IAS 20 - Terminology

The Board agreed to propose amendments to IAS 20 Government Grants and the Disclosure of Government Assistance to substitute terms used in that Standard with more widely used terms for equivalent items used elsewhere in IFRS as follows:

• 'taxable profit (tax loss') instead of 'taxable income';
• 'recognised in profit or loss' instead of 'recognised as income';
• 'recognised directly in equity' instead of 'credited directly to shareholders' interests'
• 'change in accounting estimate' instead of 'revision to an accounting estimate'.

Board members noted that the third item might better be accomplished as a consequential amendment arising from the forthcoming amendments to IAS 1.

IAS 27 - Measurement of a subsidiary held for sale in separate financial statements

The Board agreed to propose an amendment to IAS 27 paragraph 37 to remove an apparent conflict between IFRS 5 and IAS 27. IAS 27.37 would be amended in a manner similar to:

37 When separate financial statements are prepared, investments in subsidiaries, jointly controlled entities and associates that are not classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5 shall be accounted for either:

• (a) at cost, or
• (b) in accordance with IAS 39.

The same accounting shall be applied for each category of investments. Those investments that were accounted for at cost shall be accounted for in accordance with IFRS 5 on classification as held for sale (or inclusion in a disposal group that is classified as held for sale). Those that were accounted for in accordance with IAS 39 until classification as held for sale (or inclusion in a disposal group that is classified as held for sale) shall continue to be accounted for in accordance with IAS 39. Investments in subsidiaries, jointly controlled entities and associates that are classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5 shall be accounted for in accordance with that IFRS.

IAS 27 - Clarification of the Introduction to IAS 27

The Board noted that the staff intends to clarify IN7 in the Introduction to IAS 27, which currently suggests that a subsidiary acquired exclusively with a view to resale is not consolidated. This is inconsistent with the requirements of IAS 27 paragraph 12 and IFRS 5 paragraph 16. As the Introduction is not part of the IFRS, this matter will be treated as an editorial change.

IAS 28 - Impairment of an investment in an Associate

Impairment testing of an investment in an associate is performed by testing the entire carrying amount of the investment in the associate under IAS 36. IAS 28.33 is clear that goodwill included in the carrying amount of an associate is not tested for impairment separately under IAS 36. The guidance in IAS 28.33 treats the investment in the associate as a single asset for impairment purposes. This suggests that the fact that goodwill is included in the carrying amount of an investment in an associate does not prevent the full reversal of impairment if the recoverable amount of the associate increases in a subsequent period.

The Board agreed that there was a conflict in the guidance in IAS 28.33. The guidance should be clarified to say that the trigger for impairment testing is that in IAS 36. However, because IAS 28 treats the associate as a single asset, IAS 39 provides the more appropriate measurement guidance. This did imply that if an investment in an associate has been impaired, any reversal can be reversed against the notional 'goodwill' associated with that Associate.

The Board will discuss this proposed amendment again at a later meeting.

IAS 29 - Terminology

The Board agreed to propose amendments to IAS 29 Financial Reporting in Hyperinflationary Economies to replace the term 'market value' in IAS 29.14 and .19 with 'fair value'; to replace the term 'results of operations' and 'net income' in IAS 29.20 and .28 with 'profit or loss'; and to modify IAS 29.6 as follows:

6 Entities that prepare In most countries, financial statements are prepared on the historical cost basis of accounting do so without regard either to changes in the general level of prices or to increases in specific prices of assets held. The exceptions to this are those assets that the entity is required to or chooses to measure on a fair value or revaluation basis, for example except to the extent that property, plant and equipment and investments may be revalued and biological assets must be measured at fair value. Some entities, however, present financial statements that are based on a current cost approach that reflects the effects of changes in the specific prices of assets held.

Board members noted that some of these amendments might better be accomplished as consequential amendments arising from the forthcoming amendments to IAS 1.

IAS 38 - Advertising and Promotional Expenditure

In April 2007, the Board discussed a matter referred to it from the IFRIC relating to a potential proposed amendment to IAS 38 Intangible Assets paragraphs 69-70 in respect of the accounting for advertising and promotional activities. The Board was unable to reach agreement at that meeting and requested that the staff do further analysis and return with a proposal.

The Board considered that the accounting suggested by IAS 38 might seem counter-intuitive; however they were not in a position to undertake a comprehensive review of the Standard now. Consequently, the existing Standard must be the frame of reference. After a considerable debate, the Board agreed to add to the Annual Improvements Project a proposal to amend IAS 38.69-70 such that:

• IAS 38.69 would be amended to state that expenditure on advertising and promotional activities would be recognised as an expense when those activities are rendered to the entity; and
• IAS 38.70 would be clarified to state that, to the extent that there is a prepayment for such services, an entity is not precluded from recognising a prepayment asset between the time the payment is made and the time the service is rendered to the entity.

Thus, if an entity pays for the preparation of a television commercial in advance, the entity is not precluded from recognising that payment as a prepayment asset in the balance sheet. Once the commercial has been completed and is ready for transmission (that is, the service has been rendered), any prepayment asset is written off to profit or loss.

IAS 39 - Inconsistency in disclosure requirements for associates and investments in jointly-controlled entities accounted for in accordance with IAS 39

The Board discussed an apparent inconsistency in the disclosure requirements for those entities that account for investments in associates and jointly controlled entities at fair value in accordance with IAS 39. Investments in associates and jointly controlled entities held by certain investment-type entities are excluded from the scope of IAS 28 and IAS 31. These entities are therefore not required to give the disclosures that those standards would otherwise require. However, IAS 32 and IFRS 7 both require entities that account for investments in associates and jointly controlled entities in accordance with IAS 39 to give the disclosures required by IAS 28 and IAS 31 in addition to the disclosures required by IAS 32 and IFRS 7. The staff had proposed to provide relief from the IAS 28 and IAS 31 requirements in the investor's separate financial statements.

The Board modified the staff proposal and agreed to propose amendments to IFRS 7 and IAS 32 to provide limited relief from the disclosures in IAS 28 and IAS 31 when investments in associates and investments in jointly-controlled entities are measured at fair value. However, the following disclosure would be retained:

• IAS 28.37(f)
• IAS 31.55-.56 (first sentence only; the second sentence is not applicable)