Agenda and pre-meeting summaries for the June 2018 IFRS Interpretations Committee meeting

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05 Jun 2018

The IFRS Interpretations Committee meets in London on Tuesday 12 June 2018. The Committee will discuss seven issues, including two new interpretation requests.

Finalisation of a draft agenda decision

The staff are recommending that the Committee finalise a tentative agenda decision in relation to the classification of short-term loans and credit facilities and whether a short-term bank arrangement that is always overdrawn can qualify as a component of cash and cash equivalents.

Continuing discussions

The Committee will continue its discussions in relation to three matters.

IAS 12 Income Taxes Deferred tax—tax base of assets and liabilities. The staff are recommending an amendment to IAS 12 to narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to both deductible and taxable temporary differences to the extent that an entity recognises a deferred tax asset and liability of the same amount in respect of those temporary differences.

IAS 37 Provisions, Contingent Liabilities and Contingent Assets—the meaning of ‘unavoidable costs’, The staff are recommending that no new disclosure requirements be added and that the proposed amendments apply only to contracts existing at the date of initial application. 

IAS 21 The Effects of Changes in Foreign Exchange Rates—foreign exchange restrictions. The staff recommend the Committee not develop an interpretation but publish a tentative agenda decision, discussing the use of an estimated closing rate in those circumstances and the exchange rates at the dates of the transactions, and referring to applicable disclosure requirements.

New issues

There are two new issues, both in relation to IAS 23. The Committee received submissions asking whether:

  • in determining the expenditures on which to apply the capitalisation rate, an entity includes expenditures incurred on the qualifying asset before obtaining the general borrowings in the case that the entity incurs expenditures on the qualifying asset both before and after it incurs borrowing costs on the general borrowings.
  • an entity ceases to capitalise borrowing costs in respect of expenditures incurred in developing land once it begins constructing the building on the land or continues to capitalise borrowing costs in respect of the land development while it constructs the building.

The Staff are recommending that the Committee not add either of these items to its agenda on the grounds that IAS 23 provides an adequate basis for an entity to determine the appropriate accounting.

Advice from the Committee for the IASB

In June 2017, the Board published the Exposure Draft Property, Plant and Equipment––Proceeds before Intended Use (ED). The staff are concerned that the feedback in the comment letters received suggests that there is a risk that in reducing the diversity in the reporting of sale proceeds, the proposed amendments could create new diversity in the costs recognised in profit or loss. The staff are seeking advice from the Committee on how best to proceed on this project.

Other work in progress

There are three continuing topics that are not being discussed at this meeting, plus one new issue that the staff are still analysing.

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.

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