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  • FASB issues final standard on classification and measurement of financial instruments
    the ASU notes that it achieves convergence with IFRS 9 in several areas but there are still differences in the detailed guidance Both require the portion of changes in the fair value of fair value option financial liabilities attributable to instrument specific credit risk to be presented in OCI However the guidance about whether ever to reclassify fair value gains and losses from accumulated OCI to profit or loss differs between IFRS 9 and the ASU Both the new ASU and IFRS 9 require most equity investments other than equity method investments and consolidated investments to be measured at fair value with changes in fair value recognized in profit or loss However IFRS 9 has an option to recognize gains and losses on certain equity investments in OCI which is not available under the ASU Further unlike the ASU IFRS 9 does not have an elective practical expedient for measuring equity investments without a readily determinable fair value The IASB currently has a project to address the accounting for deferred tax assets on available for sale financial assets and have proposed a solution similar to the one in the ASU Unlike US GAAP however the available for sale category is being eliminated under IFRSs by IFRS 9 For details about the ASU s major changes and effective date see the Heads Up newsletter and journal entry published by Deloitte United States For more information see the ASU press release and FASB in Focus newsletter on the FASB s website Related Topics Resources Financial Accounting Standards Board FASB Jurisdictions United States of America Projects Financial instruments Classification and measurement Standards IFRS 9 Financial Instruments Other US GAAP Related news Reactions to the proposed amendments intended to address concerns about the different effective dates of IFRS 9 and the forthcoming new insurance

    Original URL path: http://www.iasplus.com/en/news/2016/01/fasb-asu-financial-instruments (2016-02-10)
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  • We comment on the IASB agenda consultation
    consultation to seek broad public input on the strategic direction and overall balance of its future work programme We support the emphasis the consultation places on completing the remaining major projects We also note that the Board should allocate sufficient resources to the implementation of these standards of the forthcoming IFRS 16 Leases and of the recently published standards IFRS 9 and IFRS 15 We welcome the attention given to research projects However we miss a sense of context how the Board sees its current standard setting priorities in relation to a wider and more long term view of financial and corporate reporting Please click to access the full comment letter Related Topics Resources International Accounting Standards Board IASB IASB requests for information Projects Agenda consultation 2015 Related news Pre meeting summaries for the February IASB meeting 09 Feb 2016 2016 IFRS Red Book coming in March 09 Feb 2016 Reactions to the proposed amendments intended to address concerns about the different effective dates of IFRS 9 and the forthcoming new insurance contracts standard 08 Feb 2016 We comment on the IASB s proposed amendments to IFRS 4 08 Feb 2016 FASB adds four projects to research agenda 08 Feb 2016 FEE briefing paper on the endorsement of IFRS 9 08 Feb 2016 All Related Related Publications Deloitte comment letter on proposed amendments to IFRS 4 08 Feb 2016 IFRS in Focus IASB issues amendments to IAS 7 Statement of Cash Flows requiring disclosure of changes in liabilities arising from financing activities 01 Feb 2016 Deloitte comment letter on the IASB s annual improvements to IFRSs 2014 2016 cycle ED 27 Jan 2016 IFRS industry insights Telecommunications sector Implications of the new leasing standard 21 Jan 2016 All Related Related Discussions 2015 Agenda Consultation Response to the IASB s Request

