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IASB Meeting — 22–23 October 2019

Start date:

End date:

Location: London

IASB (International Accounting Standards Board)

Summary

The IASB meet on 22–23 October 2019 to discuss 10 projects.

Implementation matters:

  • Onerous Contracts: For the planned amendments to IAS 37 the Board decided to replace the examples proposed in the ED with a clarification that the costs that relate directly to the contract consist of both the incremental costs of fulfilling that contract and an allocation of costs that relate directly to fulfilling that and other contracts.
  • PPE—Proceeds before intended use: The Board decided that the forthcoming amendments to IAS 16 will be effective for periods beginning on or after date 1 January 2022 and require retrospective application, but only for PPE made available for use on or after the beginning of the earliest period presented in the financial statements in which an entity applies the amendments. The amendments will prohibit the deduction of the proceeds from testing PPE, before it is capable of operating in the manner intended by management, from its cost.
  • Sale of a single asset entity containing real estate: The Interpretations Committee referred an issue involving the sale of an entity that has only one asset (real estate) and whether it should be in the scope of IFRS 10 or IFRS 15. The Board asked the staff to provide more analysis so that the Board can assess whether it should make a narrow scope amendment to IFRS 10 or IFRS 15.  

Business Combinations under Common Control: The Board decided that, when applying a predecessor approach for a business combination under common control: the acquirer should recognise and measure assets and liabilities at the carrying amounts included in the financial statements of the transferred entity (rather than at the amounts included in the consolidated financial statements of the common controller); and that the acquisition would be accounted for prospectively—i.e. the comparative information of the acquirer would not be adjusted.

Management Commentary: The Board decided that the revised Practice Statement state that the enhancing qualitative characteristics of comparability, verifiability, and understandability are relevant to management commentary along with guidance on how to apply those characteristics, but decided not to include timeliness as a qualitative characteristic. The Board also began its discussions of the business model. 

Accounting Policies and Estimates (amendments to IAS 8): The Board decided to finalise the proposed amendments to the definition of accounting estimates but not amend the definition of accounting policies.

SME Standard review and update: The Board decided that the RFI ask whether the IFRS for SMEs Standard should be updated to align the definitions of Section 15 with IFRS 11 by aligning the definitions of ‘control’ and ‘joint control’ (but not the recognition and measurement requirements) and retain three categories (i.e. jointly controlled operations, jointly controlled assets, jointly controlled entities).

Financial Instruments with Characteristics of Equity: The Board has decided to develop amendments to IAS 32 to address practice issues, clarify the underlying principles in IAS 32 and develop additional application guidance. The Board discussed the overall objectives of the project and the project timetable, which could lead to an Exposure Draft in 2021.

Dynamic Risk Management: The Board discussed the outreach plan, which focuses on assessing the viability and operability of the DRM model and whether it will reflect an entity’s risk management strategy. The outreach will focus exclusively on financial institutions and aim to provide feedback to the Board by June 2020.

Subsidiaries that are SMEs: The Board decided that when it tailors the disclosure requirements for subsidiaries that are SMEs if there is no recognition and measurement difference between full IFRS and IFRS for SMEs they will use the disclosures in IFRS for SMEs. If there is a recognition and measurement difference, they will consider the principles in BC157 of the IFRS for SMEs Standard and adapt the disclosures if supported by one of the principles. 

IBOR Reform and the Effects on Financial Reporting: The Board decided to amend IFRS 9 to clarify that an entity should apply the IBOR practical expedient first, by updating the effective interest rate based on the alternative benchmark rate, and then apply IFRS 9 current requirements (but not with an illustrative example). In the context of the IBOR reform, the Board concluded that the current requirements in IFRS 9 provide an adequate basis to determine if any other modifications to that financial instrument are substantial, and propose no other amendments to IFRS 9.

Amendments to IFRS 17 Insurance Contracts: The Board discussed an update on feedback from outreach. 

Agenda for the meeting

Tuesday 22 October 2019 (10:30-17:00)

  • Implementation matters
    • PPE — Proceeds before intended use
    • Onerous contracts — Costs of fulfilling a contract
    • Sale of a single asset entity containing real estate
    • September 2019 IFRIC update
  • Business combinations under common control — Predecessor approach: carrying amounts and precombination information
  • Management commentary:
    • Enhancing qualitative characteristics in management commentary
    • Business model
  • Amendments to IFRS 17 Insurance Contracts — Outreach summary

Wednesday 23 October 2019 (9:30-17:30)

  • IBOR reform and the effects on financial reporting:
    • Modification of financial instruments
    • Accounting implications from derecognition of a modified financial instrument
  • Financial instruments with characteristics of equity — Project plan
  • Dynamic risk management — Outreach plan for the core model
  • SME standard review and update
  • Subsidiaries that are SMEs — Research results
  • Accounting policies and accounting estimates (amendments to IAS 8) — Analysis of feedback on the definition of accounting estimates and other aspects.

Agenda papers for this meeting are available on the IASB's website.

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