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IFRS 3 — Unreplaced and voluntarily replaced share-based payment transactions

Date recorded:

The comment letters received on the proposed amendments to IFRS 3 Business Combinations related unreplaced and voluntarily replaced shared-based payment transactions were mostly supportive.

The IFRIC decided to simplify paragraph B56 of IFRS 3, as the distinction between voluntary and obligatory replacement was no longer relevant.

The IFRIC also clarified that the transition provision requirements should apply prospectively from the date the entity first applied IFRS (2008).

After a brief discussion, the IFRIC expanded the basis for conclusions to explain the distinction between the accounting treatments for share-based payment transactions that expire as a result of a business combination and those that don't expire when replacement is voluntary.

The IFRIC considered a suggestion of one constituent to provide additional guidance for the cases where the replacement value is lower than the original market-based measure allocated to pre-combination. Nonetheless, the IFRIC members agreed that such guidance would not be in scope of the Annual Improvement project and, therefore, should be left for the planned post-implementation review of IFRS 2.

One IFRIC member suggested that the guidance should be clarified for modifications as well and not only for replacement share-based payment transactions and raised other related issues. In response, the IFRIC chairman responded that as those suggestions were not exposed in the due process, they could not be included in the 2008-2010 Annual Improvements cycle. The IFRIC asked the staff to look at those issues and consider whether they should be addressed separately (as future annual improvements) or included in the planned post-implementation review of IFRS 2.

On that basis, the IFRIC recommended to the Board to finalise the amendments subject to editorial drafting suggestions.

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