Professional Documents
Culture Documents
September 2011
September 2011
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CONTENTS
1. Background
1.1 Introduction
1.2 The Conceptual Framework
2. General issues
2.1 Form and components of financial statements
2.2 Changes in equity
2.3 Statement of cash flows
2.4 Basis of accounting
2.5 Consolidation
2.5A Consolidation: IFRS 10
2.6 Business combinations
2.7 Foreign currency translation
2.8 Accounting policies, errors and estimates
2.9 Events after the reporting period
3. Specific statement of financial position items
3.1
3.2
3.3
3.4
3.5
3.6
General
Property, plant and equipment
Intangible assets and goodwill
Investment property
Investments in associates and the equity method
Investments in joint ventures and proportionate
consolidation
3.6A Investments in joint arrangements
3.7 [Not used]
3.8 Inventories
3.9 Biological assets
3.10 Impairment of non-financial assets
3.11 [Not used]
3.12 Provisions, contingent assets and liabilities
3.13 Income taxes
4.
4
4
5
9
9
11
12
13
14
16
18
21
23
24
25
25
26
28
30
32
35
37
38
39
40
43
45
47
4.1 General
4.2 Revenue
4.3 Government grants
47
49
51
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5.
52
61
63
Special topics
64
5.1
5.2
5.3
5.4
64
66
67
Leases
Operating segments
Earnings per share
Non-current assets held for sale and discontinued
operations
5.5 Related party disclosures
5.6 [Not used]
5.7 Non-monetary transactions
5.8 Accompanying financial and other information
5.9 Interim financial reporting
5.10 Insurance contracts
5.11 Extractive activities
5.12 Service concession arrangements
5.13 Common control transactions and Newco formations
6. First-time adoption of IFRSs
7.
69
71
72
73
74
76
78
79
81
83
83
Financial instruments
87
7.1
7.2
7.3
7.4
87
88
89
91
92
94
99
100
103
106
119
133
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1. BACKGROUND
1.1 Introduction
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Forthcoming requirements
Fair value measurement
IFRS 13 provides a single source of guidance on how fair value is measured. This guidance
is applied when fair value is required or permitted by other IFRSs; IFRS 13 does not
establish requirements for when fair value is required or permitted.
IFRS 13 provides a framework for determining fair value, i.e. it clarifies the factors to be
considered in estimating fair value. While it includes descriptions of certain valuation
approaches and techniques, it does not establish valuation standards on how valuations
should be performed.
Definition
Under IFRS 13, fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the
measurement date, i.e. an exit price. The transfer notion, referred to in the valuation of a
liability, is different from the settlement notion that is included in the current definition of
fair value in IAS39.
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General requirements
The fair value of a non-financial asset is based on its highest and best use from the
perspective of market participants, which may be on a stand-alone basis or based on its
use in combination with complementary assets or liabilities.
IFRS 13 generally does not specify the unit of account for measurement. This is
established instead under the specific IFRS that requires or permits the fair value
measurement or disclosure. For example, the unit of account in IAS 39 or IFRS 9 generally
is an individual financial instrument whereas the unit of account in IAS36 often is a group
of assets or a group of assets and liabilities comprising a cash-generating unit.
IFRS 13 discusses three valuation approaches: the market, income and cost approaches.
Several valuation techniques are available under each approach. An entity uses a valuation
technique to measure fair value that is appropriate in the circumstances, maximising the
use of relevant observable inputs and minimising the use of unobservable inputs. The best
evidence of fair value is a quoted price in an active market for an identical asset or liability.
For liabilities, when a quoted price for the transfer of an identical or similar liability is not
available and the liability is held by another entity as an asset, the liability is valued from
the perspective of a market participant that holds the asset. Failing that, other valuation
techniques are used to value the liability from the perspective of a market participant that
owes the liability. A similar approach is also used when valuing an entitys own equity
instruments.
Inputs used in measuring fair value reflect the characteristics of the asset or liability that a
market participant would take into account and are not based on the entitys specific use
or plans. Such asset- or liability-specific characteristics include the condition and location
of an asset or restrictions on an assets sale or use that are a characteristic of the asset
rather than of the entitys holding.
Fair value hierarchy
Inputs to valuation techniques used to measure fair value are prioritised in what is referred
to as the fair value hierarchy. The concept of a fair value hierarchy was already included
in IFRS7 and the definitions of the three levels have not changed from those currently in
IFRS7.
Level 1. Fair values measured using quoted prices (unadjusted) in active markets for
identical assets or liabilities.
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Level 2. Fair values measured using inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3. Fair values measured using inputs for the asset or liability that are not based on
observable market data (i.e. unobservable inputs).
Fair value measurements determined using valuation techniques are classified in their
entirety based on the lowest level input that is significant to the measurement. Assessing
significance requires judgement, considering factors specific to the asset or liability.
When multiple unobservable inputs are used, in our view the unobservable inputs should
be considered in total for the purposes of determining their significance.
Principal or most advantageous market
An entity values assets, liabilities and its own equity instruments assuming a transaction
in the principal market for the asset or liability, i.e. the market with the highest volume and
level of activity. In the absence of a principal market, it is assumed that the transaction
would occur in the most advantageous market. This is the market that would maximise
the amount that would be received to sell an asset or minimise the amount that would
be paid to transfer a liability, taking into account transport and transaction costs. In
either case, the entity must have access to the market on the measurement date. In
the absence of evidence to the contrary, the market in which the entity would normally
sell the asset or transfer the liability is assumed to be the principal market or most
advantageous market.
Transaction costs
Transaction costs are not a component of a fair value measurement although they are
considered in determining the most advantageous market.
Premium or discount
Although a premium or a discount may be an appropriate input to a valuation technique, it
should not be applied if it is inconsistent with the relevant unit of account. For example, a
control premium is not applied if the unit of account is an individual share even if the entity
has a large holding. Blockage factors reflect size as a characteristic of an entitys holding
rather than of the asset and therefore cannot be applied.
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Non-performance risk
Non-performance risk, including own credit risk, is considered in measuring the fair value
of a liability, but separate inputs to reflect restrictions on the transfer of a liability or an
entitys own equity instruments are not applied.
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2. GENERAL ISSUES
2.1 Form and components of financial statements
Forthcoming requirements
Presentation of other comprehensive income
Presentation of Other Comprehensive Income Amendments to IAS 1 amends IAS 1 to:
require an entity to present separately the items of other comprehensive income that
would be reclassified to profit or loss in the future if certain conditions are met from
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those that would never be reclassified to profit or loss. Consequently an entity that
presents items of other comprehensive income before related tax effects would also
have to allocate the aggregated tax amount between these sections; and
change the title of the statement of comprehensive income to the statement of profit
or loss and other comprehensive income. However, an entity is still allowed to use
othertitles.
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(IAS 1)
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(IAS 7)
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Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements. See 1.2 for further
details.
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2.5 Consolidation
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Forthcoming requirements
Revised consolidation requirements
See 2.5A for an overview of the revised consolidation requirements under IFRS 10.
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(IFRS 10)
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(IFRS 3)
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The identifiable assets acquired and the liabilities assumed as part of a business
combination are recognised separately from goodwill at the acquisition date if they
meet the definition of assets and liabilities and are exchanged as part of the business
combination.
The identifiable assets acquired and liabilities assumed as part of a business
combination are measured at the acquisition date at their fair values.
There are limited exceptions to the recognition and/or measurement principles in
respect of contingent liabilities, deferred tax assets and liabilities, indemnification
assets, employee benefits, re-acquired rights, share-based payment awards and assets
held for sale.
Goodwill or a gain on a bargain purchase is measured as a residual and is recognised
as an asset. A gain on a bargain purchase is recognised in profit or loss after re-assessing the
values used in the acquisition accounting.
Adjustments to the acquisition accounting during the measurement period reflect
additional information about facts and circumstances that existed at the acquisition
date. The measurement period ends when the acquirer obtains all information that is
necessary to complete the acquisition accounting, or learns that more information is
not available, and cannot exceed one year from the acquisition date.
