This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

IFRS 8/IAS 36 — Transition provisions for IFRS 8 amendment

Date recorded:

The IFRIC discussed a request to consider the appropriate accounting treatment of differences that might arise as a result of adoption of IFRS 8 Operating Segments. In particular the discussion focused on whether the incremental goodwill impairment charge (that would have been recognised in the prior years if cash generating units were grouped by reference to IFRS 8 and not to IAS 14 Segment Reporting) determined as a result of retrospective application of IFRS 8 should be presented as a prior year adjustment or a current period event.

The IFRIC first considered the fact that the issue relates to a one-off event – adoption of IFRS 8 for the annual periods starting on or after 1 January 2009 – and as such any guidance could not be provided in time for 2009 year-ends. Due to these time considerations, the IFRIC agreed not to add the issue to its agenda.

In the following discussion whether the adjustment should be prior-year adjustment or a current year charge, multiple arguments were presented in support for each of these alternatives. Supporters of current year adjustment argued that IFRS 8 was a pure disclosure standard and thus it would be inappropriate to change measurement of goodwill in prior periods due to changes in presentation and disclosures. Supporters of prior year adjustment argued that IFRS 8 application represented a change of accounting policy and should be thus accounted for retrospectively. In addition, they argued that this adjustment related to impairment of goodwill in prior years due to aggregation criteria that did not exist anymore. Given the diversity of views, the IFRIC did not express any preference for a single view in the tentative agenda decision.

The IFRIC briefly discussed the merit of developing an interpretation for 2010 to achieve comparability of comparative information for 2010 year-ends. This view did not receive any significant support. Most IFRIC members noted that complex transition requirement could be difficult and might lead to diversity in practice for a limited period. That complexity should be outweighed by the benefits from improved financial reporting resulting from application of a new Standard.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.