We comment on the tentative agenda decision on IAS 12 — Recognition of deferred taxes when acquiring a single-asset entity that is not a business

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15 Nov, 2016

We have commented on the IFRS Interpretations Committee's publication in the September IFRIC Update of the tentative decision not to take onto the Committee's agenda the issue of which an amendment to IAS 12 in respect of the accounting in consolidated financial statements for the purchase of a single-asset entity that does not meet the definition of a business in IFRS 3.

As stated in the comment letter, we agree with the IFRS In­ter­pre­ta­tions Committee's analysis of the IAS 12 requirements included in the tentative agenda decision; however, we note that purchases and sales of ‘single-asset’ entities give rise to a number of issues around not only deferred tax accounting, but also fair value measurement and the distinction between asset purchase and business combination accounting. We recommend that the wider accounting issues arising from such transactions be considered by the Board as it develops its agenda for the next three years.

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