IASB Update February 2026

Research and standard-setting

Financial Instruments with Characteristics of Equity (Agenda Paper 5)

The IASB met on 24 February 2026 to continue redeliberating the proposed requirements in the Exposure Draft Financial Instruments with Characteristics of Equity. The IASB discussed:

• the proposed amendments to IAS 32 Financial Instruments: Presentation related to the classification of derivatives on own equity when entities apply the fixed-for-fixed condition (Agenda Papers 5A–5B); and
• the project plan (Agenda Paper 5C).

Proposed amendments—Fixed-for-fixed condition (Agenda Papers 5A–5B)

The IASB tentatively decided to proceed with the proposed requirements set out in the Exposure Draft related to the classification of derivatives on own equity when entities apply the fixed-for-fixed condition, subject to minor drafting improvements and some targeted refinements, namely:

1. clarifying that a derivative meets the fixed-for-fixed condition if there is a fixed amount of consideration and either a fixed number of own equity instruments or a fixed exchange ratio.
2. clarifying that when a group entity issues a derivative on another group entity’s shares, the derivative could meet the fixed-for-fixed condition in the consolidated financial statements if the consideration amount is denominated in either:
   1. the functional currency of the group entity issuing the derivative; or
   2. the functional currency of the group entity whose shares are being delivered.
3. replacing the term ‘preservation adjustments’ with ‘adjustments that compensate the future holders of the equity instruments’ and clarifying that such adjustments (to the amount of consideration or number of own equity instruments or both) are consistent with the fixed-for-fixed condition only if they:
   1. aim to place the future holders in an economic position comparable to that of the current holders after a specified trigger event; and
   2. do not expose an entity to any additional risks compared to issuing the underlying equity instruments.
4. replacing the term ‘passage-of-time adjustments’ with ‘adjustments that are solely a function of time’ and clarifying that such adjustments (to the amount of consideration or number of own equity instruments or both) are consistent with the fixed-for-fixed condition only if they:
   1. are predetermined; and
   2. vary solely with the passing of time between potential exercise or conversion dates and do not expose the issuer to any other risks or variability—that is, the adjustment is not related to the time value of money.
5. withdrawing a proposed criterion for ‘passage-of-time adjustments’ in the Exposure Draft. This criterion related to fixing on initial recognition the present value of the amount of consideration exchanged for each of an entity’s own equity instruments.
6. clarifying that for an adjustment to be ‘predetermined’ as described in (d), the amount of consideration and number of own equity instruments to be exchanged on each settlement date are required, at inception of the derivative:
   1. to be specified in the contract; or
   2. to be determinable based on a formula specified in the contract, in which time is the only variable.
7. clarifying that if a contract specifies more than one adjustment that could affect the amount of consideration or the number of own equity instruments or both, each individual adjustment is required to meet the fixed-for-fixed condition. If any adjustment fails the fixed-for-fixed condition, an entity classifies the entire derivative as a financial asset or liability.
8. clarifying that adjustments described in (c) and (d) also apply to share-for-share exchanges—exchanging a fixed number of one class of own equity instruments for a fixed number of another class of own equity instruments.

All 13 IASB members agreed with these decisions.

Project update (Agenda Paper 5C)

The IASB received an update on the project plan. The IASB was not asked to make any decisions.

Next step

The IASB will continue to redeliberate the classification topics in the Exposure Draft.

Post-implementation Review of IFRS 16 Leases (Agenda Paper 7)

The IASB met on 25 February 2026 to discuss:

1. the remainder of the feedback summary on the Request for Information Post-implementation Review of IFRS 16 Leases, covering improvements to transition requirements and other matters; and
2. an updated review of academic literature relevant to the post-implementation review.

The IASB was not asked to make any decisions.

Next steps

The IASB will deliberate feedback on the Request for Information and decide whether to take any actions in response to the feedback.

Amortised Cost Measurement (Agenda Paper 11)

The IASB met on 25 February 2026 to continue deliberating issues within the scope of the project.

What constitutes a ‘modification’ of financial instruments (Agenda Paper 11A)

The IASB discussed whether it should clarify what constitutes ‘modification’ of a financial instrument for the purpose of applying IFRS 9 Financial Instruments.

The IASB tentatively decided to clarify that a modification of a financial asset or a financial liability constitutes a change in contractual terms that changes the nature, timing, amounts or uncertainty of contractual cash flows.

All 13 IASB members agreed with this decision.

Determining whether modification results in derecognition (Agenda Paper 11B)

The IASB discussed whether it should clarify requirements in IFRS 9 for determining whether a modification of a financial asset or a financial liability results in derecognition.

The IASB tentatively decided:

1. to clarify that a substantial modification of a financial asset, or a part of a financial asset, is accounted for as derecognition of the original financial asset and recognition of a new financial asset; and
2. to require that an entity apply a principles-based approach in assessing whether a modification of a financial asset or a financial liability is substantial and results in derecognition.

All 13 IASB members agreed with this decision.

Next step

The IASB will continue deliberating issues within the scope of the project. 

