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  • IFRS in Focus — IASB issues amendments to IAS 7 'Statement of Cash Flows' requiring disclosure of changes in liabilities arising from financing activities
    amendments to IAS 7 Statement of Cash Flows requiring disclosure of changes in liabilities arising from financing activities Published on 01 Feb 2016 This newsletter outlines the IASB s recent amendments to IAS 7 Statement of Cash Flows The amendments are part of the IASB s disclosure initiative project and introduce additional disclosure requirements intended to address investors concerns that financial statements do not currently enable them to understand the entity s cash flows particularly in respect to the management of financing activities Download Related Topics Publication series IFRS in Focus Resources IASB finalised pronouncements International Accounting Standards Board IASB Projects Disclosure initiative Net debt Standards IAS 7 Statement of Cash Flows Quick links Spanish translation of this publication 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 FEE briefing paper on the endorsement of IFRS 9 08 Feb 2016 February 2016 IASB meeting agenda posted 05 Feb 2016 All Related Related Publications Deloitte comment letter on proposed amendments to IFRS 4 08 Feb 2016 EFRAG endorsement status report 29 January 2016 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 Disclosure initiative Standards level review of disclosures and amendments to IAS 7 15 Dec 2015 Disclosure initiative 21 Oct 2015 Disclosure initiative Amendments to IAS 7 22 Sep 2015 IFRS Taxonomy education session 22

    Original URL path: http://www.iasplus.com/en/publications/global/ifrs-in-focus/2016/ias-7-amendments (2016-02-10)
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  • EFRAG endorsement status report 29 January 2016
    Third party publications Conceptual Framework bulletins EFRAG endorsement status reports Accounting research papers Miscellaneous IFRS e learning Info EFRAG endorsement status report 29 January 2016 Published on 01 Feb 2016 This endorsement status report update reflects the issuance of amendments to IAS 7 Statement of Cash Flows by the IASB on 29 January 2016 Endorsement is currently expected in the fourth quarter of 2016 Download Related Topics Publication series EFRAG endorsement status reports Resources EFRAG IFRS endorsement status reports European Financial Reporting Advisory Group EFRAG IASB finalised pronouncements Standards IAS 7 Statement of Cash Flows Related news 2016 IFRS Red Book coming in March 09 Feb 2016 EU endorsement of IFRS 9 now expected in the second half of 2016 04 Feb 2016 IASB finalises amendments to IAS 7 under its disclosure initiative 29 Jan 2016 IASB finalises amendments regarding the recognition of deferred tax assets for unrealised losses 19 Jan 2016 IASB issues new leasing standard 13 Jan 2016 EFRAG publishes summary report for its Conceptual Framework outreach event in Brussels 12 Jan 2016 All Related Related Publications EFRAG endorsement status report 3 February 2016 04 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 IFRS industry insights Telecommunications sector Implications of the new leasing standard 21 Jan 2016 EFRAG endorsement status report 19 January 2016 20 Jan 2016 All Related Related Discussions Disclosure initiative Amendments to IAS 7 22 Sep 2015 IFRS Taxonomy education session 22 Jul 2015 Disclosure initative 16 Dec 2014 Disclosure initiative 24 Oct 2014 All Related Related Dates Effective date of the 2016 disclosure initiative amendments to IAS 7 01 Jan 2017 Effective date of the 2015 amendments to the IFRS for SMEs 01 Jan

    Original URL path: http://www.iasplus.com/en/publications/efrag/2016/29-january-2016 (2016-02-10)
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  • Changes to Dutch Accounting Standards for small legal entities — Changes to annual edition 2015, including amendments to Title 9 Book 2 NCC
    Search site Publication Directory Global publications Member firm publications Australia Belgium Brazil Canada China Colombia Czech Republic Denmark Germany Hong Kong Hungary India Ireland Japan Korea Luxembourg Malaysia Mexico Netherlands Other Netherlands publications New Zealand Poland Portugal Russia Singapore South Africa Spain Switzerland Taiwan United Kingdom United States Non English publications Third party publications IFRS e learning Info Changes to Dutch Accounting Standards for small legal entities Changes to annual edition 2015 including amendments to Title 9 Book 2 NCC Published on 29 Jan 2016 The annual edition 2015 of the Dutch Accounting Standards DASs for small legal entities includes several changes The annual edition 2015 is effective for financial years starting on or after January 1 2016 Most changes follow from amendments to Title 9 Book 2 of the Netherlands Civil Code and the related Decrees The annual edition 2015 of the Dutch Accounting Standards for small legal entities does not include new draft standards This publication solely outlines the changes Download Related Topics Publication series Other Netherlands publications Jurisdictions Netherlands Related news Joint outreach event on the conceptual framework Amsterdam 31 Jul 2015 Survey on the PIE definitions applicable in European countries 13 Oct 2014 EFRAG outreach on Conceptual Framework 30 Sep 2013 IFRS Foundation publishes jurisdiction profiles on the application of IFRSs 05 Jun 2013 Report from recent IFASS meeting released 17 Jan 2013 EFRAG outreach on disclosures event in Amsterdam 01 Oct 2012 All Related Related Publications Changes to Dutch Accounting Standards for large and medium sized legal entities Changes to annual edition 2015 including amendments to Title 9 Book 2 NCC 29 Jan 2016 IFRSs and NL GAAP Highlighting the key differences 27 Nov 2015 Changes to Dutch Accounting Standards for large and medium sized legal entities Changes to annual edition 2014 12 Jan 2015

    Original URL path: http://www.iasplus.com/en/publications/netherlands/dutch-small-legal-entities-changes-2015 (2016-02-10)
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  • Changes to Dutch Accounting Standards for large and medium-sized legal entities — Changes to annual edition 2015, including amendments to Title 9 Book 2 NCC
    Ireland Japan Korea Luxembourg Malaysia Mexico Netherlands Other Netherlands publications New Zealand Poland Portugal Russia Singapore South Africa Spain Switzerland Taiwan United Kingdom United States Non English publications Third party publications IFRS e learning Info Changes to Dutch Accounting Standards for large and medium sized legal entities Changes to annual edition 2015 including amendments to Title 9 Book 2 NCC Published on 29 Jan 2016 The annual edition 2015 of the Dutch Accounting Standards DASs for large and medium sized legal entities includes several changes The annual edition 2015 is effective for financial years starting on or after January 1 2016 Most changes follow from amendments to Title 9 Book 2 of the Netherlands Civil Code and the related Decrees The annual edition 2015 of the DASs includes new draft standards as well Draft standards do not yet formally apply However anticipating the final standards draft standards do provide the accounting practice with a certain extent of support and guidance DAS 100 206 This publication solely outlines the changes Please note that industry specific changes such as for banks pension funds educational institutions and housing cooperatives are not addressed Download Related Topics Publication series Other Netherlands publications Jurisdictions Netherlands Related news Joint outreach event on the conceptual framework Amsterdam 31 Jul 2015 Survey on the PIE definitions applicable in European countries 13 Oct 2014 EFRAG outreach on Conceptual Framework 30 Sep 2013 IFRS Foundation publishes jurisdiction profiles on the application of IFRSs 05 Jun 2013 Report from recent IFASS meeting released 17 Jan 2013 EFRAG outreach on disclosures event in Amsterdam 01 Oct 2012 All Related Related Publications Changes to Dutch Accounting Standards for small legal entities Changes to annual edition 2015 including amendments to Title 9 Book 2 NCC 29 Jan 2016 IFRSs and NL GAAP Highlighting the key

    Original URL path: http://www.iasplus.com/en/publications/netherlands/dutch-large-medium-sized-legal-entities-2015 (2016-02-10)
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  • IASB meeting — 16–17 February 2016
