New Issues

The Committee will discuss eight new issues.

IFRS 16 Leases—Incremental borrowing rate (Agenda Paper 2). Does the incremental borrowing rate need to reflect the interest rate in a loan with both a similar maturity to the lease and a similar payment profile to the lease payments?

IFRS 16 Leases—Lease term and useful life of leasehold improvement (Agenda Paper 3). (a) Does an entity consider the economics of a contract when determining the enforceable period of the lease, and not only any contractual termination payment (such as the cost of abandoning or dismantling leasehold improvements)?  (b) Is the useful life of any non-removable leasehold improvements limited to the lease term of the related lease? 

IFRS 9 Financial Instruments—Fair value hedge of foreign currency risk on non-financial assets (Agenda Paper 4). Can foreign currency risk be a separately identifiable and reliably measurable risk component of a non-financial asset held for consumption (for example, property, plant and equipment and inventory denominated in a foreign currency) that an entity can designate as the hedged item in a fair value hedge accounting relationship?

IAS 7 Statement of Cash Flows—Changes in liabilities arising from financing activities (Agenda Paper 5). Some investors have expressed concerns about the quality and consistency of disclosures about changes in liabilities arising from financing activities required by IAS 7.

IFRS 10 Consolidated Financial Statements—Sale of a single asset entity containing real estate (Agenda Paper 6). Should an entity account for the sale of real estate through an equity interest in a single asset entity that is a subsidiary by applying IFRS 15 or IFRS 10?

IAS 1 Presentation of Financial Statements—Presentation of an uncertain tax position (Agenda Paper 7). Should an entity present a liability related to uncertain tax treatments as a current (or deferred) tax liability or as a provision?

IFRS 15 Revenue from Contracts with Customers—Compensation for delays or cancellations (Agenda Paper 8). Should an obligation to compensate customers for delayed or cancelled flights (as set out in legislation) be recognised as part of the transaction price or as an obligation in accordance with IAS 37?

IAS 41 Agriculture—Subsequent expenditure (Agenda Paper 9). Should an entity capitalise or expense the costs related to the biological transformation of biological assets?

The staff are recommending that the Committee not develop any Interpretations or amendments but instead publish tentative agenda decisions stating that the requirements provide an adequate basis for addressing each of issues.

Agenda decisions to finalise

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

IFRS 15 Revenue from Contracts with Customers—Costs to fulfil a contract (Agenda Paper 10).  When revenue is recognised over time (in this case from a property sale, using the output method to measure progress) any costs incurred to fulfil the performance obligation are recognised as an expense when they are incurred.

IFRS 16 Leases—subsurface rights (Agenda Paper 11). When a contract between a land owner and another party gives the other party the right to place an oil pipeline in a specified underground space, with the land owner retaining the right to use the surface area of the land above the pipeline, that contract contains a lease.

IAS 19 Employee Benefits—Effect of a potential discount on plan classification (Agenda Paper 12). The existence of a potential discount on the contribution an entity is obliged to make to a post-employment benefit plan, if the ratio of plan asserts to plan liabilities exceeds a set level, does not preclude the plan from being a defined contribution plan.

Holdings of a cryptocurrency (Agenda Paper 13). A cryptocurrency does not meet the definitions of cash or a financial asset. It meets the definition of an intangible asset is accounted for in accordance with IAS 38, unless it the cryptocurrency is held for sale in the ordinary course of business—in which case IAS 2 applies.

Continuing discussions

The staff are recommending that narrow-scope amendments to IAS 21 be developed to define “exchangeability” and a “lack of exchangeability” and specify the requirements that would apply when there a lack of exchangeability in a currency (Agenda Paper 14).

Work in progress

The staff have received requests in relation to the definition of a lease and foreign operations in consolidated financial statements. The staff are in the process of analysing those matters (Agenda Paper 16).

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