Provisions are recognized when the Company
has a present legal or constructive obligation as a result of past events where it is more likely than not that an outflow of resources
will be required to settle the obligation, and a reliable estimate of the amount can be made.
Current income tax assets and liabilities
for the period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the tax amounts are those that are enacted or substantively enacted, at the reporting date in accordance
with the fiscal regulations of the respective country where the Company operates and generates taxable income. Deferred tax is
provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date.
Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. If required, deferred taxation
is provided in full using the liability method, on all temporary differences at the reporting dates. It is calculated at the tax
rates that are expected to apply to the period when it is anticipated the liabilities will be settled, and it is based on tax rates
(and laws) that have been enacted or substantively enacted at the reporting date.
Deferred income tax assets are recognized
to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized. Although the Company has substantial tax loss carryforwards, historically, due to the fact that the
Company had limited certainty on the achievement of key milestones, it has not recognized any deferred tax assets as the probability
for use is low.
Earnings per share
The Company presents basic earnings per
share for each period in the financial statements. The earnings per share is calculated by dividing the earnings of the period
by the weighted average number of shares (common and preferred) outstanding during the period. Diluted earnings per share reflect
the potential dilution that could occur if dilutive securities such as share options were vested or exercised into common shares
or resulted in the issuance of common shares that would participate in net income. Anti-dilutive shares are excluded from basic
and dilutive earnings per share calculation.
Judgment was required in determining the
classification of the Preferred Shares issued by the Company as either equity or liabilities. The Preferred shareholders received
certain preference rights that represented a significant proportion of the net assets of the Company in the case of liquidation
or certain exit events, the occurrence of which was outside the control of the Company. These Preferred Shares remained outstanding
until the Company completed an IPO in September 2016 and at that time the Preferred Shares were converted from Preferred Shares
to Common Shares on a one-for-one basis.
Critical judgments and accounting estimates
The preparation of financial statements
in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses.
The areas where AC Immune has had to make
judgments, estimates and assumptions relate to (i) revenue recognition on collaboration and licensing agreements, (ii) clinical
development accruals, (iii) net employee defined