Consideration of Comments on the Exposure Draft
The Board received over 150 letters of comment on the Exposure Draft. Starting with its November 2002 meeting, the Board has been discussing the comments received and has made the following tentative decisions:
Improvements - General
In November 2003 the Board considered removing the references to 'benchmark' and 'allowed alternative' when standards are revised. The Board agreed that these references would be removing whenever possible and replaced with appropriate wording.
It was noted that IAS 31.33 expressed a preference for the benchmark treatment. Some Board members disagreed with this preference. The Board agreed that this could not be removed without due process but that it should be noted that this may change when accounting for joint ventures is considered.
IAS 1
The Board decided tentatively not to modify its proposals that:
- An entity will be in compliance with IFRS even if it believes that a 'true and fair override' is appropriate but local law requires compliance with all IFRS and therefore prohibits the override. Disclosure would be required.
- The category of extraordinary items will be abolished. Labelling of items in the income statement as unusual, nonrecurring, or abnormal is not prohibited, but they may not be presented on a net-of-tax basis.
- A post-balance sheet agreement to refinance a short-term obligation on a long-term basis (more than 12 months) does not justify classifying the short-term obligation as non-current (disclosure of the agreement will be required).
- If a borrowing agreement has a covenant that makes a liability payable on demand if certain conditions related to the borrower's financial position are breached, and those conditions are breached at the balance sheet date, the liability is classified as current, even if corrected after balance sheet date. An exception to this principle is proposed if, prior to the balance sheet date, the lender has granted a grace period in which to correct the breach and, when the financial statements are authorised for issue, either (a) the borrower has corrected the breach or (b) the grace period has not yet expired.
- Significant judgements made by management in applying accounting policies should be disclosed.
- Key assumptions about the future and other sources of measurement uncertainty should be disclosed.
Minority Interest. The Board concluded that the final standard should provide guidance on the presentation of minority interest in the income statement. The Board tentatively decided to require a subtotal for net profit and loss attributable to controlling shareholders on the face of the income statement. As a result, profits associated with controlling and minority shareholders must be presented separately on the face of the income statement. Sub-points h and g should be deleted from paragraph 76 of the proposed IAS 1.
Operating Income. The Board decided that operating income or loss should remain undefined in the final standard and should be addressed in the Performance Reporting (Comprehensive Income) project.
Undue Cost and Effort. The Board discussed the meaning of the phrases "undue cost or effort" and "impractical" used in current IFRS literature to determine when the requirements of a standard should not be followed. The Board noted that the term "impractical" is synonymous with impossible. That is, if it is impractical, the entity just can't do it no matter how much time or money is spent to determine the answer. Conversely, the "undue cost or effort" phrase is meant to be a lower threshold that is focussed more on whether the benefit exceeds the cost of accumulating the information. The Board requested the staff to prepare a paper on when these phrases are used to insure that the right phrase is used in each circumstance. The Board noted that its intention in First-Time Application is for an "undue cost or effort" exception.
Effects of post-balance sheet events on the classification of liabilities
The staff asked the Board to confirm or reverse a decision made during the November 2002 meeting as to whether an entity should classify as non-current at the balance sheet date an obligation that has become payable on demand because of a breach of a loan covenant when the lender has granted at the balance sheet date a period of grace to rectify the breach after the balance sheet date. In particular when the period of grace does not extend beyond twelve months after the balance sheet date and the entity has not cured the breach before the financial statements are authorised for issue.
The Board decided that an item should be classified as current if at balance sheet date, there does not exist an agreement to extend payment beyond 12 months. The Board clarified that post-balance sheet agreement would not be an adjusting event.
Guidance on an entity's ability to consummate a refinancing agreement
The IASB decided that no further guidance should be included on an entity's ability to consummate a refinancing.
At its October 2003 meeting, the Board noted the conclusion in ED 4 that non-current assets should not be reclassified as current under IAS 1 merely because they are held for sale. The staff proposed that the definition of current assets in the improved IAS 1 include the word 'normally expected', and 'Assets of a long-term nature are not reclassified as current assets when they are held for sale.' The Board disagreed with the staff proposal to change IAS 1 but, instead, concluded that the point be addressed specifically in the standard that results from ED 4.
The staff recommended that paragraphs 54(d) and 60-63 of the exposure draft be amended to consistently apply the principle that the period for identifying assets or liabilities as current is the longer of twelve months after the balance sheet date and the entity's normal operating cycle. The Board agreed with the staff's recommendations.