    use c Expected manner of recovery The staff does not recommend moving to a one model approach because it considers that the current approach in IAS 36 is conceptually correct However if the Board decides to consider a one approach model the staff prefers approach a 2 Relief from the annual impairment test requirement The staff considers that instead of an annual requirement there should be an indicator only approach with the addition of i a qualitative assessment of whether it is more likely than not that the fair value of a CGU to which goodwill is allocated is less than its carrying amount and ii an impairment indicator of whether actual performance of the acquisition was worse that its expected performance during the first three years following an acquisition 3 Address investor s concerns about the current information provided The staff proposes i focusing on improving the impairment test by making it less burdensome and ii requiring disclosure of key performance assumptions or targets supporting the purchase price allocation IFRS implementation issues 17 Feb 2016 The Board will discuss issues from the most recent IFRS Interpretations Committee meeting Agenda paper summary The regular update summary paper on the most recent IFRS Interpretations Committee meeting was made available IFRS 9 Financial Instruments and IAS 28 Investments in Associates and Joint Ventures Measurement of long term interests Background The issue refer to Agenda Paper 12A relates to the interaction between IFRS 9 and IAS 28 the measurement impairment in particular of long term interests in associates and joint ventures that form part of the net investment referred to as long term investments In its December 2015 meeting the IASB discussed the issue but no conclusions were reached The staff has requested that the IASB continue their discussion of the matter and has provided them with further analysis The staff will ask the IASB to consider the following does the scope exception in IFRS 9 paragraph 2 1 a apply to long term interests in associates or joint ventures and if the scope exception does not apply how the requirements of IFRS 9 and IAS 28 interact relating to these interests Furthermore at its December 2015 meeting some IASB members were uncertain about what type of interests are considered to be long term interests The IASB suggested that an interpretation be developed to clarify which interests should be included in the net investment of an associate or joint venture Staff analysis The staff is of the opinion that the requirements of IFRS 9 including those relating to impairment would apply to long term interests to which the equity method has not been applied in other words the scope exception does not apply to such long term interests The relevant exception to the scope of IFRS 9 applies only to interests accounted for using the equity method this is clarified by IAS 28 14 Furthermore IAS 28 38 distinguishes between investments accounted for using the equity method and long term interests that are in substance part of the entity s net investment in the associate or joint venture the staff understand therefore that long term interests are separate from interests to which the equity method is applied Based on the conclusion above the staff provided their recommendation relating to the accounting for such long term interests An entity would classify and measure such long term investments in accordance with IFRS 9 When allocating any impairment losses the carrying amount of the interests determined under IFRS 9 would be included in the net investment to which impairment is allocated and this net investment would be in accordance with IAS 28 40 43 Relating to the IASB s suggested interpretation of those interests be included in the net investment of an associate or joint venture the staff feel that any issues relating to investments to be accounted for using the equity method should be addressed as part of the equity accounting project The IASB is being asked whether it agrees with the staff analysis a that the scope exception in paragraph 2 1 a of IFRS 9 does not apply to long term interests and b of the accounting for long term interests in an associate or joint venture The views of the IASB will be reported back to the IFRS Interpretations Committee IAS 1 Presentation of Financial Statements Current non current classification of liabilities Background The IASB proposed in the Classification of Liabilities ED clarifications to IAS 1 relating to the classification of liabilities as either current or non current In these proposals Classification would be based on rights in existence at the end of the reporting date a liability would be current unless the entity has the right to defer settlement for at least twelve months after reporting date If the right to defer settlement for a period greater than twelve months is subject to a condition the entity must determine whether it is in compliance with that condition as at the reporting date when considering classification of the liability Respondents to the IASB s public consultation on these proposals questioned how an entity would assess compliance with a condition in circumstances when compliance with a condition is not or cannot be tested until after the reporting period see Agenda Paper 12B Staff analysis The staff presented analysis relating to a number of queries raised by respondents for the IASB s consideration Testing conditions at a specified date Example a Comment letter respondents considered the right to defer settlement and more specifically whether a right actually exists at the end of the reporting period if a condition of the right is subject to testing after the reporting period and how compliance with such a condition is to be assessed as at reporting date The staff are of the opinion that any condition would be in place to protect the lender s interest and therefore should be in place continuously Compliance with this condition should be assessed as at the reporting date The IASB

    Original URL path: http://www.iasplus.com/en/meeting-notes/iasb/2016/february/february (2016-02-10)
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  • IASB meeting — 19–20 January 2016
    concept of similar profitability as the nature of insurance is that different contracts will have different outcomes in terms of claims Another member suggested that the Staff provides examples of what is meant by similar profitability Tentative decision The Board unanimously approved the Staff recommendation Second question Level of aggregation for the allocation of the contractual service margin CSM The Staff noted that they added a third criteria that contracts were in the same group when they expected to end at a similar time Two Board members stated that they considered that there was no need for the additional criteria One of these members stated that he would prefer the requirement to be more principles based such that if the allocation would leave the balance of CSM at the end of the period to represent the profits on all remaining contracts If all contracts lapse or mature in the period the CSM should be nil The debate that followed appeared to lead to the conclusion that the third criteria did not add a great deal that the objective was important and that the mechanics by which the objective is met should be left open The Staff agreed that the CSM only relates to contracts in force and that rigid criteria were not required to achieve that accounting objective The reminder of the discussion on this topic was deferred to enable the Staff to reword the third criteria Level of aggregation addendum 2A addendum The paper summarises the key points from the Board s discussion on 19 January aiming to clarify whether the objective is to allocate the CSM on an individual contract basis with groupings permitted if they can meet the objective The paper considers whether specifying objective of allocation on an individual contract basis would force the entities to apply it that way and whether explicit groupings guidance is required The paper recommends that a The objective for the allocation of the CSM is to recognise CSM for an individual contract in profit or loss over the coverage period in a way that best reflects the transfer of services under the contract This means that the CSM for contracts where the coverage period has ended has to be fully recognised in profit and loss b Entities can group contracts provided the objective above is achieved c The objective is deemed to be achieved a safe harbour if the following criteria are met The contracts are in the group that Have cash flows responding similarly to key risks in terms of amount and timing and Have similar expected profitability at inception measured as CSM percentage of a the premium The group CSM is adjusted to reflect expected duration and size of the contract remaining after the end of the period Several Board members expressed concern at the reference in the first criteria to an individual contract rather than to a group of contracts which could be misinterpreted The Staff stated that the adjustment would be made at a group level but the objective applies to each contract However they confirmed that they would clarity what was intended when drafting the new Standard and they would also provide examples The Board members clarified that the Insurance standard requires different levels of aggregation for different purposes The same lowest level of aggregation could be used for all purposes but does not need to be The level of aggregation for onerous contracts for example would be met by criteria in paragraph c i The level of aggregation for determining the risk adjustment can be at a much higher level Some Board members suggested that there is a difference in measurement and allocation while the Staff members did not see that distinction In the Staff view there is no need to track individual contracts but the group needs to be adjusted if the entity is aware that different contracts in the group behave differently Some Board members had reservations about a clear reference to individual contract in the objective They wanted to add individual contract or group of contracts where the group would meet the conditions in paragraph c However some members saw criteria in paragraph c that as too restrictive since they were safe harbour criteria whereas inserting a word group in the objective without any constraints could be interpreted too widely Tentative decision The Board agreed that the wording would need to be revised but voted twelve against two to support the Staff recommendation that the objective of the CSM