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IASB (International Accounting Standards Board) (blue) Image

IASB votes to reconfirm overlay and deferral approach

19 Apr 2016

The IASB has just voted in favour of the staff recommendations in connection with the redeliberation of the proposals around the application of IFRS 4 together with IFRS 9.

There was a clear majority for supporting the staff's recommendations. 13 board members were present, and only one board member voted against all staff recommendations. Another board member voted for most of the staff recommendations but against the recommendations around disclosures. There were some smaller comments by board members that will lead to changes, however, these are mainly directed towards easier application. Thus, the approaches proposed in the Exposure Draft “Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts” (overlay approach and deferral approach) have been essentially reconfirmed.

A more detailed summary of the IASB's discussion can be found in our IAS Plus meeting notes from the meeting.

IPSASB (International Public Sector Accounting Standards Board) (mid gray) Image

IPSASB publishes 'Improvements to IPSAS 2015'

19 Apr 2016

The International Public Sector Accounting Standards Board (IPSASB) has published 'Improvements to IPSAS 2015', which sets out amendments to International Public Sector Accounting Standards (IPSAS).

The amendments consist of:

  • consequential amendments arising from chapters 1-4 of the Conceptual Framework;
  • general improvements to IPSAS;
  • IPSAS/Government Finance Statistics alignments; and
  • reflections of selected IASB annual improvements and narrow scope amendments.

Please click to access Improvements to IPSAS 2015 on the IPSASB website.

Japan Image

New data on voluntary IFRS adoption in Japan

18 Apr 2016

The Tokyo Stock Exchange (TSE) has released data showing that 128 companies listed on the TSE, accounting for more than a quarter of the market capitalisation, have adopted or plan to adopt International Financial Reporting Standards (IFRS). In addition, over 200 further companies are actively considering adoption.

Since the issuance of 'Japan’s Modified International Standards (JMIS)' in June 2015, there are four sets of accounting standards for consolidated financial statements in Japan: JMIS, designated IFRSs, Japanese GAAP, and US GAAP. The new data released last takes stock and shows the number and market capitalisation of companies that have adopted IFRSs or plan to do so, IFRS adoption by industrial sector, scheduled adoption dates, and the stage of progress by companies considering IFRS adoption.

Please click to access the analysis on the TSE website.

IASB webcast (blue) Image

IASB posts third webinar on insurance contracts standard

15 Apr 2016

The IASB has posted the third installment of its weekly webinar series on the upcoming insurance contracts standard.

The series, hosted by IASB member Darrel Scott, will discuss the following topics related to the upcoming insurance contracts standard:

  • The need for change and the history of the project. (issued 1 April)
  • What is an insurance contract? (issued 8 April)
  • Initial measurement of insurance contracts. (issued 15 April)
  • Subsequent measurement of insurance contracts.
  • Modifications to the general model: variable fee contracts.
  • Other modifications to the general model.
  • Presentation and disclosure.
  • Applying the Standard for the first time.

For more information, see the webinar page on the IASB’s website.

IVSC (International Valuation Standards Council) (lt green) Image

IVSC issues exposure drafts of proposed new IVSs

15 Apr 2016

The International Valuation Standards Council (IVSC) has issued exposure drafts of three proposed new International Valuation Standards (IVSs) as well as the Introduction and Framework to the 2017 IVS.

The four exposure drafts issued are:

  • Introduction and Framework to IVS 2017,
  • IVS 104 Bases of Value,
  • IVS 105 Valuation Approaches, and
  • IVS 210 Intangible Assets.

The remaining chapters of the 2017 IVS are expected to be released as an exposure draft in late May or early June 2016.

The exposure drafts can be obtained from the IVSC website. Comments are requested by 7 July 2016.

FASB document (lt blue) Image

FASB clarifies guidance on licensing and identifying performance obligations

14 Apr 2016

The US Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) 2016-10 'Identifying Performance Obligations and Licensing', which amends certain aspects of the Board’s new revenue standard, ASU 2014-09 'Revenue From Contracts With Customers'.

The amendments include the following:

  • Identifying performance obligations:
    • Immaterial promised goods or services — Entities may disregard goods or services promised to a customer that are immaterial in the context of the contract.
    • Shipping and handling activities — Entities can elect to account for shipping or handling activities occurring after control has passed to the customer as a fulfillment cost rather than as a revenue element (i.e., a promised service in the contract).
    • Identifying when promises represent performance obligations — The new guidance refines the separation criteria for assessing whether promised goods and services are distinct, specifically the “separately identifiable” principle (the “distinct in the context of the contract” criterion) and supporting factors.
  • Licensing implementation guidance:
    • Determining the nature of an entity’s promise in granting a license — Intellectual property (IP) is classified as either functional or symbolic, and such classification should generally dictate whether, for a license granted to that IP, revenue must be recognized at a point in time or over time, respectively.
    • Sales-based and usage-based royalties — The sales-based and usage-based royalty exception applies whenever the royalty is predominantly related to a license of IP. The ASU therefore indicates that an “entity should not split a sales-based or usage-based royalty into a portion subject to the guidance on sales-based and usage-based royalties and a portion that is not subject to that guidance.”
    • Restrictions of time, geographical location, and use — The ASU’s examples illustrate the distinction between restrictions that represent attributes of a license and provisions specifying that additional licenses have been provided.
    • Renewals of licenses that provide a right to use IP — Revenue should not be recognized for renewals or extensions of licenses to use IP until the renewal period begins.