Some who commented on the Improvements exposure draft said that by removing the 'results of operating activities' from the mandatory line items in the income statement, information about most expenses will only be required to be presented within the profit or loss. It was suggested that, for symmetry with the line item 'revenue' in the income statement, a line item like 'expenses other than finance costs and tax expense' should be added. The Board did not agree with adding this line item.
IAS 2, Inventories
Elimination of LIFO. The Board decided to retain the elimination of the LIFO approach to accounting for inventory. Therefore, only the FIFO, weighted average, or specific identification approaches will be allowed.
Net realisable value. The Board also decided to retain the requirement to reverse impairment losses recorded on inventory. The Board discussed the scope inclusion for broker-dealers that are measured at net realisable value with the change in value in recorded in the income statement (paragraph 1c). The Board decided to clarify that scope inclusion to brokers that deal in commodities. In addition, the Board decided to replace the phrase "net realisable value" with "fair value less cost to sell and complete".
In September 2003 the Board confirmed that all entities that do not meet the fair value measurement scope exclusion should record their inventories at the lower of cost or net realisable value and that there is no further exemption for entities operating in high inflation economies.
They agreed that the standard would not require the disclosure of the amount of inventories held at net realisable value but that the amount of the writ down would be disclosed.
IAS 8
Materiality. The staff stated that various commentators had requested guidance on the application of materiality. The Board agreed and asked the staff to draft proposed paragraphs. Some Board members expressed concern whether these paragraphs should be in IAS 1 or IAS 8. The staff will consider this and make a proposal to the Board.
Authoritativeness Hierarchy. The staff proposed a redrafting of the hierarchy in IAS 8 to address concerns around going to other standard setters' pronouncements for further detailed guidance on issues addressed directly in an IASB standard and issues for which an IFRS answer can be found by analogy to other IASB standards or the Framework. The Board stated its view that other standard setters' pronouncements should be used only when an answer cannot be found either directly in or by analogy to an IASB standard or the Framework. The Board asked its staff to redraft the wording to clarify this matter and to consider similar guidance issued by the Canadian standard setter.
Terminology change to replace 'retrospective restatement' with 'retrospective application' for changes in accounting policies
The Board agreed that the staff should work with the FASB staff to agree on consistent vocabulary for: 'retroactive vs retrospective', 'restatement vs application', and 'prospective'. The Board did not express preferences.
Additional guidance on the meaning of 'impracticable'
The Board agreed to give additional guidance on the meaning of 'impractical' and asked the staff to work with the FASB in order to use the same vocabulary. The Board does not want to create a new category, even if the FASB gave additional guidance on what is meant by 'limited retrospective'. The Board agreed to clarify that an entity should go retrospectively as far back as possible.
Additional requirement for a limited retrospective application when full retrospective application is impracticable
The Board confirmed that when the restatement cannot be reasonably allocated to prior periods, the amount of the change should go through the retained earnings of the current period.
Additional disclosures for changes in accounting policies
The Board agreed to add to disclosure requirements the following:
- The nature and justifications of the changes.
- The effect of the change on amounts in each period.
Guidance on the treatment of a change in accounting policy as a result of a change in other standard-setting bodies' pronouncements
The Board agreed to add guidance to the final standard.
IAS 10, Events after the Balance Sheet Date
IAS 15, Information Reflecting the Effects of Changing Prices
At its February 2003 meeting the Board received staff papers on comments on improvements to IAS 8, 10, and 15. However, it did not discuss those items. It would appear, therefore, that the decisions represented in the exposure draft have not been changed. This may be clarified in the IASB's Update newsletter.
IAS 16
Depreciation of idle and retired assets. The Board decided to modify its proposal that depreciation should continue when a depreciable asset becomes temporarily idle or is retired from active use and held for disposal. Under the modified approach, depreciation would continue unless the asset (a) is not being used, (b) is held for disposal, and (c) is available for immediate delivery to a buyer.
Components approach. The Board clarified that the components approach is a method of getting a more precise calculation of depreciation. There are questions related to how far down an entity should go to determine a component and the Board clarified that the entity should use its best judgement as to how small the components should be for an accurate calculation of depreciation. The Board clarified, however, that if repair and/or replacement of an item that is not a separate component occurs, that amount should be expensed. If the asset is a separate component, then that amount should be capitalised and the replaced asset should be written off.
