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IFRIC - Matters arising from the 4-5 February 2003 IFRIC Meeting

Date recorded:

The staff noted that six draft IFRIC interpretations will be sent to the Board by April 2003. Board comments should be given immediately so that the IFRIC can adjust any tentative positions the Board is not comfortable with prior to the Board receiving a final document. In addition, the IFRIC will be sending a document on linkage to the Board. The Board will be asked to consider the appropriate format for that document - amendment to a current standard, new standard, or IFRIC interpretation.

The Board then discussed four IFRIC projects: Rights of Use, Emission Rights, Changes in Decommissioning Liabilities, and Decommissioning Funds. The staff noted that the tentative conclusions in the Rights of Use project are consistent with those of the EITF. The IFRIC will be asked to vote on this document at the April 2003 meeting, which will most likely be after the final decisions of the EITF are known. A pre-ballot draft is being developed and will be distributed to the Board and the IFRIC shortly.

The Board expressed concern that emission rights received could be recorded as income on the date received, but the expense and liability would be recorded over time. One member noted a case could be made for recording a liability on the date the rights are received, as there may be a present obligation to return those rights. The Board reiterated its belief that front ending of income and expense was not desired. The Board agreed with the IFRIC that the emission right meets the definition of an intangible asset and should be accounted for under IAS 38.

One member expressed concern that convergence was not going to be achieved on accounting for changes in decommissioning liabilities. However, the Board did not object to the IFRIC's current tentative decision. The Board also noted that it does not believe an investment in decommissioning funds meets the definition of an originated loan under IAS 39 as the counterparty has no present obligation to refund the deposit.

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