allocation is to achieve very homogenous groups that grouping is allowed if that objective is met and there should be a safe harbour example of a grouping that definitely meets the objective Third question Exception for the effect of regulation The discussion of paper 2A focussed around the effect of regulation on the recognition of CSM The paper recommended that there should be no exception to the level of aggregation for determining onerous contracts or determining the allocation of the CSM as a result of regulation This point provoked a lively debate For example gender equality regulations mean that insurers need to charge the same premium to male and female drivers even if the risks are different As a result economically female drivers may be subsidising male drivers however considered as a portfolio the risk and overall profitability to the insurer remain the same Viewed as two separate portfolios the CSM of the female drivers would be much higher whereas the male drivers CSM may result in a group of onerous contracts Some members viewed this result as not reflecting the economic substance whereas others viewed it as appropriately highlighting the different profitability of the two portfolios There was also a concern that allowing for the effect of regulation required defining what regulation was and it would create an undesirable precedent for other industry groups Tentative decision The Board approved the Staff recommendation with 10 members voting for and 4 against Specifying the effect of discretion in the general model paper 2B This paper addresses how the effect of discretion for participating contracts which do not meet the definition of direct participating contracts to which the variable fee approach would be applied which therefore fall within the scope of the general model Participating contracts will often include cash flows that the entity expects to pay but which it has discretion to change which are included in the fulfilment cash flows Changes in estimates of discretionary cash flows would adjust the CSM because they are regarded as relating to future service The 2013 Exposure Draft simply stated the principle that changes in future service adjust the CSM At the November 2015 meeting the Board considered four ways to distinguish changes caused by market variables that are recognised in the statement of comprehensive income and changes in discretionary cash flows that adjust the CSM At that meeting the staff recommended using the market as a benchmark to determine the effect of discretion Some Board members suggested an approach that combined two of these views The staff think that such an approach would require an entity to specify at the inception of the contract how it viewed its discretion and to use that specification to distinguish between the effect of changes in market variables and changes in discretion Entities that gave different specifications about discretion would get different results from similar contracts but the staff think that the different results could provide useful information to the users of financial statements because such information reflects the entity s perspective about its discretion The staff think that there are two finely balanced viable alternatives The Board is asked to consider whether it wishes to require an entity a to specify how it determines the effect of discretion which is effectively relying on the principle in the 2013 Exposure Draft or b specifying further guidance by stating that an entity must determine the effect of discretion by reference to the market Board discussion Several Board members preferred the second suggestion which was that an entity would be required to determine the effect of discretion by reference to the market A Board member stated that it is useful for users of financial statements to know the expected or targeted rate of return and another expressed the view that in many cases it is possible to identify the effect on the fulfilment cash flows arising from changes in market variables Tentative decision The Board unanimously approved the second Staff suggestion Research project on discount rates education session 19 Jan 2016 This education session was part of the development of a possible research paper on discount rates The staff updated the IASB on their findings regarding 1 present value measurement methodology in particular relating to tax 2 presentation and disclosures relating to present value measurement 3 present value measurement objectives and how they explain the differences in discount rates and 4 scope of present value measurements in IFRS No decisions were made Recap In this educational session the staff has updated the IASB on their findings regarding present value measurement methodology in particular relating to tax presentation and disclosures relating to present value measurement present value measurement objectives and how they explain the differences in discount rates and scope of present value measurements in IFRS In these areas the staff have identified the following financial reporting problems the methodology for reflecting tax in measurement can be misunderstood and unclear leading to material effects and additional implementation costs inconsistent use of other comprehensive income and profit or loss relating to present value measurements makes comparisons difficult inconsistent disclosure requirements hamper comparisons there is a lack of clarity of measurement objectives in individual Standards and not discounting deferred tax impairs comparability and it can have a material effect Methodology for reflecting tax in measurement can be misunderstood and unclear leading to material effects and additional implementation costs The staff have identified three issues in this area The meaning of pre tax rate is not clearly explained in IFRS and can lead to using a pre tax rate from an instrument that is taxed differently which leads to misstatement The issue is no different from reflecting risk from an instrument that has a different risk profile Conversion from pre tax to post tax rates and vice versa is not always straightforward and taking shortcuts could lead to errors Requirement to only use pre tax inputs in IAS 36 is burdensome for preparers and does not seem to be necessary As there is no unwinding of discount any method used would achieve the same outcome IFRS 13 is the only Standard that explicitly allows use of either pre tax or post tax inputs Inconsistent use of other comprehensive income and profit or loss relating to present value measurements makes comparisons difficult The staff have identified that changes in discount rates and changes in cash flows are recognised inconsistently between pensions provisions and insurance contracts Furthermore the unwinding of discount is not always recognised as interest cost and if it is different terms are used Inconsistent disclosure requirements hamper comparisons The staff have examined different disclosure requirements for fair value IAS 19 IAS 36 IAS 37 and the latest proposals on insurance contracts The following disclosures were not consistently required for all Standards discount rate used profit and loss effect in the period sensitivity analysis for assumptions comparatives and methods used There is a lack of clarity of measurement objectives in individual Standards The staff have found that measurement objectives in individual Standards are different and explain some of the differences in discount rates However two issues have been identified IAS 19 lacks a measurement objective and the rule based guidance seems incompatible with any objectives The IAS 37 measurement objective is unclear leading to different interpretations including whether to include own credit risk in measurement Not discounting deferred tax impairs comparability and can have a material effect A measurement based on past or future cash flows that does not reflect the time value of money is not comparable to a measurement that does Yet IFRS does not currently require the time value of money to be reflected in the measurement of deferred taxes Purpose of the meeting The discussion is part of the development of a possible research paper on discount rates The Board has been discussing the research undertaken by the staff in a series of similar sessions and providing feedback on whether they think it documents issues associated with discount rates in an appropriate way As such the Board is not being requested to make any technical decisions at this point Board discussion Before touching on the technical issues of the agenda paper the Director of Research confirmed that a first screening of responses to the 2015 Agenda Consultation revealed that discount rates were still a very high priority for constituents Regarding general issues one Board member proposed to clarify that the financial reporting problem of IAS 36 was not only related to value in use but also to fair value less cost to sell even if the latter was mostly covered by IFRS 13 Regarding the question of how risk should be reflected one Board member said that adjustments to the cash flows or the rates might be overly simplistic He proposed deeper analysis and research in this area He would be interested in how preparers adjusted for risk under the current guidance Methodology for reflecting tax in measurement can be misunderstood and unclear leading to material effects and additional implementation costs The Senior Technical Manager presented an example that was handed out during the meeting The example showed that the sum of pre