Changes in decommissioning liabilities. The Board discussed the IFRIC's current project on recording changes in decommissioning liabilities. The Board noted that not all of the change in the liability should go to the asset, and the revisions to IAS 16 should make this clear. One member noted that the decision by the IFRIC was inconsistent with US GAAP (FAS 143). The staff did not believe convergence in this area was desirable.
Residual value. The Board confirmed its decisions to require revaluation of residual values on property plant and equipment on an annual basis and to prohibit recognition of credits to depreciation as a result of a change in the residual value. The staff presented an example where the residual value increased above the current amortised cost but below the original cost. The Board was split (7 to 7) over whether the credits up to the original cost should be recognised. The 7 who believe that the credits should be recognised were split over whether to spread the credit over the remaining life of the asset (6 members) or take the gain immediately (1 member). Because of this split, the Board tentatively decided to prohibit the recognition of credits in this example.
The Board discussed how an entity should handle an asset's depreciation at the point at which the asset's carrying amount is found to be below the amount of the asset's reassessed residual value. The Board decided that, when residual value exceeds net carrying amount for an asset (cost less depreciation) the entity should cease to depreciate the asset, on the basis that an asset should only be depreciated when there is a depreciable amount.
Exchanges of assets. The Board has tentatively decided to require that exchanges of assets must have "economic substance" for the exchange to be recorded at fair value. The Board gave guidance to the staff on how to incorporate this requirement into a final standard, which included looking to demonstrated transactions with other parties and attributes related to the terms of the transfer.
Property Acquired in an Exchange of Assets - Initial Measurement. The Board previously agreed that an entity would measure an item of PP&E acquired in exchange for another asset at fair value unless either:
- The exchange transaction lacks commercial substance, or
- The fair values of both the inbound and outbound assets are not reliably measurable.
In these cases, the acquired PP&E would be measured at the carrying amount of the asset given up in exchange.
The Board discussed how the 'commercial substance' requirement should be applied. The staff proposed two steps:
- Firstly, consider whether the transaction changes future cash flows. These could be the cash flows of the asset, the cash generating unit, or the entity.
- If the cash flows have not changed as a result of the transaction, the entity should determine whether the overall value of the entity has changed as a result of the transaction.
If after these two steps, no change in the future cash flows or on the value of the entity has been noted, then the acquired asset should be measured at the carrying amount of the asset given up in the exchange.
The Board further agreed that the fair value measurement principle would apply to exchanges assets covered by IAS 16 (PP&E), IAS 38 (intangible assets), and IAS 40 (investment property). The Board noted that the FASB intends to expand the scope of this principle to all non-monetary exchanges. The Board agreed to consider expanding the scope at a later stage.
Initial measurement - asset dismantlement, removal and restoration costs
The staff asked the Board whether, if an obligation is incurred for dismantlement, removal, and restoration costs as a consequence of producing inventory, those costs should be classified as conversion costs under IAS 2, Inventories, or as property, plant, and equipment costs under IAS 16. The Board agreed that example 3 of Appendix C to IAS 37 is on point and further guidance is not needed.
Initial measurement - asset exchange transactions
The Board agreed that if making a non-monetary contribution to a jointly controlled entity, a venturer should consider 'commercial substance' in determining whether to recognise the portion of its gain or loss attributable to the equity interests of the other venturers in the asset.
Recognition - subsequent expenditure
The Board agreed that the general recognition principle should apply to subsequent expenditures. The current derecognition principle shall apply to assets that are replaced.
Recognition - costs of inspection component replacements
The Board decided costs of inspection should be capitalised if they meet the recognition principle in IAS 16.
Subsequent measurement - depreciation period
The staff asked the Board whether an entity should begin depreciating an asset when the asset is available for use or when it is put into use. The Board decided an asset should be subject to depreciation when it is available for use.
Transition
The Board decided that an entity should not apply hindsight to its initial measurement of a previous asset exchange transaction in determining whether it lacked commercial substance.
September 2003 Decisions
The Board decided to clarify (as questions are being received) that property, plant, and equipment related to agricultural and extractive industries are in the scope of IAS 16.
The staff came back with a new wording regarding the commercial substance, and the Board agreed that a definition of 'an entity specific value' should be added as well.
