Finalisation of draft agenda decisions

The staff are recommending that the Committee finalise four tentative agenda decisions.

Three of those decisions relate to IFRS 15 Revenue for Contracts with Customers (Revenue recognition in a real estate contract; Revenue recognition in a real estate contract that includes the transfer of land; and Right to payment for performance completed to date). As well as considering the specific issues, the Committee received more general comments about these agenda decisions, including the appropriateness of considering specific fact patterns. 

The fourth item is the presentation of interest revenue for particular financial instruments.

Continuing discussions

The Committee is continuing its discussions of whether or how 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 are recommending that ‘cost of fulfilling’ a contract should include both the incremental costs of fulfilling the contract and an allocation of overhead costs incurred for activities required to fulfil the contract—the costs that relate directly to the contract. They are also recommending that this be in the form of an amendment to IAS 37, rather than an Interpretation.

New issues

There are five new issues.

• IAS 12 Income Taxes Deferred tax – tax base of assets and liabilities (Agenda Paper 4). How should the exemption (in IAS 12.15 and IAS 12.24) to recognising a deferred tax asset or a deferred tax liability be applied?
• IAS 7 Statement of Cash Flows - classification of short-term loans and credit facilities (Agenda Paper 6). Whether a short-term bank arrangement that is always overdrawn and does not fluctuate from being in to out of funds can qualify as a component of cash and cash equivalents.
• IAS 37 Provisions, Contingent Liabilities and Contingent Assets - payments relating to taxes other than income tax (Agenda Paper 7). What is the appropriate accounting when an entity makes a voluntarily payment to a tax authority that will either be returned or used to settle the tax liability (which the entity has determined is not probable and therefore not recognised).
• IFRS 9 Financial Instruments - classification of a particular type of dual currency bonds (Agenda Paper 8). How to assess whether a financial instrument has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding when a bond has a par amount denominated in one currency and fixed interest coupon payments denominated in another currency.
• IFRS 9 Financial Instruments hedge accounting with load following swaps (Agenda Paper 9). How should the term “highly probable” be applied, as it is used in IAS 39.88 and IFRS 9.6.3.3, to assess whether a hedging relationship qualifies for hedge accounting?

The Staff are recommending that the Committee not add any of these items to its agenda, either on the grounds that there is insufficient evidence that the matter has widespread effect or is expected to have a material effect on those affected or because they think the requirements in the relevant Standard provide an adequate basis for an entity to determine the appropriate accounting.

Work in progress

There are no new or ongoing matters that have yet to be presented to the Committee.

The full agenda for the meeting and our pre-meeting summaries can be found here. We will update this page for any changes to the agenda and our Deloitte observer notes from the meeting as they become available.