• Agenda decision: At the July 2006 Meeting the Board approved an ongoing process for annual improvements to IFRSs
• Discussed at October 2007 IASB Meeting
• Discussed at December 2007 IASB Meeting
• Discussed at January 2008 IASB Meeting
• Discussed at April 2008 IASB Meeting
• Discussed at May 2008 IASB Meeting
• Discussed at June 2008 IASB Meeting
• Exposure Draft issued 7 August 2008, comment deadline 7 November 2008.
  Click for IASB Press Release (PDF 49k).
• Discussed at February 2009 IASB Meeting
• Discussed at March 2009 IASB Meeting
• Final improvements issued for 12 IFRSs on 16 April 2009. Click for More Information.
• Discussed at January 2010 IFRIC Meeting
• Discussed at 10 February 2010 Special IASB-FASB Joint Meeting

Timetable

• Click for IASB Project Timetable

Background

Each year the Board considers minor amendments to IFRSs in an annual improvements project. The amendments are proposed in an omnibus Exposure Draft.

Discussion at the October 2007 IASB Meeting

IAS 18 – Determining whether an entity is acting as a principal or as an agent

At its September 2007 meeting, the IFRIC decided not to develop an Interpretation of IAS 18 determining whether an entity is acting as a principal or as an agent, agreeing instead to remove the issue from its agenda. The IFRIC also decided to recommend to the Board that implementation guidance should be added to the Appendix to IAS 18 to help constituents to determine whether an entity is acting as a principal or as an agent.

The Board tentatively agreed with the IFRIC recommendation and, subject to editorial corrections, agreed that the following proposed implementation guidance should be included in the Appendix to IAS 18 as part of the Annual Improvements 2008 project:

Paragraph 8 states that 'in an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the entity. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission.'

Determining whether an entity is acting as a principal or an agent depends on facts and circumstances and requires judgement. An entity is acting as a principal when it has exposure to the significant risks and rewards associated with the sale of goods or the rendering of services. Features that, individually or in combination, may indicate that an entity is acting as a principal include:

• (a) the entity has the primary responsibility for providing the goods or services desired by the customer or for fulfilling the order, for example by being responsible for the acceptability of the products or services ordered or purchased by the customer;
• (b) the entity has inventory risk before or after the customer order, during shipping or on return;
• (c) the entity has discretion in establishing prices directly or indirectly, such as by providing additional goods or services;
• (d) the entity has credit risk.

An entity is acting as an agent when it does not have exposure to the significant risks and rewards associated with the sale of goods or the rendering of services. One feature that may indicate that an entity is acting as an agent is that the amount the entity earns is predetermined, being either a fixed fee per transaction or a stated percentage of the amount billed to the customer.

Disclosures required for non-current assets (or disposal groups) classified as held for sale or discontinued operations under IFRS 5

At its September 2007 meeting, the IFRIC considered a request to clarify whether the disclosure requirements of other standards, in the absence of specific exclusion, would apply to non-current assets (or disposal groups) classified as held for sale or discontinued operations in accordance with IFRS 5. The IFRIC concluded that this issue could be resolved efficiently through an amendment to clarify IFRS 5 and decided to draw the issue to the attention of the Board rather than taking the item on to its own agenda.

The Board considered two potential alternative approaches to addressing this issue:

• View A: IFRS 5 and other standards that specifically relate to non-current assets (or disposal groups) classified as held for sale or discontinued operations set out all the disclosures required in respect of those assets or operations. Disclosures required by other standards do not apply to such assets (or disposal groups).
• View B: Disclosures required by IFRSs, whose scope does not exclude non-current assets (or disposal groups) classified as held for sale or discontinued operations, continue to apply to such assets (or disposal groups).

The Board discussed the two approaches and noted that splitting out disclosures as proposed by View B would present practical difficulties. The Board did not make a final decision on which approach is preferable. It requested staff to perform further analysis to be presented at a future Board meeting.

