Annual Improvements Process 2007

Date recorded:

IAS 41 Agriculture: Measurement of Biological Assets in accordance with IAS 41

The Board approved a proposal that the guidance in IAS 41.21 be amended, such that, in determining the present value of expected cash flows, an entity should include the net cash flows that market participants would expect an asset to generate in its most relevant market.

The effect of this amendment would be to ensure that a biological asset is measured during its biological transformation at an appropriate fair value.

In addition, minor modifications will be made to the definition of 'biological transformation' in IAS 41.5 and to the guidance in IAS 41.17.


Status of Implementation Guidance

The Board agreed to propose an amendment to IAS 8.7 to delete the phrase 'and considering any relevant Implementation Guidance (IG) issued by the IASB for the Standard or Interpretation'. In addition, the Board will propose amendments to IAS 8.11(a) and 12 to address more clearly where within the IAS 8 hierarchy Implementation Guidance falls.

The Board agreed that the current requirements in IAS 8 are problematic. IAS 8.7 has the effect of raising Implementation Guidance to 'standards-level' (mandatory) material, which is expressly not the IASB's intention: The current rubric in all IG sections states 'this guidance accompanies but is not part of IFRS x'. However, without addressing where within the IAS 8 Hierarchy IASB-developed material should fall would allow industry practice to override the IASB's Implementation Guidance. The IASB asked the staff to develop the wording of the amendments.


Restructuring IFRS 1 First-time Adoption of IFRSs

The Board agreed to restructure IFRS 1 by moving to appendixes the specific exemptions and exceptions, leaving the body of IFRS 1 to address the main principles of the Standard. Exemptions in IFRS 1 will be identified as either permanent (for example, IFRS 1.23) or temporary (for example, IFRS 1.25G). The temporary exemptions would be deleted from the Appendix as part of the Annual Improvements Project.

The Board discussed briefly whether, in light of experience, the general requirement to restate an entity's financial statements is appropriate and confirmed that it is, except when the use of hindsight is pervasive.

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