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  • Financial instruments with characteristics of equity
    of resource required to be transferred and priority of the claim on liquidation In this session the Board focused on the timing and the amount The IASB was not asked to make any decisions at this point however the staff wanted to highlight the consequences of the approaches they are developing the conceptual challenges of the fixed for fixed condition and application challenges One example in the agenda paper is a forward contract for the receipt of a fixed amount of cash in exchange for the delivery of a fixed number of ordinary shares The staff had analysed that the instrument consists of a receivable for cash that would meet the definition of a financial asset and an obligation to deliver a fixed number of equity instruments that would meet the definition of equity For instruments where the asset leg does not meet the fixed for fixed condition the entire instrument is a financial liability This means that changes in the equity leg would be recognised as income and expense To overcome this challenge the staff proposed to either componentise derivatives in finer detail or to require all derivatives on own equity to be classified as financial assets or financial liabilities including those that actually meet the fixed for fixed condition However the IASB should first consider the challenges for some other types of derivatives before deciding whether the staff should develop an alternative to the fixed for fixed condition IASB discussion This was an education session for the Board and the papers did not ask for any Board decisions As suggested by the agenda paper the Board spent most of the time discussing the fixed for fixed condition In general many Board members acknowledged the simplifying nature of the condition and warned that an alternative approach might add complexity Some Board members suggested refining the fixed for fixed condition rather than developing a new approach Several Board members expressed a desire to include instruments that are denominated in a foreign currency in the condition Componentising would be very difficult for instruments where the asset leg and the equity leg were interdependent e g share options A componentising approach would therefore have to be considered very thoroughly One Board member proposed using componentisation only under very special circumstances whilst another Board member would only use componentising for presenting performance One Board member asked to reconsider the basic ownership approach However this approach was rejected by several Board members as remeasurement was the main criticism raised by constituents and under the basic ownership approach everything would be remeasured One Board member struggled to apply the approaches developed by staff to fixed for fixed instruments The Board member said that whilst the approaches worked well with obligations they would not work with instruments with both rights and obligations This was especially true when the entity issued the instrument and therefore had a right to receive cash Two Board members stressed that the project should aim at expanding sections of equity in the

    Original URL path: http://www.iasplus.com/en/meeting-notes/iasb/2015/october/fi-equity (2016-02-10)
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  • IFRSs in Europe – Events of 2015
    forthcoming new IFRS on leases on financial covenants in loan agreements 09 Dec 2015 EFRAG has issued a report summarising the results of a public survey conducted by the IASB and the National Standard Setters of France Germany Italy Lithuania and the UK on the potential impact of the forthcoming new IFRS on leases on financial covenants in loan agreements EBA launches consultation on FINREP using IFRS 9 09 Dec 2015 The European Banking Authority EBA has launched a consultation on using IFRS 9 Financial instruments for the reporting of financial information by institutions using IFRS EFRAG repeats that the IFRS 9 insurance issue needs to be solved quickly 04 Dec 2015 In September 2015 the European Financial Reporting Advisory Group EFRAG finalised the long awaited endorsement advice on IFRS 9 Financial Instruments and recommended endorsement of IFRS 9 but withheld comments on insurance industry European Union formally adopts amendments to IAS 16 and IAS 38 03 Dec 2015 The European Union has published a Commission Regulation endorsing the May 2014 amendments to IAS 16 and IAS 38 that provide additional guidance on how the depreciation or amortisation of property plant and equipment and intangible assets should be calculated Recording and statements at public hearing on IFRS 9 02 Dec 2015 On 1 December 2015 the Committee on Economic and Monetary Affairs ECON of the European Parliament held a public hearing on IFRS 9 Financial Instruments EFRAG explains its conclusion that IFRS 9 is not contrary to true and fair 01 Dec 2015 Upon the request of the European Commission the European Financial Reporting Advisory Group EFRAG has further explained how it has reached the conclusion contained in its endorsement advice that IFRS 9 is not contrary to the true and fair principle 18th ESMA enforcement decisions report released 25 Nov 2015 The European Securities and Markets Authority ESMA has published further extracts from its confidential database of enforcement decisions taken by European national enforcers This batch deals with decisions in relation to IAS 1 IAS 19 IAS 27 IAS 34 IAS 36 IFRS 5 IFRS 10 and IFRS 13 European Union formally adopts amendments to IFRS 11 25 Nov 2015 The European Union has published a Commission Regulation endorsing the May 2014 amendments to IFRS 11 that clarify the accounting for acquisitions of an interest in a joint operation when the operation constitutes a business ECON announces public hearing on IFRS 9 24 Nov 2015 The Committee on Economic and Monetary Affairs ECON of the European Parliament announces that it will hold a public hearing on IFRS 9 Financial Instruments on 1 December 2015 European Union formally adopts amendments to IAS 16 and IAS 41 24 Nov 2015 The European Union has published a Commission Regulation endorsing Agriculture Bearer Plants Amendments to IAS 16 and IAS 41 FEE calls for an international solution of the effective date problem 21 Nov 2015 The Federation of European Accountants Fédération des Experts comptables Européens FEE has commented on the draft letter from

