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Matters to report to the Board from the Interpretations Committee

Date recorded:

The staff provided the Board with a summary of the issues discussed at the previous IFRS Interpretations Committee meetings.

In particular, the Board discussed the following topics:

  • IFRS 3 Business Combinations — identification of the acquirer and common control transactions (Agenda paper 7A).
    • The IFRS Interpretations Committee ('the Committee') received two submissions requesting guidance on the accounting treatment for two fact patterns that involved the formation of a new entity to facilitate the spinning-off of a business within a group under IFRS 3 Business Combinations. The first submission requested guidance on the factors that are relevant when identifying an acquirer in a business combination while the second submission requested guidance on the accounting for common control transactions and included a request to clarify whether a business that is not a legal entity could be considered the acquirer in a reverse acquisition under IFRS 3.
    • Based on the staff's analysis and assessment of the agenda criteria, the Committee felt that the accounting for fact patterns involving the creation of a newly formed entity and the accounting for common control transactions were too broad to be addressed through an interpretation or through an annual improvement. As such, the Committee recommended to the Board that it should consider the specific fact patterns submitted in the context of a broader project on accounting for common control transactions, which the Board might address at a later stage. The Board discussed the issue and noted that this topic would be considered as part of its wider agenda consultation.
  • IAS 7 Statement of Cash Flows — classification of cash payments for deferred and contingent considerations (Agenda paper 7B)
    • The Committee received a submission requesting guidance on the classification of cash payments for deferred and contingent considerations under IAS 37.
    • The majority of the Committee members determined that the issues raised by the submitter was too broad to be resolved through the annual improvement process and proposed that the Board should not add this issue to the Annual Improvements project. The staff noted that it had received many submissions on various issues relating to IAS 7. The Board asked the Committee to look at the issues relating to IAS 7 as a package and perform an analysis to determine if there were any common themes and to evaluate these and present their findings to the Board.
  • IAS 7 Statement of Cash Flows — classification of cash flows for construction or upgrade services in a service concession arrangement
    • The Committee received a submission requesting clarification on the classification of cash flows for an operator in a service concession arrangement within the scope of IFRIC 12 Service Concession Arrangements.
    • The Committee recommended that the Board proceed with the proposed improvement to amend paragraph 14 of IAS 7 to include 'cash receipts and payments from construction or upgrade services related to service concession arrangements within the scope of IFRIC 12' within the list of examples of cash flows from operating activities. The Board decided not to make a decision at this point in time and as noted above, the Board asked the Committee to look at the issues relating to IAS 7 as a package and perform an analysis to determine if there were any common themes and to evaluate these and present their findings to the Board.

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