    Original URL path: http://www.iasplus.com/en/news/2016/01/agenda-consultation-cl (2016-02-10)
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  • Heads Up — FASB proposes guidance on presentation of net periodic benefit cost and disclosures related to defined benefit plans
    include The fair value measurement of the investments and a description of the investee s investment strategies For investments that cannot be directly redeemed with the investee an estimate of the period over which the investee s underlying assets are expected to be liquidated and result in distributions to investors The amount of unfunded commitments A general description of the terms and conditions upon which investors may redeem their investments The circumstances in which an otherwise redeemable investment may be unredeemable and certain disclosures about any investments that are currently not redeemable Significant restrictions on the ability to sell the investments Certain disclosures related to intended sales of investments A narrative description of the reasons for significant gains and losses resulting from remeasurement of the benefit obligation and plan assets The proposed guidance would also eliminate an entity s requirement to disclose The amount of the accumulated benefit obligation For pension plans with accumulated benefit obligations in excess of plan assets the aggregate pension accumulated benefit obligation and aggregate fair value of plan assets However for pension plans with projected benefit obligations in excess of plan assets entities would still need to disclose the aggregate projected benefit obligation and aggregate fair value of plan assets Information about plan assets to be returned to the entity including expected timing Disclosures about transactions resulting from the June 2001 amendments to the Japanese Welfare Pension Insurance Law Disclosures about 1 benefits covered by related party insurance and annuity contracts and 2 significant transactions between the plan and related parties Entities would only need to provide the related party disclosures required under ASC 850 The amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year For nonpublic entities with Level 3 plan assets in the fair value hierarchy measured on a recurring basis a reconciliation of the opening balances to the closing balances However those entities would still need to disclose transfers of plan assets into and out of Level 3 and any purchases of Level 3 assets by the plan Under the proposed guidance entities would be required to disaggregate disclosures between foreign and domestic defined benefit pension and other postretirement plans Currently this disaggregation is required only when the foreign plans are significant relative to the total benefit obligation and use significantly different assumptions In addition nonpublic entities would need to disclose the effects of a one percentage point change on the assumed health care costs and the effect of this change in rates on service cost interest cost and the benefit obligation for postretirement health care benefits Public entities are already required to disclose this information Editor s Note The Board believes that additional costs incurred by entities as a result of implementing the proposed new disclosure requirements would be offset by cost reductions associated with the elimination of other disclosure requirements as well as the omission of immaterial disclosures The amendments would be applied retrospectively to all periods presented

    Original URL path: http://www.iasplus.com/en/publications/us/heads-up/2016/issue-3 (2016-02-10)
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  • Consolidation — FASB tentatively decides to make technical corrections and improvements to ASU 2015-02
    parties including de facto agents only if the reporting entity has a direct interest in the related parties 3 If the related party is not under common control the indirect interest is considered on a proportionate basis However if the related party is under common control the reporting entity must include the related party s entire interest in its economics criterion evaluation 4 At the meeting the Board tentatively decided to remove the last sentence in ASC 810 10 25 42 that states Indirect interests held through related parties that are under common control with the decision maker should be considered the equivalent of direct interests in their entirety The removal of this sentence may affect consolidation conclusions reached under ASU 2015 02 Next Steps The Board instructed the FASB staff to evaluate whether any amendments to the guidance in ASC 810 10 that addresses fees paid to decision makers or service providers 5 will need to be made as result of the Board s tentative decision to amend ASC 810 10 25 42 The Board expects to issue a separate proposed ASU related to this amendment for a 30 day comment period 1 For titles of FASB Accounting Standards Codification ASC references see Deloitte s Titles of Topics and Subtopics in the FASB Accounting Standards Codification 2 FASB Accounting Standards Update No 2015 02 Amendments to the Consolidation Analysis 3 This guidance is only applicable for a reporting entity that is a single decision maker 4 On the basis of the guidance in ASC 810 10 25 42 5 ASC 810 10 55 37 through 55 37D address fees paid to decision makers or service providers in the context of evaluating whether fees are variable interests ASC 810 10 25 38H through 25 28J also address fees paid to

