The priority given to this bitter issue, and the manner in which the IASB press release treated expense recognition as a foregone conclusion, has disturbing implications about the fairness of the IASB deliberation process going forward."

Comment deadline is 15 December 2001.

That paper had proposed that all goods and services acquired by payment of shares or share options be accounted for at fair value, with a charge against earnings when the goods/services are consumed. For employee share options, fair value would be measured at vesting date.

IASB's predecessor, IASC, had sought comments on the paper in 2000.

Click for:

• IASB Press Release (PDF 33K).
• Project Information.
• Summary of the G4+1 Paper.

 

IFRS includes IAS.

Herdman, partner at Ernst & Young, has been appointed SEC Chief Accountant effective 8 October 2001. He has been the senior partner responsible for his firm's relationships with the SEC, FASB, and the AICPA. (PDF 33k).

The October 2001 Meeting dates are now 16-20 October (the first two days with SAC) in Washington. IASC Foundation Trustees will meet 15 October in Washington; this will be their first public meeting.

We have also updated our individual project files for the following projects to reflect discussions at the meeting:

• Business Combinations
• First-Time Application of IAS
• Insurance
• Share-Based Payments

Comment deadline on both is 5 November 2001:

• SIC D33, Consolidation and Equity Method – Potential Voting Rights, proposes that potential voting rights that are presently exercisable or convertible should be considered when assessing whether an enterprise controls or significantly influences another enterprise. All potential voting rights should be considered, including potential voting rights held by other enterprises.
• SIC D34, Financial Instruments - Instruments or Rights Redeemable by the Holder, proposes that the issuer of a puttable instrument should classify the entire instrument as a liability. A puttable instrument is a financial instrument or a right that gives the holder the right to put the instrument or right back to the issuer for cash or another financial asset. The amount payable upon redemption is determined based on an index or other item that has the potential to increase and decrease. The consensus in SIC D34 will affect open-ended mutual funds and certain co-operative organisations by requiring them to present their unitholders' funds as liabilities.
• SIC has also completed its discussions of SIC D27, Transactions in the Legal Form of a Lease and Leaseback, including comments received from the IASB. The SIC reaffirmed its consensus and is redrafting the Interpretation to focus on the principles involved.

There's also a follow-up story.

Issues to be discussed include first-time application of IAS, business combinations, share-based payments, and improvements to IASB Standards. The Board will then meet for three days (12-13 September) to deliberate various Technical Agenda Projects. Check back here each day for brief summaries of the discussions.

IAS 40, in combination with IAS 17.11, prohibits the revaluation of leased land. The effect of the change was to eliminate US$4.2 billion (81%) of shareholders' equity at 31 December 2000. In Hong Kong (and elsewhere, including China) nearly all land is leased from the government under long-term leases rather than owned outright. Hong Kong Land says it cannot reliably value the buildings apart from the land. In its first-half 2001 financial report, Hong Kong Land presented, in addition to its primary cost/depreciation model financial statements, supplementary financial information prepared "in accordance with IAS as modified by the revaluation of leasehold properties", with value changes reported in net profit or loss. This method increased net profit for 2000 from US$0.3 billion to US$2.2 billion. Revaluation of long leases of land was an issue considered by the IASC in developing IAS 40, but IASC concluded that it should reconsider IAS 17.11 separately and not as part of the investment property project. Click for Link to Hong Kong Land Website. IASB has indicated that it will be addressing long leases of land as part of its Improvements Project.