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Date recorded:

The IFRS Interpretations Committee (Committee) met on Tuesday 2 February 2021.

The Committee discussed two new issues and the feedback on one tentative agenda decision and two new issues.

Agenda decision to finalise

IFRS 10 Consolidated Financial Statements and IFRS 16 Leases—Sale and Leaseback of an Asset in a Single-asset Entity: In September 2020, the Committee discussed the applicability of the sale and leaseback requirements in IFRS 16 to a transaction in which an entity sells its equity interest in a subsidiary that holds only a real estate asset and then leases that real estate asset back. The staff concluded that IFRS 10:25 and B97-B99 apply to the accounting for the loss of control of the subsidiary and IFRS 16:100(a) applies for measuring of the right of use (ROU) asset and the gain on the leaseback arrangement. However, in this meeting, most of the Committee members considered the requirements in IFRS Standards do not provide an adequate basis to support the analysis and conclusion in more complex situations. Therefore, the Committee decided to propose a narrow-scope standard setting project to the Board.

New issues

IAS 2 Inventories—Cost necessary to sell inventories: The Committee members generally agreed that the costs to include as part of the estimated costs necessary to make the sale when determining the net realisable value of inventories should not be limited  to incremental costs but should include other costs necessary to make the sale. Consequently, the Committee decided not to add the matter to the Committee’s standard-setting agenda but publish a tentative agenda decision.

IAS 10 Events after the Reporting Period—Preparation of Financial Statements when an Entity is No Longer a Going Concern: The Committee concluded that the financial statements for all prior periods which had not been issued could not be prepared on a going concern basis if it intends to liquidate the entity subsequently. The Committee did not analyse the issue of restatement of comparative information in respect of the preceding period given the issue is not widespread.

The Committee agreed with the staff’s recommendation not to add the matter to the Committee’s standard-setting agenda as the matter is not widespread and there is no evidence of diversity in practice.

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.