In December 2012, the IASB published for comment the Exposure Draft ED/2012/5 Clarification of Acceptable Methods of Depreciation and Amortisation—Proposed amendments to IAS 16 and IAS 38. The comment period ended on 2 April 2013.
At this meeting, the Interpretations Committee was presented with a summary and an analysis of the 98 comment letters received on the Exposure Draft. The members of the Interpretations Committee expressed mixed views on the proposed amendments. However, they agreed that the focus of the amendments should remain on the principle that the method used for depreciation or amortisation should reflect the expected pattern of consumption of the future economic benefits embodied in the asset.
The Interpretations Committee directed the staff to develop the proposed amendment further to clarify the principle for depreciating assets in paragraph 60 of IAS 16 and the principle for amortising intangible assets in paragraph 97 of IAS 38. This proposal should clarify that a depreciation or amortisation method shall reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity. As a consequence, a method whose objective is to reflect the pattern in which the asset’s future economic benefits are expected to be generated should be prohibited.
The staff will bring this proposal for an amendment to IAS 16 and IAS 38 to a future meeting.
See IFRIC Update July 2013.