tax cash flows and tax cash flows discounted by the post tax rate delivered the same result as post tax cash flows discounted by the post tax rate Several Board members disagreed with the example and a lively discussion ensued Many of the issues raised by the Board members related to the actual numbers of the example As a consequence the Executive Technical Director proposed to address issues regarding the example outside of the Board meeting Some Board members disagreed with that approach As a compromise the Board agreed that the example should be revised and brought back at a later Board meeting One Board member said that the example should distinguish between different kinds of measurement e g value in use bond like instruments etc As regards pre tax vs post tax one Board member stated that preparers should take the rate that is easier to observe The Senior Technical Manager replied that although pre tax was in theory easier to observe preparers would often derive pre tax rates by artificially adjusting post tax rates Inconsistent use of other comprehensive income and profit or loss relating to present value measurements makes comparisons difficult One Board member suggested moving this topic to the primary financial statements project As regards the pensions issue one Board member said that the Standard was clear that the unwinding of discounting was interest expense The Senior Technical Manager confirmed that however the presentation guidance in IAS 1 was very high level which led to diversity Inconsistent disclosure requirements hamper comparisons One Board member disagreed with the indication in the agenda paper that a reconciliation of opening to closing balance was not applicable for IAS 36 In his view it was applicable as the value in use could potentially be reconciled from opening to closing balance Several Board members replied that this was a matter for IAS 16 rather than IAS 36 as it would be a reconciliation of the carrying amount of property plant and equipment instead of a reconciliation of value in use After a short discussion the Board member was still of the view that reconciliations were applicable for IAS 36 but agreed that they were covered elsewhere Not discounting deferred tax impairs comparability and can have a material effect One Board member thought that discounting deferred tax was outside the scope of the project as it was a deliberate decision at that time and not an oversight She said that any revision of this decision should only be done in a dedicated IAS 12 project Several Board members agreed with one stating that the scope of the discount rates project was already too wide The Vice Chairman said it had been a practical decision not to discount deferred taxes but that he did not see why it could not be addressed in the discount rates project A Board member said that it was not operational in practice to time the cash flows arising from deferred taxes To mandate the discounting of deferred taxes would lead to much higher costs for the preparers which did not outweigh the benefits No decisions were made Fair value measurement 20 Jan 2016 The Board continued its analysis of the comment letters received on the ED Measuring Quoted Investments in Subsidiaries Joint Ventures and Associates at Fair Value Recap The Board continued with the analysis of the comment letters received on the ED Measuring Quoted Investments in Subsidiaries Joint Ventures and Associates at Fair Value When the Board last considered this topic in November 2015 the Board was provided with an assessment of the population that could be affected by the ED and the analysis of feedback received from valuation specialists accounting firms securities regulators the Accounting Standards Advisory Forum ASAF and staff of the Financial Accounting Standards Board FASB The purpose of this session was to discuss the feedback received from users and preparers of financial statements Agenda paper 6A the analysis of the academic review undertaken by the staff Agenda paper 6B and the staff proposal for next steps Agenda paper 6C Staff analysis and recommendation On the first topic the staff indicated that in accordance with the feedback obtained the majority of users primarily investors were in favour of using P x Q because they believed that it provides a more reliable measure than assumptions taken in valuation techniques by management while

    Original URL path: http://www.iasplus.com/en/meeting-notes/iasb/2016/january/january (2016-02-10)
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  • IFRS Interpretations Committee meeting — 12 January 2016
    derecognise the liability using IAS 39 IFRS 9 or IAS 37 respectively In July 2014 the Interpretations Committee tentatively decided not to add the issue into its agenda In September 2015 Interpretations Committee concluded that the prepaid card met the definition of a financial liability because the entity had a contractual obligation to deliver cash and did not have an unconditional right to avoid delivering cash to settle the contractual obligation and consequently an entity would apply the guidance in IAS 39 IFRS 9 to determine when to derecognise the financial liability The purpose of this session was to analyse the comments letters received and the wording of the final agenda decision which included some wording suggestions from the comment letters received The agenda paper indicated that all the respondents agreed with not adding the issue into the Interpretations Committee agenda Discussion The Interpretations Committee did not reach a conclusion There was a decision to bring back the issue to the next meeting to be held in March to continue the discussion There remains a possibility that the Committee will not be able to reach a conclusion The concerns were focused on the following Some Interpretation Committee members believed that the comment letter issued by PWC had not been properly addressed by the staff analysis The comment letter stated that in the circumstances set out in the fact pattern the item did not meet did not meet the definition of a financial instrument because there was no financial asset and accordingly the transaction was out of scope of IAS 39 Some committee members thought that the item did meet the definition of a financial instrument Some Interpretation Committee members suggested that the issue of breakage should be discussed with the IASB because they believed that it would not make economic sense to maintain a liability perpetually For example it was mentioned that the most significant economic benefit for issuers of prepaid cards was the potential breakage Some Interpretation Committee members suggested taking the issue into the agenda and issuing a narrow scope amendment There were different views as to whether the fact pattern should include or exclude the possibility that the customer can redeem goods or services with the issuer of the prepaid card given the potential interaction with IFRS 15 On that regard there were also concerns raised of potential unintended consequences were the Committee to expand the topic On the other hand there was general agreement that the last paragraph of the draft agenda decision which makes reference to bifurcating transactions including customer loyalty programs should be deleted The main argument focused on the fact that they did not know how this requirement would work IFRS 11 Remeasurement of previously held interests 12 Jan 2016 The purpose of this session was to discuss the comment letters received The agenda paper indicated that the majority of respondents supported the staff analysis and accordingly the staff proposed to finalise the agenda decision Recap The Interpretations Committee was analysing whether previously held retained interests in the assets and liabilities of a joint operation should be remeasured in several transactions for which there was a lack of guidance and or diversity of views in accounting for previously held retained interests This session was focused on a transaction in which an entity obtained control or joint control of a joint operation that did not meet the definition of a business The Interpretations Committee noted that paragraph 2 b of IFRS 3 provided guidance on the typical accounting for an asset acquisition in which the asset or group of assets did not meet the definition of a business The staff did not identify diversity in practice on this transaction The purpose of this session was to discuss the comment letters received The agenda paper indicated that the majority of respondents supported the staff analysis and accordingly the staff proposed to finalise the agenda decision Discussion The Interpretations Committee agreed with issuing an agenda decision with wording changes to reflect some concerns discussed during the session Those concerns related to paragraph 2b of IFRS 3 Committee members thought that it did not provide enough guidance which was also suggested in one the comment letters and accordingly the agenda decision should provide more background information No other significant comments were made IFRS 5 Non current assets held for sale and discontinued operations 12 Jan 2016 The Committee discussed the staff s recommendation in connection with three previous tentative agenda decisions The staff recommended finalising one of them with minor changes and merging the other two into one issue In its September 2015 meeting the Committee published three tentative decisions relating to IFRS 5 related issues These are To what extent an impairment loss can be allocated to non current assets within a disposal group The presentation of intragroup transactions between continuing and discontinued operations and Various other IFRS 5 issues A number of comments were received from respondents on the proposed agenda decisions Issue 1 see Agenda Paper 7A Background The issue relates to the allocation of impairment losses to assets within a disposal group to the extent that they reduce the carrying amounts of assets below fair value less costs to sell The Committee decided not to add the issue to its agenda as it thought that sufficient guidance was already provided in IFRS 5 and IAS 36 Comment letter analysis Two of the three respondents agreed with the conclusion in the tentative agenda decision but suggested that it should discuss the unit of account The other respondent did not think that sufficient guidance was available Originally staff had included a discussion relating to the unit of account in the tentative agenda decision but the Committee decided that this should be removed as it would not affect the ultimate conclusion and consensus on its inclusion could not be reached Furthermore two respondents questioned whether this issue should be addressed separately from the other issues addressed as Issue 3 Staff recommendation Staff recommend that the agenda

