EFRAG issues draft endorsement advice and effects study report on amendments to IAS 16 and IAS 41
23 Jul, 2014
The European Financial Reporting Advisory Group (EFRAG) has issued for comment its draft endorsement advice for the use of the amendments to International Accounting Standard (IAS) 16 ‘Property, Plant and Equipment’ and IAS 41 ‘Agriculture’ in the European Union (EU). EFRAG has also issued its Effects Study Report.
The amendments to IAS 16 and IAS 41, issued by the International Accounting Standards Board (IASB) on 30 June 2014 bring bearer plants, which no longer undergo significant biological transformation, into the scope of IAS 16 so that they are accounted for in the same way as property, plant and equipment. The amendments also clarify that produce growing on bearer plants continues to be accounted for under IAS 41 and that government grants related to bearer plants no longer fall into the scope of IAS 41 but need to be accounted for under IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. The amendments are effective for annual periods beginning on or after 1 January 2016, with earlier application being permitted.
EFRAG supports the adoption of the amendments to IAS 16 and IAS 41 and recommends their endorsement. EFRAG’s initial assessment is that the amendments to IAS 16 and IAS 41 meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.
EFRAG’s conclusion is supported by an Effects Study Report which considers the costs and benefits of implementing the amendments to IAS 16 and IAS 41. EFRAG’s assessment is that the benefits for preparers and users in implementing the amendments to IAS 16 and IAS 41 outweigh the costs.
Comments are requested by 5 September 2014.
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