Pre-meeting summaries for the December IASB meeting

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04 Dec 2017

The IASB will meet at its offices in London on 13–14 December 2017. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

There are seven topics on the agenda.

Wednesday 13 December

The meeting starts with a continuation of the discussion on the Primary Financial Statements. There are three topics at this meeting: objective of, and suitable locations for, the management performance measure; classification of interest and dividends in the statement of cash flows; and initial thoughts on other targeted improvements to the statement of cash flows. The staff are recommending that the Board:

  • explore how to present unusual or infrequently occurring items;
  • require that the management performance measure be presented as a subtotal in the statement of financial performance, or in a separate reconciliation directly following the statement of financial performance;
  • prescribe that interest paid on financing activities, regardless of whether it is capitalised, be classified as financing cash flows, dividends paid be classified as financing cash flows and interest and dividends received be classified as investing cash flows; and
  • not seek to align the operating sections of the income and cash flow statements.

The Board will begin considering feedback on its Discussion Paper Disclosure Initiative—Principles of Disclosure. The Board received 108 comment letters, and the staff have provided a high-level overview of the views expressed on those letters. The overall impression is that respondents think the DP lacked focus and depth. There was also concern over a lack of cohesiveness between the different Disclosure Initiative projects. This is an education session, so the Board is not being asked to make any decisions.

Thursday 14 December

The Board will continue its discussions on accounting for Goodwill. The staff are recommending that the Board not reintroduce goodwill amortisation and instead focus on improving the impairment test. The Board is being asked to clarify whether, in relation to the impairment test, it wants to take no further action; modify the VIU calculation by removing the explicit requirement to use pre-tax inputs and the requirement to exclude estimated cash flows from uncommitted future restructuring and from improving or enhancing the asset’s performance; use a single method to determine the recoverable amount; and/or apply the updated headroom approach. Additionally, the Board will be asked whether it wishes to develop disclosure requirements in relation to the headroom in a CGU to which goodwill is allocated and a breakdown of goodwill by past business combination, explaining why the carrying amount of goodwill is recoverable.

The Board will discuss a project plan for the development of an accounting model for Dynamic Risk Management (DRM). The staff intend to focus on developing the areas that are core to the model (target profile, asset profile, DRM derivative instruments and performance assessment and recycling) which they will test with external stakeholders before addressing extensions of the concepts.

The Consultative Group for Rate Regulation met on 26 October 2017.  The staff will summarise for the Board the feedback from this meeting. The consultative group encouraged the Board to develop an exposure draft as the next consultative document.

The Board will consider four IFRS Implementation Issues. The Board will:

  • be updated on the IFRS Interpretation Committee’s decision to add to its agenda a project to clarify which costs should be considered in assessing whether a contract is onerous;
  • consider a recommendation that the ED proposing to lower the threshold for relief from retrospective application of a change in accounting policy arising from agenda decisions also propose that the change to IAS 8 would be applied prospectively.
  • consider a recommendation from the IFRS Interpretation Committee to amend IFRS 1 to subsidiaries that apply adopt IFRS later than their parent with additional relief for measuring cumulative translation differences; and
  • discuss a summary of feedback on the proposed amendments to IAS 16 in relation to accounting for the proceeds from sales from testing—many respondents disagreed with the proposed amendments, considering them to be ineffective, costly to apply and require significant judgement.

The meeting concludes with a continuation of the Board’s discussions on the Business Combinations under Common Control (BCUCC) project. The papers review related projects and recommend that the project include within its scope transactions that are preceded by an external acquisition and/or followed by an external sale of one or more of the combining entities and transactions that are conditional on a future sale such as in an IPO. The staff are also recommending that the project focus on the acquisition method and predecessor accounting as the potential methods of accounting.

More information

Our pre-meeting summaries are available on our December meeting note page and will be supplemented with our popular meeting notes after the meeting.

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