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IASB meeting summaries


 IASB September 2011


 

 

The IASB discussed eight issues that the IFRS Interpretations Committee (the Interpretations Committee) had recommended that the Board should include in the next Improvements to IFRSs exposure draft that is expected to be published in November 2011.

IFRS 2 Share-based Payment� vesting and non-vesting conditions

The Board discussed a proposed amendment to the definitions of service conditions and performance conditions by separating the description of a performance condition and service condition from the definition of vesting conditions and setting out new definitions of 'performance condition' and 'service condition'.

The amendment would clarify that:

  • a performance target is defined by reference to the entity's own operations or activities;
  • a performance target may relate either to the performance of the entity as a whole or to some part of the entity, such as a division or an individual employee;
  • in order to constitute a performance condition, any performance target needs to have an explicit or implicit service requirement for the duration of the period for which the performance target is being measured; and
  • if the employee fails to complete a specified service period, then the employee fails to satisfy a service condition regardless of what the reason for failure is.

The Board agreed with the Interpretations Committee that these are the higher-priority issues from the Interpretations Committee's project Vesting and non-vesting Conditions that should be dealt with through annual improvements.

The Board tentatively decided to include the proposed amendment in the next Improvements to IFRSs exposure draft. Twelve Board members voted in favour of this decision and two voted against.

IFRS 8 Operating Segments� reconciliation of segment assets

The Board discussed a proposed amendment to remove an inconsistency in the disclosure requirements in IFRS 8.

The proposed change would be to clarify that the reconciliation of the total of the reportable segments' assets in paragraph 28(c) of IFRS 8 should be disclosed only if a measure of segment assets is regularly provided to the chief operating decision-maker. The proposed change would align the disclosure requirements for segment assets with those for segment liabilities in paragraph 28(d).

The Board tentatively decided to include the proposed amendment in the next Improvements to IFRSs exposure draft. All Board members present voted in favour of this decision.

IAS 1 Presentation of Financial Statements� current/non-current classification of debt

The Board discussed a proposed amendment to clarify the meaning of 'unconditional right to defer settlement of the liability' in paragraph 69(d) of IAS 1.

The proposed change would be to amend the wording of paragraph 73 of IAS 1 to clarify that, for an existing loan that is due within 12 months after the reporting date to be classified as non-current, it must be refinanced with the same lender, at the same or similar terms.

The proposed amendment would be applied prospectively as of the beginning of the annual period in which it is initially applied and would not need to be applied to comparative information that is provided for periods before initial application of the amendment.

The Board tentatively decided to include the proposed amendment in the next Improvements to IFRSs exposure draft, subject to additional explanations being given in the Basis for Conclusions. Ten Board members voted in favour and four against.

IAS 7 Statement of Cash Flows� classification of interest paid that is capitalised

The Board discussed proposed amendments to IAS 7 to clarify the classification in the statement of cash flows of interest paid that is capitalised into the cost of property, plant and equipment.

The amendments would be to:

  • propose that the example guidance in paragraph 16(a) of cash flows arising from investing activities should explicitly include interest paid that is capitalised into the cost of property, plant and equipment; and
  • clarify that interest paid that is capitalised in accordance with IAS 23 should be classified in conformity with the classification of the underlying asset to which those payments were capitalised.

The Board tentatively decided to include the proposed amendments in the next Improvements to IFRSs exposure draft, subject to some editorial amendments. All Board members present voted in favour of this decision.

IAS 12 Income Taxes� recognising deferred tax assets for unrealised losses on AFS debt securities

The Board discussed proposed amendments to IAS 12 Income Taxes relating to future taxable profits and tax planning opportunities that would use deductible temporary differences and unused tax losses.

The amendments would clarify that:

  • separate assessment should be made of each type of taxable profit if tax law specifically distinguishes a specific type of profit (eg capital gain) from other types of taxable profit;
  • an action that results in reversal of existing deductible temporary differences without creating or increasing taxable profit in the future is not a tax planning opportunity; and
  • taxable profit against which realisation of a deferred tax asset is assessed is the amount before reversal of deductible temporary differences.

The Board tentatively decided to include the proposed amendments in the next Improvements to IFRSs exposure draft. All Board members present voted in favour of this decision.

IAS 16 Property, Plant and Equipment-revaluation method� proportionate restatement of accumulated depreciation

The Board discussed proposed amendments to clarify the guidance on the revaluation method to address concerns about the computation of the accumulated depreciation at the date of the revaluation.

The Board noted that the determination of the accumulated depreciation does not depend on the selection of the valuation technique used for the revaluation. They also noted that the accumulated depreciation is computed as the difference between the gross and the net carrying amounts. Consequently, in instances in which the revalued amounts for the gross and net carrying amounts both reflect observable data, restatement of the accumulated depreciation is not proportionate to the change in the gross carrying amount of the asset.

The Board tentatively decided to include the proposed amendments in the next Improvements to IFRSs exposure draft. All Board members present voted in favour of this decision.

IAS 24 Related Party Disclosures� meaning of key management personnel

The Board discussed a proposed amendment to clarify the disclosure requirements for related party transactions that are identified when a management entity provides key management personnel (KMP) services to a reporting entity in the specific circumstances where the management entity does not control, jointly control or have significant influence over the reporting entity.

Some Board members raised concerns about potential unintended consequences of the proposed amendments. The Board therefore asked the staff to consider these concerns and to bring the proposals back to a future meeting.


IAS 36 Impairment of Assets� harmonisation of disclosures for value in use and fair value less costs to sell

The Board discussed a proposed amendment to remove an inconsistency in the disclosure requirements of impairment losses in IAS 36.

The proposed change would apply when entities recognise a material impairment loss or impairment reversal. The proposed change would be to include an explicit requirement in paragraph 130(f) of IAS 36 that, if fair value less costs to sell is determined based on a present value technique, then the entity would disclose the discount rate that was used in the calculation. The proposed change would align the disclosure requirements when an entity uses a present value technique for fair value less costs to sell with the disclosure requirements in paragraph 130(g) relating to value in use.

The Board tentatively decided to include the proposed amendment in the next Improvements to IFRSs exposure draft. All Board members present voted in favour of this decision.


Issues not recommended for inclusion within the Annual Improvements cycle for 2010 2012

Following the IFRS Interpretations Committee's recommendation, the Board agreed that the four issues listed below did not meet the criteria for inclusion in Annual Improvements:

  • IFRS 2 Share-based Payment�modification of a share-based payment from cash-settled to equity-settled;
  • IAS 27 Consolidated and Separate Financial Statements�contributions to a jointly controlled entity or an associate;
  • IAS 28 Investments in Associates�purchase in stages-fair value as deemed cost; and
  • IAS 28 Investments in Associates�equity method.

The Board asked the Interpretations Committee to further analyse whether and where changes in the net assets of an associate, other than the investor's share of profit or loss distributions and other comprehensive income, should be recognised in the investor's financial statements and to recommend how the Board might address this issue in the short term.

Date: 9/22/2011