The Board agreed (8-6) that incidental income that arises from incidental operations that are necessarily undertaken to arrive at the final asset or process should be deducted from the cost of the asset but that income from other incidental operations should be taken to income.
At its October 2003 meeting, the Board noted that the SEC has expressed concern that there is potential circularity between the commercial substance provisions of IAS 16 and the 'business purpose' doctrine applied for tax accounting in the United States. Under the valid business purpose doctrine, a transaction is not to be given effect for tax purposes unless it serves a legitimate business purpose other than tax avoidance. The SEC's concern is that an entity may assert that the business purpose for structuring a transaction is to get commercial substance treatment (ie fair value accounting) under financial reporting even though the only thing supporting the commercial substance is the change in tax cash flows. In other words, the financial reporting and tax treatments are co-dependent.
FASB agreed to include wording in the Basis for Conclusions to APB 29 that would prohibit commercial substance from being predicated on tax cash flows that arise solely because the tax business purpose is based on achieving a specified financial reporting result.
The staff believes that this co-dependence is a tax jurisdiction-specific issue that needs to be addressed by the respective tax authority. The fundamental question is whether the respective tax authority is going to grant the tax treatment - a question that a global financial reporting standard cannot answer. It should be noted that the staff does not necessarily believe that excluding from IAS 16 language similar to that which was agreed to by the FASB would result in a different accounting treatment for entities that operate in the US tax jurisdiction. The Board agreed that no change should be made in this regard.
IAS 17 and IAS 40
The Board did not change its proposals regarding leases of land. Therefore:
- A lease of land and building(s) should be separated into two elements – lease of land and lease of building(s).
- A property interest held under an operating lease can be classified as investment property provided that the rest of the definition of investment property is met and the lessee uses the fair value model as set out in IAS 40.27-49.
A lessor will be required to capitalise and amortise over the lease term any incremental initial direct costs. The current IAS 17 option of immediate expensing will be eliminated.
Though commentators raised a number of other issues relating to IAS 17, the Board decided not to address any of them as part of the Improvements Project. It also decided not to consider, in the Improvements Project, whether to eliminate the choice in IAS 40 between the cost model and the fair value model.
At the Board's July 2003 meeting, the Board considered a paper on the interactions of IAS 17 and IAS 40 for the purpose of lease classification. The Board discussed whether additional guidance should be added on how to split the land and the building elements in a lease. Additionally, the Board considered the treatment of the liability side of a finance lease.
The Board tentatively decided that the lease liability should be accounted for under IAS 39. Additionally, the Board tentatively decided that contingent rent should be considered an embedded derivative that is not closely related to the host contract. This would presumably change the requirements in IAS 39.25(g) and paragraph A7(f) of the ED. The Board will address this issue at a future meeting.
At its November 2003 meeting, the Board discussed whether entities can classify property interests held under operating leases that qualify as investment property on a property-by-property basis. The staff proposed that this allowance be retained provided all investment properties are carried under the fair value option.
Some Board members queried whether the property by property operating lease choice should dictate the accounting policy choice for all investment properties.
In addition it was proposed that this would only be available at inception of the lease, to prevent operating leases over property that was owner occupied from being classified as investment property if there was a change in circumstances. In addition IAS 40 already deals with transfers between categories.
The Board agreed with the restriction in accounting policy but did not include the restriction on classification at inception only.
The Board previously decided to clarify that the fair value of a property interest held under a long-term lease, and classified as an investment property asset under the fair value model in IAS 40, should be determined by reference to the rights given by the lease, and that the obligation under the lease should be accounted for as a liability.
The staff proposed that IAS 40 clarify that a leasehold property interest is valued by reference to expected cash flows – both inflows and outflows – but without deduction for any outflows that are separately recognised in the balance sheet as a liability.
The Board agreed to include this in the standard.
Improvements to IAS 19, Employee Benefits
The Board considered how to proceed with the improvements to IAS 19 given that an exposure draft on Other Comprehensive Income will be delayed.
The staff proposed that IAS 1 should be amended to create a second performance statement similar to the statement of other comprehensive income (OCI) in the US and the statement of total recognised gains and losses (STRGL) in the UK. In addition IAS 19 should be amended to reflect both the Board's decisions in the project to date, including the immediate recognition of actuarial gains and losses, and also to require particular actuarial gains and losses to be recognised in OCI rather than in the income statement.
It was noted that this is not just a presentation issue but that other issues such as recycling and some measurement issues would also be addressed. Concern was also expressed that this may give the impression that the main Other Comprehensive Income project is halted.
