At this meeting the Board discussed some of the remaining issues relating to the proposed IFRS for Private Entities.
Financial statement presentation. At its meeting in May 2008, the Board tentatively decided that the IFRS for Private Entities should incorporate the requirements of IAS 1 Presentation of Financial Statements as revised in 2007. At this meeting the Board considered issues resulting from that decision, and made the following tentative decisions:
- Entities should have the option to present either a single statement of comprehensive income or two separate statements�an income statement displaying components of profit or loss and a statement of comprehensive income beginning with profit or loss and displaying components of other comprehensive income (OCI).
- If an entity has no items of OCI, the statement of comprehensive income need not have a subtotal for �profit for the period�. Instead, the bottom line could be labelled �profit and comprehensive income for the period�. Furthermore, because an entity may use titles for financial statements other than those in the IFRS, if an entity has no items of OCI, the title of the statement could be, for example, �statement of profit or loss� or �statement of income�.
- An entity should not be required to present a statement of financial position as at the beginning of the earliest comparative period when the entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements. IAS 1 (revised 2007) would require such a presentation.
Impairment of non-financial assets. The staff presented a revised Section 26 Impairment of Non-financial Assets reflecting tentative decisions made by the Board in July 2008. The revision:
- modifies the general approach for the impairment of non-financial assets to include the �recoverable amount� and �value in use� concepts;
- simplifies the requirements for assessing goodwill impairment; and
- introduces the concept of a cash-generating unit.
The indicator approach to impairment proposed in the ED is retained. In general, the Board was supportive of the rewrite. However, a few inconsistencies were highlighted, for example, regarding determining fair value in a forced sale (paragraph 26.14 of the rewrite). The Board also suggested modifications, such as deleting the �market capitalisation� impairment indicator, deleting paragraph 23.13 (on allowing value in use to be used as recoverable amount in some circumstances) and shortening the section (for instance, some of the guidance for value in use could instead be covered by the training materials being developed by the IASC Foundation) to make it more manageable for private entities.
Financial instruments. In June 2008, the Board asked the staff to redraft Section 11 Financial Assets and Financial Liabilities and to present a recommendation at a future Board meeting. Among the tentative decisions made by the Board in June were:
- Restructure Section 11 in two parts with one part (Section 11A) dealing with the simple payables and receivables and other basic financial instruments, and the second part (Section 11B) dealing with the more complex instruments and transactions.
- Clarify, by giving examples of the types of financial instruments that a private entity is likely to have, that the cost model will be appropriate for the significant majority of financial instruments held by private entities. A private entity with no other financial instruments would then not need to consider Section 11B.
The Board considered the first draft of Section 11A at this meeting and decided that changes or clarification are needed in a number of areas including:
- the initial measurement of a financial instrument: the fair value of whatever is receivable (for an asset) or payable (for a liability);
- the need to identify clearly which basic financial instruments cannot be carried at amortised cost; and derecognition, including factoring.
The staff will present an updated version of Section 11A at the meeting in January, along with a draft of Section 11B.
Outstanding issues. At its meeting in January, the Board will discuss the main outstanding issues, which include amortisation of goodwill, a requirement to prepare consolidated financial statements, whether the IFRS for Private Entities should allow use of the complex options, the section on concepts and pervasive principles, simplification of defined benefit pension accounting, and the revised and complete proposal for financial instruments