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IFRIC Issues

Date recorded:

The Board considered the proposed interpretation approved by IFRIC.

Some Board members queried whether IAS 37 should be interpreted as requiring a current interest rate. The majority of the Board believed it did.

Some Board members queried whether changes in the discount rate should be capitalised to the asset. The staff noted that separating the effects of changes in cash flows from changes in discount rates was difficult in practice.

Some Board members queried the interaction between the interpretation and the revaluation of assets as they believed this was unclear.

The Board agreed to ask IFRIC to clarify the revaluation issues.

Some Board members noted that the Interpretation required testing for impairment whenever the asset value was changed. Some Board members noted this would be a change to the requirements of IAS 36. It was agreed to discuss with IFRIC changing this to a consideration of impairment indicators.

Some Board members asked whether the guidance provided in respect of first-time adoption was correct and was capable of being applied. It was agreed that the liability should be determined using estimates at the date of transition. Consequently there could not be a requirement to restate the asset and redetermine depreciation for each prior period. The Board agreed to ask IFRIC to re-examine this.

The Board discussed the scope addition in respect of mineral rights and reserves as it was unlikely that these assets would be affected. The Board agreed to ask IFRIC to reconsider this issue.

Subject to any changes arising from the above the Board agreed to approve the Interpretation (9-4-1).

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