			622,929			(3,219	)		16,019,184
Share capital		44,639			—			—			44,639
Capital surplus and others		196,281			—			—			196,281
Retained earnings		17,835,946			1,900,049			60,026			19,796,021
Reserves		(234,727	)		—			(68,804	)		(303,531	)
Non-controlling interests		187,056			—			—			187,056
Total Shareholders’ Equity	￦	18,029,195			1,900,049			(8,778	)		19,920,466
Total Liabilities and Shareholders’ Equity	￦	33,428,669			2,522,978			(11,997	)		35,939,650