Date recorded:

The IASB met on Tuesday 21, Wednesday 22 and Thursday 23 April 2020.

Financial Instruments with Characteristics of Equity: At the December 2019 Board meeting, the Board discussed the staff’s preliminary analysis on how the fixed-for-fixed requirement in IAS 32 could be clarified. At this meeting the Board decided to articulate its foundation principle by stating that in a derivative on own equity that meets the fixed-for-fixed condition, the amount of functional currency units to be exchanged with each underlying equity instrument is fixed and does not vary other than (if applicable) with preservation adjustments and passage of time adjustments. The Board also supported the staff recommendations for how the preservation and passage of time adjustments should be expressed.

Post-implementation review of IFRS 10, 11 and 12: The Board decided to proceed with the PIR and publish (in December) a Request for Information to gather more information about the application of these Standards.

Disclosure Initiative—Subsidiaries that are SMEs: In the January 2020 meeting, the Board agreed to move the project from the research programme to the standard-setting programme. The objective is to develop a reduced disclosure IFRS Standard that would apply on a voluntary basis to subsidiaries that are SMEs, adapted from the disclosure requirements of the IFRS for SMEs. The staff expect to start drafting an ED or a DP in Q4 2020.

Maintenance and Consistent Application:

Commodity loans: In 2017, the IFRS Interpretations Committee (Committee) received a question about a particular commodity loan transaction and observed that the transaction may not be captured within the scope of any IFRS Standard. The Board decided to refer to commodity transactions as a potential project in its Request for Information on the 2020 Agenda Consultation.

Sale and leaseback with variable payments. At its March 2020 meeting, the Committee discussed a submission about a sale and leaseback transaction with variable payments. The Committee published a tentative agenda decision but its discussions highlighted that IFRS 16 is not as complete as it could be regarding the subsequent measurement of the lease liability arising in a sale and leaseback transaction. They therefore recommended that the Board make a narrow-scope amendment to IFRS 16. The Board decided to amend IFRS 16 to state that for lease modifications or changes in the lease term of a sale and leaseback transaction, the seller-lessee remeasures the lease liability by discounting the revised expected payments for the lease using a revised discount rate.

Lack of exchangeability. At its November 2019 meeting, the Board decided to propose an amendment to IAS 21 to address the accounting when the spot exchange rate is not observable (because of a lack of exchangeability between two currencies). The Board supported the staff recommendations for a definition of a lack of exchangeability, indicators for assessing exchangeability and disclosure requirements.

Deferred tax related to assets and liabilities arising from a single transaction. In July 2019 the Board published the Exposure Draft Deferred Tax related to Assets and Liabilities arising from a Single Transaction, proposing an amendment to IAS 12 to narrow the scope of the recognition exemption (which affects initial recognition of leases and decommissioning liabilities). The staff presented a summary of feedback received. Although a majority of Board members thought the staff should continue with the project, several members questioned whether the benefits of the change would exceed the costs.

Second comprehensive review of the IFRS for SMEs Standard: The staff have published a survey on 20 April 2020, with comments to be received by 27 July 2020, for stakeholders who do not have an existing process or do not have sufficient capacity or resources to submit a comment letter.

Management Commentary: The Board discussed disclosure objectives and the type of information that would support those objectives, focusing on business model, strategy and resources and relationships.

There was also an oral update on amendments to IFRS 17 Insurance Contracts. The amendments are expected to be finalised at the end of June 2020.

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