The ASU’s effective date and transition provisions are aligned with the requirements in the new revenue standard, which is not yet effective. For more information, see Deloitte's Heads Up newsletter as well as the ASU on the FASB’s website.

Comparison with the IASB's guidance

Earlier this week, the IASB issued clarifications to IFRS 15 that address (1) identifying performance obligations, (2) principal-versus-agent considerations, and (3) licensing. The clarifications also provide some transition relief for modified contracts and completed contracts.

The following table compares the FASB’s guidance on identifying performance obligations and its licensing implementation guidance under ASU 2016-10 with the IASB’s guidance as a result of its recently issued clarifications to IFRS 15:

Identifying Performance Obligations
TopicFASB’s GuidanceIASB’s GuidanceComparison
Immaterial promised goods or services An entity is permitted to evaluate the materiality of promises at the contract level; if the promises are immaterial, the entity does not need to evaluate such promises further. No changes to IFRS 15. The ASU clarifies but does not change the revenue standard’s guidance; therefore, divergence is not expected.
Shipping and handling activities Clarifies that shipping and handling activities that occur before control is transferred to the customer are fulfillment costs. Allows entities to elect a policy to treat shipping and handling activities as fulfillment costs if they occur after control is transferred. No similar policy choice is available for shipping and handling activities after control is transferred. The decision to not allow a policy election will result in divergence. Entities that adopt IFRSs will need to determine whether shipping and handling after control has transferred is a performance obligation.
Identifying when promises represent performance obligations Reframes the separation criteria to focus on a bundle of goods or services. Adds illustrative examples. Same as FASB’s guidance. Continued convergence is expected.
Licensing Implementation Guidance
TopicFASB’s GuidanceIASB’s GuidanceComparison
Determining the nature of an entity’s promise in granting a license Requires an entity to characterize the nature of a license as either functional or symbolic. Clarifies the guidance on when an entity is expected to undertake activities that will significantly affect intellectual property and, if so, to characterize a license as a right to use. The decisions are different and will result in divergence. Although the accounting for many licenses will be similar under both U.S. GAAP and IFRSs, some licenses may be accounted for differently.
Sales-based and usage-based royalties Clarifies that rather than splitting a royalty (and applying both the royalty and general constraints to it), an entity would apply the royalty constraint if the license is the predominant feature to which the royalty is related. Same as FASB’s guidance. The decisions are the same; continued convergence is expected.
IASB webcast (blue) Image

IASB webcast on the definition of a lease now available

13 Apr 2016

As part of the IASB webcast series on IFRS 16 implementation, the IASB staff has made available a webcast related to the definition of a lease.

This webcast discusses the IFRS 16 requirements and application guidance relating to the definition of a lease, practical differences between IFRS 16 and the previous definition of a lease  in IAS 17 and IFRIC 4, and how entities should account for contracts with both lease and service components.

The new webcast and all previous webcasts of the series available on the IFRS 16 implementation page on the IASB’s website.

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IASB publishes clarifications to IFRS 15

12 Apr 2016

The International Accounting Standards Board (IASB) has published final clarifications to IFRS 15 'Revenue from Contracts with Customers'. The amendments are effective for annual reporting periods beginning on or after 1 January 2018 (same effective date as IFRS 15 itself). Earlier application is permitted.



On 28 May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers. After issuing the new revenue standard, which is substantially the same as the FASB's ASU 2014-09, the IASB and the FASB formed the joint Revenue Transition Resource Group (TRG) to support the implementation of the new standard. The substantial majority of the issues discussed by the TRG were resolved without the need for standard-setting activity. However, five topics (identifying performance obligations, principal versus agent considerations, licensing, collectability, and measuring non-cash consideration) were identified as requiring consideration by the Boards. In addition, some stakeholders asked for practical expedients. After considering the five topics and possible practical expedients, the IASB proposed in July 2015 targeted amendments in three areas of IFRS 15 as well as some transition relief. The proposals in the exposure draft have now been finalised.



The amendments in Clarifications to IFRS 15 'Revenue from Contracts with Customers' address three of the five topics identified (identifying performance obligations, principal versus agent considerations, and licensing) and provide some transition relief for modified contracts and completed contracts. The IASB concluded that it was not necessary to amend IFRS 15 with respect to collectability or measuring non-cash consideration. In all its decisions, the IASB considered the need to balance helping entities with implementing IFRS 15 and not disrupting the implementation process.

