Overview

A summary of the amendments is as follows:

The amendments introduce specific guidance for when an entity reclassifies an asset (or disposal group) from being held-for- sale to held-for-distribution to owners (or vice versa), and for when held-for-distribution accounting is discontinued.

Changes in methods of disposal

The Board amended IFRS 5 to introduce specific guidance in IFRS 5 for when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa), or when held-for-distribution accounting is discontinued. The amendments state that:

• Such reclassifications should not be considered changes to a plan of sale or a plan of distribution to owners and that classification, presentation and measurement requirements applicable to the new method of disposal should be applied; and
• Assets that no longer meet the criteria for held for distribution to owners (and do not meet the criteria for held for sale) should be treated in the same way as assets that cease to be classified as held for sale.

Servicing contracts

The amendments provide additional guidance to clarify whether a servicing contract is ‘continuing involvement’ in a transferred asset for the purposes of applying the disclosure requirements in paragraphs 42E–42H of IFRS 7.

The Board amended IFRS 7 to provide additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purposes of the disclosures required in relation to transferred assets. Paragraph 42C(c) of IFRS 7 states that a pass through arrangement under a servicing contract does not, in itself, constitute a continuing involvement for the purposes of the transfer disclosure requirements. However, in practise, most service contracts have additional features that lead to a continuing involvement in the asset, for example, when the amount and/or timing of the servicing fee depend on the amount and/or the timing of the cash flows collected. The amendments add guidance to this effect. 

Applicability of the amendments to IFRS 7 on offsetting disclosure to condensed interim financial statements

The amendments clarify that the additional disclosure required by the December 2011 amendments to IFRS 7, Disclosure–Offsetting Financial Assets and Financial Liabilities, is not explicitly required for all interim periods. However, the additional disclosures may need to be included in condensed interim financial statements that are prepared in accordance with IAS 34, Interim Financial Reporting, when their inclusion would be required to comply with the requirements of IAS 34.

The Board amended IFRS 7 to remove uncertainty as to whether the disclosure requirements on offsetting financial assets and financial liabilities (introduced in December 2011 and effective for periods beginning on or after January 1, 2013) should be included in condensed interim financial statements, and if so, whether in all condensed interim financial statements after January 1, 2013 or only in the first year. The amendments clarify that the offsetting disclosures are not explicitly required for all interim periods. However, the disclosures may need to be included in condensed interim financial statements to comply with IAS 34 Interim Financial Reporting.

The amendments clarify that the high quality corporate bonds used to estimate the discount rate for post-employment benefit obligations should be in the same currency as the benefits to be paid, This requirement would result in the depth of the market for high quality corporate bonds needing to be assessed at the currency level.

Discount rate: regional market issue

The Board clarified that the high quality corporate bonds used to estimate the discount rate for post-employment benefits should be issued in the same currency as the benefits to be paid. These amendments would result in the depth of the market for high quality corporate bonds being assessed at currency level.

The amendments clarify the meaning of disclosure of information ‘elsewhere in the interim financial report’ and require the inclusion of a cross-reference from the interim financial statements to the location of this information (noting that the relevant information must be available to users of the financial statements on the same terms as the interim financial statements and at the same date).

Disclosure of information "elsewhere in the interim report"

The Board clarified the requirements relating to information required by IAS 34 that is presented elsewhere within the interim financial report but outside the interim financial statements. The amendments require that such information be incorporated by way of a cross-reference from the interim financial statements to the other part of the interim financial report that is available to users on the same terms and at the same time as the interim financial statements.

Other developments

January 2015

Most recently, on January 30, 2015, Highlight Summary I.29 dated February 2015, was issued adding Annual Improvements to IFRSs 2012- 2014 Cycle to the “IFRSs Issued but Not Yet Effective” section of the CPA Canada Handbook, Part I. Of note, new IFRSs only become part of Canadian GAAP once they have been issued in the CPA Canada Handbook. 

September 2014

On September 25, 2014, the IASB issued its Annual Improvements to IFRSs 2012 2014 Cycle, which includes five amendments to four IFRSs under the IASB’s annual improvements process, namely amendments to IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, IFRS 7, Financial Instruments: Disclosure, IAS 19, Employee Benefits, and IAS 34, Interim Financial Reporting.