(IASB education session and IASB-only decision-making session)
On 23 May 2013, the IASB held an education session on the application of the revenue model to credit card reward programs (Paper 7A). No decisions were made.
At this meeting, the IASB also discussed IASB-only topics related to the revised Exposure Draft Revenue from Contracts with Customers (‘the 2011 ED’). Specifically, the IASB discussed (a) exemptions for transition for first-time adopters and (b) transition disclosures in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Paper 7B).
The IASB also considered an analysis of its due process completed to date. The IASB noted that the FASB will complete its own due process analysis in the coming weeks; however, both boards will approve and issue the final Standard at the same time.
(IASB and FASB joint decision-making session)
On 24 May 2013, the IASB and the FASB met for a joint decision-making session on the application of the revenue model to credit card reward programmes (Paper 7A).
7A: Application of the model: credit card reward programmes
Some preparers in the financial services industry requested in their feedback to the 2011 ED clarification about the application of the revenue model to credit card reward programmes. Specifically, those respondents questioned whether the accounting illustrated in Example 24 in the 2011 ED would always apply to the award credits in a credit card reward programme.
The boards tentatively decided to amend paragraph IE21/IG79 (that is, the introductory paragraph to Example 24 in the 2011 ED) to clarify that the existence of a ‘customer loyalty programme’ and the promise to transfer award credits does not automatically give rise to a performance obligation. The boards noted that in all arrangements, including, for example, where there are more than two parties to the arrangement, the entities in the arrangement should consider all the facts and circumstances in applying the revenue model to determine whether the promise to transfer award credits gives rise to a performance obligation.
Fifteen IASB members agreed. One IASB member was absent.
All FASB members agreed.
7B: Transition: First-time adopters and IAS 8 disclosures
The IASB tentatively decided not to amend IFRS 1 First-time Adoption of International Financial Reporting Standards to permit first-time adopters of IFRS to use the alternative ‘cumulative catch-up’ transition method (as outlined by the boards in February 2013).
Eleven IASB members agreed. One IASB member was absent.
The IASB tentatively decided to amend IFRS 1 to provide an optional exemption for first-time adopters from the requirements of the final Revenue Standard in accounting for contracts completed before the earliest period presented. Under this exemption, a first-time adopter would not be required to restate all of its contracts for which it has recognised all of its revenue in accordance with its legacy revenue requirements before the earliest period presented.
Ten IASB members agreed.
The Board also tentatively decided that when an entity applies the retrospective transition method, the entity is not required to provide the amount of adjustments in the current period as required by paragraph 28(f) of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Fifteen IASB members agreed.
7C: Due process summary
The IASB discussed a summary of the mandatory and non-mandatory due process steps completed in developing the Revenue Recognition Standard. The IASB concluded that it had met its due process requirements and sufficient consultation and analysis had been undertaken. The IASB decided not to re-expose the Revenue Recognition Standard and agreed that the staff could begin the balloting process.
Fifteen IASB members agreed.
None of the IASB members present at the meeting indicated an intention to dissent from issuing the Revenue Recognition Standard.
The staff have begun drafting the final Revenue Recognition Standard and will bring any ‘sweep’ issues that arise in the drafting process to a future board at a future FASB meeting.