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  • Research project share-based payment
    IFRS derives from i the complexity of the arrangements and ii the usage of the grant date fair value measurement model for arrangements that are settled in shares or in share options The staff also identified the following application issues i difficulty in understanding the core principle of the standard ii perceived counterintuitive results in accounting for some transactions iii complexity in classifying vesting and non vesting conditions and iv use of valuation assumptions which are not subsequently updated The staff also explored different approaches to move forward including i perform a post implementation review ii perform further research on the grant date fair value measurement model iii narrow scope amendments to IFRS or iv discontinue the project The staff does not present any recommendation on those topics Discussion The agenda paper was well received with overall agreement that the paper staff had identified the right issues and their related implications The main comments focused on the issues identified and possible ways to move forward There was agreement on the difficulties derived from the grant date fair value model The issues discussed were for example i differences on treatment of some conditions when some were reflected at grant date while others were reflected at a future date ii implications of the fact that the expense for past service would be recorded in the future even if that year was a bad year in terms of performance and iii the implications of having differences in the approaches to employee services received in IAS 19 and IFRS 2 There was agreement that the work being undertaken in the conceptual framework and the liability equity projects would provide an opportunity to align the definitions There was also agreement that any review of IFRS 2 should involve stepping back to analyse the accounting model

    Original URL path: http://www.iasplus.com/en/meeting-notes/iasb/2015/november/share-based-payment (2016-02-10)
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  • IFRS implementation issues — IFRIC update
    clarification should be provided relating to the difference between compensation costs and the cash paid and expected to be paid to the tax authority and the treatment if a higher number of equity instruments than required had been withheld by an entity Any reclassification to equity should be recognised at the beginning of the annual period in which the amendment is first applied IASB discussion and decision After a lively discussion the IASB agreed with the recommendation but suggested that the proposed wording be amended A number of members were concerned that the proposed paragraph 51 c would lead to additional mandatory disclosure of the estimated amount of cash an entity will pay relating to withholding tax on behalf of the employee as paragraph 51 refers to the need to disclose at least the following A few alternatives were discussed about how to address this potential issue including addressing the problem as part of the materiality project or the disclosure initiative and including guidance that would promote rather than require the disclosure Ultimately the IASB decided to include the proposed guidance as part of paragraph 52 where its inclusion would not lead to a mandatory disclosure requirement but rather they thought that this would mean that the entity would need to determine the materiality of the effect of the transaction and decide whether disclosure should be made In addition one member was concerned that the proposed paragraph 33H provided prescriptive accounting treatments on how to account for situations when too many equity instruments had been withheld by the entity and should be re drafted to provide guidance rather than to detail accounting mechanics The other members agreed The accounting for a modification to the terms and conditions of a share based payment that changes the classification of the transaction from cash settled to equity settled An example illustrating the issue should be added in addition to specifying why the difference between the liability derecognised and equity recorded is recognised in profit or loss The carrying amount of a related liability should be adjusted on the date the amendment is first applied with the effect to retained earnings from the beginning of period in which the amendment is first applied IASB discussion and decision During the discussion it was proposed not to add anything to the standard The reasoning behind this was that a similar issue expressed using wording similar to that used in the proposed amendment already exists within the standard No guidance had been provided in relation to that issue and therefore for consistency no guidance should be provided in this instance Deferral of the effective date of the September 2014 Amendment to IFRS 10 and IAS 28 The September 2014 Amendment to IFRS 10 and IAS 28 relates to Sale or Contribution of Assets or Joint Ventures The IASB was asked whether they agree with the staff s recommendations relating to finalising the deferral A number of courses of action were raised based on responses to the ED