Discussion at the December 2007 IASB Meeting

IFRS 8: Disclosures of Information about Segment Assets

The IASB staff presented a proposal for the 2008 annual improvements process. The staff asked the Board whether IFRS 8 should be amended to eliminate an unintended potential divergence from existing US practice regarding the disclosures of information about segment assets. Specifically:

• (a) should a measure of segment assets be disclosed even when such information is not provided to the chief operating decision maker (CODM) notwithstanding that this requirement creates a difference from existing US practice?
• (b) Should the standard be amended to state clearly the disclosure requirement for segment assets that the Board intends?

The issue arises as BC35 appears to require such disclosures in all cases even when those amounts are not provided to the CODM. This interpretation contradicts guidance published for the application of SFAS 131 Disclosures about Segments of an Enterprise and Related Information. Further, information about segment assets is not listed as one of the intended differences between IFRS and US GAAP.

The Board agreed that a measure of segment assets should only be disclosed when such information is provided to the CODM and no difference should be created from US practice. The Board further agreed to amend the Basis for Conclusions and to make no changes to the standard of IFRS 8. This amendment is to be included in the 2008 annual improvements process.

Scope of Paragraph 11A of IAS 39 - Application of Fair Value Option

The staff presented a paper to the Board analysing two alternative interpretations of paragraph 11A of IAS 39. The issue was initially referred to the IFRIC when they were asked to consider whether the fair value option (FVO) available in paragraph 11A of IAS 39 can be applied to all contractual arrangements with one or more 'substantive' embedded derivatives, including contractual arrangements that contain host contracts outside the scope of IAS 39. The IFRIC referred the issue to the Board as it relates to some of the basic requirements of IAS 39 and amendments to the standard may be required.

IAS 39 paragraph 11A states that 'Notwithstanding paragraph 11, if a contract contains one or more embedded derivatives, an entity may designate the entire hybrid (combined) contract as a financial asset and financial liability at fair value through profit or loss'.

The issue arises as to whether paragraph 11A applies to all hybrid contracts, even if , in the absence of such designation, the host would not be in the scope of IAS 39 or whether paragraph 11A only applies to hybrid contracts with financial hosts in the scope of IAS 39.

The Board agreed that the wording of IAS 39 should be amended to clarify that paragraph 11A only applies to financial host contracts in the scope of IAS 39. This amendment is to be included in the 2008 annual improvements process.

Application of Paragraph AG33(d)(iii) - Bifurcation of Embedded Foreign Currency Derivative

In May 2007 the IFRIC issued a tentative agenda decision, noting that applying AG33(d)(iii) of IAS 39 requires an entity to:

• identify where the transaction takes place; and
• identify currencies that are commonly used in the economic environment in which the transaction takes place.

However at its September 2007 meeting the IFRIC decided to refer the issue to the Board because any guidance developed would be more in the nature of application guidance rather than an interpretation.

The IASB staff presented a paper to the Board outlining the issue and inconsistencies in practice with respect to the application of paragraph AG33(d)(iii)and suggested amended wording for the Board's consideration. The staff noted that the standard does not explain the meaning of economic environment and noted that entities are interpreting 'economic environment' in different ways.

The IASB staff believe that the intent of the exemption is to allow preparers not to separate embedded foreign currency derivatives if the embedded derivatives are integral to the arrangement and therefore bear a close relationship to the terms of the contract. That is, the exemption applies to embedded foreign currency derivatives that have been entered into for reasons that are clearly not based on achieving a desired accounting result or for speculative purposes.

The staff presented examples of situations in which foreign currency would be considered to be integral and noted that in each example the currencies have many of the characteristics of a functional currency (that is, the currency of the primary economic environment in which the entity operates).

The IASB staff recommended to the Board that the paragraph be amended to refer to the characteristics of a functional currency as detailed in paragraph 9 of IAS 21 (refer to Agenda paper 3C Appendix 1 for the proposed wording of the amendment). The Board agreed. This amendment is to be included in the annual improvements process.