The acquirer in a business combination can elect, on a transaction-by-transaction
basis, to measure ordinary non-controlling interests (NCI) at fair value or at their
proportionate interest in the recognised amount of the identifiable net assets of the
acquiree at the acquisition date. Ordinary NCI are present ownership interests that
entitle their holders to a proportionate share of the entitys net assets in liquidation.
Other NCI generally are measured at fair value.
When a business combination is achieved in stages (step acquisition), the acquirers
previously held non-controlling equity interest in the acquiree is remeasured to fair
value at the acquisition date, with any resulting gain or loss recognised in profit or loss.
In general, items recognised in the acquisition accounting are measured and accounted
for in accordance with the relevant IFRS subsequent to the business combination.
However, as an exception, IFRS3 includes some specific guidance for certain items,
e.g. in respect of contingent liabilities and indemnification assets.
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Forthcoming requirements
Revised consolidation requirements
IFRS10 supersedes IAS27 in determining whether one entity controls another, and
introduces a number of changes from the control model in IAS27. See 2.5A for further
details.
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When financial statements are translated into a presentation currency other than the
entitys functional currency, the entity uses the same method as for translating the
financial statements of a foreign operation.
An entity may present supplementary financial information in a currency other than its
presentation currency if certain disclosures aremade.
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(IAS 1, IAS 8)
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(IAS 1)
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Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements. See 1.2 for further
details.
IFRS 13 also amends IAS 16 as regards its disclosure requirements for assets carried at
revalued amounts, with new additional requirements being included within IFRS 13 for
such assets. See 1.2 for further details.
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Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements.
In particular, IFRS 13 deletes the definition of an active market in IAS 38; the definition in
IFRS 13 is applied instead. An active market is a market in which transactions for the asset
or liability take place with sufficient frequency and volume for pricing information to be
provided on an ongoing basis. See 1.2 for further details.
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Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements.
In particular, IFRS 13 deletes the guidance in paragraph 51 of IAS 40. As a result, an entity
may include future cash flows arising from planned improvements to the extent that they
reflect the assumptions of market participants.
See 1.2 for further details.
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(IAS 28)
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Forthcoming requirements
Venture capital organisations and similar entities
IAS 28 (2011) retains the exception for venture capital organisations, and certain
similar entities, although it is now characterised as a measurement rather than a scope
exception. The exception also applies to a portion of an investment in an associate held by
such entities. However, it does not apply to a portion of an investment in an IFRS 11 joint
venture (currently jointly controlled entity).
Measurement of investments
On the adoption of IFRS 9, all equity investments are measured at fair value, including
retrospectively by restatement if the investments were held at cost under paragraph46(c)
of IAS39 prior to adoption of IFRS 9. In addition, the cumulative gain or loss in other
comprehensive income may be transferred within equity but will not be reclassified to
profit or loss.
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Forthcoming requirements
Venture capital organisations and similar entities
IAS 28 (2011) retains the exception for venture capital organisations, and certain
similar entities, although it is now characterised as a measurement rather than a scope
exception. The exception also applies to a portion of an investment in an associate held by
such entities. However, it does not apply to a portion of an investment in an IFRS 11 joint
venture (currently jointly controlled entity).
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(IFRS 11)
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3.8 Inventories
(IAS 2)
Forthcoming requirements
Fair value measurement
IFRS 13 deletes the fair value measurement guidance currently included in paragraph7
of IAS 2; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes
a comprehensive disclosure framework for fair value measurements. See 1.2 for
furtherdetails.
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(IAS 41)
Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes
a comprehensive disclosure framework for fair value measurements. See 1.2 for
furtherdetails.
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An impairment loss for a CGU is allocated first to any goodwill and then pro rata to other
assets in the CGU that are within the scope of IAS 36.
An impairment loss generally is recognised in profit or loss. However, an impairment
loss on a revalued asset is recognised in other comprehensive income, and presented
in the revaluation reserve within equity, to the extent that it reverses a previous
revaluation surplus related to the same asset. Any excess is recognised in profit or loss.
Reversals of impairment are recognised, other than for impairments of goodwill.
A reversal of an impairment loss generally is recognised in profit or loss. However, a
reversal of an impairment loss on a revalued asset is recognised in profit or loss only to
the extent that it reverses a previous impairment loss recognised in profit or loss related
to the same asset. Any excess is recognised in other comprehensive income and
presented in the revaluation reserve.
Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes
a comprehensive disclosure framework for fair value measurements. See 1.2 for
furtherdetails.
Regarding the use of depreciated replacement cost to determine fair value less costs of
disposal, this method is not ruled out by IFRS13 assuming that market participants would
value the asset or CGU in this manner.
At this early stage it is not clear whether the fair value less costs of disposal of a
listed subsidiary that constitutes a CGU could be valued taking into account a control
premium. On the one hand, the unit of account in accordance with IAS36 is the CGU (the
subsidiary) as a whole, which implies that a control premium may be appropriate. But on
the other hand, IFRS 13 states that when a Level 1 input (i.e. fair values measured using
quoted prices (unadjusted) in active markets for identical assets or liabilities) is available
for an asset or liability, it is used without adjustment except in specific circumstances that
do not apply in this case.
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Details of contingent liabilities are disclosed in the notes to the financial statements
unless the probability of an outflow is remote.
Contingent assets are possible assets whose existence is uncertain.
Contingent assets are not recognised in the statement of financial position. If an inflow
of economic benefits is probable, then details are disclosed in the notes.
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Income tax related to items recognised outside profit or loss is itself recognised outside
profit or loss.
Forthcoming requirements
Tax base of investment property
Deferred Tax: Recovery of Underlying Assets Amendments to IAS 12 introduces a
rebuttable presumption that the carrying amount of investment property measured at
fair value will be recovered through sale. Therefore, deferred taxes arising from such
investment property are measured based on the tax consequences resulting from
recovering the carrying amount of the investment property entirely through sale.
The presumption is rebutted if the investment property is depreciable and held in a
business model whose objective is to consume substantially all of the economic benefits
of the investment property through use.
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4.
4.1 General
(IAS 1)
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Forthcoming requirements
Presentation of other comprehensive income
Presentation of Other Comprehensive Income Amendments to IAS 1 amends IAS 1 to:
require an entity to present separately the items of other comprehensive income that
would be reclassified to profit or loss in the future if certain conditions are met from
those that would never be reclassified to profit or loss. Consequently an entity that
presents items of other comprehensive income before related tax effects would also
have to allocate the aggregated tax amount between these sections; and
change the title of the statement of comprehensive income to the statement of profit
or loss and other comprehensive income. However, an entity is still allowed to use
othertitles.
In addition, IFRS 9 impacts whether certain items can be presented in other
comprehensive income and whether items presented in other comprehensive income
can be reclassified to profit or loss.
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4.2 Revenue
(Conceptual Framework, IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC18, SIC-27,
SIC31)
Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements.
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IFRS 13 also amends IFRIC 13 to specify that non-performance risk also is taken into
account when measuring the value of the award credits.
See 1.2 for further details.
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Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes
a comprehensive disclosure framework for fair value measurements. See 1.2 for
furtherdetails.
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Actuarial gains and losses of defined benefit plans may be recognised in profit or
loss, or immediately inother comprehensive income. Amounts recognised in other
comprehensive income are not reclassified to profit or loss.
If actuarial gains and losses of a defined benefit plan are recognised in profit or loss,
then as a minimum gains and losses that exceed a corridor are required to be
recognised over the average remaining working lives of employees in the plan. Faster
recognition (including immediate recognition) in profit or loss ispermitted.
Liabilities and expenses for vested past service costs under a defined benefit plan are
recognised immediately.
Liabilities and expenses for unvested past service costs under a defined benefit plan
are recognised over the vesting period.
If a defined benefit plan has assets in excess of the obligation, then the amount of
any net asset recognised is limited to available economic benefits from the plan in the
form of refunds from the plan or reductions in future contributions to the plan, and
unrecognised actuarial losses and past service costs.