    Original URL path: http://www.iasplus.com/en/meeting-notes/ifrs-ic/2016/january/january (2016-02-10)
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  • IASB meeting — 15–16 December 2015
    Classification and Measurement of Share based Payment Transactions The IASB discussed the proposed amendments to IFRS 2 in its November meeting After this meeting steps have been taken to complete the narrow scope project Based on the relevant criteria the staff proposed that the amendments be finalised without re exposure see Agenda Paper 12A The staff proposed that the amendment reflect the decisions made in the November meeting specifically The effects of vesting conditions on the measurement of cash settled share based payments When accounting for cash settled schemes including a performance condition the approach used for measuring equity settled schemes should be used refer to paragraphs 19 21A of IFRS 2 The classification of share based payment transactions with net settlement features Under existing requirements paragraph 34 of IFRS 2 such transactions would be bifurcated into an equity settled and a cash settled component and accounting would follow based on this split The IASB had previously decided to create an exception and remove the requirement to bifurcate if certain criteria are met If a scheme is net settled by withholding a specified portion of equity instruments to meet a statutory withholding tax obligation the transaction should be accounted for as equity settled in its entirety However this will only be the case if the scheme would have been accounted for as equity settled if the net settlement feature had not been included Further this exception would not apply to shares withheld in excess of the tax withholding 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 Given that IFRS 2 did not provide guidance on how to account for such a situation the IASB had previously decided to clarify that if a cash settled scheme is modified such that it is equity settled the cash settled scheme is replaced by a grant of equity instruments In such a situation measurement of the transaction is based on the modification date fair value of the equity instruments granted the previous liability is derecognised and the equity settled transaction is recognised in equity to the extent of services rendered to modification date and any difference between the liability and amount recognised in equity should be recognised in profit or loss immediately The IASB had sought to clarify that the guidance provided would also apply in a situation where a cash settled scheme is cancelled or settled and equity instruments granted as replacement equity instruments The IASB was asked whether it agrees that the amendments be finalised without re exposure whether any members intended to dissent from the final amendments proposed whether they agreed with a mandatory effective date for the amendments of 1 January 2018 and whether the members agreed that the required due process has been followed relating to the publication of the final amendments Board discussion All members agreed to finalise the amendments without re exposure with the proposed mandatory effective date and that due process had been followed correctly No members intend to dissent The staff propose to start the balloting process of the ED in January 2016 with finalisation in late February 2016 IAS 1 Presentation of Financial Statements Current non current classification of liabilities Staff provided the IASB with an analysis of comment letters received and outreach conducted relating to this issue see Agenda Paper 12B The IASB was asked whether it had any questions relating to the analysis presented and whether further analysis was required prior to finalising any amendments A number or questions were raised in the ED Classification of Liabilities and comments responses have been received relating to these Question 1 Classification based on rights at reporting date The proposals in the related ED clarify that classification of liabilities as current or non current is based on rights that are in place at the end of the reporting period and to clarify this wording amendments to IAS 1 were proposed by the IASB These included a replacing discretion with right in paragraph 73 to align it with paragraph 69 d b making it explicit in these paragraphs that only rights in place at the reporting date affect the classification of a liability and c deleting unconditional from paragraph 69 d therefore an unconditional right is replaced by a right The key messages from comment letters and outreach include the majority of respondents agree with proposal a above most respondents agree with proposal b above but some suggested that right should refer solely to substantive rights and mixed responses were received relating to proposal c above Board discussion The IASB discussion focussed on the need to ensure that what was trying to be achieved through the amendments was clearly understood and that further testing of the proposals would be beneficial Question 2 Linking settlement with the outflow of resources The IASB had previously proposed to clarify the link between the settlement of a liability and the outflow of resources from the entity by adding by the transfer to the counterparty of cash equity instruments other assets or services to paragraph 69 The majority of respondents supported this proposal Four related topics were also dealt with a when timing of settlement is uncertain A minority of respondents sought clarity for situations when the timing of settlement was uncertain The staff think that IAS 37 provides sufficient guidance in such situations b rollover and refinancing Many respondents agree that the term transfer clarifies that rollover of debt does not constitute settlement whereas refinancing would do c nature of the counterparty The staff in response to a comment received recommend that the IASB consider using the wording the counterparty or any entity authorised by the counterparty instead of transfer to the counterparty d the inclusion of equity in the proposed wording A number of respondents thought this inclusion could lead to confusion The staff intend to prepare further analysis for presentation to the IASB Board discussion Similarly to question 1 the IASB discussion focussed on the need to be clear as to what was trying to be achieved and what the overall outcome of the amendments is it is important to determine whether information presented should focus on the maturity of the liability or the liquidity thereof Question 3 Transition arrangements The proposal to retrospectively apply any amendments was agreed to by the majority of respondents They thought that consistency of information was vital despite analysis that indicates that the proposed amendments exhibit the characteristics of a change in estimate which would require prospective application Many responses received highlight that the proposals are likely to affect existing practice Therefore the staff recommends that any decisions made should be tested against the transactions referred to in comment letters prior to finalisation and publication of the amendments Board discussion There were no comments raised by the IASB The staff proposed to conduct more work relating to the various questions comments and responses received The IASB agreed with this IFRS 9 Financial Instruments and IAS 28 Investments in Associates and Joint Ventures Measurement of long term interests The staff provided a summary see Agenda Paper 12C of the IFRS IC discussions relating to the issue The issue relates to the interaction between IFRS 9 and IAS 28 the measurement impairment in particular of long term interests in associates and joint ventures that form part of the net investment The IASB was asked for its opinion regarding how the issue should be dealt with in other words how the scope exclusion to IFRS 9 is understood by the IASB and depending on this whether the IASB agreed with the staff s recommended alternative view to the accounting for long term interests The issue had been raised because of a lack of clarity about whether such impairment is governed by IFRS 9 IAS 28 or a combination of the two A number of views have been identified