Cash Flow Hedge Accounting Issues

The IASB staff presented an issue for clarification as to the period in which gains or losses on hedging instruments should be reclassified from equity to profit or loss as a reclassification adjustment for cash flow hedges. In particular, the staff noted that there was some confusion regarding the period during which reclassification adjustments should be made if the hedged forecasted transaction resulting in recognition of a financial instrument. The staff proposed amendments to paragraph 97 and 100 of IAS 39 to remove any confusion as to the appropriate timing of reclassification.

The Board agreed that the paragraphs required amendment; however a number of Board members had issues with the proposed wording, and the Board decided that drafting the proposed amended wording would be concluded offline. The resulting amendment is to be included in the annual improvements process.

Discussion at the January 2008 IASB Meeting

Disclosures required for non-current assets (or disposal groups) classified as held for sale or discontinued operations under IFRS 5

The staff presented a paper on disclosures required for non-current assets (or disposal groups) classified as held for sale or discontinued operations. This issue was previously discussed at the October 2007 Board meeting at which the Board agreed that:

• IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations;
• Disclosures in other IFRSs do not apply to such assets (or disposal groups) unless that other IFRS specifically requires a disclosure in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations; and
• Other disclosures about such assets (or disposal groups) may be necessary to comply with the general requirements of IAS 1 Presentation of Financial Statements.

At the October 2007 meeting the Board asked staff to analyse whether it would be burdensome to segregate the information relate to assets held for sale and whether the information produced would be meaningful. The staff have completed this research, and recommended that the Board clarify the disclosure requirements of IFRS 5 though the Annual Improvements Process to reflect the discussion at the October 2007 board meeting. The staff proposed changes to IFRS 5 to reflect the above decisions. The board agreed, subject to editorial changes.

Discussion at the April 2008 IASB Meeting

Application of IAS 39.2

The purpose of this session was to seek Board members' views on adding to the Annual Improvements Project 2008 an amendment regarding the applicability of the scope exemption in IAS 39.2(g), which excludes from the scope of IAS 39 Financial Instruments: Recognition and Measurement contracts between an acquirer and a vendor in a business combination to buy or sell an acquiree at a future date. The question raised was whether this applies only to binding contracts (forwards) or whether it applies more widely and whether it could be applied by analogy.

Originally, this issue had been referred to the IFRIC along with the question whether IAS 39 paragraph 2(g) could be applied to similar transactions (such as contracts with an associate) by analogy. The IFRIC concluded that the standard is ambiguous, which could lead to diversity in practice.

The staff presented an analysis of the scope exemption for three types of financial instruments in a business combination:

1. Binding contracts (such as forwards) constituting control within the period necessary to complete a business combination.
2. Currently exercisable option contracts to acquire shares in another entity the exercise of it would result in a transaction to which IFRS 3 applies.
3. Non-currently exercisable option contracts to acquire shares in another entity.

On forward contracts, the staff analysis concluded that the scope exemption in paragraph 2(g) applies. For currently exercisable options, the staff noted that IAS 39 provides another scope exemption in paragraph 2(a), which precedes paragraph 2(g). Finally, the staff concluded that paragraph 2(g) is not applicable to non-currently exercisable option contracts.

The Board only discussed this issue briefly. One Board member noted that originally the Board excluded such contracts because there might be a period between agreement and closing of a business combination. Some Board members suggested drafting changes. The Board agreed to the proposed wording by the staff subject to drafting changes.

The staff then asked the Board if it would concur with the staff recommendation that paragraph 2(g) could not be applied to similar transactions by analogy. The Board agreed.

Furthermore, the Board confirmed that this amendment should be included as part of the Annual Improvements Project 2008.

Discussion at the May 2008 IASB Meeting

The Board discussed potential improvements to the annual improvements process itself and two amendments to IAS 38 Intangible Assets for inclusion in the 2008 annual improvements.

Scope and process for future 'Improvements to IFRSs'

The staff presented a paper suggesting changes to scope and due process for future improvements to IFRSs. The proposals were based on general comments received on the exposure draft for Improvements to IFRSs published in October 2007.