Equity Method (Agenda Paper 13)

The IASB met on 25 February 2026 to continue redeliberating the proposals in the Exposure Draft Equity Method of Accounting—IAS 28 Investments in Associates and Joint Ventures (revised 202x).

 

Impairment of an investment—Impairment indicators (Agenda Paper 13A)

The IASB tentatively decided to retain guidance from IAS 28 Investments in Associates and Joint Ventures:

1. to explain that a single, discrete event might not by itself indicate an impairment and that instead the combined effect of several events might indicate an impairment; and
2. to clarify that the investor is required to consider observable information that comes to its attention when the investor determines whether its net investment in an associate might be impaired.

All 13 IASB members agreed with this decision.

The IASB tentatively decided:

1. to proceed with its proposal to replace ‘decline in the fair value of an investment … below its cost’ in paragraph 41C of IAS 28 with ‘decline in the fair value … to less than its carrying amount’;
2. to proceed with its proposal to remove from IAS 28 the reference to a ‘significant or prolonged’ decline in fair value;
3. to proceed with its proposal to explain that an investor considers observable price information—such as the quoted market price, the price paid to purchase an additional interest in the associate, or the price received to sell part of the interest—when the investor determines whether its net investment might be impaired; and
4. to clarify that for a publicly traded associate, the investor considers the quoted market price at the reporting date.

All 13 IASB members agreed with this decision.

 

 

Impairment of an investment—Other matters (Agenda Paper 13B)

The IASB tentatively decided:

1. not to move the impairment requirements from IAS 28 to IAS 36 Impairment of Assets; and
2. not to consider two application issues relating to the reversal of an impairment loss.

All 13 IASB members agreed with this decision.

 

Transactions with Associates—Feedback from further work (Agenda Paper 13C)

The IASB met to discuss feedback from meetings with stakeholders on its proposals in the Exposure Draft related to gains or losses from transactions with associates.

The IASB was not asked to make any decisions.

Next step

The IASB will continue redeliberating the proposals in the Exposure Draft.

Post-implementation Review of IFRS 9—Hedge Accounting (Agenda Paper 26)

The IASB met on 24 February 2026 to discuss the objective, activities and timeline for the first phase of the post-implementation review.

The IASB was not asked to make any decisions.

Next step

The IASB plans to engage with consultative groups and other stakeholders to inform a request for information, which it expects to publish in the second half of 2026.

Maintenance and consistent application

Provisions—Targeted Improvements (Agenda Paper 22)

The IASB met on 24 February 2026 to redeliberate proposals in the Exposure Draft Provisions—Targeted Improvements relating to one of the criteria for recognising a provision: the present obligation recognition criterion. That criterion requires an entity to have a present obligation as a result of a past event.

The IASB discussed two of the three conditions proposed for inclusion within the present obligation recognition criterion:

1. the ‘past-event’ condition, and specifically, proposed requirements for applying that condition to levies (Agenda Papers 22A–22B); and
2. the ‘transfer’ condition, which would require that ‘the nature of the entity’s obligation is to transfer an economic resource’ (Agenda Paper 22C).

Levies—Application requirements (Agenda Paper 22A)

The IASB tentatively decided to supplement the ‘past-event’ condition proposed in the Exposure Draft with application requirements for levies. Those application requirements would:

1. specify a principle—namely, that the economic benefit or action that meets the past-event condition for a levy is the economic benefit or activity the government is seeking to levy; and
2. support this principle with a constraining presumption—namely, that the economic benefit or activity the government is seeking to levy will be one of those required by the levy legislation for the levy to be payable.

All 13 IASB members agreed with this decision.

Levies—Rebuttable or non-rebuttable presumption? (Agenda Paper 22B)

The IASB discussed whether the constraining presumption should be rebuttable in some circumstances.

The IASB was not asked to make any decisions.

Recognition—Transfer condition (Agenda Paper 22C)

The IASB tentatively decided:

1. to retain the proposal to add an explicit transfer condition to the present obligation recognition criterion in IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
2. to explain more fully the difference between an obligation to transfer an economic resource and an obligation to exchange economic resources, by clarifying that:
   1. an obligation to exchange economic resources with another party combines an obligation to transfer an economic resource to that party with a right to receive another economic resource from that party.
   2. the economic resource an entity receives could be one it will recognise as an asset (for example, goods) or an expense (for example, a service).
   3. an entity has an obligation to exchange economic resources with another party only if transferring one economic resource to that party gives the entity a right to receive another economic resource from that party. It is not sufficient that transferring the economic resource to the other party could give rise to other forms of economic benefit for the entity.
3. to expand examples in the Guidance on implementing IAS 37 to clarify:
   1. why asset decommissioning and environmental rehabilitation obligations meet the transfer condition; and
   2. how the transfer condition relates to the measurement requirements in IAS 37.
4. to clarify the implications of the transfer condition for levies by:
   1. defining the term ‘levy’ to include only non-reciprocal charges; and
   2. stating within the application requirements for levies that an obligation for a levy will, by definition, meet the transfer condition.

All 13 IASB members agreed with these decisions.

Next step

The IASB will continue redeliberating the proposals in the Exposure Draft.