    Original URL path: http://www.iasplus.com/en/publications/us/aje/2016/0125 (2016-02-10)
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  • Proposed technical corrections to the new revenue recognition standard
    with ASC 340 40 Amend ASC 340 40 to clarify that for impairment testing an entity should Consider contract renewals and extensions when measuring the remaining amount of consideration the entity expects to receive 4 Include in the amount of consideration the entity expects to receive both 1 the amount of cash expected to be received and 2 the amount of cash already received but not yet recognized as revenue Test for and recognize impairment in the following order 1 assets outside the scope of ASC 340 40 such as inventory under ASC 330 2 assets accounted for under ASC 340 40 and 3 reporting units and asset groups under ASC 350 and ASC 360 Amend certain guidance in ASC 605 35 that will not be superseded by ASC 606 i e the requirement for an entity to test for onerous contracts to specify that the contract level is the lowest level on which loss provisions are required to be recorded However the amended guidance would also state that an entity would not be precluded from recording at the performance obligation level a loss that results in a contract with a customer Clarify the scope exception in ASC 606 related to contracts subject to ASC 944 in ASC 606 10 15 2 b the phrase insurance contracts would be changed to the term contracts Revise the analysis in Example 7 of ASC 606 10 55 125 through 55 128 which illustrates the modification of a services contract to better align it with the modification guidance in ASC 606 10 25 12 Include a scope exception in ASC 924 for fixed odds wagering contracts by adding a new subtopic ASC 924 815 Entertainment Casinos Derivatives and Hedging clarifying that such contracts are revenue contracts within the scope of ASC 606 5 Amend ASC 946 to remove a portion of a conforming amendment from ASU 2014 09 to eliminate the potential for diversity in accounting for incurred costs by private funds and public funds The Board also tentatively agreed to 1 issue these technical corrections separately from technical corrections to other ASC topics 2 use the same effective date and transition provisions as those in ASC 606 as amended and 3 permit a 45 day comment period 1 For titles of FASB Accounting Standards Codification ASC references see Deloitte s Titles of Topics and Subtopics in the FASB Accounting Standards Codification 2 FASB Accounting Standards Update No 2014 09 Revenue From Contracts With Customers 3 This topic was discussed at the November 9 2015 meeting of the FASB IASB joint revenue transition resource group TRG meeting See Deloitte s November 2015 TRG Snapshot for more information 4 This topic was discussed at the July 18 2014 TRG meeting See Deloitte s July 2014 TRG Snapshot for more information 5 This topic was discussed at the November 9 2015 TRG meeting See Deloitte s November 2015 TRG Snapshot for more information Download Related Topics Publication series Accounting Journal Entries Resources Financial Accounting Standards

    Original URL path: http://www.iasplus.com/en/publications/us/aje/2016/0122b (2016-02-10)
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  • Financial instruments with characteristics of equity
    other comprehensive income to subclasses of equity and claims with conditional alternative settlement outcomes Subclasses of liabilities including presenting income and expense arising from particular types of liabilities In previous meetings the IASB has acknowledged that a single distinction between equity and liabilities cannot convey all of the similarities and differences between claims Hence the IASB decided that improvements to presentation and disclosures should be explored in addition to improvements to the distinction between liabilities and equity The agenda paper considers whether the IASB should use subclasses of financial liabilities These would provide additional information that will be useful to assess financial performance by presenting separately income and expense arising from particular subclasses of liabilities and assess financial position through the presentation of different subclasses on the balance sheet or within different subtotals within total liabilities In order to speed up the process the staff intends to focus on developing approach Gamma This approach focuses on the distinction between liabilities and equity on both the timing of required settlement which is relevant to assessing the extent to which the entity is expected to have the economic resources required when it is required to transfer them and the amount of economic resources required to settle the claim which is relevant to assessing the extent to which the entity has sufficient economic resources to satisfy the total claims against it if they were all to be settled at a point in time and produced sufficient return on its economic resources to satisfy the promised return on claims against it The classification outcomes under Approach Gamma are closest to the existing outcomes from applying IAS 32 The staff concludes that under Approach Gamma a it will be useful to present income and expense arising from liabilities for a specified amount that is not independent of the entity i e those liabilities that do not promise a return independent of the entity in other comprehensive income OCI b it will be useful to present liabilities for a specified amount that is not independent of the entity on the statement of financial position within total liabilities and c one class of instrument that the presentation requirements in a and b will be useful for is a share redeemable at fair value Attribution of profit or loss and other comprehensive income to sub classes of equity The objective of the agenda paper is to explore how subclasses within equity might help in providing additional information about features the IASB identified as being relevant The staff intends to reduce the gap between the information provided for items classified as equity and those classified as liabilities The preliminary views of the staff are the attribution of profit or loss and other comprehensive income should be expanded to classes of equity other than ordinary shares of the parent the carrying amount of each subclass of equity should also be updated to reflect the attribution and subclasses of equity should include ordinary shares and senior classes of equity Claims with

