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Part I - IFRS

IASB publishes proposed amendments to IAS 12

Jul 17, 2019

On July 17, 2019, the International Accounting Standards Board (IASB) published an exposure draft "Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Proposed amendments to IAS 12)" that aim at clarifying how companies account for deferred tax on leases and decommissioning obligations. Comments are requested by November 14, 2019.

 

Background

The IFRS Interpretations Committee received a submission about IAS 12, Income Taxes and the recognition of deferred tax in relation to leases (when a lessee recognizes an asset and a liability at the lease commencement) and decommissioning obligations (when an entity recognizes a liability and includes the decommissioning costs in the cost of the item of of property, plant and equipment). The submitted fact pattern assumed that lease payments and decommissioning costs were deductible for tax purposes when paid and identified different approaches in practice.

The Committee discussed the submission at its meetings in March 2018 and June 2018 and came to the conclusion that the matter was relevant and widespread, as there are various kinds of contracts and fact patterns affected. Moreover, the question as to whether tax deductions are attributable to a contract, a (single) asset/liability, or rather to cash flows, and as to which consequences this may have for determining temporary differences, is fundamental within IAS 12. Therefore, the Committee recommended that the IASB develop clarifying amendments to IAS 12.

The IASB discussed the issue in October 2018 (general discussion of the issue and agreement with the IFRS Interpretations Committee's recommendation) and January 2019 (transition, retrospective application, and early application) and has now published an exposure draft of proposed clarifying amendments.

 

Suggested changes

The main change proposed in ED/2019/5 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Proposed amendments to IAS 12) is a proposed exemption from the initial recognition exemption provided in IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption would not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of deferred tax assets and liabilities of the same amount. This is also explained in the newly inserted paragraph IAS 12.22A.

    Comments on the proposed changes are requested by November 14, 2019.

     

    Effective date and transition

    The exposure draft does not contain a proposed effective date as the IASB intends to decide on this after exposure. The proposed amendments would be applied retrospectively in accordance with IAS 8 and early adoption would be permitted.

    For practical and cost reasons, some simplification is provided for the assessment of the probability that a taxable profit will be available against which the deductible temporary difference can be utilized. A similar simplification is proposed for first-time adopters.

     

    Additional information

     

    AcSB Exposure Draft – Amendments to IFRS 17

    Jul 17, 2019

    On July 17, 2019, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by September 25, 2019.

    The AcSB would like input from Canadian respondents on the following additional question regarding the proposed amendments:

    The IASB has developed the proposed amendments in accordance with its due process for application around the world. Assuming the Exposure Draft proposals are finalized and approved by the IASB in accordance with its due process, do you think that the proposals are appropriate for application in Canada? If not, please specify which aspects of the proposals, and what circumstances, make the accounting requirements proposed in the Exposure Draft inappropriate.

    Review the press release and Exposure Draft on the AcSB's website.

    AcSB and OIC hold joint meeting

    Jul 15, 2019

    On July 15, 2019, the Canadian Accounting Standards Board (AcSB) and the Italian standard-setter Organismo Italiano di Contabilità (OIC) held a joint meeting in Rome. The meeting was the second bilateral meeting between the two standard-setters.

    In addition to giving updates on their respective standard-setting activities at the meeting, the two boards exchanged views on the IASB’s current project on proposed amendments to IFRS 17 and on rate-regulated activities. In addition, the AcSB and the OIC discussed implementation activities regarding IFRS 16 Leases.

    Review the press release on the OIC's website.

    Statement on LIBOR transition

    Jul 12, 2019

    On July 12, 2019, the Securities and Exchange Commission (SEC) published a statement by the staffs of the Divisions of Corporation Finance, Investment Management, and Trading and Markets, and the Office of the Chief Accountant on managing the transition from LIBOR.

    The statement covers:

    • Alternative reference rates
    • Managing the transition from LIBOR
    • Division specific guidance

    Review the full statement on the SEC's website.

    FASB consults on the amortization of goodwill

    Jul 09, 2019

    On July 9, 2019, the Financial Accounting Standards Board (FASB) issued an invitation to comment "Identifiable Intangible Assets and Subsequent Accounting for Goodwill", which notes that the FASB has been considering whether to change the subsequent accounting for goodwill for cost-benefit reasons. US GAAP currently requires a goodwill impairment model.