It was proposed to allow entities to record the IAS 19 unrecorded smoothing effects in the IAS 1 alternate comprehensive income statement provided agreement can be achieved on the separation between amounts recorded in the income statement and those in the other comprehensive income statement.
Some Board members expressed concern as to the affects this may have. The Board asked the staff to consider the issue further and bring it back to the next meeting.
IAS 21, The Effects of Changes in Foreign Exchange Rates
Functional Currency. The Board confirmed its decision that an entity's functional currency should be the currency of the primary economic environment in which the entity operates. The Board stated its intention that paragraphs 7 and 8 of the revised IAS 21 should be looked at as a hierarchy when determining an entity's functional currency. The Board also noted that there is no such thing as a "group functional currency" and that the final revised standard should make this clear. The Board also decided to require disclosure of why an entity has changed its functional currency, if applicable.
Relationship with IAS 29. One Board member noted that IAS 29 in its current state is too hard to implement and that the Board should address revisions to its requirements at a future date. There was agreement on adding this to a longer-term improvements project.
Presentation Currency. The Board confirmed its decision that a reporting entity should be permitted to present its financial statements in any currency. However, the Board views this as a convenience translation from the functional currency of the entity that should be translated at the spot rate. The Board noted that the final standard should clearly distinguish between a presentation currency and a convenience translation.
The Board reaffirmed its decision to prohibit the current allowed alternative in paragraph 21 of IAS 21 that allows capitalisation of certain foreign exchange differences on monetary items resulting from a non-hedgeable severe devaluation. All such differences will be recognised in net profit or loss.
The Board discussed whether goodwill and fair value adjustments to assets and liabilities should be considered assets and liabilities of the foreign operation and translated at the closing rate. Several members noted that this decision is inherently requiring pushdown accounting for goodwill. The Board decided to retain the position in the exposure draft and further decided to require goodwill and fair value adjustments to be translated at the closing rate. The Board decided to allow prospective application (but permit retrospective application) for acquisitions after the effective date that give rise to goodwill.
The Board decided to keep the net investment exception to providing changes in the exchange rate in the profit and loss accounts.
At its October 2003 meeting the Board discussed:
The level to which goodwill should be allocated for foreign currency translation purposes; and
The guidance that should be provided on goodwill allocation issues.
The staff recommended the following wording to be added to the Basis for Conclusions:
"The Board was persuaded by the reasons set out in paragraph BC29 and decided that goodwill is treated as an asset of the foreign operation and translated at the closing rate. Consequently, that goodwill should be allocated to the level of each functional currency of the acquired foreign operation. Accordingly, the level to which goodwill is allocated for foreign currency translation purposes may be different to the level at which the goodwill is tested for impairment. Entities should follow the requirements in IAS 36 Impairment of Assets to determine the level at which goodwill should be tested for impairment."
The Board agreed and consequently no additional guidance will be provided on goodwill allocation.
IAS 24, Related Party Disclosures
Management Compensation. The staff noted that several comment letters requested that management compensation be a required disclosure. Several Board members expressed concern with this requirement, as it would require the Board to define management compensation. The Board tentatively decided to amend the exposure draft to require this disclosure. Therefore, the staff was asked to develop a working definition of management compensation, which the Board suggested should include items such as stock compensation, use of airplanes and apartments, etc.
Intra-group Transactions. The Board decided to delete paragraph 3 from the exposure draft – disclosures of related party transactions between consolidated entities. The Board clarified its position that if transactions are eliminated in the financial statements presented, those transactions need not be disclosed. However, if transactions are not eliminated, then those transactions must be disclosed.
IAS 27
The Board reaffirmed the proposal in the Improvements Exposure Draft that minority interest be presented as a separate component of equity in consolidated financial statements. Classifying minority interest either as a liability or as a separate category between liabilities and equity will be prohibited. The IASB will discuss the implications of this decision for the income statement in December.
Exemption from presenting consolidated financial statements
The Board agreed that where a partially owned subsidiary does not prepare consolidated financial statements the approval required from the minority would be worded that it applies where on objection from a minority shareholder is received.
Certain commentators requested clarification of the words "its securities are not publicly traded" and "in the process of issuing securities in public securities markets" used in conjunction with the above exemption. The Board requested the staff to provide more detailed explanations of "securities" and "publicly traded".