    Original URL path: http://www.iasplus.com/en/meeting-notes/iasb/2016/february/fi-equity (2016-02-10)
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  • Post-employment benefits
    the revised Conceptual Framework fair value would not be the best answer for pension accounting because the entity usually fulfils the liability rather than transferring it to another party ii A customised fulfilment value model Under the IASB s approach to measuring insurance contracts measurement for an obligation to pay net future cash outflows fulfilment cash flows would include a current unbiased estimate of the cash flows expected to fulfil the contract an adjustment for the time value of money and an adjustment for risks and uncertainty As insurance contracts and pensions share similarities this model could be applied to pensions as well The staff conclude that this model would solve the issues relating to hybrid plans c Other practical models suggested in the past i The D9 model This model was proposed in 2004 as Draft Interpretation D9 by the IFRS Interpretations Committee The model suggests measuring benefits with a variable return at the fair value of the underlying reference assets and benefits with a fixed return using the projected unit credit method A higher of option see above would be measured at the intrinsic value While the staff acknowledge that this model would be an improvement to IAS 19 they think it is not possible to set a scope for it ii Bifurcation model Under this model a contribution based promise would be separated into a defined contribution component and a component for any guaranteed return The guaranteed return would be measured at fair value The IASB had previously rejected this model as it would mix different measurement bases for one obligation and might provide opportunities for accounting arbitrage The staff shares those concerns iii Mirroring model Under this model the fair value of the plan assets would be the present value of the related obligations The staff concede that it would be difficult to scope the model and that it would be conceptually challenging to not measure some assets at fair value d A new practical model i A capped ultimate costs adjustment model This model would cap the rate of asset returns used to estimate future benefits at a rate equal to the discount rate specified under IAS 19 While the staff acknowledge that this would conflict with the best estimate requirements and would not provide the most useful information for a higher of option they think the model would be relatively simple to develop and give a cost beneficial short term solution for some of the problems relating to hybrid plans Potential impact of the Agenda Consultation and other IASB projects Agenda Paper 15C The staff expects constituents to provide comments on the pension research during the current Agenda Consultation They also think that it might be desirable to wait for the current revision of the Conceptual Framework to be completed before carrying out further work in this research project Board discussion There was general agreement amongst Board members that IAS 19 is becoming more and more outdated and its financial reporting requirements are not

    Original URL path: http://www.iasplus.com/en/meeting-notes/iasb/2015/november/post-employment-benefits (2016-02-10)
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  • 2015 Agenda Consultation — Response to the IASB’s Request for Views
    respect of certain cash pooling arrangements IFRS 9 Determining hedge effectiveness for net investment hedges IFRIC 12 Combined service concession and lease arrangements Administrative session Work in progress Info 2015 Agenda Consultation Response to the IASB s Request for Views Date recorded 10 Nov 2015 Background The Interpretations Committee decided to prepare a comment letter in response to the IASB s 2015 Agenda Consultation Request for Views The Interpretations Committee discussed its initial views in September 2015 and the staff informally surveyed members of the Committee The staff was asked to prepare a draft letter reflecting that input Analysis and draft comment letter The purpose of this session was to discuss the wording of the comment letter prepared by the staff and to decide whether it should be sent to the IASB The agenda paper listed those topics that the Committee members thought should be a priority for the IASB Topics listed as priority were i financial instruments with characteristics of equity ii equity method and iii non current assets held for sale and discontinued operations Other topics listed with less priority are i business combinations under common control ii disclosures iii discount rates iv employee benefits and v income taxes Appendix A of the staff paper included a draft of the comment letter Discussion The Interpretation Committee agreed with the staff recommendation During the discussion it was suggested and supported that the letter should explain that the priorities suggested were in the context of the Interpretation Committee activity rather than reflecting the personal views of the members The priorities therefore reflect those matters for which the Committee had identified that there were more than isolated issues which suggested that a more substantial response than piece meal interpretations was required It was also agreed to keep the three main topics

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/2015-ac (2016-02-10)
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