IFRS Interpretations Committee holds November 2022 meeting

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05 Dec, 2022

The IFRS Interpretations Committee (Committee) met on 29 November 2022. The Committee discussed one new item, six potential annual improvements to IFRS Accounting Standards and an item for input on an IASB project.

New item: IFRS 16 Leases—Definition of a Lease: Substitution Rights: The Committee received a submission about how to assess whether a contract contains a lease applying IFRS 16 when the supplier has particular substitution rights and at what level an entity evaluates whether that right is substantive. The contract in the fact pattern is for the use of 100 similar assets. The supplier has the practical ability to substitute alternative assets throughout the period of use but is expected to benefit economically from the exercise of its right to substitute only after some time into the period of the lease. The Committee members generally agreed with the staff conclusion that there is an identified asset because the supplier’s substitution right is not substantive but had various comments on how the tentative agenda decision analyses it and reaches that conclusion. Most of the Committee members agreed that the level to evaluate whether the substitution right is substantive is on each asset. The Committee voted in favour of not adding a standard-setting project to the work plan and instead to publish a tentative agenda decision, with the drafting amended to take comments into consideration that have been raised by Committee members during the meeting.

Potential annual improvements to IFRS Accounting Standards: The Committee members shared their views on the staff’s preliminary views on the following six proposed amendments to IFRS Accounting Standards and to include them in the next annual improvements cycle:

  • IFRS 1 First-time Adoption of International Financial Reporting Standards—terminology update
  • IFRS 10 Consolidated Financial Statements—'De facto agent’ assessment
  • IFRS 9 Financial Instruments—terminology update
  • IAS 7 Statement of Cash Flows—terminology update
  • IFRS 7 Financial Instruments: Disclosures—reference update
  • IFRS 7 Financial Instruments: Disclosures—implementation guidance

Input on IASB project: Post-implementation Review (PIR) of IFRS 15 Revenue from Contracts with Customers: The IASB has started the PIR of IFRS 15 which aims at assessing whether the effects of applying new requirements on users of financial statements, preparers, auditors and regulators are as intended when the IASB developed those requirements. The Committee members shared their views on the implementation and ongoing application of IFRS 15, including the matters that the Committee members think the IASB should consider in the PIR of the Standard.

Work in progress: There are two new matters that have not been presented to the Committee.

More In­for­ma­tion

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

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