Minimum funding requirements give rise to a liability if a surplus arising from the
additional contributions paid to fund an existing shortfall with respect to services
already received is not fully available as a refund or reduction in future contributions.
If insufficient information is available for a multi-employer defined benefit plan to be
accounted for as a defined benefit plan, then it is treated as a defined contribution plan
and additional disclosures are required.
If an entity applies defined contribution plan accounting to a multi-employer defined
benefit plan and there is an agreement that determines how a surplus in the plan would
be distributed or a deficit in the plan funded, then an asset or liability that arises from the
contractual agreement is recognised.
If there is a contractual agreement or stated policy for allocating a groups net defined
benefit cost, then participating group entities recognise the cost allocated to them. If
there is no agreement or policy in place, then the net defined benefit cost is recognised
by the entity that is the legal sponsor.
The expense for long-term employee benefits is accrued over the service period.
Redundancy costs are not recognised until the redundancy has been communicated to
the group of affected employees.
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Forthcoming requirements
Revised employee benefits requirements
IAS 19 (2011) changes the definition of both short-term and other long-term employee
benefits so that it is clear that the distinction between the two depends on when the entity
expects the benefit to be settled. Under the amended definitions:
short-term employee benefits are those employee benefits (other than termination
benefits) that are expected to be settled wholly before 12 months after the end of the
annual reporting period in which the employees render the related service; and
other long-term employee benefits are defined by default as being all employee benefits
other than short-term benefits, post-employment benefits and termination benefits.
IAS 19 (2011) also provides new guidance about the need or otherwise to reclassify
between short-term and other long-term benefits. Reclassification of a short-term
employee benefit as long-term need not occur if the entitys expectations of the timing
of settlement change temporarily. However, the benefit will have to be reclassified if the
entitys expectations of the timing of settlement change other than temporarily.
In addition, IAS 19 (2011) includes a requirement to consider the classification of a benefit
if its characteristics change, giving the example of a change from a non-accumulating to an
accumulating benefit. In this case, the entity will need to consider whether the benefit still
meets the definition of a short-term employee benefit.
Multi-employer plans
IAS 19 (2011) sets out the accounting to be applied when participation in a multi-employer
plan ceases. The new requirement is that an entity should apply IAS 37 when determining
when to recognise and how to measure a liability that arises from the wind-up of a multiemployer defined benefit plan, or the entitys withdrawal from a multi-employer defined
benefit plan.
Expected return on plan assets
IAS 19 (2011) changes the manner in which interest cost is calculated. The expected return
on plan assets will no longer be calculated and recognised as interest income.
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assets are insufficient. These kinds of criteria are reflected in the measurement of the
defined benefit obligation, regardless of whether the changes in benefits resulting from
the criteria either being or not being met are automatic or are subject to a decision by the
entity, by the employee or by a third party such as the trustee or administrators of the plan.
Optionality included in the plan
Under IAS 19 (2011) actuarial assumptions include an assumption about the proportion
of plan members who will select each form of settlement option available under the plan
terms. Therefore, when the employees are able to choose the form of the benefit (e.g.
lump sum payment vs annual pension), the entity would make an actuarial assumption
about what proportion would make each choice. As a result, an actuarial gain or loss will
arise if the choice of settlement taken by the employee is not the one that the entity has
assumed will be taken.
Other actuarial assumptions
IAS 19 (2011) includes some limited changes to other actuarial assumptions, which are not
expected to change current practice significantly, as follows:
an entity includes current estimates of expected changes in mortality assumptions;
various factors are set out that should be taken into account in estimating future
salary increases, such as inflation, promotion and supply and demand in the
employment market; and
any limits to the contributions that an entity is required to make are included in the
calculation of the ultimate cost of the benefit, over the shorter of the expected life of the
entity and the expected life of the plan.
Defined benefit plans Recognition
Under IAS 19 (2011) the net defined benefit liability (asset) is recognised in the statement
of financial position. This is:
(a) the present value of the defined benefit obligation; less
(b) the fair value of any plan assets (together, the deficit or surplus in a defined benefit
plan); adjusted for
(c) any effect of limiting a net defined benefit asset to the asset ceiling.
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All changes in the value of the defined benefit obligation, in the value of plan assets and in
the effect of the asset ceiling, are recognised immediately. Therefore IAS 19 (2011):
eliminates the corridor method, by requiring immediate recognition of actuarial gains
and losses; and
requires immediate recognition of all past service costs, including unvested amounts,
at the earlier of:
when the related restructuring costs are recognised if a plan amendment arises as
part of a restructuring;
when the related termination benefits are recognised if a plan amendment is linked
to termination benefits; and
when the plan amendment occurs.
Defined benefit plans Presentation
Under IAS 19 (2011) the cost of defined benefit plans includes the following components:
service cost recognised in profit or loss;
net interest on net defined benefit liability (asset) recognised in profit or loss; and
remeasurements of the defined benefit liability (asset) recognised in other
comprehensive income.
Net interest on the net defined benefit liability (asset)
Under IAS 19 (2011) net interest on the net defined benefit liability (asset) is the change during
the period in the net defined benefit liability (asset) that arises from the passage of time.
Specifically, under the amended standard, the net interest income or expense on the net
defined benefit liability (asset) is determined by applying the discount rate used to measure
the defined benefit obligation at the start of the annual period to the net defined benefit liability
(asset) at the start of the annual period, taking into account any changes in the net defined
benefit liability (asset) during the period as a result of contribution and benefit payments.
The net interest on the net defined benefit liability (asset) can be disaggregated into:
interest cost on the defined benefit obligation;
interest income on plan assets; and
interest on the effect of the asset ceiling.
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As the approach taken by IAS 19 (2011) is to calculate and recognise the net interest on the
net defined benefit liability (asset) in profit or loss, the net interest income or expense will
be presented in one line item, as opposed to the currently available policy of including the
gross amounts of interest cost and expected return on plan assets with interest and other
financial income respectively.
Remeasurements
Under IAS 19 (2011) remeasurements of a net defined benefit liability (asset) are
recognised in other comprehensive income and comprise:
actuarial gains and losses on the defined benefit obligation;
the return on plan assets, excluding amounts included in the net interest on the net
defined benefit liability (asset); and
any change in the effect of the asset ceiling, excluding amounts included in the net
interest on the net defined benefit liability (asset).
Remeasurements are recognised immediately in other comprehensive income and are
not reclassified subsequently to profit or loss. IAS 19 (2011) permits, but does not require,
a transfer within equity of the cumulative amounts recognised in other comprehensive
income.
Curtailments
IAS 19 (2011) explains that a curtailment occurs when a significant reduction in the number
of employees covered by the plan takes place. A curtailment may arise from an isolated
event, such as the closing of a plant, discontinuance of an operation or termination or
suspension of a plan.
Under IAS 19 (2011) a curtailment gives rise to past service cost and as such it is
recognised at the earlier of:
when the related restructuring costs are recognised if a curtailment arises as part of a
restructuring;
when the related termination benefits are recognised if a curtailment is linked to
termination benefits; and
when the curtailment occurs.
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Settlements
IAS 19 (2011) changes the definition of settlements in order to distinguish between
settlements and remeasurements. A settlement is a transaction that eliminates all further
legal or constructive obligations for part or all of the benefits provided under a defined
benefit plan, other than a payment of benefits to, or on behalf of, employees that are
set out in the terms of the plan and included in the actuarial assumptions. The actuarial
assumptions include an assumption about the proportion of plan members who will select
each form of settlement option available under the plan terms.
Payment of benefits to, or on behalf of, employees, that eliminates all further legal or
constructive obligations for part or all of the benefits provided under a defined benefit plan,
but when those payments are being made in a way that is allowed for in the terms of the
plan and in respect of which an actuarial assumption has been made, potentially results in
a remeasurement being recognised.
Gain or loss on curtailments and settlements
As a direct result of the immediate recognition requirement, the gain or loss on any
curtailment and settlement calculation is simplified by no longer including any related
unrecognised actuarial gains and losses or unrecognised past service costs in the
computation.