    Original URL path: http://www.iasplus.com/en/meeting-notes/iasb/2015/november/implementation-issues (2016-02-10)
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  • IFRS Interpretations Committee meeting — 10–11 November 2015
    Login Name Password Login Register Forgot password Welcome My account Logout IAS Plus Global English Global English Global Deutsch Canada English Canada Français United Kingdom English United States English Toggle navigation Search site Toggle navigation Home News Publications Meetings Standards Projects Jurisdictions Resources My IAS Plus Topics Communications Toggle navigation Search site Info Site map Jurisdictions Africa Americas Asia Europe Oceania News 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Projects Major projects Narrow scope amendments Research projects Post implementation reviews Agenda consultations Completed projects Items not added to the agenda IFRIC Resources IFRS Foundation and the IASB Use and adoption of IFRS Global organisations Regional organisations Topics in financial reporting Research and education Sustainability and integrated reporting Standards International Financial Reporting Standards International Accounting Standards IFRIC Interpretations SIC Interpretations Other pronouncements Meeting notes Important IASB Dates IASB IFRS Foundation Trustees IFRS Interpretations Committee 2015 IFRS Interpretations Committee meeting 10 11 November 2015 IFRS Advisory Council Accounting Standards Advisory Forum ASAF Contact us About Legal Privacy FAQs Material on this website is 2015 Deloitte Global Services Limited or a member firm of Deloitte Touche Tohmatsu Limited or one of their related

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/sitemap (2016-02-10)
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  • IAS 16/IAS 38/IFRIC 12 — Variable payments for asset purchases and payments made by an operator to a grantor
    so principles consistent with those of business combinations should be applied when accounting for variable payments because they provide a conceptually robust conclusion that leads to a more faithful representation of the economic consideration transferred In addition the staff considered and presented the advantages and disadvantages of instead applying leasing principles for the Committee s consideration Subsequent measurement When an adjustment to a liability is interest expense it would be recognised in profit or loss Any other adjustments to the financial liability that result from a revision of estimates of payments would be an adjustment to the cost of the related asset The Committee was asked whether it agrees with the staff s resulting proposals relating to the initial recognition and measurement see Agenda Paper 2A and the subsequent recognition and measurement see Agenda Paper 2B of variable payments made for the purchase of property plant and equipment and intangible assets outside of a business combination Committee discussion and decision After a lively discussion the Chair identified and confirmed with the Committee that no consensus had been or could be reached relating to the issues under discussion The issue under consideration is too big and too fundamental to be addressed by the Committee and the Chair requested the staff to prepare an Agenda Decision for review that reflected this Many different aspects were discussed by the Committee The primary issue is whether or not the variable payments would or should be recognised as a liability in particular a financial liability Some Committee members were of the opinion that they should while others did not share this view but there was agreement that consideration of this issue was particularly complex given the inconsistent treatment within numerous Standards Furthermore many members raised concerns about measurement and uncertainty of any liability that was recognised In addition there was no consensus irrespective of whether a liability could be recognised or not regarding which accounting principles business combinations or lease accounting should be applied Service concession arrangements Staff recommendations The staff per the Committee s request also considered whether service concession arrangements represent a distinct and specific type of transaction that can be separately analysed In addition the staff have considered whether a solution for accounting for payments to be made by an operator to a grantor under such an arrangement could be developed without addressing the broader issues of variable payments for asset purchases see Agenda Paper 2C The staff concluded that the intangible asset arising under a service concession arrangement is not unique and therefore the Committee should resolve the broader issue of accounting for variable payments for asset purchases If consensus cannot be reached the staff think that a solution with similar principles applied to accounting for a lease arrangement can be developed within the confines of IFRIC 12 The Committee was asked whether consensus on the appropriate consensus accounting for variable payments for asset purchases can be reached and if not should work on a solution within the confines of IFRIC

