Finalisation of agenda decisions

The Committee finalised the three decisions relating to IFRS 15 Revenue for Contracts with Customers (Revenue recognition in a real estate contract; Revenue recognition in a real estate contract that includes the transfer of land; and Right to payment for performance completed to date) and will not take those items onto its agenda. As well as considering the specific issues, the Committee discussed more general comments about these agenda decisions, including the appropriateness of considering specific fact patterns. 

The Committee also finalised the decision not to add to its agenda a project in relation to the presentation of interest revenue for particular financial instruments.

Continuing discussions

In Committee continued its discussions of whether or how to clarify the meaning of the term ‘unavoidable costs’, which is used in the definition of an onerous contract in IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Committee decided to develop a separate narrow scope proposal to amend IAS 37 that would specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’, with examples to illustrate the application of this.

New issues

The Committee decided to publish a tentative decision not to add to its agenda a project on IAS 7 Statement of Cash Flows - classification of short-term loans and credit facilities (Agenda Paper 6) because they think the requirements in the relevant Standard provide an adequate basis for an entity to determine the appropriate accounting.

The Committee decided to publish tentative decisions not to add two items to its agenda because they think there is insufficient evidence that the matter has widespread effect:

• IFRS 9 Financial Instruments - classification of a particular type of dual currency bonds (Agenda Paper 8). How to assess whether a financial instrument has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding when a bond has a par amount denominated in one currency and fixed interest coupon payments denominated in another currency.
• IFRS 9 Financial Instruments hedge accounting with load following swaps (Agenda Paper 9). How should the term “highly probable” be applied, as it is used in IAS 39.88 and IFRS 9.6.3.3, to assess whether a hedging relationship qualifies for hedge accounting?

The Committee also considered two other issues. The staff will assess whether an interpretation is necessary in relation to IAS 12 Income Taxes Deferred tax – tax base of assets and liabilities (Agenda Paper 4) and how the exemption (in IAS 12.15 and IAS 12.24) to recognising a deferred tax asset or a deferred tax liability should be applied. The staff will bring back a revised draft agenda decision in relation to IAS 37 Provisions, Contingent Liabilities and Contingent Assets - payments relating to taxes other than income tax (Agenda Paper 7).  The issue relates to when an entity makes a voluntarily payment to a tax authority that will either be returned or used to settle the tax liability (which the entity has determined is not probable and therefore not recognised).

There are no new or ongoing matters that have yet to be presented to the Committee.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.