Scope of termination benefits
IAS 19 (2011) provides two indicators that an employee benefit is provided in exchange for
services, rather than for termination of services provided:
whether the benefit is conditional on future service being provided, including whether
the benefit increases if further service is provided; and
whether the benefit is provided in accordance with the terms of an employee benefit
plan.
Recognition of termination benefits
Under IAS 19 (2011) an entity recognises a liability and an expense for termination benefits
at the earlier of:
when it recognises costs for a restructuring within the scope of IAS 37 that includes the
payment of termination benefits; and
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(IFRS 2)
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Forthcoming requirements
Revised consolidation requirements
The consolidation conclusion in respect of employee benefit trusts may need to be
reconsidered under IFRS 10. See 2.5A for further details.
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(IAS 23)
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5.
SPECIAL TOPICS
5.1 Leases
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Immediate gain recognition from the sale and leaseback of an asset depends on
whether the leaseback is classified as an operating or finance lease and, if the
leaseback is an operating lease, whether the sale takes place at fair value.
A series of linked transactions in the legal form of a lease is accounted for based on the
substance of the arrangement; the substance may be that the series of transactions is
not a lease.
Special requirements for revenue recognition apply to manufacturer or dealer lessors
granting finance leases.
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(IFRS 8)
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(IAS 33)
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For diluted EPS, diluted potential ordinary shares are determined independently for
each period presented.
When the number of ordinary shares outstanding changes, without a corresponding
change in resources, the weighted average number of ordinary shares outstanding
during all periods presented is adjusted retrospectively for both basic and diluted EPS.
Adjusted basic and diluted EPS based on alternative earnings measures may be
disclosed and explained in the notes to the financial statements.
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Forthcoming requirements
Associates and joint ventures
Under IAS 28 (2011) an investment, or a portion of an investment, in an associate or a joint
venture is classified as held for sale when the relevant criteria are met. For any retained
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portion of the investment that has not been classified as held for sale, the entity applies
the equity method until disposal of the portion classified as held for sale. After disposal,
any retained interest in the investment is accounted for in accordance with IFRS 9/IAS 39
or by using the equity method if the retained interest continues to be an associate or a
joint venture.
The financial statements for the periods since classification as held for sale are amended
if the disposal group or non-current asset that ceases to be classified as held for sale is
a subsidiary, joint operation, joint venture, associate, or a portion of an interest in a joint
venture or an associate.
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(IAS 24)
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(IAS 16, IAS 18, IAS 38, IAS 40, IFRIC 18, SIC31)
Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes
a comprehensive disclosure framework for fair value measurements. See 1.2 for
furtherdetails.
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Forthcoming requirements
Fair value measurement
IFRS 13 adds further items that are disclosed as explanatory notes to the condensed
interim financial statements, unless disclosed elsewhere in the interim report.
For financial instruments, the following additional disclosures are required by class of
financial instrument:
the fair value measurement at the end of the reporting period;
the level of the hierarchy in which the measurement is categorised;
any transfers between Level 1 and Level 2, as well as the policy for timing of
recognising transfers between levels of the fair value hierarchy;
a description of the valuation technique for Level 2 and Level 3 measurements;
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if a change in valuation technique has been made, the reasons for the change;
quantitative information about significant unobservable inputs for Level 3
measurements;
a reconciliation of Level 3 balances from opening to closing balances;
a description of valuation processes for Level 3 measurements;
a quantitative sensitivity analysis for recurring Level 3 measurements;
whether the election was taken to measure offsetting positions on a net basis;
the existence of an inseparable third-party credit enhancement issued with a liability
measured at fair value and whether it is reflected in the fair value measurement;
day one gain or loss information as required by IFRS 7; and
information about instruments for which fair value cannot be measured reliably.
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(IFRS 4)
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Significant disclosures are required of the terms, conditions and risks related to
insurance contracts, consistent in principle with those required for financial assets and
liabilities.
Forthcoming requirements
Gains and losses in other comprehensive income
In applying IFRS 9, an entity may elect to present gains and losses on some investments
in equity instruments measured at fair value in other comprehensive income. The gains
and losses on these investments are not reclassified from equity to profit or loss on
disposal of the investment. In our view, paragraph 30 of IFRS4 allows the use of shadow
accounting through other comprehensive income for the remeasurement of liabilities to
reflect gains and losses that are not recognised in profit or loss on disposal of the related
assets. The relevant criterion in paragraph30 of IFRS4 is that unrealised gains or losses
on the investment are recognised in other comprehensive income. The standard does
not specify where realised gains or losses should be recognised. In our view, if shadow
accounting is applied, then remeasurement of the liabilities reflecting gains and losses on
these assets should be recognised in other comprehensive income as unrealised gains
and losses are recognised on the investment and should not be reclassified to profit or
loss on derecognition of the investment. See 7A for further details on the forthcoming
requirements with respect to accounting for financial instruments.
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(IFRS 6)
Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements. See 1.2 for further
details.
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Forthcoming requirements
Revised consolidation requirements
IFRS 10 changes the definition of control and introduces a number of changes from the
control model in IAS 27. Therefore, the new standard will change the assessment of
whether a business combination involves entities under common control. See 2.5A for
further details.
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(IFRS 1)
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Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements. See 1.2 for further
details.
includes IFRS7 disclosures related to assets in the scope of IAS39 for adoption of IFRS9
(2009) and to all items within the scope of IAS 39 for adoption of IFRS 9 (2010). If this
option is taken:
with respect to the application of IFRS 9, the date of transition is the beginning of the
first IFRS reporting period;
previous GAAP is applied in comparative periods (rather than IFRS 9 or IAS 39);
the fact that the exemption is applied, as well as the basis of preparation of the
comparative information, is disclosed; and
the differences arising on adoption of IFRS 9 are treated as a change in accounting
policy; all adjustments resulting from applying IFRS 9 are recognised in the statement
of financial position at the beginning of the first IFRS reporting period and certain
disclosures required by IAS8 are given.
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In financial statements for periods beginning before 1 January 2014, a first-time adopter
need not present comparative information for the disclosures required by paragraph145
of IAS 19 (2011) about the sensitivity of the defined benefit obligation.
Severe hyperinflation
Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters Amendment
to IFRS1 adds an optional exemption that a first-time adopter can apply at the date of
transition after being subject to severe hyperinflation. This exemption allows a first-time
adopter to measure assets and liabilities held before the functional currency normalisation
date at fair value and use that fair value as the deemed cost of those assets and liabilities
in the opening IFRS statement of financial position.
The functional currency normalisation date is the date when the entitys functional
currency no longer has either, or both, of the characteristics of a currency that is subject
to severe hyperinflation, or when there is a change in the entitys functional currency to a
currency that is not subject to severe hyperinflation.
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7.
FINANCIAL INSTRUMENTS
Forthcoming requirements
Revised requirements for financial instruments
See 7A for an overview of the revised requirements for accounting for financial
instruments under IFRS 9.
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Forthcoming requirements
Revised requirements for financial instruments
See 7A for an overview of the revised requirements for accounting for financial
instruments under IFRS 9.
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Forthcoming requirements
Revised requirements for financial instruments
See 7A for an overview of the revised requirements for accounting for financial
instruments under IFRS 9.
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(IAS 39)
Forthcoming requirements
Revised requirements for financial instruments
See 7A for an overview of the revised requirements for accounting for financial
instruments under IFRS 9.
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(IAS 39)
Forthcoming requirements
Revised requirements for financial instruments
See 7A for an overview of the revised requirements for accounting for financial
instruments under IFRS 9.
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Forthcoming requirements
Revised requirements for financial instruments
See 7A for an overview of the revised requirements for accounting for financial
instruments under IFRS 9.
such as matrix pricing. This practical expedient is appropriate only when the following
criteria are met:
the entity holds a large number of similar assets or liabilities that are measured at fair
value; and
a quoted price in an active market is available but not readily accessible for each of
these assets or liabilities individually.
