IAS 7 — Classification of expenditures as investing or operating

Date recorded:

In January 2008 the IFRIC discussed a possible agenda item regarding the criteria for classifying expenditures as 'operating' or 'investing' in the statement of cash flows. The original submission focused on exploration and evaluation activities, but the staff concluded this could be extended on many situations. The IFRIC tentatively agreed not to add the item to the agenda, but refer it to the Board, as IAS 7 Statement of Cash Flows was considered ambiguous in this respect. The tentative agenda decision also contained a recommendation to the Board that classification in the statement of cash flows should follow recognition, that is, only expenditure for an asset recognised in the statement of financial position qualifies for classification as 'investing' in the statement of cash flows.

The IFRIC received two comment letters expressing disagreement with the content of the proposed agenda decision. The IFRIC discussed what their recommendation to the Board should be (if any). Some IFRIC members were of the view that an exception in IAS 7 should be created for IFRS 6 Exploration for and Evaluation of Mineral Resources expenditures and hence, not dealing with the broader issue. Others were of the view that nothing should be recommended. In response to that, the Chairman reminded IFRIC members that if IFRIC refers anything to the Board, the Board expects IFRIC to make a recommendation (as it would ask this question anyway).

The IFRIC agreed that the wording as proposed in the published tentative agenda decision should be kept and published as a final agenda decision.

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