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/ias-16-ias-38-ifric-12 (2016-02-10)
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  • Definition of a business – Update on IASB’s proposals
    useful improvements to IFRS 3 and would address the issues that had arisen in practice It was acknowledged that this would always be an area of judgement but that the proposals provided a helpful framework for applying that judgement The Committee members made suggestions for improvements to some of the proposals with Proposal 3 to not consider a set a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets attracting the greatest discussion With respect to Proposal 3 there were concerns expressed that this could be tricky to apply in practice One Committee member highlighted the fact that situations might arise where the bulk of the fair value was concentrated in assets that were not part of the primary focus of the business for example in a start up biotech company that happened to own a building and had in process R D IPR D the bulk of the fair value could be in the building rather than in the IPR D in which case an entity might come to a different conclusion under this test Another Committee member observed that it appeared that if an entity was going to determine whether the fair value of the assets acquired was concentrated in a single asset by comparing it to the fair value of the gross assets the entity would be required to do a whole purchase price allocation to get there which seemed to defeat the purpose of then saying it was an asset acquisition The Committee member added that if the other proposals were followed this step would not be necessary as an entity would get to the answer anyway Several Committee members highlighted unit of account issues that could arise under this proposal It was specifically noted that under IFRS today investment property was considered to be a single unit of account including all in place leases and questioned whether under this proposal entities would be required to separate out the value of property and the value of the leases With respect to Proposal 1 it was observed that what was considered a substantive process would create some judgement issues and a Committee member suggested that in addition to the proposed examples some further guidance on this could be helpful Another Committee member noted that it was not clear whether if an entity i e an exploration entity acquired inputs i e tenements and a workforce undertaking drilling and exploration activities that were capable of producing something on the path to the ultimate output but not the ultimate output that would be a business or not With respect to Proposal 4 revising the definition of outputs to focus on goods and services provided to customers a Committee member questioned whether a customer could be internal It was noted that this question had arisen in the joint IASB FASB meeting and confirmed that a customer could be internal In general it was

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/definition-of-a-business (2016-02-10)
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  • IAS 2 — Prepayments in long-term supply contracts
    recorded 10 Nov 2015 Background tentative agenda decision The IFRS Interpretations Committee has been considering whether a purchaser should accrete interest on long term prepayments for the purchase of inventory The original request arose in relation to long term supply contracts for raw materials for which the purchaser agrees to make prepayments to the supplier Recognising interest income would increase the cost of inventories and ultimately the cost of sales In July 2015 the Interpretations Committee concluded that the issue should not be added to the agenda It did so on the grounds that its outreach gleaned very little information about the extent of the problem or whether there was diversity in practice The Interpretations Committee issued a tentative agenda decision which stated that if a long term supply contract contains a significant financing component that financing component should be recognised separately Comment letter analysis The purpose of this session is to discuss the comments letters received The Interpretations Committee received three comment letters Two of the submitters urged the Interpretations Committee to add this issue to its agenda mainly to address an uncertainty The staff recommendation is to finalise the agenda decision on the grounds that the comment letters did not provide additional information and that the original conclusion of the Interpretations Committee remains valid Discussion The majority of the Interpretation Committee members approved the staff recommendation During the discussion it was agreed to amend the wording of the agenda decision by removing a reference to raw materials so as to make the wording more generic to long term supply contracts The support was based on the fact that those transactions depend on specific facts and circumstances which made it difficult to specify and analyse Some Interpretation Committee members raised a concern that the agenda decision implied that a

