IFRS Interpretations Committee publishes proposed guidance on levies and put options
May 31, 2012
Today, the IFRS Interpretations Committee published for public comment proposed guidance on accounting for (1) levies charged by public authorities on entities that operate in a specific market and (2) a put option written by a parent entity on the shares of its subsidiary held by a non-controlling-interest shareholder.
The Committee considered how an entity would account for the payment of levies, other than income taxes, in its financial statements; specifically, when the liability to pay a levy should be recognised. The proposed guidance, DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market, clarifies that "the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation".
Comments on the levies proposal are due by 5 September 2012.
The Committee considered how to measure the financial liability created when a parent entity is obliged to purchase the shares of its subsidiary for cash or for another financial asset, and the parent must recognise a financial liability in its consolidated financial statements for the present value of the option exercise price.
The proposed guidance, DI/2012/2 Put Options Written on Non-controlling Interests, clarifies that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.
Comments on the put options proposal are due by 1 October 2012.
- IAS 32 — Financial Instruments: Presentation
- IAS 37 — Provisions, Contingent Liabilities and Contingent Assets
- IFRS 10 — Consolidated Financial Statements
- IAS 12 — Income Taxes
- IAS 27 — Separate Financial Statements (2011)
- IFRIC 6 — Liabilities Arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment