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Review of tentative agenda decisions to finalise

Date recorded:

IAS 10 Events after the Reporting Period: Reissuing previously issued financial statements

The Committee received a request for guidance on the accounting implications of applying IAS 10 when previously issued financial statements are reissued in an offering document, namely which adjusting events should be reflected in the reissued financial statements. The Committee continued the discussions from November 2012 and January 2013 meetings with the objective to finalize the wording for the final agenda decision.

One Committee member believed that the deletion of a paragraph from the agenda decision, as previously agreed, did not go far enough instead the agenda decision should also clarify that the second set of financial statements was not in the scope of IAS 10 (and perhaps could use the wording from the Deloitte comment letter). Most Committee members were in agreement.

There was another clarification brought up by another Committee member about varying reporting regimes in various jurisdictions: sometimes adjustments are required (as currently stated in the agenda decision) and sometimes they are permitted.

The Committee approved the agenda decision (as modified by the two drafting comments).

IAS 28 Investments in Associates and Joint Ventures and IFRS 3 Business Combinations: Acquisition of an interest in an associate or joint venture under common control

In October 2012, the Committee received a request to clarify the accounting for an acquisition of an interest in an associate or joint venture from an entity under common control, namely whether it was appropriate to apply the IFRS 3 scope exemption for business combination under common control by analogy to the acquisition of an interest in an associate or joint venture under common control.

The Committee discussed this issue in January 2013 and tentatively decided not to take this issue to the agenda: a) given that paragraph 32 of IAS 28 provides ‘guidance on the acquisition of an interest in an associate or a joint venture and does not distinguish between acquisition of an investment under common control and acquisition of an investment from an entity that is not under common control’ and b) ‘in the light of the Committee’s concerns about the broader issues that relate to accounting for business combinations under common control’. The Staff has since made a change to the agenda decision and removed the sentence referring to existing diversity in practice.

During the May meeting the Committee discussed the wording of the final agenda decision. One Committee member observed that removing the paragraph referring to the diversity in practice was not a solution and suggested to move the sentence to the beginning of the paragraph.

It was also suggested to add that the Committee had concerns not only about business combinations under common control but also about the equity method of accounting.

The Committee approved the agenda decision (as modified by the drafting comments).

IAS 7 Statement of Cash Flows: Identification of cash equivalents

In January 2013, the Committee received a request to clarify the issue about the classification of investments as cash equivalents.  The submitter believed that the classification on the basis of the remaining period to maturity as at the balance sheet date would lead to a more consistent classification rather than the current focus on the investment’s maturity from the acquisition date.

The Committee decided not to add this issue to the agenda on the basis of paragraph 7 of IAS 7 that states that “for an investment to be held for the ‘short term’, it would normally have a maturity of three months or less from the date of acquisition”.

During the May meeting the Committee discussed the wording of the final agenda decision.

A Committee member questioned whether it was necessary to keep the phrase about paragraph 7 of IAS 7: ‘three month presumption [previously ‘criterion’]’ promoted consistency. The sentiment was the discussion about the three month period as a bright line might open unnecessary discussions. It was suggested to remove the reference to the three month presumption in paragraph 7. Other Committee members agreed with this approach.

The Committee approved the agenda decision (as modified by the drafting comment).

IFRS 2 Share-based Payments: Timing of the recognition of intercompany recharges

In January 2013, the Committee discussed a request for clarification about the timing of recognition for intragroup recharges made in respect of share-based transactions in the financial statements of a subsidiary:

  • at the date of grant of the award; or
  • at the date of exercise of the award.

The Committee decided not to add this issue to the agenda because it was “concerned about the breadth of the topic”, i.e. it was too broad for them to take on.

During the meeting the Committee approved the agenda decision.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.