    The International Accounting Standards Board (IASB) has also been discussing restoring amortization of goodwill. In December 2017, the Board decided tentatively not to reintroduce amortization and to focus on improving the impairment model instead. It confirmed this decision at its June 2019 meeting. However, the paper was the most heavily debated paper during the session as improving the impairment model has turned out to be very difficult, and the final decision was very close. The Board finally decided by a vote of 8 to 6 to confirm its preliminary view not to reintroduce amortization and to retain an impairment-only model.

    The FASB's invitation to comment offers a comprehensive analysis of the subsequent accounting for goodwill as well as a comparison with the IASB approach and the approach of the Japanese standard-setter ASBJ.

    Comments on the the FASB's invitation to comment are due by October 7, 2019.

    Review the press release, a short explanatory video, and the invitation to comment on the FASB's website.

    Speech by CFO of BMW: Relevance of financial reporting in today's global environment

    Jul 05, 2019

    On July 5, 2019, the In­ter­na­tional Ac­count­ing Stan­dards Board (IASB) posted a copy of the speech by the CFO of BMW regarding the relevance of financial reporting in today's global environment.

    Dr. Nicolas Peter, Chief Financial Officer of BMW AG, gave the keynote address at a stakeholder event in Munich on June 26, 2019, jointly hosted by the Trustees of the IFRS Foundation and the Deutsche Rechnungslegungs Standards Committee (DRSC, the German accounting standard-setter). In his speech, Dr. Peter outlines the importance of IFRS Standards to BMW AG and the global financial market, and discusses some of the challenges for the future.

    Here is the link to the speech on the IASB web­site.

    IFRS Foundation launches new quarterly podcast

    Jul 05, 2019

    On July 5, 2019, the In­ter­na­tional Ac­count­ing Stan­dards Board (IASB) published the first of a new quarterly podcast focusing on the work undertaken by the IASB and the IFRIC to support consistent application of IFRS Standards. The podcasts will report on discussions at meetings of the Interpretations Committee and provide an overview of other relevant activities in the period.

    Listen to the first such podcast in which Vice-Chair of the Board and Chair of the Interpretations Committee Sue Lloyd joins Technical Staff member Patrina Buchanan for a discussion that focuses on the June 2019 meeting of the Interpretations Committee. Among the topics covered in this podcast are questions about applying the new financial instruments, revenue recognition and leases Standards—IFRS 9, IFRS 15 and IFRS 16—as well as the accounting for holdings of cryptocurrencies. 

    Here is the link to the 24 minute podcast on the IASB web­site.

    Presentations from the IFRS Foundation workshops at the EAA Conference in May 2019

    Jul 05, 2019

    On July 5, 2019, the In­ter­na­tional Ac­count­ing Stan­dards Board (IASB) posted several presentations by an IASB Board member and staff at the Annual Congress of the European Accounting Association held in Paphos, Cyprus on May 29-31, 2019.

    Ann Tarca, IASB Member and Anne McGeachin, IASB Technical Staff presented at two IFRS Foundation events at the annual congress, covering:

    • IASB Technical Update
    • Guide to new Standards—IFRS 9, IFRS 15, IFRS 16 and research opportunities
    • IASB Technical Update: Primary Financial Statements

    Here is the link to the presentations on the IASB web­site.

    New IASB webinar: Overview of Exposure Draft, Amendments to IFRS 17

    Jul 04, 2019

    On July 4, 2019, the In­ter­na­tional Ac­count­ing Stan­dards Board (IASB) released a recorded webinar which provides an overview of its recent Exposure Draft, Amendments to IFRS 17, published by the IASB on June 26, 2019.

    This recording took place to provide national standard-setters with an overview of the proposed amendments to IFRS 17. The presenters are Laura Kennedy and Roberta Ravelli, Technical Staff at the IFRS Foundation. 

    Here is the link to the 25 minute webinar on the IASB website.

    IASB posts webcast on IFRS IC and IASB agenda decisions

    Jul 02, 2019

    In April 2019, the Trustees of the IFRS Foundation issued an updated IFRS Foundation Due Process Handbook for public comment. Clarifications regarding the role and status of agenda decisions published by the Interpretations Committee (IFRS IC) and amendments to make agenda decisions a tool for the Board were the most prominent proposed amendments.

    In the context of the proposed amendments, the IASB has posted a webcast with IASB Chair Hans Hoogervorst, IASB Vice-Chair Sue Lloyd and IFRS Foundation staff member Sam Prestidge that discusses some of the main elements of due process around agenda decisions.

    The 13 minute webcast can be accessed through the press release on the IASB website.

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