The issue is how to account for non-cash ('in-specie') distributions to owners. The IFRIC began an assessment of this potential agenda item against its agenda criteria. In doing so, it agreed that the issue is widespread and that there is known diversity in practice. Some IFRIC members suggested that even reducing the number of allowed alternative treatments might be useful.

The staff noted that at least three alternative treatments are known to be in use:

• Distributions recorded at the carrying amounts
• Distributions recorded at the fair values, with any difference between the fair values and the carrying amounts being recognised in profit or loss
• Distributions recorded at the fair values, with any difference between the fair values and the carrying amounts being recognised in equity.

IFRIC members noted that in-specie distributions interacted with a number of areas: non-monetary transactions with owners, company law, and securities regulation. As such, the scope of any Interpretation would need to be determined very carefully. The IFRIC seemed to agree that a useful starting point would be to limit the scope to in-specie distributions (of any asset) to owners acting in their capacity as owners. This would usually be pro-rata distributions (that is, all owners would receive a pro-rata share of the asset), but would not preclude distributions in which some shareholders received a cash alternative (for example, because of legal restrictions in a particular jurisdiction).

The IFRIC was unable to conclude whether the project satisfied all of its agenda criteria and will continue its discussions at the July 2007 meeting.