If a quoted price in an active market does not represent fair value at the measurement
date, then an entity should choose an accounting policy, to be applied consistently, for
identifying such circumstances that may affect fair value. This may be the case when a
significant event takes place after the close of a market but before the measurement
date, such as the announcement of a business combination.
An entity may measure the fair value of a liability or its own equity instruments
using the quoted price of an identical instrument traded as an asset and there may
be specific differences between the item being measured and the asset. This may
happen, for example, when the identical instrument traded as an asset includes a credit
enhancement that is excluded from the liabilitys unit of account.
Liabilities and an entitys own equity instruments
IFRS 13 contains specific requirements for the application of the fair value measurement
framework to liabilities, including financial liabilities, and an entitys own equity
instruments. Although the fair value measurement of financial liabilities and an entitys
own equity instruments is based on a transfer notion, in many cases there is no
observable market to provide pricing information about transfers by the issuer. Therefore,
the fair value of most financial liabilities and own equity instruments is measured from the
perspective of a market participant that holds the identical instrument as an asset.
In this case, an entity adjusts quoted prices for features that are present in the asset but
not in the liability or the own equity instrument, or vice versa.
Financial assets and financial liabilities with offsetting positions in market risks or
credit risk
An entity that holds a group of financial assets and financial liabilities is exposed to
market risks (i.e. interest rate risk, currency risk or other price risk) and to the credit risk
of each of the counterparties. IFRS 13 introduces an optional exception that allows an
entity, if certain conditions are met, to measure the fair value with regard to a specific
risk exposure on the basis of a group of financial assets and financial liabilities instead of
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on the basis of each individual financial instrument, which generally is the unit of account
under IAS 39 and IFRS9.
If the entity is permitted to use the exception, then it should choose an accounting policy,
to be applied consistently, for a particular portfolio. However, an entity is not required to
maintain a static portfolio.
An entity that measures fair value on the basis of its net exposure to a particular market
risk (or risks):
applies the price within the bid-ask spread that is most representative of fair value; and
ensures that the nature and duration of the risk(s) to which the exception is applied are
substantially the same.
Any basis risk is reflected in the fair value of the net position.
A fair value measurement on the basis of the entitys net exposure to a particular
counterparty:
includes the effect of the entitys net exposure to the credit risk of that counterparty
or the counterpartys net exposure to the credit risk of the entity if market participants
would take into account any existing arrangements that mitigate credit risk exposure in
the event of default (e.g. master netting agreements or collateral); and
reflects market participants expectations about the likelihood that such an arrangement
would be legally enforceable in the event of default.
The exception does not pertain to financial statement presentation. Therefore, if an entity
applies the exception, then the basis of measurement of a group of financial instruments
might differ from the basis of presentation. When the presentation of a group of financial
instruments in the statement of financial position is gross, but fair value is measured on a
net exposure basis, then the bid-ask or credit adjustments are allocated to the individual
assets and liabilities on a reasonable and consistent basis.
Gains or losses on initial recognition
IFRS 13 introduces consequential amendments to IAS 39 and IFRS 9 through which
the initial measurement of a financial instrument is based on fair value as defined in
IFRS13. Generally, the transaction price is the best evidence of the fair value of a financial
instrument on initial recognition. However, if an entity determines that this is not the case
and the fair value is evidenced by a quoted price in an active market for an identical asset
or liability, i.e. a Level 1 input, or based on a valuation technique that uses only observable
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market data, then the entity immediately recognises a gain or loss for the difference
between the fair value on initial recognition and the transaction price.
If an entity determines that the fair value on initial recognition differs from the transaction
price and this fair value is not evidenced by observable market data only, then the carrying
amount of the financial instrument on initial recognition is adjusted to defer the difference
between the fair value measurement and the transaction price. This deferred difference is
subsequently recognised as a gain or loss only to the extent that it arises from a change in
a factor (including time) that market participants would take into account when pricing the
asset or liability.
Significant decrease in the volume or level of activity
The fair value of an item may be affected when there has been a significant decrease
in the volume or level of activity for that item compared with its normal market activity.
Judgement is required in determining whether, based on the evidence available, there has
been such a significant decrease. The entity should assess the significance and relevance
of all facts and circumstances.
If an entity concludes that the volume or level of activity has significantly decreased,
then further analysis of the transactions or quoted prices is required. A decrease in the
volume or level of activity on its own might not indicate that a transaction or a quoted
price is not representative of fair value or that a transaction in that market is not orderly. It
is not appropriate to conclude that all transactions in a market in which there has been a
decrease in the volume or level of activity are not orderly. However, if an entity determines
that a transaction or quoted price does not represent fair value, then an adjustment to that
price is necessary if it is used as a basis for determining fair value.
It might be appropriate for an entity to change the valuation technique used or to use
multiple valuation techniques to measure the fair value of an item if the volume or level of
activity has significantly decreased.
If the evidence indicates that a transaction was not orderly, then the entity places little
if any weight on the transaction price when measuring fair value. However, if evidence
indicates that the transaction was orderly, then the entity considers the transaction price
in estimating the fair value of the asset or liability. The weight placed on such a transaction
price depends on the circumstances, such as the volume and timing of the transaction
and the comparability of the transaction to the asset or liability being measured. If an
entity does not have sufficient information to conclude whether a transaction was orderly,
then it should take the transaction price into account but place less weight on it compared
with transactions that are known to be orderly.
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Forthcoming requirements
Presentation in the statement of comprehensive income
IFRS 9 (2009) and IFRS 9 (2010) introduce consequential amendments to IAS 1 that require
two additional line items to be separately presented in the statement of comprehensive
income:
gains or losses arising from the derecognition of financial assets measured at
amortised cost; and
gains or losses arising from remeasurement to fair value of financial assets due to
reclassification.
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(IFRS 9)
financial assets within the scope of IFRS 9 (e.g. financial liabilities and non-financial host
contracts) are assessed to determine whether the embedded derivative(s) are required
to be separated from the host contract.
If a financial asset is measured at fair value, then all changes in fair value are recognised
in profit or loss. However, for investments in equity instruments that are not held for
trading, an entity has the irrevocable option, on an instrument-by-instrument basis, to
recognise gains and losses in other comprehensive income with no reclassification of
gains and losses into profit or loss and no impairments recognised in profit or loss. If an
equity investment is so designated, then dividend income generally is recognised in profit
or loss.
There is no exemption that allows unquoted equity investments and related derivatives
to be measured at cost. However, guidance is provided on the limited circumstances in
which the cost of such an instrument may be an appropriate approximation of fair value.
The classification requirements for financial liabilities in IFRS 9 are similar to those in
IAS 39.
Entities have an irrevocable option to classify financial liabilities that meet the amortised
cost criteria as at fair value through profit or loss similar to the fair value option in IAS 39.
However, generally a split presentation of changes in the fair value of financial liabilities
designated as at fair value through profit or loss is required. The portion of the fair value
changes that is attributable to changes in the financial liabilitys credit risk is recognised
directly in other comprehensive income. The remainder is recognised in profit or loss. The
amount presented in other comprehensive income is never reclassified to profit or loss.
There are two exceptions from this split presentation. If the accounting treatment
of the effects of changes in the financial liabilitys credit risk creates or enlarges an
accounting mismatch in profit or loss, then all fair value changes are recognised in profit
or loss. Furthermore, all gains and losses on loan commitments and financial guarantee
contracts that are designated as at fair value through profit or loss are recognised in
profit or loss.
The classification of a financial asset or a financial liability is determined on initial
recognition. Reclassifications of financial assets are made only on a change in an
entitys business model that is significant to its operations. These are expected to be
very infrequent. No other reclassifications are permitted.
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Forthcoming requirements
Fair value measurement
IFRS 13 replaces most of the fair value measurement guidance currently included in
individual IFRSs; the general valuation principles in IFRS 13 are applied instead. It provides
a single definition of fair value and fair value application guidance, and establishes a
comprehensive disclosure framework for fair value measurements. See 1.2 for a summary
of the general requirements, 7.6 for the application of the revised fair value measurement
requirements to financial instruments and 7.8 for the application of the revised fair value
disclosure requirements to financial instruments.
