Welcome to the website of the IFRS Foundation and the IASB

Sunday 23 November 2014

Banner graphic

Project news history


 IASB January 2014


 

The IASB discussed the remaining aspects of its proposals in the Exposure Draft ED/2012/4 Classification and Measurement: Limited Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010)) (the 'Limited amendments ED').


Agenda Paper 6A: Interaction between the classification and measurement of financial assets and the accounting for insurance contracts liabilities


The IASB discussed the interaction between the classification and measurement of financial assets under IFRS 9 Financial Instruments (including the tentative decisions made in redeliberating the Limited Amendments ED) and the accounting for insurance contracts liabilities under the Exposure Draft ED/2013/7 Insurance Contracts (the '2013 Insurance Contracts ED'), including the feedback received on that interaction. The IASB noted that the proposals in the Limited Amendments ED that were tentatively reaffirmed in the redeliberations – specifically the introduction of the fair value through other comprehensive income (FVOCI) measurement category for financial assets that reflects the 'hold and sell' business model and the extension of the fair value option to financial assets that would otherwise be measured at FVOCI – are relevant to many entities that hold insurance contracts and result in an improved interaction. These tentative decisions also provide a 'toolkit' that the IASB can consider when finalising the accounting model for insurance contracts liabilities. The IASB also noted that it will consider the feedback related to the accounting model for the insurance contracts liabilities, and whether that model should be modified to reflect the interaction with the classification and measurement for financial assets, when redeliberating the 2013 Insurance Contracts ED.


Agenda Paper 6B: Presentation and Disclosure


The IASB discussed the presentation and disclosure proposals in the Limited amendments ED and the feedback received on those proposals. The IASB tentatively decided to confirm those proposals, specifically:

    a.     paragraph 12B of IFRS 7 Financial Instruments: Disclosures will be extended to reclassifications into and out of the FVOCI measurement category;
    b.     paragraph 12C of IFRS 7 will be extended to reclassifications from the fair value through profit or loss (FVPL) measurement category into the FVOCI measurement category;
    c.  paragraph 12D of IFRS 7 will be extended to: 
            i.     reclassifications from the FVPL measurement category into the FVOCI measurement category; and
            ii.     reclassifications;
    d.     paragraph 82 in IAS 1 Presentation of Financial Statements will be amended to require the presentation of any cumulative gain or loss previously recognised in other comprehensive income that is reclassified to profit or loss when a financial asset is reclassified from the FVOCI measurement category into the FVPL measurement category; and
    e.     the judgement involved in the assessment of a financial asset's contractual cash flow characteristics will be added to paragraph 123 of IAS 1 as an example of a judgement that could have a significant effect on the amounts recognised in the financial statements.

Sixteen IASB members agreed.


Agenda Paper 6C: Transition to IFRS 9—presentation of comparative information by first-time adopters of IFRS and the early application of IFRS 9


The IASB discussed the presentation of comparative information by first-time adopters of IFRS (FTAs) and tentatively decided that:

        a.     FTAs will not be required to present comparative information that complies with the completed version of IFRS 9 if the beginning of their first IFRS reporting period is earlier than the mandatory effective date of IFRS 9 plus one year; and
        b.     if an FTA chooses to present comparative information that does not comply with the completed version of IFRS 9, it will be required to provide the same disclosures that were required by IFRS 1 First-time Adoption of International Financial Reporting Standards for an FTA that transitioned to IFRS 9 (2009) or IFRS 9 (2010) and that chose not to present comparative information that complied with those new Standards. Those disclosures are set out in paragraph E2 of IFRS 1.

Sixteen IASB members agreed.


The IASB discussed the early application by both existing IFRS preparers and FTAs of both the completed and the previous versions of IFRS 9 and tentatively decided that 

        a.     entities will be permitted to early apply the completed version of IFRS 9; and 
        b.     entities will not be permitted to early apply a previous version of IFRS 9 if their date of initial application is six months or more after the completed version of IFRS 9 is issued. (However, if an entity has early applied a previous version of IFRS 9 before the 'six month window' expires, the entity is permitted to continue to apply that version until the completed version of IFRS 9 becomes mandatorily effective.)

Fourteen IASB members agreed.

Agenda Paper 6D: Transition to IFRS 9—application of particular classification and measurement requirements and a transition issue on impairment


The IASB discussed the transition to the completed version of IFRS 9 and tentatively decided that:

        a.     if it is impracticable (as defined by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors) on transition to IFRS 9 for an entity to assess a modified time value of money component of an asset's interest rate based on the facts and circumstances that existed at the initial recognition of the financial asset, then the entity must assess the contractual cash flow characteristics of that financial asset without taking into account the specific requirements related to the modification of the asset's interest rate. In addition, in those cases, the entity will be required to disclose the carrying value of the financial assets until those assets are derecognised.
        b.     if it is impracticable (as defined by IAS 8) on transition to IFRS 9 for an entity to assess whether the fair value of a prepayment feature was insignificant at the initial recognition of a financial asset that was originated (or acquired) with a significant premium or discount and is prepayable at par (plus accrued and unpaid interest), an entity shall assess the contractual cash flow characteristics of that financial asset without taking into account the specific exception for prepayment features. In addition, in those cases the entity will be required to disclose the carrying value of the financial assets until those assets are derecognised. 
        c.     entities that have already applied a previous version of IFRS 9 and are subsequently applying the completed version of IFRS 9 will be: 
                    i.     required to revoke previous fair value option designations if an accounting mismatch no longer exists at initial application of the completed version of IFRS 9 as a result of the amended classification and measurement requirements, but are not permitted to revoke previous fair value option designations if an accounting mismatch continues to exist; and 
                    ii.     permitted to apply the fair value option to new accounting mismatches that are created by the initial application of the amended classification and measurement requirements in the completed version of IFRS 9, but are not permitted to newly apply the fair value option to accounting mismatches that already existed before the initial application of the completed version of IFRS 9.
        d.     the transition provisions on the initial application of the expected credit loss model that the IASB tentatively decided to require for existing IFRS preparers (see December IASB Update) should also be required for FTAs.

Sixteen IASB members agreed.


Next steps


The IASB will consider whether it has complied with its due process requirements. The IASB expects to issue the completed version of IFRS 9, which will include the limited amendments to the classification and measurement requirements, in the first half of 2014.

 

Date: 1/21/2014