At this meeting the Board discussed some of the issues that had been deferred at previous meetings and some new issues on which respondents requested further guidance, in particular, on matters addressed by some IFRIC Interpretations. The Board made the following tentative decisions:
Income taxes. The Board decided tentatively :
- to pursue an approach that starts from the temporary difference approach as set out in the latest version of a forthcoming exposure draft of revisions to IAS 12 Income Taxes, but makes simplifications
- to retain the requirements proposed in the exposure draft of an IFRS for SMEs (ED) and contained in IAS 12 regarding the measurement of deferred tax when a jurisdiction imposes different tax rates on distributed and undistributed income, rather than follow the forthcoming exposure draft of revisions to IAS 12.
- to require all deferred tax assets and liabilities to be classified as non-current.
- to prohibit discounting of current and deferred tax assets and liabilities.
- not to require private entities to disaggregate the initial measurement of assets and liabilities that have a tax basis different from their initial carrying amount into (i) an asset or liability excluding entity-specific tax effects and (ii) any entity-specific tax advantage or disadvantage.
- that deferred tax assets should be recognised for unused tax loss and tax credit carry forwards, subject to the same criteria as in IAS 12.
Share-based payment (SBP). The Board decided tentatively that private entities should recognise an expense for equity-settled SBPs and that the expense should be measured on the basis of observable market prices, if available, or, if not, using the directors� best estimate of the fair value of the equity-settled SBPs. Disclosure alone, without expense recognition, would not be permitted.
For SBP transactions that give either the entity or the counterparty a choice of settlement in cash or equity instruments, the Board decided that the entity should account for the transaction as a cash-settled SBP transaction unless either:
- the entity has a past practice of issuing equity instruments or
- the option to settle in cash has no commercial substance.
In the latter two circumstances, the transaction should be treated as equity-settled.
The Board decided tentatively to simplify the disclosure requirements for SBPs. However, the Board asked the staff to ensure that the disclosure requirements for private entities are sufficient for an understanding of how the amount recognised in profit or loss has been determined, including information on the key assumptions used in measuring SBPs.
Post-employment benefit plans . The Board rejected a staff proposal to require an entity to measure the defined benefit obligation of a defined benefit plan at the current termination amount (vested benefit obligation) in some circumstances. However, in the Board�s view the defined benefit accounting under IAS 19 Employee Benefits should be simplified for private entities. The Board asked the staff to bring back an approach at a future meeting that is more in line with the current IAS 19 approach (eg it includes consideration of unvested benefits), but would be something that entities would generally be capable of applying themselves without needing to use external specialists. The Board suggested that the staff should also consider whether the concept of accumulated benefit obligation in SFAS 87 might be suitable.
The Board also decided tentatively:
- to retain the requirements for multi-employer plans as proposed in the ED (and contained in IAS 19), ie when sufficient information is not available to use defined benefit accounting for a multi-employer plan that is a defined benefit plan, an entity should treat the plan as a defined contribution plan with appropriate disclosure.
- to permit subsidiaries to recognise a charge based on a reasonable allocation of the group charge if the parent presents consolidated financial statements under the IFRS for Private Entities or full IFRSs.
- not to require entities to divide the return on assets into an expected return and an actuarial gain or loss.
- to allow two methods for recognising actuarial gains and losses - immediate recognition in profit or loss (as proposed in the ED) and immediate recognition in other comprehensive income.
IFRIC Interpretations. The Board decided tentatively to include in the IFRS for Private Entities the following IFRIC Interpretations, suitably adapted.
- IFRIC 4 Determining whether an Arrangement contains a Lease
- IFRIC 12 Service Concession Arrangements
- IFRIC 15 Agreements for the Construction of Real Estate
Name of standard. The Board discussed the proposed title of the Standard in the light of some negative reactions received on the change from SMEs to private entities. The Board decided tentatively that the title should describe the types of entities to which the standard would be applicable. As Board members� views were divided on a specific title, the Board decided to invite public comment via the IASB�s Website or a Webcast.
Outstanding issues . The staff noted that a few outstanding issues have been deferred at previous meetings, and the Board will discuss these at one or more future Board meetings. Some of the main outstanding issues relate to restructuring the financial instruments section, concepts and pervasive principle, impairment of goodwill and simplification of defined benefit pension accounting (see discussion above).