At its meeting on October 22, 2019, the IASB discussed feedback on the Exposure Draft. The Board tentatively decided:

1. to replace the examples proposed in the Exposure Draft with a clarification that the costs that relate directly to the contract consist of: (a) the incremental costs of fulfilling that contract, and (b) an allocation of costs that relate directly to fulfilling that and other contracts;
2. to amend paragraph 69 of IAS 37 to refer to assets that relate directly to a contract, rather than assets dedicated to a contract; and
3. regarding implementation: (a) not to permit the application of the amendments retrospectively applying IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; (b) to clarify within the transition requirements that an entity applies the amendments to contracts under which the entity has not yet fulfilled all its obligations at the beginning of the annual period in which the entity first applies the amendments; and (c) to provide no exception or exemption for first-time adopters.

The Board also decided not to expand the scope of the project to address: (a) the meaning of ‘economic benefits’ in the IAS 37 definition of an onerous contract; (b) whether and when an entity should combine or segment contracts; or (c) how an entity should measure an onerous contract liability. The Board will discuss the due process steps in relation to the project at a future meeting.

Review the IASB Update and podcast on the Board's Web site.