IFRS implementation issues

Date recorded:


The purpose of this session was to discuss the following:

  • Commodity loans and related transactions—Potential new research project: AP 12A
  • IAS 41—Taxation in fair value measurement—Potential annual improvement: AP 12B

Commodity loans and related transactions—Potential new research project – Agenda Paper 12A


In March 2017, the IFRS Interpretations Committee (IC) considered a submission about how to account for a particular commodity loan transaction. The IC decided not to add the issue onto its agenda and to refer the matter to the Board on grounds that it is too big for the IC to address.

In this paper, the Staff gave an overview of typical commodity transactions and provided the Board with an update on the recent developments on digital currencies and emission allowances. The aim was to inform the Board of the extent of diversity in practice so that it can decide at a future meeting whether commodity loans and related transactions should be added onto the research agenda.

This session was for information only and the Board was not asked to make any decisions.

Staff analysis

There are no existing Standards that deal directly with transactions involving commodities, digital currencies and emission allowances. In the absence of specific guidance, different Standards may be applicable to different transactions according to the nature of the transaction. Nevertheless, for more complex transactions, they may not fall neatly within the scope of any existing Standard. This has led to diversity in practice.

The recent development in the digital currency arena has also sparked calls for the Board and the FASB to address how digital currencies should be accounted for. In 2017 alone, the Japanese government passed a law making digital currency a legal payment method; there was an increasing number of initial coin offerings where entities sell newly created digital currencies; and two of the world’s largest derivative trading exchanges began offering bitcoin futures. Entities currently account for digital currencies as one of the following: cash, another financial asset, inventory or intangible asset.

Given the broad range of transactions, the Staff observed that it will be critical to define clearly the scope of any potential project.


The Board had mixed views about whether they should take on this project as well as the scale of the project. The Chair questioned the sustainability of digital currencies and several other Board members questioned whether there is diversity in practice to such an extent that have caused users to make ill-informed decisions to justify the Board spending resources on it. However, the Vice-Chair observed that digital currencies is a hot topic and that the Board should not be dismissive about its potential consequences. The Chair asked the Staff to liaise with regulators to see whether they see any urgent need for Standard-setting activities in this regard, as well as to consider which projects in the research pipeline should be postponed to make way potentially for this project.

The Board considered whether the scope of some existing Standards could be amended to cater for commodities and digital currencies as opposed to creating new Standards for them. They believe this could help expedite the Standard-setting process and cover a wider range of transactions (e.g. artworks). The focus would be on the nature and characteristics of the transactions, i.e. are they held for speculative purposes, as long-term investments or used in a way similar to cash because of their liquidity etc., rather than on the items underlying the transactions (i.e. whether they are commodities or digital currencies).

IAS 41—Taxation in fair value measurement — Potential annual improvement – Agenda Paper 12B


In September 2017 (agenda paper 3), the IC considered a request to remove the requirement in IAS 41 to use pre-tax cash flows when fair valuing a biological asset. The IC recommended that the Board propose such an amendment as part of the next annual improvements cycle.

Staff recommendation

The Staff recommended that the Board accept the IC’s recommendation and to require prospective application of the proposed amendment to avoid the potential use of hindsight, with earlier application permitted.


The Board approved the Staff recommendation without much discussion.

A Board member suggested coordinating the issue of the proposed amendments with the potential next steps arising from the IFRS 13 post-implementation review.

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