relating to accounting for such long term interests View A the interests are entirely within the scope of IFRS 9 subject to a loss allocation in accordance with IAS 28 View B the interests are entirely within the scope of IFRS 9 subject to a loss allocation in accordance with IAS 28 and also within the scope of IAS 28 for impairment View C entirely within the scope of IAS 28 and View D within the scope of IFRS 9 for classification and measurement purposes excluding the impairment subject to a loss allocation in accordance with IAS 28 and within the scope of IAS 28 for impairment The findings from outreach reflect that the majority of respondents feel that the requirements are unclear and therefore any or all of the views are possible Based on the current wording of IAS 28 and IFRS 9 the staff concluded that View D should be adopted In their September 2015 meeting the IFRS IC largely supported this view but noted that a narrow scope amendment should be made to clarify the issue as well to clarify the interaction between the two standards To address the potential interaction problem the staff developed an alternative view to View D This view accounts for the long term interest in accordance with IFRS 9 including impairment is subject to the allocation of the share of losses of an investee in accordance with IAS 28 and is assessed as part of the net investment using IAS 28 guidance The IFRS IC s view were mixed when this alternative was discussed at their November 2015 meeting The issue was therefore been brought to the IASB Board discussion The IASB discussion was lively and at times quite heated A small majority of IASB members 7 out of 13 agreed with the staff recommendations especially given that the alternative approach could deal with the issue without an amendment to IFRS 9 with the amendment instead being to IAS 28 Those who did not agree cited paragraph 34 of IAS 28 and its requirements that items that are in substance part of the net investment should be included as such and accounted for as equity However they conceded that such instances were likely to occur infrequently Further points were raised concerning the longer term project associated with equity accounting and whether and how this could address the issue and whether the staff s recommended approach could lead to double counting of losses Ultimately the staff stated that they would report back the outcomes of the discussion to the IFRS Interpretations Committee for their consideration as to what steps to take next Definition of a business 15 Dec 2015 The IASB discussed a Is the assessment of whether substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets needed or workable b Are there circumstances under which the acquisition of an outsourcing agreement would represent acquisition of a substantive process c What is the impact of the proposed changes on vertical integration d Can examples be added for financial institutions and extractive activity entities Recap In the October 2015 meeting the IASB tentatively decided to change the application guidance related to the definition of a business by proposing changes to IFRS 3 using the same changes being proposed by the FASB the IASB and FASB definitions are the same At that meeting IASB members asked whether those changes would address the practical problems that had been raised with the IFRS Interpretations Committee The Interpretations Committee discussed the proposed amendments in its November 2015 meeting Committee members agreed that the proposals should address the problems it had examined However they raised some comments and questions about the proposed amendments The staff identified the four main questions as follows a Is the assessment of whether substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets needed or workable b Are there circumstances under which the acquisition of an outsourcing agreement would represent acquisition of a substantive process c What is the impact of the proposed changes on vertical integration d Can examples be added for financial institutions and extractive activity entities Is the assessment of whether substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets needed or workable The IASB had previously decided that if substantially all of the fair value of the assets acquired is concentrated in a single asset or group of similar assets the acquired set of activities and assets would not constitute a business Some Committee members had noted that the existence of a process distinguishes a business from an asset and questioned whether the substantially all threshold would therefore be needed The staff recommended that the threshold be retained They conceded that the proposed guidance on substantive processes would lead to the same conclusion because a process would have a more than insignificant value and therefore the value of the acquired set of activities and assets would not be concentrated in one asset However the substantially all threshold would be easier to apply and would be less subjective Furthermore the staff proposed to clarify whether and how to apply the proposed threshold when a building is acquired with an in place operating lease When applying the FASB codification the acquirer recognises an intangible asset for in place leases separately whereas IFRS requires the acquirer to include the lease in the measurement of the leased property Staff identified two options Option 1 Estimate the fair value of the building and the fair value of the lease separately for the purpose of this assessment Option 2 Clarify that the building and the in place operating lease shall be considered a single asset for the evaluation of the threshold Staff expressed a preference for Option 2 as Option 1 would create additional costs for the preparer Furthermore Option 2 would be consistent with the U S requirements in all common cases Are there circumstances under which the acquisition of an outsourcing agreement would represent acquisition of a substantive process The IASB had previously decided that to be considered a business a transaction must include at a minimum an input and a substantive process that together contribute to the ability to create outputs Some Committee members were concerned that there would be no guidance on whether and how inputs and processes that have been outsourced should be considered in the assessment of whether an acquired set of assets constitutes a business The staff are in the view that the proposed guidance on substantive process does not distinguish between inputs and processes of the seller and processes that have been outsourced by the seller Consequently this means that the acquirer would need to consider whether the outsourced workforce performs a substantive process and whether the entity controls the substantive process The staff intend to clarify this in the proposed amendment What is the impact of the proposed changes on vertical integration The IASB had previously proposed to narrow the definition of an output to exclude returns in the form of lower costs or other economic benefits directly to investors or other owners members or participants because many asset acquisitions may provide lower costs One IFRS Interpretations Committee member asked whether the focus on goods and services provided to customers would have an impact on a vertical integration i e the acquisition of a supplier Since the supplier does not provide goods or services to a customer after the acquisition it might not be considered a business under the proposals The staff believe that the focus of this assessment is on whether the supplier is capable of generating revenues after the acquisition Accordingly it would be considered a business The staff recommend to add this explanation to the Basis for Conclusions Can examples be added for financial institutions and extractive activity entities The staff agree with the proposals by Interpretations Committee members to add examples for financial institutions and extractive activity entities They propose to add the examples included in the appendix of the agenda paper The Board were asked whether they agree with the staff recommendations to the above questions see Agenda Paper 13 Board discussion All Board members agreed with the staff recommendations Thereafter the Board was then asked to consider the due process steps taken for the proposed amendments to IFRS 3 see Agenda Paper 13A and the related proposed amendments to IFRS 11 relating to the remeasurement of previously held interests see Agenda Paper 13B In both cases the Board was satisfied that the due process steps had been followed correctly the comment period for each ED would be 120 days and the staff have permission to commence the balloting process No Board members plan to dissent Research programme 15 Dec 2015 In this session the Director of Research informed the IASB about changes to the research programme since the last update in September 2015 In this session the Director of Research informed the IASB about changes to the research programme since the last update in September 2015 Since the previous update the project on definition of a business has advanced from research stage to maintenance and implementation stage Regarding the project on the equity method of accounting at its September meeting some ASAF members expressed concern about the staff s proposals for progressing the project ASAF has discussed the scope of the project in the December meeting After considering the ASAF discussions the staff expect to revise the project plan at the