IASB Meeting — 17–19 June 2019

Start date:

End date:

Location: London

IASB (International Accounting Standards Board)

The IASB met on Monday 17, Tuesday 18 and Wednesday 19 June 2019. 

This overview summarises the staff recommendations and Board decisions. The full discussions and decisions are included in the more detailed summaries below. 

Goodwill and impairment: The staff aim to begin the process for preparing a Discussion Paper in July or September and to publish it towards the end of this year.  At this meeting the Board decided which preliminary views it wishes to express in the DP:

  • a) New disclosure objectives about the rationale for the business combination and disclosure requirements about how the entity plans to assess whether the combination is meeting its objectives and the measures reported to the CDOM.
  • b) That the amortisation of goodwill not be reintroduced.
  • c) That the requirement to undertake a quantitative impairment test annually be removed and replaced with an impairment-indicator approach (for goodwill and intangible assets with indefinite useful lives or not yet available for use).
  • d)removing the requirement to exclude from the calculation of value-in-use cash flows that are expected to arise from a future restructuring or enhancement.,
  • e) Removing references to pre-tax cash flows and discount rates and instead requiring that the assumptions about cash flows and discount rates be internally consistent.
  • f) A subtotal of total equity before goodwill be required to be disclosed.

Primary Financial Statements: This is the last meeting planned before the staff intend to begin the process of preparing an exposure draft that will propose a replacement of, or revisions to, IAS 1. At this meeting, the Board decided that:

  • a) exchange differences and gains and losses on derivatives be classified into the section (i.e operating, financing or investing) to which they relate, with special guidance for derivatives;
  • b) incremental expenses related to an investment (those expenses that would not have been incurred if the investment had not been made) be classified as investing;
  • c) the income tax effect of MPM adjustments be based on a reasonable pro-rata allocation of the current and deferred tax of the entity in the tax jurisdiction, or another method which achieves more appropriate allocation, and the approach taken disclosed;
  • d) entities not be required to disclose how and why the MPM differs from the total of the measure of profit or loss for the reportable segments; and
  • e) the requirements not be effective for 12 to 24 months after publication and that comparative information would be required to be reclassified.

Proposed amendments to IAS 16: The Board decided to finalise the proposal to require that proceeds generated when testing if an asset is functioning be recognised in income (rather than a reduction of the cost of the asset) and to clarify the meaning of ‘testing’. 

Rate-regulated activities: The staff aim to begin the process for preparing an exposure draft in July or September and to publish it in the first quarter next year. At this meeting, the Board decided that:

  • a) the descriptions of the scope criteria and the definitions of regulatory assets and liabilities be refined, a reference to fines payable be included in the explanation of total allowed compensation and that the Board retain its earlier decisions about recognition and not develop further derecognition requirements;
  • b) regulatory assets and liabilities be measured by discounting the estimated future cash flows arising from the regulatory assets (including the cash flows relating to the regulatory interest or return), using the regulatory interest or return rate unless there is any indication that that rate is not adequate. An exception is regulatory assets and liabilities that relate to expenses or income that will be included in/deducted from the future rate(s) when cash is paid/received. They are adjusted for risks that are not present in the related liability or asset.
  • c) the model not include a separate step to assess whether the effects of the time value of money and risks inherent in the cash flows are significant or a practical expedient that would avoid the need for discounting if the effects of the time and risks are not significant.
  • d) an indicator-based approach be used to assess whether the regulatory interest rate or return rate is adequate. The minimum adequate rate is one that the entity would expect to receive for a stream of cash flows with the same timing and uncertainty as those of the regulatory asset. If the rate provided by the agreement is inadequate the minimum adequate rate is used for initial and subsequent measurement. The same measurement requirements apply to regulatory liabilities and assets, except in the limited circumstances when that rate is affected by an identifiable event or transaction that should be recognised separately.
  • e) Regulatory income and expense that is related to a particular income or expense line item be presented immediately above or below that line item (for both profit or loss and OCI line items) with all other regulatory income and expenses presented immediately below the revenue line in profit or loss. Regulatory interest or returns accrued on regulatory assets or liabilities must be disclosed as a separate caption (either in the breakdown of regulatory income/expense for the period or the regulatory asset and liability reconciliations).

There are also papers summarising the similarities and differences between the proposed model and US GAAP requirements and the Board’s tentative decisions to date.

Business Combinations under Common Control: The Board agreed that distinguishing between combinations in which the non-controlling shareholders of the receiving entity get a residual interest in the transferred entities or businesses is a viable approach to explore in determining when to apply a current value approach, and when to apply a form of a predecessor approach.

Financial instruments with the characteristics of equity: The Board discussed detailed analysis of the comment letter feedback received about the Discussion Paper on a selection of topics: The Board’s preferred approach; Classification of non-derivative financial instruments; Classification of derivative financial instruments; Compound instruments and redemption obligation arrangements; the Puttable exception; and IFRIC 2 instruments. 

Comprehensive review of the IFRS for SMEs Standard: The Board plans to issue a Request for Information (RFI) in the second half of 2019. The Board decided that the RFI propose that IFRS 13 Fair value Measurement, IFRS 9 Financial Instruments and IFRS 16 Leases be incorporated in the SME Standard, with some simplifications but that IFRS 14 Regulatory Deferral Accounts not be incorporated.


Agenda for the meeting

Monday 17 June 2019 (11:00-18:00)

  • Primary financial statements
    • Classification of exchange differences and fair value gains and losses on derivatives in the statement(s) of financial performance
    • Expenses from investments
    • Income tax effect of MPMs
    • Differences between MPMs and segment measure of profit or loss
    • Transition
  • Rate regulated activities (education session)
    • US GAAP Comparison
    • Summary of tentative decisions made to date
  • Goodwill and impairment
    • Better disclosures for business combinations
    • Reintroduction of amortisation of goodwill
    • Presentation of total equity before goodwill subtotal
    • Relief from mandatory annual impairment test
    • Value in use—cash flows from a future restructuring or a future enhancement
    • Value in use—use of post-tax inputs
    • Preliminary views

Tuesday 18 June 2019 (09:00-15:15)

  • SME Standard review and update
    • Approach for aligning the IFRS for SMEs Standard with new and amended IFRS Standards (IFRS 13, IFRS 9, IFRS 14, and IFRS 16)
  • Rate regulated activities
    • Principles of the model: a summary
    • Scope, definitions of regulatory assets and liabilities, recognition and derecognition
    • Measurement principles
    • Measurement: discounting estimated cash flows
    • Presentation and disclosure
  • Financial instruments with characteristics of equity
    • Board's preferred approach
    • Summary of feedback on the classification of non-derivative financial instruments
    • Summary of feedback on the classification of derivative financial instruments
    • Comment letter feedback on compound instruments and redemption obligation arrangements
    • Comment letter feedback on puttable exception and IFRIC 2 instruments

Wednesday 19 June 2019 (09:30-12:00)

  • Business combination under common control
    • Transactions that do not affect non-controlling shareholders
  • Implementation matters
    • Property, plant and equipment: Proceeds before intended use (amendments to IAS 16)

Agenda papers for this meeting are available on the IASB's website.

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