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IFRS 10 — Single-asset, single-lessee lease vehicles and the assessment of control under IFRS 10

Date recorded:

The Project manager introduced the agenda paper. She said that the purpose of the paper was to set out the form of a revised tentative agenda decision prior to its re-exposure for comment in the IFRIC Update. She said that the issue was discussed in November when the Committee decided not to add the issue into the agenda. In March 2015, the Committee discussed the comments letters received and following that analysis it was decided to include more information on the agenda decision. She then asked whether the Committee members had any comment to add on the wording of the revised agenda decision.

There were several comments from the Committee members regarding the need to add more clarifications. One Committee member said that the last paragraph indicated that “The Interpretations Committee concluded that it did not have sufficient information about the specific fact patterns in either submission to make an assessment about which entity would consolidate the SE” he said that he disagreed with this comment because there was a lot of discussion in prior meetings. He suggested deleting this comment. Several Committee members agreed with his suggestion.

Another Committee member suggested changing the wording in paragraph b) because it mentioned a situation about having 51% of voting rights. He said that in this case they were dealing with structured entities so the example was not helpful. He also said that in a) it was mentioned that the right of use of an asset would not be expected to give a lessee decision making rights that would provide power over the lessor. He said that this assessment should be justified.  Several Committee members agreed with his suggestion.

One Committee member said that there were still more issues to be addressed, for example whether decisions depend on where the asset was in the vehicle, outside the vehicle, legal status etc.

The Chairman indicated that the approach taken was to have a more generic view and also that they could not give an opinion based on a particular structured entity.

One Committee member also indicated that it should be clarified that lease classification was not relevant to the determination of control.

Another Committee member said that he did not believe that the tentative agenda decision should be re-exposed. The Chairman responded that he had the same view.

The Chairman then indicated that there was general agreement with the wording suggested. In relation to re-exposure, he explained that the criteria should be whether they expected to obtain more relevant information by re-exposing.  Only one Committee member said that he would prefer to re-expose. Accordingly, the tentative agenda decision will not be re-exposed for comments.

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