Scope of the project

The staff was of the view that it would not be possible to define a universally agreed scope for the improvement project. In particular, the staff noted that the term 'minor amendment' was subjectively interpreted, for example, in terms of word count or accounting effect. Therefore, the staff proposed that the scope of the project should be determined on the basis of what amendments are appropriate to be included in a single annual exposure draft rather than on the definition of the word 'minor'.

When deciding whether the nature of the amendment allows inclusion in a single annual exposure draft or requires individual exposure the staff suggested using the factors included in the Due Process Handbook for the IASB, including pervasiveness of issue, diversity of practice, increasing convergence, feasibility of a sound solution, and cost/benefit considerations. The staff emphasised that such a decision requires judgement.

The Board agreed to the staff proposal.

The Board also agreed to a staff analysis that the use of a single annual exposure draft is appropriate, that is, that no additional due process documents are required.

Due process

Regarding the process for future improvements to IFRSs the Board made the following decisions:

• The IASB's website summary should be amended by including a revised explanation of the project scope and, in particular, eliminating the word "minor".
• Balloting should take place individually for each issue throughout the year. Immediately after approval by the Board, the text of the post-ballot draft (including basis for conclusion, consequential amendments to other IFRSs and dissenting opinions) is posted to the IASB's website.
• At the end of the project cycle all previously balloted issues are collated in the exposure draft. The exposure draft should have a 90 day comment period. In this context the staff noted that constituents will not be precluded from providing feedback on individual proposed amendments at any time after the post-ballot draft is available on the website.
• To segregate in the ED amendments that result in accounting changes (Part I) and those that are terminology or editorial changes (Part II), similar to the segregation in the near-final draft of the 2007 annual improvements.
• To continue considering early adoption and transitional provisions on a standard by standard basis.

For the 2008 annual improvements the Board agreed to the following estimated timetable:

• June 2008: Last Board meeting to discuss/approve new proposals; sweep issues, if any, to be discussed in July
• August 2008: Publication of exposure draft with comment letter due date in November 2008 (90 days comment period)
• January to March 2009: Board redeliberations of comments received
• 1 April 2009: Publication of final amendments
• 1 January 2010: Effective Date (unless otherwise indicated)

IAS 38 - Measuring the fair value of an asset acquired in a business combination

The Board discussed a proposed amendment to paragraphs 40 and 41 of IAS 38, which provide guidance regarding valuation techniques to measure the fair value of an intangible asset acquired in a business combination when there is no active market for the asset.

The general concern raised by constituents was that the guidance in paragraph 41 of IAS 38 does not describe commonly-used valuation techniques in the manner in which they are used in practice. In particular:

• It is uncommon in practice to use valuation multiples to measure the fair value of intangible assets
• The relief from royalty approach is mischaracterised since this approach reflects the hypothetical amount the entity saves by not having to license it from another party whereas paragraph 41(a) focuses on the amount received from licensing the asset to another party.
• IAS 38 could be interpreted as prohibiting the use of a cost approach, in particular, the approach of 'current replacement cost' which is considered to be a commonly used valuation technique.
• The word 'or' between paragraphs 41(a) and 41(b) may be misinterpreted in a way that (a) and (b) are mutually exclusive.

For timing reasons the Board decided to address this issue in the 2008 annual improvement project and not in the fair value measurement project.

The Board agreed to the proposed amendment (omitted from observer notes) subject to drafting suggestions.

IAS 38 - Additional consequential amendments arising from IFRS 3 (revised 2008)

The staff suggested making additional consequential amendments to paragraphs 36 and 37 of IAS 38 to clarify that:

• an intangible asset must be recognised separately from goodwill even if it is separable only together with a related contract, identifiable asset, or liability.
• if an intangible asset is separable only together with another intangible asset, those assets can be recognised together as a single asset.
• if the individual assets in a group of complementary intangible assets have similar useful lives, those assets can be recognised together as a single asset.

The Board agreed to the proposed amendment (omitted from observer notes) subject to drafting suggestions.

The Board decided to propose an effective date of 1 July 2009 to align it with the effective date of the revised IFRS 3. The Board agreed to a staff analysis that the short implementation period of three months would be acceptable since (1) the amendments simply clarify the Board's decisions in the business combinations project and (2) the proposed final wording would be available on the IASB's website before the exposure draft is published.