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APPENDIX I
Currently effective requirements and forthcoming
requirements
Below is a list of standards and interpretations, including the latest amendments to the
standards and interpretations, in issue at 1 August 2011 that are effective for annual
reporting periods beginning on 1 January 2011. The list notes the principal related
chapter(s) within which the requirements are discussed. It also notes forthcoming
requirements in issue at 1 August 2011 that are effective for annual reporting periods
beginning after 1 January 2011.
Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
6.1
Improvements to IFRSs
2010
IFRS 9 Financial
Instruments
Reporting Standards
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
IFRS 2 Share-based
Payments
4.5
Group Cash-settled
Share-based Payment
Transactions (Amendments
to IFRS 2)
Issued: June 2009
Effective: 1 January 2010
IFRS 3 Business
Combinations
2.6, 3.3,
5.13
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 July 2010
5.10
Improving Disclosures
about Financial
Instruments (Amendments
to IFRS 7)
Issued: March 2009
Effective: 1 January 2009
IFRS 9 Financial
Instruments
Issued: October 2010
Effective: 1 January 2013
IFRS 5 Non-current
Assets Held for Sale and
Discontinued Operations
5.4
Improvements to IFRSs
2009
Issued: April 2009
Effective: 1 January 2010
5.11
Improvements to IFRSs
2009
Issued: April 2009
Effective: 1 January 2010
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
IFRS 7 Financial
Instruments: Disclosures
7.1, 7.8
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 January 2011
Disclosures Transfers
of Financial Assets
(Amendments to IFRS 7)
Issued: October 2010
Effective: 1 July 2011
IFRS 9 Financial
Instruments
Issued: October 2010
Effective: 1 January 2013
IFRS 13 Fair Value
Measurement
Issued: May 2011
Effective: 1 January 2013
IFRS 8 Operating
Segments
5.2
7A
IFRS 9 Financial
Instruments
Issued: October 2010
Effective: 1 January 2013
2.5A
IFRS 10 Consolidated
Financial Statements
Issued: May 2011
Effective: 1 January 2013
3.6A
IFRS 11 Joint
Arrangements
Issued: May 2011
Effective: 1 January 2013
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
2.5A, 3.6A
IFRS 12 Disclosure of
Interests in Other Entities
Issued: May 2011
Effective: 1 January 2013
1.2
IAS 1 Presentation of
Financial Statements
1.1, 2.1,
2.2, 2.4,
2.8, 2.9,
3.1, 4.1,
5.8, 7.8
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 January 2011
IFRS 9 Financial
Instruments
Issued: October 2010
Effective: 1 January 2013
Presentation of Items of
Other Comprehensive
Income (Amendments to
IAS 1)
Issued: June 2011
Effective: 1 July 2012
IAS 2 Inventories
3.8
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
2.3
Improvements to IFRSs
2009
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
2.8
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
2.9
IFRIC 17 Distributions
of Non-cash Assets to
Owners
Issued: November 2008
Effective: 1 July 2009
IAS 11 Construction
Contracts
4.2
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
3.13
IFRS 3 Business
Combinations
Issued: January 2008
Effective: 1 July 2009
3.2, 5.7
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
IAS 17 Leases
3.4, 5.1
Improvements to IFRSs
2009
Issued: April 2009
Effective: 1 January 2010
IAS 18 Revenue
Improvements to IFRSs
2009
Issued: April 2009
Effective: April 2009
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
4.4
4.3
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 July 2010
4.6
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
5.5
IAS 27 Consolidated
and Separate Financial
Statements
2.1, 2.5,
5.13
Improvements to IFRSs
2008 and Cost of an
Investment in a Subsidiary,
Jointly Controlled Entity or
Associate (Amendments to
IFRS 1 and IAS27)
Issued: May 2008
Effective: 1 January 2009
IFRS 10 Consolidated
Financial Statements and
IAS 27 Separate Financial
Statements
Issued: May 2011
Effective: 1 January 2013
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
IAS 28 Investments in
Associates
3.5
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 July 2010
IAS 28 Investments in
Associates and Joint
Ventures
Issued: May 2011
Effective: 1 January 2013
2.4, 2.7
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
3.6
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 July 2010
IFRS 11 Joint
Arrangements
Issued: May 2011
Effective: 1 January 2013
IAS 32 Financial
Instruments: Presentation
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 July 2010
5.3
IFRS 3 Business
Combinations and IAS 27
Consolidated and Separate
Financial Statements
Issued: January 2008
Effective: 1July 2009
5.9
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 January 2011
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
Presentation of Items of
Other Comprehensive
Income (Amendments to
IAS 1)
Issued: June 2011
Effective: 1 July 2012
IAS 36 Impairment of
Assets
3.10
Improvements to IFRSs
2009
Issued: April 2009
Effective: 1 January 2010
IAS 37 Provisions,
Contingent Liabilities and
Contingent Assets
3.12
IFRS 3 Business
Combinations
Issued: January 2008
Effective: 1 July 2009
3.3, 5.7
Improvements to IFRSs
2009
Issued: April 2009
Effective: 1 July 2009
IAS 39 Financial
Instruments: Recognition
and Measurement
7.17.7
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 July 2010
IFRS 9 Financial
Instruments
Issued: October 2010
Effective: 1 January 2013
IFRS 13 Fair Value
Measurement
Issued: May 2011
Effective: 1 January 2013
IAS 40 Investment
Property
3.4, 5.7
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
IAS 41 Agriculture
3.9, 4.3
Improvements to IFRSs
2008
Issued: May 2008
Effective: 1 January 2009
IFRIC 1 Changes in
Existing Decommissioning,
Restoration and Similar
Liabilities
3.2, 3.12
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
7.3
Puttable Financial
Instruments and
Obligations Arising on
Liquidation (Amendments
to IAS32 and IAS 1)
Issued: February 2008
Effective: 1 January 2009
IFRIC 4 Determining
whether an Arrangement
contains a Lease
5.1
IFRIC 12 Service
Concession Arrangements
Issued: November 2006
Effective: 1 January 2008
IFRIC 5 Rights to
Interests arising from
Decommissioning,
Restoration and
Environmental
Rehabilitation Funds
3.12
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
3.12
IFRIC 7 Applying
the Restatement
Approach under IAS
29 Financial Reporting
in Hyperinflationary
Economies
2.4
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
IFRIC 9 Reassessment of
Embedded Derivatives
7.2
Improvements to IFRSs
2009
Issued: April 2009
Effective: 1 July 2009
IFRS 9 Financial
Instruments
Issued: October 2010
Effective: 1 January 2013
3.10, 5.9
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
IFRIC 12 Service
Concession Arrangements
5.12
IAS 1 Presentation of
Financial Statements
Issued: September 2007
4.2
Improvements to IFRSs
2010
Issued: May 2010
Effective: 1 January 2011
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
4.4
Prepayments of a
Minimum Funding
Requirement
(Amendments to IFRIC 14)
Issued: November 2009
Effective: 1 January 2011
4.2
7.7
Improvements to IFRSs
2009
Issued: April 2009
Effective: 1 July 2009
IFRIC 17 Distributions
of Non-cash Assets to
Owners
Issued: November 2009
Effective: 1 July 2009
5.4, 5.13,
7.3
IFRIC 18 Transfers of
Assets from Customers
Issued: January 2009
Effective: 1 July 2009
3.2, 4.2,
5.7
IFRIC 19 Extinguishing
Financial Liabilities with
Equity Instruments
Issued: November 2009
Effective: 1 July 2010
7.3
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
None
IAS 27 Consolidated
and Separate Financial
Statements
Issued: January 2008
Effective: 1 July 2009
SIC10 Government
Assistance No Specific
Relation to Operating
Activities
4.3
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
SIC12 Consolidation
Special Purpose Entities
2.5
IFRIC Amendment to
SIC12 Scope of SIC12
Consolidation Special
Purpose Entities
Issued: November 2004
Effective: 1 January 2005
IFRS 10 Consolidated
Financial Statements
Issued: May 2011
Effective: 1 January 2013
3.6
IAS 1 (2007)
Issued: September 2007
Effective: 1 January 2009
IFRS 11 Joint
Arrangements
Issued: May 2011
Effective: 1 January 2013
5.1
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
3.13
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
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Standard
Principal
related
chapter(s)
Latest effective
amendment
Forthcoming
requirements
3.13
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
4.2, 5.1
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
5.12
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
4.2, 5.7
3.3
IAS 1 Presentation of
Financial Statements
Issued: September 2007
Effective: 1 January 2009
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APPENDIX II
Future developments
The currently effective and forthcoming requirements discussed in this publication may be
impacted by projects that are on the IASBs and Interpretation Committees work plans.