beginning of 2016 In the public session the Director of Research confirmed that for many projects the staff awaited the results of the Agenda Consultation He said that there were projects that might not be continued however if the Board were to make such a decision the staff would present one final wrap up session to conserve the research performed One Board member suggested enhancing the overview by providing information on how different research projects are linked Another Board member proposed not to wait for IPSAS decisions on polluting pricing mechanisms before moving on with the research project The Board was not requested to make any decisions in this session Revenue from contracts with customers 15 Dec 2015 In this session the staff presented the feedback received from the comments letters and provided their recommendations on the topics discussed in the July 2015 ED Clarifications to IFRS 15 The IASB issued an ED Clarifications to IFRS 15 to amend IFRS 15 Revenue from Contracts with Customers in July 2015 with a comment period that ended on 28 October 2015 In this session the staff presented the feedback received from the comments letters and provided their recommendations on the topics discussed in the ED The session covered agenda papers 7A E and H Agenda papers F and G were covered in the joint session held on December 16 2015 Summary of feedback on Exposure Draft Clarifications to IFRS 15 Agenda paper 7A The agenda paper covered feedback received on the general approach taken by the IASB to address the issues related to IFRS 15 At this stage the staff papers did not include any recommendations A summary of the feedback obtained is detailed below The high hurdle set by the IASB when considering amending IFRS 15 The ED proposed that the IASB would consider amendments that were essential to clarifying the Boards intention when developing IFRS 15 or when convergence was view with greater benefit than amending the standard The agenda paper explained that most of the respondents agreed with the IASB approach The status of convergence of IFRS 15 and Topic 606 The agenda paper indicated that many respondents expressed concerns that the IASB and the FASB were proposing different amendments Feedback from ASAF The agenda paper indicated that ASAF members supported the IASB approach and highlighted the importance of maintaining convergence ASAF members suggested that when convergence was not possible that fact should be explained in the Basis for Conclusions Transition Resource Group TRG for Revenue Recognition The majority of respondents supported the continuation of the TRG group until the mandatory effective date of the standard Other questions raised by respondents There were additional comments received related to the interaction of IFRS 15 and IFRS 9 Discussion Some Board members expressed a concern that existence of the TRG could be preventing companies from implementing the standard During the discussion it was suggested that there could be a cut off date to ensure that any suggestions from the TRG are implemented by the IFRS 15 effective date with any issues that come after that date being treated separately There was also discussion about the need to maintain convergence with US GAAP In that regard some Board members argued that the high hurdle to changing IFRS 15 should be maintained because the issues have already been discussed by the Board and supported in the comment letters on the other hand others indicated that when the outcome was expected to be similar then the IASB and FASB should use the same words The Chairman indicated that primarily it was the accounting firms who were asking to give convergence a priority he said that if the outcome would be similar there should not be issues with having different wording and if there were a risk for unintended consequences that could be solved by exposing the draft and obtaining feedback The paper provided a general overview of the comments received so no decisions were made Identifying Performance Obligations feedback on ED Clarifications to IFRS 15 and re deliberations Agenda paper 7B The staff proposed to discuss the responses to question 1 in the ED and the staff proposals to address those comments The topics were Identifying performance obligations The TRG had raised concerns that there was potential diversity developing around how stakeholders understand the principle for determining whether promised goods or services were distinct To address those concerns the FASB exposed proposed amendments to the requirements In contrast the IASB s ED proposed that rather than amending the requirements illustrative examples would be added A majority of respondents to the IASB agreed with adding the illustrative examples although many raised concerns and sought further clarifications for example the fact that it is not clear how the conclusions in the example have been reached The staff identified two possible approaches to address the comments raised amend paragraph 29 of IFRS 15 and the illustrative examples to align with the FASB wording In this case the staff considered that the FASB amendments should be considered as a package or revise the illustrative examples on the basis of the feedback received and add comments to the Basis for Conclusions The staff recommends the second of these approaches Promised goods or services that were immaterial in the context of a contract The TRG discussed an implementation question about whether an entity should identify items or activities as promised goods or services that were not identified as deliverables or components under previous revenue Standards The FASB proposed an amendment that would permit an entity not to identify promised goods or services that were immaterial in the context of a contract The feedback received indicated that the amendments introduced by the FASB were not considered necessary and accordingly the staff proposed not to include in IFRS 15 the amendments introduced by the FASB on this matter Shipping and handling activities The ED did not propose including the accounting policy choice proposed by the FASB to account for shipping and handling activities that occur after the customer has obtained control of a good as fulfilment activities The IASB decided not to propose this amendment because it would create an exception to the revenue recognition model and potentially reduce comparability The majority of respondents to the IASB agreed and consequently the staff proposed not to amend the Standard in relation to shipping and handling activities Other matters The FASB included a question in its proposals about whether the requirement to account for a series of distinct goods or services as a single performance obligation should be changed to an optional practical expedient The IASB decided not to include a similar question on the ED The FASB had concluded that an amendment was not required The agenda paper also indicated that the TGR discussed the accounting for a series of distinct goods or services and those discussions provided educational material for stakeholders Accordingly the staff did not recommend amending the existing guidance on this topic Discussion There was general support for the staff recommendations and the Board approved the staff proposal with the exception of the first issue identifying performance obligations For that issue the Board decided to converge with the wording exposed by the FASB The Board did not vote regarding the illustrative examples because the staff will analyse whether those examples might need to be changed to reflect the new wording The Board decided to move to the FASB wording because Board members thought that their wording was clearer There was significant discussion before this decision was reached because some Board members pointed out that the majority of the comment letters agreed with the staff recommendation for not amending paragraph 29 of IFRS 15 The staff acknowledged that they were unable to conclude whether there could be unintended consequences or different outcomes if the IASB did not adopt the amendments introduced by the FASB Some Board members thought that the illustrative examples would help in the application of the standard However some Board members expressed caution noting that there are already a significant number of illustrative examples and it would be impossible to cover every situation one Board member commented that the standard should work with or without the clarifications introduced by the FASB There were no significant issues raised on the other topics in the paper Feedback on ED Clarifications to IFRS 15 and re deliberations Agenda paper 7C The staff discussed the feedback obtained in relation to question 3 Licencing and their recommendations Question 3 in the ED asked whether respondents agree the IASB approach to amending the application guidance and illustrative examples on determining the nature of the entity s promise in granting a licence of intellectual property and the Application Guidance on the scope and applicability of the sales based and usage based royalties exception The agenda paper indicated that most respondents agreed with the ED proposals Many respondents expressed concern that the IASB and the FASB proposed different amendments on this topic however most respondents indicated a preference for the IASB approach Accordingly the staff recommended that the IASB confirm the proposals set out in the ED The staff did not recommend adding the alternative approach proposed by the FASB for determining the nature of the