Discussion at the June 2008 IASB Meeting

The purpose of this session was to discuss possible improvements to IFRSs for inclusion in the 2008 Annual Improvements Process. The staff presented three proposed items:

• IAS 7 Statement of Cash Flows - Classification of expenditures
• IAS 36 Impairment of Assets - Unit of account for goodwill impairment test
• IFRS 2 Share-based Payment - Scope of IFRS 2 and revised IFRS 3

IAS 7 Statement of Cash Flows - Classification of expenditures

This proposal has been recommended from IFRIC for resolution via the Annual Improvements Process. The issue that should be addressed is whether expenditures that do not result in the recognition of an asset can be classified as a cash flow from investing activities in accordance with IAS 7. This issue is most prevalent in extractive industries due to the accounting policy choice provided in IFRS 6 Exploration for and Evaluation of Mineral Resources as an asset or an expense, but could be easily extended to other scenarios.

The staff noted that the wording in IAS 7 is not definitive and that IFRIC considered two possible views of classifying such cash flows:

• View 1: all expenditure intended to enhance future cash flows or income may be presented as investing activities.
• View 2: expenditure that is immediately expensed should be recognised in the statement of cash flows as an operating activity.

The staff recommendation was that IAS 7 should be amended to state that only expenditure that results in asset recognition can be classified as 'investing' in the statement of cash flows. Specifically, the staff proposed the following:

• To address the issue in the annual improvements project;
• To amend IAS 7 to make an explicit statement that only expenditure that results in a recognised asset can be classified as a cash flow from investing activities;
• To make no consequential amendment to IFRS 6 that would clarify that the accounting policy choice provided by that Standard only covers recognition and measurement, but to make some statements in the Basis for Conclusions of IFRS 6;
• To require retrospective application and provide no relief for first-time adopters;
• To include this amendment in Part I of the Annual Improvements ED (that is, acknowledging that this amendment would result in an accounting change in some instances);
• To solicit comments as part of the invitation to comment.

One Board member expressed his consent with the staff recommendation and stated that an entity has other possibilities to make clear in its financial statements that it considers certain expenditures as investing activity although presented as 'operating' in the statement of cash flows.

Other Board members had drafting comments, but the Chairman proposed that these should be dealt with offline. The Chairman then took the vote on this issue. The staff proposals were agreed to unanimously.

IAS 36 Impairment of Assets - Unit of account for goodwill impairment test

The next issue presented by the staff was the need for a further clarification what was the largest possible unit for allocating goodwill when testing for impairment in accordance with IAS 36. IAS 36.80 states that goodwill arising from a business combination should be allocated to (groups of) cash-generating units for impairment testing. The level of this allocation should be the lowest level where management monitors goodwill. However, this unit may not be 'larger than an operating segment determined in accordance with IFRS 8'.

Practice has taken differing views regarding what is meant by 'operating segment' in this context - the operating segment as defined in IFRS 8.5 or the operating segment level determined after applying the voluntary aggregation criteria as permitted by IFRS 8.12.

The staff recommended referring to the definition of an operating segment in IFRS 8.5 for the purposes of determining the appropriate level of allocation when applying IAS 36.80. This should be done by amending IAS 36.80 to make this clear. The main argument for this is that the Board aimed to look at the lowest level where management monitors its goodwill for impairment testing purposes when it developed IAS 36 and that this view would also avoid masking impairment losses by offsetting effects possibly resulting from the aggregation of operating segments.

Furthermore, the staff recommended the following:

• To address this issue in the annual improvements project;
• To propose no consequential amendment to IFRS 8;
• To propose prospective application and no relief for first-time adopters:
• To include the proposed amendment in Part I of the Annual Improvements ED (that is, acknowledging that this amendment would result in an accounting change in some instances);
• To solicit comments as part of the ED's invitation to comment.

The Board agreed with the staff proposals.

