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EFRAG questionnaire reveals different assessments of proposed definitions of assets and liabilities

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

21 Mar 2016

In order to test whether the proposed new definitions in the IASB's exposure draft ED/2015/3 'Conceptual Framework for Financial Reporting' will be interpreted similarly by different persons, the European Financial Reporting Advisory Group (EFRAG) has published a questionnaire in October 2015.

The questionnaire presented nine arrangements and asks respondents to provide their assessment of whether different aspects of the definitions of assets and liabilities proposed in the May 2015 ED are met. Respondents are asked to provide their assessment solely based on the proposed definitions and the additional guidance included in the ED.

The main issues identified by the questionnaire were the following:

  • The term ‘present’ was interpreted differently by the respondents when the term was considered in relation to the definition of an asset.
  • The respondents had different views of what and how many past events it was necessary to consider when assessing whether the control of an economic resource arose as result of past events.
  • Respondents had different assessments about whether the economic resource related to a lottery ticket was controlled by the entity acquiring the lottery ticket.
  • Respondents had different assessments about whether an improved market position had the potential to produce economic benefits. 
  • Respondents had different assessments about whether an assembled workforce resulted in a right of an entity.
  • Respondents had different assessments about whether the costs of legal advisors related to a restructuring resulted in an obligation to transfer an economic resource.
  • Although respondents generally thought that the economic resource related to a lease agreement was controlled by the entity, their arguments for this assessment were different.
  • Respondents had different assessments about whether the deposit guarantee scheme resulted in an obligation to transfer an economic resource (for payments in future years).

Please click to access the summary of responses on the EFRAG website. EFRAG has provided the results of the test to the IASB staff.

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.