The Board discussed proposed amendments to the measurement requirements in IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
At a previous meeting, it had decided tentatively that an entity should measure a liability at the amount it would rationally pay at the end of the reporting period to be relieved of the present obligation. At this meeting, it decided tentatively that:
- the amount an entity would rationally pay to be relieved of the present obligation is the lower of:
(a) the value to the entity of not having to fulfil the obligation; and
(b) the amount that the entity would have to pay to cancel the obligation or transfer it to a third party.
- if there is no evidence that the entity could cancel the obligation or transfer it to a third party, the entity measures the obligation at the value of not having to fulfil it.
The Board discussed, but did not reach any decisions on, how an entity should measure the value of not having to fulfil an obligation. It directed the staff to undertake further work in this area. The following steps will be to consider:
- whether to re-expose the proposed amendments, and
- possible consequential amendments to other standards.