    Original URL path: http://www.iasplus.com/en/resources/ifrs-topics/europe/europe-2015 (2016-02-10)
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  • IFRSs in Europe – Events of 2016
    on the endorsement of IFRS 9 08 Feb 2016 The Federation of European Accountants Fédération des Experts comptables Européens FEE has prepared a short briefing paper with additional answers to some of the questions asked by Members of the European Parliament of the Economic and Monetary Affairs Committee ECON during recently held two public hearings on the International Financial Reporting Standards IFRS broadly and on IFRS 9 Financial Instruments specifically EU endorsement of IFRS 9 now expected in the second half of 2016 04 Feb 2016 The European Financial Reporting Advisory Group EFRAG has published an updated endorsement status report indicating the EU endorsement of IFRS 9 Financial Instruments is now expected in the second half of 2016 EBA launches an impact assessment of IFRS 9 on banks 28 Jan 2016 The European Banking Authority EBA is launching an impact assessment of IFRS 9 Financial Instruments on a sample of approximately 50 institutions across the European Union European consultation on non financial reporting guidelines 15 Jan 2016 The European Commission has launched a public consultation to collect views from stakeholders on non binding guidance on the methodology for reporting of non financial information by certain large companies across all sectors Draft report on the IAS evaluation and on activities of IFRS Foundation EFRAG and PIOB 14 Jan 2016 The Committee on Economic and Monetary Affairs ECON of the European Parliament has made available a draft report on IAS evaluation and on activities of IFRS Foundation EFRAG and PIOB The report includes a motion for a European Parliament resolution Hoogervorst discusses major IASB projects at European Parliament meeting 11 Jan 2016 Today IASB Chairman Hans Hoogervorst spoke with the Committee on Economic and Monetary Affairs ECON of the European Parliament at its meeting in Brussels Mr Hoogervorst discussed four high priority

    Original URL path: http://www.iasplus.com/en/resources/ifrs-topics/europe/europe-2016 (2016-02-10)
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  • IFRS 9 — Determining hedge effectiveness for net investment hedges
    effectiveness for net investment hedges IFRIC 12 Combined service concession and lease arrangements Administrative session Work in progress Info IFRS 9 Determining hedge effectiveness for net investment hedges Date recorded 11 Nov 2015 The IFRS Interpretations Committee has received a request to clarify how to determine hedge effectiveness for hedges of a net investment in a foreign operation net investment hedges The submitter noted that IFRS 9 does not provide specific guidance for net investment hedges Instead the Standard states that they should be accounted for similarly to cash flow hedges and in addition the net investment hedge guidance in IFRS 9 cross references to the accounting guidance for cash flow hedges including the lower of test to measure effectiveness for hedging instruments The submitter finds it unclear whether the lower of test also applies to the accounting for net investment hedges Staff recommendation The staff contacted several constituents of which a majority noted that IFRS 9 hedge accounting rules have not yet been adopted by most entities Under the current IAS 39 practice application of the lower of test to net investment hedges was the approach most commonly observed The respondents were not aware of any significant diversity in practice In addition the staff analysed that the term similarly in IFRS 9 should be understood to also extend to the application of the requirements of the lower of test when accounting for net investment hedges because the mechanics and underlying rationale of those requirements are closely aligned to the requirements and principles of IAS 21 Based on the results of the outreach and the staff s analysis the staff recommend that the Interpretations Committee should not take this issue onto its agenda Committee discussion and decision There was general support amongst Committee members to follow the staff recommendation as they had also not observed any significant diversity in practice They confirmed that applying the lower of test to net investment hedges was the predominant accounting However some Committee members suggested amendments to the proposed tentative agenda decision Several members struggled with the reasoning of aligning the hedge accounting requirements for net investment hedges with IAS 21 They argued that IAS 39 and IFRS 9 were the only Standards that dealt with hedge accounting The reference to IAS 39 in the proposed tentative agenda decision was challenged by one Committee member as in his view the guidance in IFRS 9 was sufficient However the other Committee members did not see an issue with this reference when the Chairman called for a formal vote on that reference Related Topics Standards IFRS 9 Financial Instruments Related news 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 FEE briefing paper on the endorsement of IFRS 9 08 Feb 2016 EU endorsement of IFRS 9 now expected in the second half of