IFRS 2 Share-based Payment - Scope of IFRS 2 and revised IFRS 3

The final issue for discussion at this session was the interaction between the IFRS 2 and revised IFRS 3 Business Combinations. The Board received a request if due to the changes to IFRS 3 formations of a joint venture would now be within the scope of IFRS 2. The staff also highlighted that this question could be extended to common control transactions and hence, included such transactions in the proposal.

IFRS 2 excludes from its scope transactions that meet the definition of a business combination in IFRS 3. However, the revision to IFRS 3 changed the definition of a business combination. The request noted that at least for the formation of a joint venture the definition of a business combination under IFRS 3 revised 2008 is not met. This could lead to the conclusion that such transactions are now within the scope of IFRS 2. The staff noted that it did not think that the Board intended to change the scope of IFRS 2 when revising IFRS 3 and consequently recommended that the Board should amend IFRS 2.5 to reaffirm that the transactions mentioned above are outside the scope of IFRS 2.

Additionally, the staff made the following recommendations:

• To include this issue in the annual improvement project;
• To propose no consequential amendments to other standards;
• To provide no relief for first-time adopters;
• To include the proposal in Part II of the ED (that is, it is considered to be an editorial change only with no changes to accounting);
• To solicit comments as part of the ED's invitation to comment.

The staff highlighted that there would only be a short implementation period between the publication of the amendment (expected April 2009) and the effective date of IFRS 3 revised, which is 1 July 2009. However, the staff considered this acceptable as the amendment would not change existing practice. The Board agreed with the staff proposals.

August 2008: IASB proposes improvements to 8 IFRSs

On 7 August 2008, the IASB issued an exposure draft (ED) of proposed amendments to eight International Financial Reporting Standards (IFRSs) as part of its 2008 Annual Improvements Project. Most of the proposals would be effective for annual periods beginning on or after 1 January 2010, with earlier adoption permitted. However, the proposed effective date for those amendments arising from the revised IFRS 3 Business Combinations is 1 July 2009 (in line with the effective date of that standard and related changes to IAS 27 Consolidated and Separate Financial Statements). The IFRSs and topics covered by the proposed amendments are:

Deloitte's IFRS Global Office has published a Special Edition IAS Plus Newsletter– IASB Releases Omnibus Exposure Draft of Annual Improvements for 2008 (PDF 146k) explaining the proposals in the ED.

Discussion at the February 2009 IASB Meeting

Proposed amendment to IFRS 8 Operating Segments: Disclosure of information about segment assets

The Board agreed to amend IFRS 8 paragraph 23 to clarify that a measure of total assets shall be reported if such a measure is reported to the chief operating decision maker. This was the Board's intent when it issued IFRS 8 but some constituents found the wording of the requirement confusing. The reasoning in BC 35 will also be amended to explain the change.

Proposed amendment to IAS 39: Financial Instruments: Recognition and Measurement – Cash flow hedge accounting

The Board agreed to amend IAS 39 paragraph 97 to clarify when gains or losses on hedging instruments should be reclassified from equity to profit or loss as a reclassification adjustment, as the amendment was exposed in the August 2008 exposure draft. Conforming amendments to IAS 39 IG F.6.2 were also approved.

IAS 17 Leases: Classification of leases of land and buildings – transition issues

The Board discussed two issues identified by the staff during the pre-ballot process on the modified retrospective transition provision that the Board agreed to adopt in December 2008. These issues were:

• Should an entity apply the tests to reassess lease classification based on the conditions existing on (a) the date of adoption; or (b) the inception of the lease?
• Should an entity recognise the asset and liability related to a finance lease based on amounts determined as of (a) the date of adoption; or (b) the inception of the lease?

The Board agreed a hybrid approach as follows:

For those leases for which retrospective information is available, an entity would:

• reassess classification of unexpired land leases based on conditions existing as of the inception dates of the leases; and
• recognise land leases that are now finance leases retrospectively based on the fair values as of the inception dates of the leases.

For those unexpired land leases for which retrospective information is not available, entities would be permitted to reassess lease classification and recognise lease assets and liabilities based on conditions that exist and fair values determined as of the adoption date.