The below reflects the work plans as at 26 July 2011 (except for updated information about
the investment entities project) and distinguishes between active and inactive projects.
Active projects are those that are currently being deliberated and for which a due process
time line has been established. Inactive projects include previous active projects that have
been deferred.
On 26 July 2011 the IASB published an agenda consultation requesting views about its
strategy for setting its agenda and on its future work plan. The agenda consultation sets
out the IASBs priority projects and other activities and projects it plans to undertake
because it is already committed or required to do so. Appendix C to the agenda
consultation lists and provides a short description of the projects that the IASB deferred
and new project suggestions. Comments are due on 30 November 2011 and the IASB
plans to issue a feedback statement in the second quarter of 2012.
For up-to-date information on the IASBs active projects and IASB and Interpretations
Committee deliberations please refer to our IFRS Newsletters and In the Headlines
publications.
Active projects
Annual improvements 2011
Next document expected
Expected release
Relevant chapter(s)
Final amendments
Q1 2012
In June 2011 the IASB published ED/2011/2 Improvements to IFRSs as part of the annual
improvements project cycle that began in 2009.
The ED proposes the following improvements to current IFRSs.
IFRS 1 Repeated application of IFRS 1. An entity would apply IFRS 1 when its most
recent previous annual financial statements did not contain an explicit and unreserved
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Expected release
Relevant chapter(s)
Exposure draft
Q3 2011
Expected release
Relevant chapter(s)
Final standard
Q4 2011
7.8
In January 2011 the Boards published ED/2011/1 Offsetting Financial Assets and Financial
Liabilities. The objective of the ED was to establish a common principle and address
the differences between IFRSs and US GAAP for balance sheet offsetting of derivative
contracts and other financial instruments.
The proposed offsetting criteria would be similar to those that currently exist in IAS32.
However, it would amend IAS 32 by clarifying that a right of set-off must be both
unconditional and legally enforceable in all circumstances as opposed to the present
requirement that an entity must have a current right to set-off. The offsetting requirements
would apply to all entities and to all items within the scope of IAS39 or IFRS9.
Expected release
Relevant chapter(s)
Final amendment
Q4 2011
In August 2011 the IASB published ED/2011/3 Mandatory Effective Date of IFRS. The
ED proposes to push back the mandatory effective date of IFRS 9 from annual periods
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Expected release
Relevant chapter(s)
Q4 2011
7.7
Q4 2011 or 2012
7.7
In December 2010 the IASB published ED/2010/13 Hedge Accounting. The proposed
changes to the general hedge accounting model responded to criticisms of the complexity
and burden of hedge accounting. The ED proposed that hedge accounting would be more
aligned with risk management strategies. The proposals in the ED would alleviate some
of the more operationally onerous requirements, such as the quantitative threshold and
retrospective assessment for hedge effectiveness testing. In addition, the ED proposed
further simplification of hedge accounting requirements by allowing entities to rebalance
and continue certain existing hedging relationships that have fallen out of alignment
instead of having to restart the hedge in a new relationship. However, voluntarily
stopping hedging relationships would be prohibited. The IASBs deliberations on this topic
areongoing.
In addition, the IASB is working on hedge accounting proposals to address risk
management strategies referring to open portfolios (portfolio or macro hedging), which
were not addressed in ED/2010/13.
Expected release
Relevant chapter(s)
H2 2011
7.6
cost. In May 2010 the FASB published its proposals on the accounting for impairment of
financial assets as part of its comprehensive exposure draft on financial instruments.
Following joint deliberation of the comments received in their respective proposals, the
Boards published Supplement to ED/2009/12 Financial Instruments: Amortised Cost and
Impairment (the supplement) in January 2011. The supplement set out common proposals
for accounting for impairment of financial assets managed on an open portfolio basis.
The supplement contained a modified version of the expected loss approach proposed in
ED/2009/12, while aiming to address operational concerns. In addition, the supplement
proposed presentation requirements for interest revenue and impairment losses in the
statement of comprehensive income, and disclosure requirements for open portfolios of
financial assets. The IASBs deliberations on this topic are ongoing.
Expected release
Relevant chapter(s)
Draft interpretation
Timing unknown
3.12
In July 2011 the Interpretations Committee added to its agenda a project to clarify
whether, under certain circumstances, IFRIC 6 should be applied by analogy to other
levies charged for participation in a market on a specified date to identify the event that
gives rise to a liability. The expected timing of any guidance to be published is unknown at
this stage.
Insurance contracts
Next document expected
Expected release
Relevant chapter(s)
Q4 2011 or 2012
3.12, 5.10
In July 2010 the IASB published ED/2010/8 Insurance Contracts as part of its joint project
with the FASB to develop a common, high-quality standard that will address recognition,
measurement, presentation and disclosure requirements for insurance contracts. Given
the current divergent accounting practices related to insurance contracts, any final
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standard resulting from this project will have a significant impact. The ED proposed the
following:
scope that focuses on insurance contracts, financial guarantees and certain investment
contracts with a discretionary participation feature;
a fulfilment value-based net measurement approach for insurance and reinsurance
contracts, which incorporates an estimate of future cash flows including incremental
acquisition costs, the effect of the time value of money, an explicit risk adjustment and a
residual margin;
an unearned premium approach for short duration contracts that requires discounting if
the effect is material;
new unbundling criteria for non-derivative components; and
revised accounting guidance for business combinations and portfolio transfers.
The ED does not address policyholder accounting other than in the context of reinsurance
contracts.
The IASBs deliberations on this topic are ongoing.
Leases
Next document expected
Expected release
Relevant chapter(s)
Re-exposure draft
Q4 2011
The IASB and FASB are working on a joint project to develop a comprehensive set of
principles for lease accounting. In August 2010 the IASB published ED/2010/09 Leases.
The ED proposed the following approaches to lessee and lessor accounting.
For lessees, the ED proposed to eliminate the requirement to classify a lease contract
as an operating or finance lease; instead, it proposed a single accounting model to
be applied to all leases. A lessee would recognise a right-of-use asset representing
its right to use the leased asset, and a liability representing its obligation to pay lease
rentals.
For lessors, the ED proposed two accounting approaches.
Performance obligation approach. If a lessor retains exposure to significant risks and
benefits associated with the underlying asset, then it would apply the performance
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obligation approach to the lease; otherwise it would apply the derecognition approach
to the lease. Under the performance obligation approach the lessor would continue
to recognise its interest in the underlying asset and at commencement of the lease
would recognise a new asset (the lease asset) representing its right to receive
lease payments from the lessee over the lease term and would recognise a liability
representing its obligation to deliver use of the underlying asset to the lessee.
Derecognition approach. Under the derecognition approach the lessor would
recognise an asset representing its right to receive lease payments from the lessee;
would derecognise a portion of the underlying asset representing the lessees rights;
and would reclassify the remaining portion as a residual asset representing its right to
the underlying asset at the end of the lease term.
However, a lessor would apply IAS 40 and not the new standard to leases of investment
property measured at fair value.
The Boards redeliberated the proposals contained in the ED during the first half of 2011.