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/ifrs-9 (2016-02-10)
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  • IFRS 9/IAS 28 — Is measurement of long-term interests in associates and joint ventures, including impairment, in accordance with IFRS 9, IAS 28, or both?
    the impairment of long term interests and that the issue was widespread The Committee concluded that the interaction between the requirements of IFRS 9 and IAS 28 were unclear Staff recommendation At this meeting the staff will present their analysis of this issue The September paper suggested four alternatives Entirely in the scope of IFRS 9 subject to an IAS 28 38 loss allocation entirely in the scope of IFRS 9 subject to an IAS 28 38 loss allocation and also in the scope of IAS 28 36 for impairment entirely in the scope of IAS 28 and in the scope of IFRS 9 for classification and measurement The last of these alternatives received the strongest support for the members of the Interpretations Committee In the current paper the staff are recommending a fifth alternative a the long term interests are accounted for in accordance with IFRS 9 in their entirety including the impairment requirements b as part of the net investment the long term interests are subject to allocation of share of losses of an investee and c as part of the net investment the long term interests are assessed for impairment using the indicators that are included in IAS 28 Under this approach long term interests would be subject to two different methods of impairment testing The staff acknowledged this fact and concluded that the two layers of impairment testing is consistent with the measurement objective of both IAS 28 and IFRS 9 Therefore the staff recommends a narrow scope amendment to IAS 28 based on this new approach Committee discussion and decision While some Committee members welcomed the alternative view introduced by the staff others were reluctant to deviate from the views expressed in the previous meeting Those in favour welcomed the fact that both impairment models applied in layers while those who opposed the staff recommendation struggled with the fact that entities had to apply three different Standards IFRS 9 IAS 28 and IAS 36 to one net investment which in their view was not beneficial One Committee member said that IAS 28 often did not reflect the economic reality as it was common to have contractual agreements prescribing how losses are absorbed While investors took those agreements into account when making decisions IAS 28 accounting did not She conceded that this was unrelated to the submitted issue but more a general problem with the equity method of accounting For her the core issue was that IAS 28 aggregates the equity investment and the long term investment into one item That was supported by fellow Committee members who expressed a desire to define the term net investment The Chairman added that the issue would only arise in a loss making situation and that otherwise IFRS 9 would apply Several Committee members agreed that the equity method was flawed but acknowledged that it would take a significant amount of time to address those issues However since the issue was urgent the Committee needed to decide whether IFRS

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/ifrs-9-ias-28 (2016-02-10)
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  • IFRS 9 / IAS 39 — Derecognition of modified financial assets
    lease arrangements Administrative session Work in progress Info IFRS 9 IAS 39 Derecognition of modified financial assets Date recorded 10 Nov 2015 Derecognition of modified financial assets In this session the staff will ask the IFRS Interpretations Committee whether they would like to progress with a potential project to clarify IFRS 9 and IAS 39 The project would relate to derecognition requirements on modifications or exchanges of financial assets Staff had performed an initial analysis on the general issues with this topic The results of the analysis are presented in the agenda paper Staff recommendation The staff concluded that it would be difficult to develop a narrow scope project as there are potential implications for the derecognition of transferred financial assets linkage of transactions and the derecognition of modified financial liabilities Moreover such a project would require a significant amount of time and resources The staff also noted that there was limited evidence of a pressing need for new guidance Hence the staff recommends not to pursue the issue at this time Individual members of the IASB supported this recommendation in an informal sounding Committee discussion and decision Some Committee members disagreed with the staff recommendation and believed the issue could be narrowed down sufficiently to be addressed by the Interpretations Committee They acknowledged that the process would not be simple but in their view it would be feasible Some expressed disagreement with the statement that there was limited evidence of a pressing need as they had been observing significant diversity in practice The Technical Director acknowledged this but said that the issue could not be fixed quickly as the existing guidance in IAS 39 and IFRS 9 would have to be amended Several Committee members conceded that further discussion of the issue would be futile as long as the IASB remained reluctant to address it An observing IASB member added that developing guidance would be very difficult as the derecognition requirements for liabilities could not simply be mirrored for the asset side This was mainly owing to the fact that financial assets unlike financial liabilities are subject to impairment and the impairment guidance would interact with any guidance on modifications The Chairman called a vote on the issuance of an agenda decision 9 of the 14 Committee members voted in favour of a rejection notice The Chairman concluded that this was a sufficient majority Related Topics Standards IAS 39 Financial Instruments Recognition and Measurement IFRS 9 Financial Instruments Related news 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 FEE briefing paper on the endorsement of IFRS 9 08 Feb 2016 EU endorsement of IFRS 9 now expected in the second half of 2016 04 Feb 2016 EBA launches an impact assessment of IFRS 9 on banks 28 Jan 2016 We comment on a number of tentative

