The Board approved issuance of SIC 32, Intangible Assets - Web Site Costs, as a final Interpretation. Website graphic design costs will be capitalised if they satisfy the IAS 38 tests for an intangible asset but will be charged to expense if they are in the nature of advertising.

The Board concluded that if IASB were ultimately to require either recognition or disclosure of the fair values of share-based payments, disclosure should be required of:

• which model was used to determine the fair value, and
• inputs to that model, including which interest rate is used (both % and which market the rate comes from); historical and expected price volatility and discussion of the reasons for any differences between the two; and historical and expected dividend yield and discussion of the reasons for any differences between the two.

The Board reaffirmed its key tentative conclusions reached at prior meetings that:

• All business combination transactions within the scope of the Standard should be accounted for by the purchase method.
• Goodwill should not be amortised but, rather, should be subject to an impairment test. Three Board members indicated that they were considering dissenting to the exposure draft and a fourth indicated he probably would not dissent to the exposure draft but might dissent to the final Standard unless comments on the ED persuaded him otherwise.

Among the more detailed decisions on business combinations and intangible assets made at this meeting were these:

• Rather than exempting combinations of mutual entities and combinations of entities by contract, the new IFRS would have a delayed effective date for those business combinations pending completion of Phase II of the business combinations project; meanwhile existing IAS 22 would continue to apply.
• An 'assembled workforce', in the absence of a legal contract, will not meet the recognition criteria for an intangible asset. However, a labour contract can be an asset if it is at a favourable price.
• IAS 38 will be amended so it no longer requires a detailed impairment calculation for goodwill or other intangibles being amortised over an estimated life longer than 20 years.
• If the estimated life of an intangible asset is changed from indefinite to a finite life, such change will be accounted for as a change in estimate (prospectively).
• A liability will not be recognised for an obligation that is triggered as a result of a business combination (such as a 'golden parachute' payment). This will be an expense of the combined entity.
• IAS 22.71 currently requires that an acquired asset identified after the end of the 'allocation period' is recognised with a corresponding credit to income. The revised IFRS on business combinations will say that if the asset was overlooked at the time of the acquisition, it should be recognised as a correction of an error (restatement) rather than as income.
• For each significant business combination, disclose the carrying amounts of each entity's assets and liabilities at the time of acquisition. If the acquired company is a non-IFRS company, first convert to IFRS and then determine the disclosures.
• For interim reporting purposes, the disclosures in IAS 34 will be conformed to those that will be required in the annual financial statements and those required by FASB SFAS 141.

This project had been discussed by the Board at its January and February 2002 meetings, but no tentative decisions were made. At today's meeting, discussion focused on application of the following principle to tangible fixed assets: For assets and liabilities held at current values, a useful distinction can be made in the performance statement between expected income, unexpected income of the period, and unexpected capital gains and losses. Discussion centred on the meaning of 'expected' and 'unexpected' in the context of fixed assets. No tentative decisions were made.

The Board considered how an entity that is applying IFRS for the first time would apply the provisions in IAS 39. The Board tentatively decided:

• Not to change its prior tentative decision to require that the derecognition provisions of IAS 39 (as revised) be applied retrospectively in a first-time application (FTA) situation.
• To rewrite the hedging transition provisions of IAS 39 so that they encompass the related questions and answers developed by the IAS 39 Implementation Guidance Committee and include the rewritten provisions in the FTA standard.
• Not to establish special FTA provisions for embedded derivatives; therefore, at the time of first-time application of IFRS, embedded derivatives must be split out or, alternatively, the hybrid instrument in which they are embedded must be accounted for at fair value in its entirety.
• An 'undue cost and effort' transition exception for financial instruments will not be included.
• For financial assets remeasured to fair value at time of FTA and classified as Available for Sale, cumulative fair value changes should reported in retained earnings, not as a separate component of equity. When the financial asset is subsequently sold, only those gains or losses that arose after the date of transition to IAS will be 'recycled' and reported in net profit or loss.

• The First-Time Application Standard will apply when there has been no explicit prior claim of full compliance with IAS or IFRS.
• If, prior to first-time application of IFRS, an entity did occasional revaluations of certain property, plant, and equipment using price indexes rather than measurement at fair value as would be required by IAS 16 if a revaluation policy were adopted, the amounts revalued by index can be regarded as deemed cost for the purpose of first-time application of IFRS.
• If IFRS are first applied in 2005, the entity's 2005 financial statements must include (a) a reconciliation of income and expense items for 2004 from previous GAAP to IFRS and (b) a reconciliation of equity at 1 January 2004 and also at 31 December 2004 from previous GAAP to IFRS.
• The Board reversed an earlier decision to require, for a business combination that took place prior to FTA, that the lessee recognise assets and liabilities under leases that meet the IAS 17 definition of a finance lease that were not recognised under the entity's previous GAAP.
• If the financial statements of a parent or a group follow IFRS and the parent acquires a new subsidiary that has not, prior to the acquisition, followed IFRS, this is not a First Time Application situation in the consolidated or parent's financial statements, though it would be FTA in the new subsidiary's separate financial statements.

The Board reversed an earlier decision that would have restricted the exemption in IAS 24.4 for financial statements of parent companies and wholly-owned subsidiaries. The Board had previously agreed, as part of the Improvements project, that such financial statements could omit IAS 24 disclosures only if those financial statements are published in a single document together with the consolidated financial statements for the group to which the entity belongs. Today's decision would essentially revert back to the existing IAS 24.4, which allows the exemption if the parent company or wholly-owned subsidiary financial statements are made available at the same time as the consolidated statements.

The Board discussed measurement issues from Chapter 3 of the Draft Statement of Principles (DSOP) on Insurance Contracts that the IASC Steering Committee has developed. The Board also considered two alternative approaches to performance reporting:

• The traditional insurance reporting model, which separates underwriting and investing and financing activities, and
• The reporting model proposed in the DSOP, which would report three components of performance: profit or loss from new business, ongoing profit or loss from prior years' business, and profit or loss from investing and financing activities.