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IFRS Implementation issues

Date recorded:

IFRS Implementation Issues - Agenda paper 12

The purpose of this session was to discuss the following:

  • Uncertainty over Income Tax Treatments – Ratification of the IFRIC Interpretation: AP 12A
  • Amendments to IAS 28 Investments in Associates and Joint Ventures — Long-term interests - Analysis of feedback on the proposed amendments: AP 12B

Uncertainty over Income Tax Treatments – Ratification of the IFRIC Interpretation – Agenda Paper 12A


The purpose of this session was to ask the Board to ratify the IFRIC Interpretation Uncertainty over Income Tax Treatments. The draft Interpretation was issued in October 2015. No substantive changes were made to the proposals during deliberations by the IFRS Interpretations Committee (IC) in its July 2016 meeting. Balloting of the Interpretation took place in April 2017 and no member of the IC objected to the Interpretation.

The Interpretation has an effective date of 1 January 2019. Retrospective application is required either by applying IAS 8 (i.e. restating comparatives) or using a modified approach of not restating comparative information and recognising the cumulative effect of initially applying the Interpretation in opening equity. This option is also available to first-time adopters.

APs 12A(i) and (ii) reproduce the post-ballot draft of the Interpretation and the due process steps considered by the IC in their November 2016 meeting respectively.


The Board ratified the Interpretation without much technical debate.

The discussion centred on the methods allowed by the Interpretation to estimate the uncertain tax amount. Several members questioned the necessity of having both the expected value method and the most likely amount, preferring the former over the latter. One member suggested incorporating this issue in the pipeline project relating to IAS 37 for a more fundamental review. Another member warned that it would not be wise to re-open the debate of allowing asymmetry in the measurement of liabilities unless that discussion is absolutely necessary.

Amendments to IAS 28 Investments in Associates and Joint Ventures — Long-term interests - Analysis of feedback on the proposed amendments – Agenda Paper 12B


The Board published the proposed amendments to IAS 28 in relation to long-term interests as part of the Annual Improvements to IFRS Standards 2015–2017 Cycle Exposure Draft in January 2017. The proposed amendments clarify that an entity is required to apply IFRS 9, including its impairment requirements, to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied.

The purpose of this session was to analyse the feedback received on the ED.

Analysis of feedback received

Overall proposals

Most of the respondents agreed with the proposals. Those who disagreed were concerned about the lack of definition of what constitutes long-term interests, the difficulty of applying the impairment requirements of IFRS 9 to these interests, the perception that the proposals may lead to double accounting of losses, and that requiring the application of both IAS 28 and IFRS 9 adds unnecessary complexity to the whole scheme of things. In response, the Staff noted that all of the concerns raised above have been discussed by the Board and/or the IC previously (see appendix C to the paper for related past discussions). The Staff believed that there were no new issues raised to justify a reconsideration of the proposals by the Board.

Many respondents also suggested that the Board include an example illustrating how the requirements of IFRS 9 and IAS 28 interact with one another with respect to long-term interests. Some other clarifications were also sought, which are included in recommendation (b) below.

Effective date

Most respondents agreed with the proposed effective date of 1 January 2018. Those who disagreed cited the usual concern of not having enough time to implement the amendments especially where translation or endorsement is required. On balance, the Staff believe that an effective date of 1 January 2019 would be appropriate.

Staff recommendation

The Staff recommend that the Board:

  • (a) reaffirm the proposed amendments to IAS 28 to clarify that IFRS 9 applies to long-term interests. This includes the impairment requirements of IFRS 9;
  • (b) clarify in IAS 28 that:
    • (i) an entity applies the requirements in IFRS 9 to long-term interests before applying the loss allocation and impairment requirements in IAS 28; and
    • (ii) in applying IFRS 9, the entity does not take into account any adjustments to the carrying amount of long-term interests that resulted from the application of IAS 28 in previous periods;
  • (c) include an example illustrating how the requirements of IFRS 9 and IAS 28 interact with one another as regards long-term interests;
  • (d) set an effective date of 1 January 2019 for the amendments, with earlier application permitted; and
  • (e) require retrospective application of the amendments, with specific transition provisions that are similar to those under IFRS 9 and specific considerations for insurers and first-time adopters.

In addition, the Staff recommend that the Board finalise the proposals as a narrow-scope amendment separately from the Annual Improvements 2015-2017 Cycle in view of the urgency of the matter.


The Board approved the Staff’s recommendations without much technical debate. One Board member objected to the recommendations for the same reasons as he has previously expressed about double-counting concerns.

A few members requested the Staff to think of ways to make the educational material more visible to users and tentatively suggested including a reference to the material in the green book series.

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