• an option that would permit entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
• an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.

The comment letters on the ED made available on the IASB's Web site seem to focus on two questions:

1. Is one of the two approaches preferable?/ Can one or the other be dropped altogether?
2. How can predominance best be determined for the deferral approach?/ What is the appropriate level for assessing predominance?

On the first question, the vast majority of respondents state that both approaches are needed. They claim that both the overlay approach and the temporary exemption from applying IFRS 9 are needed as these address different issues depending on the type of business activities and group structures. On the ends of the spectrum are the insurance industry on the one side, and user organizations on the other side. The insurance industry is asking for a deferral of IFRS 9 until the insurance standard is completed; they mostly cite cost reasons. Some user groups are asking for the overlay approach only, some very few even argue that it is best to do nothing; these respondents mainly cite lack of comparability if multiple options exist.

One level down, it is especially the deferral approach that triggers suggestions for refinement. While most respondents agree that assessing predominance is the right approach, the IASB's proposal to assess predominance "at the reporting entity level" causes confusion. Most respondents seem to believe that the IASB sees the group level as the reporting entity level. Others believe that "reporting entity level" is an empty phrase that could also mean lower levels than the group level. The question of how to treat conglomerates is important in both cases. Therefore, respondents assuming that the IASB intends testing at the group level often argue that a testing "below the reporting entity level" is needed; respondents assuming an assessment at a lower level often wonder of the implications for the group. The two possibilities that seem to emerge are:

• Assessment is at the group level and results are cascaded down - this would leave pure insurance companies that are subsidiaries of conglomerates without the option of deferral while companies that are not subsidiaries of conglomerates would have the option.
• Assessment is at a lower level than the group level, however, there is the question of roll-up - this could either mean that groups need to consolidate IFRS 9 and IAS 39 numbers or that qualifying subsidiaries would need to keep two sets of books - an IAS 39 one for reporting to their users and an IFRS 9 one for reporting within the group.

Expectations are currently (as communicated at the October 2015 IASB meeting) that the IASB will begin re-deliberation of the exposure draft in the second quarter of 2016. Final amendments are expected in the third quarter of 2016.

The issues to be added are:

• Pensions and other postretirement employee benefit plans;
• Intangible assets;
• Distinguishing liabilities from equity; and
• Financial performance reporting.

With the exception of intangible assets, which the IASB currently does not address in its research projects, these issues correspond with those raised by the IASB's agenda consultation respondents. Although a full analysis of the 118 responses on the IASB's Web site is not available yet, projects on Pensions and other postretirement employee benefit plans and Distinguishing liabilities from equity rank high among the research projects currently on the IASB's agenda.

Please click for the following information on the FASB's Web site:

• Tentative Board decisions of February 3, 2016
• "From the Chairman's Desk" - explaining the survey results

The Climate Disclosure Standards Board (CDSB), together with the Carbon Tracker Initiative, has launched proposals for risk reporting by fossil fuel companies. The report, Considerations for reporting and disclosure in a carbon-constrained world, looks at the questions of

• What should resource companies report on climate change and carbon asset stranding risks?
• Who should set the reporting requirements and how should the information be used?
• What are the challenges ahead?
• What are the opportunities?

Please click to access the report on the CDSB Website.

The amendments in Recognition of Deferred Tax Assets for Unrealized Losses clarify the following aspects:

• Unrealized losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.
• The carrying amount of an asset does not limit the estimation of probable future taxable profits.
• Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences.
• An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

The amendments are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. As transition relief, an entity may recognize the change in opening retained earnings of the earliest comparative period on initial application. The Board has not added additional transition relief for first-time adopters.

Please click for:

• IASB press release (link to IASB Web site)
• Access to the amendments (link to IASB Web site)
• Our project page on IAS 12 — Recognition of deferred tax assets for unrealized losses