At its meeting on April 21-23, 2020, the IASB continued its discussions on how to clarify the principles for classifying financial instruments settled in an entity’s own equity instruments. The Board tentatively decided, as a foundation principle, that for a derivative on own equity to meet the fixed-for-fixed condition in IAS 32, the number of functional currency units to be exchanged with each underlying equity instrument must be fixed or only vary with: (a) allowable preservation adjustments; or (b) allowable passage of time adjustments.

The Board also tentatively decided to classify as equity a contract that can be settled by exchanging a fixed number of non-derivative own equity instruments with a fixed number of another type of non-derivative own equity instruments. The Board tentatively decided, as an adjustment principle, that an entity would be required to classify derivatives on own equity as equity instruments if preservation adjustments require the entity to preserve the relative economic interests of future shareholders to an equal or a lesser extent than those of the existing shareholders.

The Board also tentatively decided that an entity would be required to classify derivatives on own equity as equity instruments if passage of time adjustments: (a) are pre-determined and vary only with the passage of time; and (b) fix the number of functional currency units per underlying equity instrument in terms of a present value.

At a future Board meeting, the Board will begin its discussions on other topics included in the project plan discussed at the October 2019 Board meeting.

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

At its meeting on April 21-23, 2020, the IASB discussed the findings from the first phase of the Post-implementation Review and decided to proceed with the Post-implementation Review and publish a Request for Information. The Request for Information will focus on:

• In relation to IFRS 10: (i) power over an investee; (ii) the link between power and returns, with a focus on identifying agency relationships; (iii) accounting requirements, with a focus on changes in ownership interests; and (iv) the investment entity consolidation exception;
• In relation to IFRS 11: (i) collaboration arrangements outside the scope of IFRS 11; (ii) the classification of joint arrangements as joint operations based on other facts and circumstances; and (iii) accounting requirements, with a focus on joint operations;
• In relation to IFRS 12, the quality of information an entity provides and whether and how well the disclosure objectives are met by an entity applying the requirements. The Board also decided the Post-implementation Review would not cover the interaction of IFRS 10, IFRS 11 and IFRS 12 with other IFRS Standards.

At a future meeting, the Board will discuss related due process steps.

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

At its meeting on April 21-23, 2020, the IASB continued to discuss its proposed narrow-scope amendment to IAS 21 to address how an entity should determine the spot exchange to use when exchangeability between two currencies is lacking. The Board made a number of tentative decisions relating:

1. to an entity’s assessment of exchangeability;
2. to an entity’s estimation of the spot rate when a currency lacks exchangeability; and
3. disclosure requirements when a currency lacks exchangeability, including when a foreign operation’s functional currency lacks exchangeability.

The Board will discuss the proposed amendment’s effective date and transition, as well as the Board’s compliance with applicable due process steps at a future meeting.

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

At its meeting on April 21-23, 2020, the IASB discussed a summary of feedback on its Exposure Draft. The Board was not asked to make any decisions The Board will consider the project’s direction at a future meeting.

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

At its meeting on April 21-23, 2020, the IASB discussed the disclosure objectives and supporting guidance to be included in the revised IFRS Practice Statement 1 Management Commentary. The Board tentatively decided to specify in the disclosure objectives that management commentary should provide information and analysis to help investors and creditors understand:

1. how an entity’s business model creates value and generates cash flows;
2. management’s strategy for sustaining and developing the entity’s ability to create value and generate cash flows in the future; and
3. the resources and relationships on which the business model and strategy depend.

The Board made a number of other tentative decisions related to the entity’s business model, management’s strategy, and the entity’s resources and relationships. The Board’s next discussion is expected to cover risks and external environment.

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