For lessees, the Boards tentatively decided to proceed with the right-of-use model
proposed in the ED, revising the proposals regarding lease term, purchase options and
contingent rents. For lessors, the Boards discussions focused on a revised version of the
derecognition approach.
The Boards concluded that the decisions taken to date were sufficiently different from
those published in the original ED to warrant re-exposure of the revised proposals.
Revenue recognition
Next document expected
Expected release
Relevant chapter(s)
Re-exposure draft
Q3 2011
The IASB and the FASB are working on a joint project to develop a comprehensive
set of principles for revenue recognition. In June 2010 the IASB published ED/2010/6
Revenue from Contracts with Customers, which would replace IAS 11, IAS 18 and a
number of interpretations, including IFRIC18 and SIC-31. The ED proposed a single
revenue recognition model in which an entity would recognise revenue as it satisfies
a performance obligation by transferring control of promised goods or services to a
customer. The model was proposed to be applied to all contracts with customers except
leases, financial instruments, insurance contracts and non-monetary exchanges between
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entities in the same line of business to facilitate sales to customers other than the parties
to the exchange.
The Boards redeliberated the proposals contained in the ED during the first half of 2011
and agreed tentatively to revise a number of aspects of the proposals, including the
criteria for identifying separate performance obligations, the guidance on transfer of
control, and the measurement of the transaction price, particularly for arrangements
including uncertain consideration.
The Boards concluded that, although there was no formal due process requirement to reexpose the proposals, it was appropriate to go beyond established due process given the
importance of this topic to all entities.
Expected release
Relevant chapter(s)
Final interpretation
H2 2011
5.11
Expected release
Relevant chapter(s)
Timing unknown
2.5
The Interpretations Committee has recommended that the IASB consider making an
amendment to the scope of IAS 32 for put options written over non-controlling interests
(NCI puts) in the consolidated financial statements of the controlling shareholder. The
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scope exclusion would change the measurement basis of NCI puts to that used for other
derivative contracts instead of recognising the financial liability at the present value of the
option exercise price. In addition, the scope exclusion would apply only to NCI puts that
are not embedded in another contract and that contain an obligation for an entity in the
consolidated group to settle the contract by delivering cash or another financial asset in
exchange for the interest in the subsidiary.
Expected release
Relevant chapter(s)
Draft interpretation/amendment
Timing unknown
3.2, 3.3
In January 2011 the Interpretations Committee added to its agenda a project to establish
guidance on how to account for contingent prices agreed for the purchase of property,
plant and equipment and intangible assets. The core issues discussed at subsequent
meetings of the Interpretations Committee centred around the measurement of the
purchase cost of an asset and how to account for the remeasurement of the contingent
liability in these cases, specifically whether the remeasurement should be recognised in
profit or loss, or included as an adjustment to the cost of the asset. The Interpretations
Committee decided to defer further work on this project until the IASB concludes
its discussions on the accounting for the liability for variable payments as part of the
leasesproject.
Inactive projects
In November 2010 the IASB amended its work plan and deferred work on certain projects
that were active at the time. It also put on hold other research projects. The future of these
inactive projects (except for the Conceptual Framework project) will be considered by the
IASB during its agenda consultation process.
5.13
This project would examine the definition of common control and the methods of
accounting for business combinations among entities under common control. It was
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Conceptual Framework
Relevant chapter(s)
1.1, 1.2
In April 2004 the IASB and the FASB agreed to add to their agendas a joint project for the
development of a common Conceptual Framework.
The Boards have identified the following phases of this project:
A. Objectives and qualitative characteristics
B. Elements and recognition
C. Measurement
D. Reporting entity
E. Presentation and disclosure
F. Purpose and status
G. Application to not-for-profit entities
H. Remaining issues, if any.
Phase A was completed in September 2010 with the publication of Chapter 1 The
objective of general purpose financial reporting and Chapter 3 Qualitative characteristics
of useful financial information of the Conceptual Framework. Phases E to H have not
started yet.
The Boards have started deliberating issues in phases B and C of the project but have not
published any due process documents.
In March 2010, as a result of phase D, the IASB published ED/2010/2 Conceptual
Framework for Financial Reporting: The Reporting Entity. The objective of the ED was
to develop a reporting entity concept consistent with the objective of general purpose
financial reporting for inclusion in the common Conceptual Framework.
The IASB indicated in its agenda consultation that it would continue work on this project.
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5.3
In August 2008 the IASB published ED Simplifying Earnings Per Share Proposed
Amendments to IAS 33. The ED proposed to simplify the denominator for the EPS
calculation. In addition, the IASB proposed the use of a fair value model to replace the
treasury share method in certain circumstances and to require the two-class method for
computing basic earnings per share for mandatorily convertible instruments with stated
participation rights.
In December 2007 the IASB activated a joint project with the FASB to address the
underlying accounting for emissions trading schemes. This project was expected to
interact with the project to revise IAS 20 with regard to emissions trading schemes
granted by the government (see below).
Extractive activities
Relevant chapter(s)
5.11
In April 2010 the IASB published DP Extractive Activities, which was based on the work of
a group of national standard-setters. The DP focused on upstream activities for minerals,
oil and natural gas, addressing the following principal topics:
definitions of reserves and resources for financial reporting
asset recognition criteria for exploration assets
unit of account selection for asset recognition
asset measurement of exploration assets
impairment testing requirements for exploration assets
disclosure requirements
publish what you pay disclosure proposals.
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7.3
5.4
The overall objective of the comprehensive financial statement presentation project was
to establish a global standard that would prescribe the basis for presentation of financial
statements of an entity that are consistent over time and that promote comparability
between entities. The financial statement presentation project was conducted in
threephases.
Phase A was completed in September 2007 with the release of a revised IAS1 Financial
Statement Presentation.
Phase B addresses the more fundamental issues related to financial statement
presentation.
Phase C has not been initiated, but would address issues related to interim financial
reporting.
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In July 2010 the IASB posted a staff draft of a proposed ED reflecting tentative decisions
made to date in respect of phase B to obtain further stakeholder feedback.
Government grants
Relevant chapter(s)
4.3
This project would amend IAS 20 in order to resolve inconsistencies between the
standards recognition requirements and the Conceptual Framework.
Income taxes
Relevant chapter(s)
3.13
In March 2009 the IASB published ED/2009/2 Income Tax, in which it proposed to replace
IAS12 with a new IFRS. In light of responses to the ED, the IASB narrowed the scope
of the project to focus on resolving problems in practice under IAS 12, without changing
the fundamental approach under IAS12 and preferably without increasing divergence
with US GAAP. The first amendment to IAS12 as a result of this project was published in
December2010.
Intangible assets
Relevant chapter(s)
3.3
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The proposed amendments would result in significant changes from current practice in
accounting for provisions, contingent liabilities and contingent assets.
In January 2010 the IASB published ED/2010/1 Measurement of Liabilities in IAS37 (the
2010 ED), which is a limited re-exposure of the 2005 ED focused on the following.
A high-level measurement objective for liabilities (that would mandate the use of
expected value to measure single obligations) and certain aspects of application of that
measurement objective.
The measurement of obligations involving services, e.g. decommissioning. The
2010ED proposed that service-related obligations would be measured by reference to
the price that a contractor would charge to undertake the service, i.e. including a profit
margin. This would be irrespective of the entitys intentions with regard to settling the
obligation, i.e. irrespective of whether the entity intends that the work will be carried
out by an in-house team or by external contractors.
A staff draft of the proposed IFRS was released in 2010.
Rate-regulated activities
Relevant chapter(s)
5.12
In July 2009 the IASB published ED/2009/8 Rate-regulated Activities, which proposed
definitions of regulatory assets and regulatory liabilities. It also proposed that regulatory
assets and regulatory liabilities would be measured at the present value of expected
future cash flows, both on initial recognition and for subsequent remeasurement.
The IASB concluded that it would not resolve the matters quickly, but identified a number
of possible ways to take the project forward.
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Publication name: Insights into IFRS: An overview
Publication number: 314686
Publication date: September 2011
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