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/ias-2-supply-contracts (2016-02-10)
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  • IAS 20 — Recoverable cash payments
    of the R D project The submitter cited current divergence in practice Staff recommendation Having performed analysis and outreach on the issue the staff considered there was sufficient guidance in IAS 20 and other Standards to assist an entity in determining the appropriate treatment for the cash payments and that diversity in practice was limited The staff highlighted that the appropriate accounting would depend on the specific terms and conditions of the cash payment received and included in the paper a list of factors that an entity should consider in determining the appropriate accounting for the cash payment These factors were also set out in the tentative agenda decision and related to a whether the assistance gave the government ownership in the entity and if it did not whether it was a loan at favourable terms The staff concluded that for the scenario considered the payment was likely to be a forgivable loan in the first instance The staff recommended that the issue was not taken onto the Interpretations Committee s agenda and proposed wording for a tentative agenda decision The Interpretations Committee was asked whether they agreed with the conclusion of the staff and with the wording in the tentative agenda decision Interpretations Committee discussion and decision There was general agreement amongst the Committee members on the proposed direction the IASB staff had taken on this issue with observations made that the facts and circumstances and terms and conditions of these transactions vary greatly judgement is required in determining the appropriate accounting treatment and that predominant practice is to account for them as forgivable loans Commenting on the staff view in paragraph 45 of the agenda paper that this loan should be accounted for under IFRS 9 until there is reasonable assurance that the R D project will not be successful and the entity will abandon the project and meet the terms for forgiveness for all or a portion of the loan several Committee members questioned what reasonable assurance meant and at what stage this would be achieved It was observed that determining whether there was reasonable assurance would be a matter of judgement and a Committee member suggested including this point in the agenda decision to make it clear that this was not at a specific point in any arrangement The ESMA representative present supported this edit adding that this was a key element in the analysis and therefore worth mentioning in the agenda decision The point was also raised that if a loan was being accounted for under IFRS 9 one would need to meet the derecognition criteria in IFRS 9 to move away from accounting for the liability under IFRS 9 Several Committee members observed that the agenda decision picked up some peripheral issues around government participation and below market rate loans and noted that these were considerations that would need to be applied in any circumstances and did not address the question actually asked They expressed concern that inclusion of these issues could result in

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/ias-20-government (2016-02-10)
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  • IAS 12 — Income tax consequences of interest payments on, and issuing costs of, financial instruments that are classified as equity
    costs of financial instruments that are classified as equity The Interpretations Committee has received a request to clarify the accounting for the income tax consequences income tax consequences of interest payments to holders of equity instruments and the costs of issuing such instruments In general IAS 12 requires that the tax consequences follow the primary transaction or event Accordingly if an item is recognised directly in equity the deferred tax that relates to that item is also recognised directly in equity However IAS 12 52B states that the income tax consequences of dividends are recognised in profit or loss unless the dividends relates to transactions recognised outside of profit or loss or a business combination The submitter is seeking clarity as to whether instruments such as perpetual bonds that provide interest payments at the discretion of the entity which are deductible for tax purposes by the entity should be recognised and therefore presented in profit or loss or directly in equity They are also seeking the same clarity for issue costs of this type of instrument Staff recommendation The staff recommendation to the Committee is that the issue not be added to its agenda The staff believe that a conclusion can be reached drawing on existing principles in IAS 12 Most of the staff analysis relates to the interest payments The tax accounting for the costs of issuing the instrument seem less contentious with the recommendation being that the tax consequences be recognised directly in equity consistently with the presentation of the transactions that create those income tax consequences Staff paper paragraph 48 b On the interest payments the staff argue that whereas dividends are generally distributed from retained earnings interest payments on equity instruments are not associated with anything other than the interest payments themselves and therefore the income tax consequences are not linked to past transactions or events sic Staff paper paragraph 31 By implication the staff have concluded that these discretionary interest payments are not distributions Staff paper paragraph 29 On this basis the staff conclude that that IAS 12 52B would not apply to these interest payments and that consequently the related income tax consequences should be presented directly in equity Committee discussion and decision The Committee believe that there is a disconnect in IAS 12 between the requirement to have the deferred tax consequences follow the accounting for the related item and the exception in IAS 12 52B for distributions Some members of the Committee disagreed with the staff analysis that this was not a distribution and also highlighted that in some jurisdictions dividends are the subject of a solvency test rather than a reference to retained earnings Ultimately the conflict can only be resolved through an interpretation of or a narrow scope amendment to IAS 12 The issue will be brought back when the Committee next has a face to face meeting in March 2016 Related Topics Standards IAS 12 Income Taxes Related news We comment on two IFRIC draft Interpretations 19 Jan 2016

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2015/november/ias-12 (2016-02-10)
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