IFRS Interpretations Committee holds November 2017 meeting

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21 Nov 2017

The IFRS Interpretations Committee met in London on Monday 20 November 2017. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee discussed six issues, including three new interpretation requests.

Finalisation of draft agenda decisions

The Committee consider the public feedback on a request related to IFRS 3 Business Combinations on the acquisition of a group of assets, and decided to finalise the decision not to add to its agenda. However the IASB will monitor this issue and proactively seek feedback from stakeholders on the significance of the issue after the revised definition of a business takes effect.

Continued discussions

In its September 2017 meeting, the IC tentatively decided to add a project to clarify the meaning of the term ‘unavoidable costs’, which is used in the definition of an onerous contract in IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The staff recommended that the clarification be by way of an amendment to IAS 37 and that the scope of the project be limited to clarifying the meaning of ‘unavoidable costs’, and not consider broader issues related to identifying or measuring an onerous contract. The Committee agreed with the Staff’s recommendation but decided to leave open what form the clarification should take until the project is more mature.

In its September 2017 meeting, the IC asked the Staff to research into the scope of a potential narrow-scope amendment to IFRS 1 First Time Adoption of International Financial Reporting Standards with the aim of reducing compliance costs when a subsidiary becomes a first-time adopter later than its parent. The Staff recommended amending IFRS 1 to allow a subsidiary that applies paragraph IFRS 1.D16(a) to measure cumulative translation differences using the amounts reported by the parent based on the parent’s date of transition to IFRS. The Committee supported that recommendation but the Staff will provide further analysis on whether IFRS 1 should require or permit the subsidiary to measure CTD based on the parent’s reported amounts.

New issues

There were three new issues. Two relate to IFRS 15 Revenue from Contracts with Customers:

  • Revenue recognition in a real estate contract that includes the transfer of land
  • Right to payment for performance completed to date

The third relates to IAS 1 Presentation of Financial Statements and IFRS 9 Financial Instruments:

  • Presentation of interest revenue for particular financial instruments

For all three issues the Committee tentatively decided not to add the issue to its agenda. The draft Agenda Decisions will be published in IFRIC Update.

Future items

The Staff are analysing requests received on whether a dual currency bond meets the solely payments of principal and interest condition in IFRS 9; whether an instrument for which the notional amount varies depending on the outcome of a transaction can be a hedging instrument applying IFRS 9; and how the initial recognition exemption in paragraphs 15 and 24 of IAS 12 applies to the recognition of right-of-use assets and lease liabilities arising under IFRS 16.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

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