Annual Improvements

Date recorded:

Amendments recommended for finalisation

The Board ratified the IFRIC's recommendation to finalise amendments to the following IFRSs:

  • IFRS 1 - Accounting policy changes in the year of adoption
  • IAS 1 - Clarification of paragraph 106(d)
  • IAS 27 - Transition requirements for amendments made to IAS 21, IAS 28 and IAS 31 as a result of IAS 27 (as amended in 2008)
  • IFRIC 13 - Fair value of award credit


Other issues

IFRS 3: Un-replaced and voluntarily replaced share-based payment transactions

The Board ratified the IFRIC's recommendations on finalising the proposed amendment to IFRS 3 paragraph 30, and related material in IFRS 3.B56, B62A and B62B. IFRS 3.30 will refer to 'share-based payment transactions' rather than 'share-based payment awards'. This approach was adopted to keep the alignment between IFRS and US GAAP on this issue as close as possible, while also clarifying the issue identified in the annual improvements process.

The Board also noted that the IFRIC had declined to take three further issues related to modifications (rather than replacements) of share-based payment awards; subsequent accounting for un-replaced share-based payment awards; and situations in which the replacement award has a lower value than the original market-based measure allocated to the pre-combination value. The staff assured Board members that these issues would be considered in due course either for inclusion in the next cycle of annual improvements or as part of the planned post-implementation review of IFRS 2.


IFRS 3: Measurement of non-controlling interests-Illustrative examples

The Board declined to finalise proposed illustrative examples designed to illustrate the application of IFRS 3.19. Some Board members did not think that Board time was required to agree non-authoritative illustrations. Some also disagreed with the illustrations themselves.

The staff agreed to address Board members' concerns out of session and return to the Board only if necessary.


IAS 8: Change in terminology to the qualitative characteristics

The Board ratified the IFRIC's recommendation to finalise the proposed changes to IAS 8 that would conform the terminology in the IFRS with that in the forthcoming final Chapters of the revised IASB Framework with respect to qualitative characteristics. This decision was subject to the caveat that the changes to IAS 8 should not be issued before the Chapters of the Framework are issued. The staff noted that the post-ballot draft of those Chapters would be circulated to the IASB later in March, suggesting that the Chapters could be issued by the end of March or very early April 2010.


Items to be discontinued without finalisation

IFRS 5-Loss of significant influence over an associate or loss of joint control over a joint venture

The Board agreed to discontinue and to remove from the Annual Improvements project the proposed amendment to IFRS 5: Application of IFRS 5 to loss of significant influence over an associate or loss of joint control over a jointly controlled entity. The IFRIC was concerned that clarity was needed on the application of IFRS 5 in circumstances in which a highly probable sale transaction is expected to result in the loss of significant influence or loss of joint control they considered that the issue was best addressed in the forthcoming Joint Arrangements IFRS. The staff confirmed that this was in hand.

Any problems encountered would be treated as a sweep issue.


IAS 40: Change from fair value model to the cost model

ED 2009/11 included proposals designed to remove a potential inconsistency between IAS 40, IFRS 5, and IAS 2 when an entity determines there is a change in use of an investment property. The responses to the exposure draft demonstrated mixed views in favour of and opposed to the proposals. In addition, several respondents thought that the issue required further and more detailed analysis and/or was a more significant change than should be within the Annual Improvements project.

The Board declined to discontinue the project and referred it back to the IFRIC. The Board noted that the problem was more with IFRS 5, especially with respect to entities such as real estate investment trusts, which routinely sell buildings in their portfolio. In this situation, it was 'nonsensical' to move from a fair value model to a cost model.

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