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IAS 37

Date recorded:

The Board continued its redeliberations of proposed amendments to IAS 37.

Scope

The Board agreed that:

  • (a) IAS 37 applies to all liabilities not within the scope of another Standard.
  • (b) The wording in paragraph 7 of the ED be improved specifically to clarify that items presented as credits on the balance sheet that arise from the operation of IAS 18 Revenue are outside the scope of IAS 37.
  • Board members noted that the dividing line between 'deferred revenue' and other non-financial liabilities was not well defined in IFRS, but is important because of the fundamentally different accounting that results from following IAS 37 as opposed to IAS 18. The staff acknowledged this tension and promised to revisit it.
  • (c) The Basis for Conclusions should be expanded to explain the analysis undertaken that leads the Board to believe that the requirements of IAS 37 are appropriate for all liabilities.
  • (d) The term 'provision' should not be a defined term in IAS 37 [the Board wants to avoid using it altogether].
  • (e) The term 'liability' should be used to describe liabilities within the scope of IAS 37 [that is, the ED term 'non-financial liability' will not be carried forward to the final standard].
  • (f) The scope section include positive examples of liabilities within the scope of the Standard.

Possible additional topics

The Board considered whether five topics raised by constituents during the comment letter process should be added to the project. The Board decided not to add the following items:

  • Recognition and measurement guidance in IAS 38 Intangible Assets
  • Onerous contracts There was a brief discussion on this topic. It was noted that there is often difficult to distinguish an out-of-the-money forward from an onerous contract. They distinguishing feature was whether the forward would settle in cash. If it would settle in cash, it would be within the scope of IAS 39; if not cash settled, it would be an onerous contract within the scope of IAS 37.
  • Application guidance for specific staff benefit plans
  • Measurement guidance for non-financial liabilities

However, the Board agreed to provide measurement guidance on reimbursement rights in the final standard.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.