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/ifrs-9-ias-39 (2016-02-10)
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  • IPSASB proposes revisions to the cash basis IPSAS
    2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Info IPSASB proposes revisions to the cash basis IPSAS 04 Feb 2016 The International Public Sector Accounting Standards Board IPSASB has released for comment Exposure Draft ED 61 Amendments to Financial Reporting under the Cash Basis of Accounting The IPSASB s cash basis standard Financial Reporting Under the Cash Basis of Accounting unnumbered January 2003 establishes requirements for the preparation and presentation of a statement of cash receipts and payments and supporting accounting policy notes It also includes encouraged disclosures that enhance the cash basis report The primary role of the standard in the IPSASB s overall standard setting strategy is to work as a stepping stone to adoption of accrual IPSAS ED 61 proposes to revise certain requirements and to recast them as encouragements The ED also proposes amendments to ensure that the existing requirements and encouragements of the standard are better aligned with the equivalent accrual IPSAS unless there is a reason to deviate as a result of adopting the cash basis of accounting Please click to access the press release and ED 61 on the IPSASB website Comments are requested by 31 July 2016 Related Topics Resources International Public Sector Accounting Standards Board IPSASB Related news Interview with IPSASB Chair 08 Feb 2016 IPSASB publishes proposed guidance on public sector combinations 29 Jan 2016 IPSASB publishes proposed changes to IPSAS 25 Employee Benefits 14 Jan 2016 Recent EPSAS developments 11 Jan 2016 IPSASB publishes 2015 Handbook of pronouncements 14 Dec 2015 IPSASB establishes advisory body 09 Dec 2015 All Related Related Publications IPSAS in your pocket 2015 edition 30 Sep 2015 Accounting Roundup January 2015 03 Feb 2015 Deloitte comment letter on the IPSASB strategy consultation 31 Jul 2014 Deloitte comment letter on the

    Original URL path: http://www.iasplus.com/en/news/2016/02/ipsasb-ed-61 (2016-02-10)
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  • IPSASB publishes proposed guidance on public sector combinations
    combinations as either amalgamations or acquisitions taking into account control and other factors Gaining of control over an operation creates a rebuttable presumption that the combination is an acquisition If the acquisition presumption is rebutted then the transaction is treated as an amalgamation This approach is different to that proposed in the June 2012 consultation paper on the same topic and addresses concerns raised by stakeholders For recognition and measurement of amalgamations ED 60 proposes use of the modified pooling of interests method of accounting This method recognises the amalgamation on the date it takes place For acquisitions ED 60 proposes use of the acquisition method of accounting applying the same approach as in IFRS 3 Business Combinations This is supplemented with guidance for public sector specific situations such as public sector combinations lacking a profit motive often being conducted by non exchange transactions and the frequent involuntary imposition of such combinations by law or other authority Please click to access the press release and ED 60 on the IPSASB website Comments are requested by 30 June 2016 Related Topics Resources International Public Sector Accounting Standards Board IPSASB Standards IFRS 3 Business Combinations Related news Interview with IPSASB Chair 08 Feb 2016 IPSASB proposes revisions to the cash basis IPSAS 04 Feb 2016 IPSASB publishes proposed changes to IPSAS 25 Employee Benefits 14 Jan 2016 Recent EPSAS developments 11 Jan 2016 IPSASB publishes 2015 Handbook of pronouncements 14 Dec 2015 IPSASB establishes advisory body 09 Dec 2015 All Related Related Publications IPSAS in your pocket 2015 edition 30 Sep 2015 Accounting Roundup January 2015 03 Feb 2015 EFRAG endorsement status report 9 January 2015 09 Jan 2015 Francesco Mazzi Paul André Dionysia Dionysiou and Ioannis Tsalavoutas Goodwill related mandatory disclosure and the cost of equity capital 02 Oct 2014 All

    Original URL path: http://www.iasplus.com/en/news/2016/01/ipsasb-ed-60 (2016-02-10)
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