entity s promise in granting a licence of intellectual property nor additional application guidance addressing i the effect of particular contractual restrictions in a licence and ii when the guidance on determining the nature of the entity s promise in granting a licence applied The staff also recommended that the IASB conclude that the issues discussed in the November 2015 TRG meeting about licence renewals and identifying attributes of a single licence versus identifying additional licences were outside the scope of the ED The paper explored in detail the feedback in the comment letters received on a general comments on the ED regarding licencing b determining the nature of the licence c sales based or usage based royalty d topics for which the IASB did not propose any clarification e other matters raised by respondents and f issues raised after the publication of the ED Discussion Some Board members stated that it would not be appropriate to change the wording of the standard given that many companies had probably already started analysing their licencing contracts and changing the standard could cause those companies to re perform the analysis In relation to the use of the word predominantly it was pointed out that the Board had discussed an issue with similar wording and it was concluded that it would mean more than 75 If the staff had a different understanding in the context of the revenue standard then it should be clarified The staff responded that the FASB was using similar wording and they were not making any clarification It was also emphasised that there would always be a need for judgement in applying the standard including how to apply this concept The Board approved the staff recommendations Practical expedients on transition feedback on ED Clarifications IFRS 15 and re deliberations Agenda Paper 7D The agenda paper discussed the feedback received on the proposed practical expedients on transition set out in the ED The ED proposed two practical expedients i to permit an entity electing to use the full retrospective method not to apply IFRS 15 retrospectively to completed contracts as defined in paragraph C2 at the beginning of the earliest period presented and ii to permit an entity to use hindsight in i identifying the satisfied and unsatisfied performance obligations in a contract that has been modified before the beginning of the earliest period presented and ii determining the transaction price There was broad support for the proposals included in the ED and accordingly the staff recommended the IASB to confirm the proposals included in the ED The staff did not recommend amending the definition of a completed contract because some preparers had either already adopted or were planning to adopt IFRS 15 However the staff recommended including in the Basis for Conclusions a summary of the IASB discussion to provide entities more guidance on this topic Discussion The Board agreed with the staff recommendations No significant comments or issues were raised during the discussion Topics for which the IASB did not propose any clarifications feedback on ED Clarifications to IFRS 15 and re deliberations Agenda paper 7E The agenda paper discussed question 5 of the ED which asked respondents if they agreed with the IASB s decision that amendments to IFRS 15 were not required on the following three topics for which the FASB was developing potential amendments a collectability b the measurement of non cash consideration and c the presentation of sales taxes The staff recommended the IASB to confirm that it would not amend IFRS 15 for these matters the majority of respondents agreed with that conclusion The agenda paper provided further detail as to the reasoning from the IASB for not proposing amendments in those areas In relation to collectability the staff considered that the requirements in paragraph 9 e and the supporting explanation in paragraph BC46 of IFRS 15 provided sufficient guidance On the second issue measurement of non cash consideration the staff indicateed that IFRS 15 required an entity to measure non cash consideration at fair value although it did not specify the measurement date The IASB did not propose additional clarifications because IFRSs generally did not contain any specific requirements about the measurement date of non cash considerations and the feedback obtained indicated that it was not expected significant diversity in practice In relation to the presentation of sales taxes the staff indicated that if an entity s sales were subject to sales taxes in different jurisdictions then the entity should assess on a jurisdiction by jurisdiction basis whether it collected sales taxes on behalf of the tax collection authority in order to determine whether to include or exclude those taxes from the transaction price The IASB decided not to propose an amendment to IFRS 15 to provide an accounting policy choice to exclude all sales taxes from the transaction price as proposed by the FASB because this could reduce comparability Discussion The Board agreed with the staff recommendations In relation to collectability there were some concerns raised as to whether there could be different results derived from the changes introduced by the FASB The staff indicated that they were unable to conclude because they were aware that the FASB received several comments that they had yet to discuss No significant comments were raised on the remaining topics Constraining estimates of variable consideration when the consideration varies based on a future market price Agenda Paper 7H The agenda paper discussed a question received from stakeholders regarding whether the requirements in IFRS 15 to constrain estimates of variable consideration must be applied to variability arising solely from changes in market prices such as commodity price IFRS 15 required an entity to estimate the amount of consideration to which the entity would be entitled The staff noted that in some cases the consideration was variable after the entity had satisfied its performance obligations for example a contract to deliver a commodity with a price based on the market price on a date subsequent to delivery The staff concluded that once the entity has completed its obligation in this case delivery the entity s right to consideration was unconditional and the entity would recognise a receivable under IFRS 9 and the variability considered in IFRS 15 related only to an entity s performance and not to variability that aroused solely from changes in market prices The staff clarified in the agenda paper that the determination of whether an entity was required to assess the existence of an embedded derivatives in a contract with a customer or whether the requirement for separation in IFRS 9 was met was not part of the scope of this analysis Discussion The Board approved the staff recommendations There was general agreement with the staff analysis and their conclusion It was pointed out that it was not necessary to issue specific guidance at this stage Present value measurements Discount rates 16 Dec 2015 In this educational session the staff updated the IASB on their findings regarding the components of present value measurement and measurement methodology Recap In this educational session the staff updated the IASB on their findings regarding the components of present value measurement and measurement methodology The staff have identified the following potential financial reporting problems in these areas application of an entity specific perspective in measurement inconsistent reflection of liquidity risk and three issues relating to the methodology of reflecting tax in measurement Application of an entity specific perspective in measurement The staff has identified that there is a prevalence of companies not recognising any goodwill impairment even though their book value of equity is higher than their market value of equity According to staff this could indicate that there is an issue with applying the entity perspective in practice because value in use is used in goodwill impairment tests With regard to that the staff identified two possible causes the principle of entity perspective measurement as set out in IFRS is sound but the problems stem from difficulties in implementation audit and enforcement or the principle of entity perspective measurement as set out in IFRS is flawed Inconsistent reflection of liquidity risk Staff found that liquidity is not consistently reflected in entity specific current value measurements Reflecting liability specific liquidity would have a material impact on measurement of defined benefit liabilities and provisions Not reflecting the liquidity risk can have a material impact on comparability Three issues relating to the methodology of reflecting tax in measurement The staff identified the following three issues regarding measurement methodology for tax The pre tax rate should only reflect tax effects that will not be picked up by the application of IAS 12 Market pre tax rates reflect the market perspective and therefore include some tax Recognising entity specific deferred tax on this rate would overstate the tax effect Users make mistakes when grossing up post tax rates to arrive at a pre tax rate Furthermore as the terms pre tax and post tax are not defined users may think that the pre tax input does not depend on the rate of tax and therefore use an inappropriate pre tax rate IAS 36 adds complexity to the measurement methodology by mandating pre tax rates

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