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EFRAG issues draft endorsement advice on Annual Improvements to IFRS Standards 2015-2017 Cycle

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

26 Jan 2018

The European Financial Advisory Group (EFRAG) has issued for comment its draft endorsement advice for the use of the Annual Improvements to IFRS Standards 2015-2017 Cycle in the European Union (EU).

The Amendments, issued in December 2017 make amendments to the following three Standards as result of the IASB's annual improvements project.

  • IFRS 3 Business Combinations and IFRS 11 Joint Arrangements - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.
  • IAS 12 Income Taxes - The amendments clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognised in profit or loss, regardless of how the tax arises.
  • IAS 23 Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

EFRAG recommends the endorsement of the Amendments. EFRAG’s initial assessment is that the Amendments 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 also considers that the overall benefits of the Amendments are likely to outweigh the associated costs to implement them.

Comments are requested by 26 February 2018.

For more information, see the press release, draft endorsement advice letter and the invitation to comment on the EFRAG’s website. EFRAG has also updated its endorsement status report that is available here.

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