Identifying performance obligations. IFRS 15 requires an entity to identify performance obligations on the basis of distinct promised goods or services. To clarify the concept of 'distinct', the IASB has added the clarification that the objective of the assessment of a promise to transfer goods or services to a customer is to determine whether the nature of the promise, within the context of the contract, is to transfer each of those goods or services individually or, instead, to transfer a combined item or items to which the promised goods or services are inputs.

Principal versus agent considerations. When another party is involved in providing goods or services to a customer, IFRS 15 requires an entity to determine whether it is the principal in the transaction or the agent on the basis of whether it controls the goods or services before they are transferred to the customer. To clarify how to assess control, the IASB has amended and extended the application guidance on this issue, and especially stresses:

  • that an entity determines whether it is a principal or an agent for each specified good or service promised to the customer and could be a principal for some specified goods or services and an agent for others;
  • that the indicators provided for assessing control are not a conclusive list; and
  • that the indicators provided may be more or less relevant to the assessment of control depending on the nature of the specified good or service and the terms and conditions of the contract so that different indicators may provide more convincing evidence in some contracts than others.

Licensing. When an entity grants a licence to a customer that is distinct from other promised goods or services, the entity has to determine whether the licence is transferred at a point in time or over time on the basis of whether the contract requires the entity to undertake activities that significantly affect the intellectual property to which the customer has rights. To clarify when an entity's activities significantly affect the intellectual property, the IASB has amended the application guidance and stresses that the activities significantly affect the intellectual property if

  • the activities are expected to significantly change the form or the functionality of the intellectual property; or
  • the ability of the customer to obtain benefit from the intellectual property is substantially derived from, or dependent upon, those activities.

Additionally, the IASB has extended the application guidance with respect to the application of the royalties constraint.

Transition relief. The IASB has provided two additional practical expedients (both optional):

  • An entity need not restate contracts that are completed contracts at the beginning of the earliest period presented (for entities that using the full retrospective method only).
  • For contracts that were modified before the beginning of the earliest period presented, an entity need not retrospectively restate the contract but shall instead reflect the aggregate effect of all of the modifications that occur before the beginning of the earliest period presented (also for entities recognising the cumulative effect of initially applying the standard at the date of initial application).


Alternative view

One Board member voted against the publication of the amendments. This Board member supports all clarifications and the additional transition relief, but disagrees with the proposal to require an entity to apply the amendments retrospectively as if those amendments had been included in IFRS 15 at the date of initial application as this would be inconsistent with allowing early application of IFRS 15.


Interaction with the FASB

The FASB has adopted a more piecemeal approach to amending its revenue standard and has decided to publish more extensive amendments. Final amendments to the application guidance on principal versus agent considerations were published in March 2016, amendments on identifying performance obligations and licensing are expected soon, and other narrow scope amendments and practical expedients on transition are expected slightly after that.

Also, while the IASB has announced that it will no longer attend TRG meetings as it is of the view that stakeholders need to know that they can continue their implementation process with the confidence that IFRS 15 will not be subject to further changes, the FASB declared in February that it will continue to address implementation issues and has scheduled three TRG meetings for 2016.


Additional information

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IASB meeting (blue) Image

Pre-meeting summaries for the April IASB meeting

12 Apr 2016

The International Accounting Standards Board (IASB) will meet at its offices in London on 19–21 April 2016. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

A main focus of the IASB's discussions this month will be the feedback to the Agenda Consultation (more than six hours split over all three days). In order to stress the fact that although they all form part of the Agenda Consultation redeliberations, these discussions also refer to individual projects on the IASB agenda, our observers have decided to summarise each agenda paper for the Agenda Consultation discussion separately. Rather than going to our meeting note page you might find it more intuitive to go to the Agenda Consultation project page if you want to get an overview of all Agenda Consultation discussions this month. For all other pre-meeting summaries please see our meeting note page and note that all summaries are posted strictly in the order of discussion at the IASB meeting.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

Feedback to the EFRAG consultation on its proactive agenda

11 Apr 2016

The European Financial Reporting Advisory Group (EFRAG) has issued a summary of the feedback received on its proactive agenda consultation. The consultation sought views on the recent proactive work performed by the EFRAG as well as future proactive activities relevant for Europe.

EFRAG received 13 replies to its consultation and additional feedback in a number of outreach events spread over Europe. In general, respondents considered EFRAG proactive activities as important contributions to the international accounting debate. However, some called for more evidence and clarity on the objective that EFRAG tries to achieve in each project and the way EFRAG proactive projects were selected. The EFRAG Board has therefore decided that:

  • Any new proactive project must be clearly motivated and the reasons for taking up the project must be clearly communicated.
  • For any new project a news item explaining the proactive project will be published to inform constituents.
  • A project plan would be included with an overview of the planned outreach activities.

For more information, see the press release and feedback statement on the EFRAG’s website.

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