In addition, the Board decided not to provide any additional transitional provisions. The revised standard would apply retrospectively as required by IAS 8 and any adjustment on adoption would be recognised in opening retained earnings of the earliest period presented.

Mr Leisenring indicated his intention to dissent from the amendment on the basis that he disagreed with the conclusion that any right to the land passes in a long lease when the title to that land does not pass.

Discussion at the March 2009 IASB Meeting

IAS 39.2(g) - Scope exemption for business combinations contracts

The staff introduced this topic by highlighting that nearly all respondents to the Annual Improvements 2008 ED commented on this issue. The proposals would make clear that only forward contracts entered into during a business combination would qualify for the scope exemption. Most respondents agreed to exclude forward contracts.

Many respondents asked to extend the exemption to optional contracts. The staff noted that option contracts are not binding and, hence, staff believe it is not appropriate to exclude option contracts.

Furthermore, the staff did not recommend extending the exemption to contracts that are synthetic forwards (that is a combination of a put and a call option with same volume, maturities, and strike prices). The rationale for this was that while such a combination in theory is equivalent to a forward, there are many other business considerations that might result in one party not exercising.

The staff informed the Board that it changed the drafting to clarify that a forward contract would have to mature within a 'normal timeframe' to qualify for the exemption.

Finally, the staff recommended not adopting proposals from constituents to extend the exemption to joint ventures and investments in associates, as they would not represent business combinations.

The Board agreed with all staff recommendations.

April 2009: IASB Issues Final Improvements to 12 IFRSs

On 16 April 2009, the IASB issued Improvements to IFRSs – a collection of amendments to twelve International Financial Reporting Standards – as part of its program of annual improvements to its standards. The IASB uses the annual improvements project to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project. The latest amendments were included in exposure drafts of proposed amendments to IFRSs published in October 2007, August 2008, and January 2009. Most of the amendments are effective for annual periods beginning on or after 1 January 2010, although entities are permitted to adopt them earlier. During its deliberations of comments received on the exposure draft of Proposed Improvements to IFRSs published in August 2008, the IASB decided to postpone reconsideration of two IAS 39 issues (relating to the fair value option and bifurcation of an embedded foreign currency derivative) until more analysis could be completed. Consequently, with the document published today, all the other issues included in the three exposure drafts have been finalised or removed from the IASB's agenda. The following table lists the IFRSs and topics addressed by the amendments. Click for IASB Press Release (PDF 45k).

Discussion at the January 2010 IFRIC Meeting

The IFRIC has assumed responsibility for making recommendations to the Board on the Annual Improvements to IFRSs.

Following publication of IFRS 9 by the Board, the IFRIC formally removed from the annual improvement project the two remaining IAS 39 issues that were included in the August 2008 exposure draft:

• Application of fair value option
• Bifurcation of an embedded foreign currency derivative

Discussion at the Joint IASB-FASB Special Meeting 10 February 2010

The Board discussed three issues that were originally part of the Annual Improvements ED published in August 2008:

• bifurcation of embedded foreign currency derivatives;
• application of fair value option; and
• impairment of investments in subsidiaries, jointly controlled entities, and associates in the separate financial statements of the investor.

The Board felt the proposed amendments are too narrow in scope and do not address situations that exist in practice. The Board also concluded that those issues should be considered as part of the wider project to replace IAS 39 and, therefore, confirmed the IFRIC's recommendation to formally remove these items from the annual improvement project.

Where to address contingent consideration

The Board was asked to consider bringing the requirements for contingent consideration that is a financial instrument together in one Standard. The Board voted in favour of the recommendation and asked the IFRIC to explore the matter further and provide feedback at a future meeting.

Partial use of fair value for measurement of interest in joint ventures

In the light of the Board's agreement to amend IAS 28 to allow the use of different measurement basis when accounting for associates, the Board was asked to consider whether equivalent guidance should be included in the IFRS replacing IAS 31.

The Board did not agree with the staff's recommendation, and no resulting changes will be made in the forthcoming IFRS on joint ventures.