Parent Company Financial Statements
The Board agreed to retain the proposed accounting for subsidiaries in parent company financial statements.
It was agreed that a requirement to disclose the names of significant subsidiaries would be required in parent company financial statements
Investments in subsidiaries held by venture capital organisations
Comment was received requesting that the exemption in IAS 28 for these types of organisations should be extended to include investments in subsidiaries or that the temporary control should be linked to a business cycle where this is longer than 12 months.
The Board did not agree that such an exemption should be provided. They did however note that the fair value of such investments could be used for measurement purposes in the parent-only financial statements. They further noted that it was likely that the amended standard would have an effective date of 1 January 2005 giving entities the time to develop systems to comply with this requirement.
In addition the Board agreed that extending the temporary control exemption beyond twelve months was not appropriate except where the sale of an acquired subsidiary was required by a competition authority and the necessary permission to sell was delayed beyond twelve months.
It was noted that both of the above decisions were subject to a review of the requirements under US GAAP and discussion with FASB where necessary.
In September 2003, the Board agreed to extend the exemption for intermediate parents to not prepare consolidated financial statements, under the circumstances specified, to include equity accounting and proportionate consolidation of associated and joint ventures.
IAS 28
Investments in associates held by venture capital organisations
Comment was received that for such associates the standard should only note that IAS 39 applied and consequently entities could choose to account for the fair value of the investment in the income statement or equity. The Board agreed that any fair value adjustment to an investment in such an associate should be reported in the income statement and that these investments would meet the definition of "held for trading" in IAS 39. The wording in this regard would therefore remain as it was exposed. It was however agreed to drop the reference to "well established practice in those industries" as it was not necessary. Where fair value could not be determined IAS 39 provided adequate exemptions.
Inclusion of long-term receivables within investment in associate
It was agreed that long-term receivables should be excluded from inclusion within the investment in an associate except where the receivable is in substance part of the investment in the associate. It was noted that where the associate incurred losses, these would be used to reduce such receivables, which would then also be subject to the impairment requirements of IAS 39.
Information not older than three months
Comment was received that the requirement to equity account using information from within the last three months was problematic. The Board believed that this requirement was correct and if information could not be obtained they should consider a requirement to fair value the associate through the income statement. If neither of these could be done it was questioned whether the investment was an associate. This will however be discussed again.
In September 2003, the Board agreed to retain the requirement that associates financial information used for equity accounting may only differ from the investor by a maximum of three months.
Also, the Board agreed to retain the requirement that equity accounted results should be prepared using uniform accounting policies with the group.
IAS 33, Earnings Per Share
Year-to-date EPS. The proposed approach to calculating EPS in the exposure draft is based on taking an average of the interim periods presented. The Board noted that not all jurisdictions have similar interim reporting requirements and therefore a different EPS figure could be obtained merely as a result of reporting on a quarterly basis versus a semi-annual basis. The staff noted that the annual reporting period is its own distinct period. The Board decided to withdraw the approach in the exposure draft and replace it with an accumulative method approach. The Board noted that this method would be a divergence from US GAAP. The staff was asked to liaise with the FASB to converge in this area towards an accumulative method approach.
Instruments that Can Be Settled in Shares. The Board noted that the objective of diluted EPS is to obtain the maximum dilution possible. Therefore, the Board decided that if an instrument can be settled in shares, it should be included in the diluted EPS calculation. (The Improvements ED had proposed that the presumption of settlement in shares could be rebutted.) This is consistent with SIC 24 (which would be withdrawn and included in the final standard) but inconsistent with the requirements of IAS 32. However, the Board noted that EPS is merely a calculation of a ratio, and therefore consistency with other standards is not required. The Board noted this decision is in conflict with US GAAP and therefore requested that the staff liaise with the FASB to obtain convergence.
Mandatorily Convertible Securities. The Board also concluded that mandatorily convertible securities should be included in the basic EPS calculation, as their issuance depends only on the passage of time, which is a certainty. The Board discussed the presentation of EPS in parent only financial statements and agreed to allow such presentation if it is useful to the users. In September 2003, the Board confirmed its February decision regarding mandatory redeemable preferred stock, namely that they should be included in the basic EPS calculation.
Effective Date
The Board agreed that the effective date for the Improvement standards would be 1 January 2005 with earlier application encouraged. The Board noted that publication of the standards will commence in the middle of 2003.
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