IASB issues amendments to IAS 16 regarding proceeds before intended use

14 May 2020

The International Accounting Standards Board (IASB) has published 'Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)' regarding proceeds from selling items produced while bringing an asset into the location and condition necessary for it to be capable of operating in the manner intended by management.



The issue was initially raised with the IFRS Interpretations Committee that had originally intended to develop an interpretation of IAS 16 Property, Plant and Equipment to deal with it. However, during the course of discussions the Committee concluded that a narrow-scope amendment to IAS 16 would be a better solution. The IASB developed an exposure draft published in June 2017 and has now finalised the amendments.



Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) amends the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.


Effective date and transition

The amendments published today are effective for annual periods beginning on or after 1 January 2022. Early application is permitted. An entity applies the amendments retrospectively only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments.


Additional information

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IASB concludes the 2018-2020 annual improvements cycle

14 May 2020

The IASB has issued 'Annual Improvements to IFRS Standards 2018–2020'. The pronouncement contains amendments to four International Financial Reporting Standards (IFRSs) as result of the IASB's annual improvements project.

Annual Improvements to IFRS Standards 2018–2020 makes amendments to the following standards:

Standard Subject of amendment
IFRS 1 First-time Adoption of International Financial Reporting Standards Subsidiary as a first-time adopter. The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.
IFRS 9 Financial Instruments Fees in the ‘10 per cent’ test for derecognition of financial liabilities. The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
IFRS 16 Leases Lease incentives. The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
IAS 41 Agriculture Taxation in fair value measurements. The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13.

The amendments to IFRS 1, IFRS 9, and IAS 41 published today are all effective for annual periods beginning on or after 1 January 2022. Early application is permitted. The amendment to IFRS 16 only regards an illustrative example, so no effective date is stated.

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IASB publishes amendments to IFRS 3 to update a reference to the Conceptual Framework

14 May 2020

The International Accounting Standards Board (IASB) has published 'Reference to the Conceptual Framework (Amendments to IFRS 3)' with amendments to IFRS 3 'Business Combinations' that update an outdated reference in IFRS 3 without significantly changing its requirements.



In March 2018, the IASB issued the 2018 Conceptual Framework and most references to the Framework included in IFRSs were updated to the 2018 Framework at that time. However, paragraph 11 of IFRS 3 Business Combinations, which continued to refer to the 1989 Framework, was not updated as this could have caused conflicts for entities applying IFRS 3.

Potential conflicts occur as the definition of assets and liabilities in the 2018 Framework differ from those in the 1989 Framework potentially leading to day 2 gains or losses post-acquisition for some balances recognised.

In a May 2019 exposure draft, the IASB identified three possible amendments to IFRS 3 that would update IFRS 3 without significantly changing its requirements. These amendments have now been finalised.



The changes in Reference to the Conceptual Framework (Amendments to IFRS 3):

  • update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
  • add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
  • add to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.


Effective date

The amendments published today are effective for annual periods beginning on or after 1 January 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.


Additional information

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IASB finalises amendments to IAS 37 regarding onerous contracts

14 May 2020

The International Accounting Standards Board (IASB) has published 'Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)' amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.



The IFRS Interpretations Committee received a request to clarify what costs an entity considers in assessing whether a contract is onerous. The Committee’s research revealed that, for some contracts, differing interpretations of the onerous contract requirements in IAS 37 Provisions, Contingent Liabilities and Contingent Assets could have a material effect on entities that enter into those contracts. Consequently, the Committee recommended that the Board clarifies the onerous contract requirements in IAS 37. The Board supported the Committee’s suggestion and published an exposure draft of proposed clarifications in December 2018, which were finalised today.



The changes in Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).


Effective date and transition requirements

The amendments published today are effective for annual periods beginning on or after 1 January 2022. Early application is permitted.

Entities apply the amendments to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity first applies the amendments. Comparatives are not restated.


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We comment on two IFRS Interpretations Committee tentative agenda decisions

13 May 2020

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 12 and IFRS 16, as published in the March 2020 IFRIC Update.

More in­for­ma­tion about the issues is set out below:


Agenda decision supported?

More in­for­ma­tion

IAS 12 — Deferred tax related to an investment in a subsidiary


IFRS 16 — Sale and leaseback with variable payments

Yes; conclusions regarding the measurement of the RoU asset and the resulting gain or loss for the reasons stated in the tentative agenda decision and how to measure a right-of-use asset (RoU asset) arising from a sale and leaseback and thus how to determine the amount of any gain or loss on the transaction. In addition, we suggest the Board consider (1) addressing what appears to be a conflict between IFRS 16 paragraphs BC262 and BC266 and (2) the scope of this project on subsequent measurement of the liability to encompass, for example, the impact of contract modifications.

Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee.

Pre-meeting summaries for the May 2020 IASB meeting

13 May 2020

The IASB will meet via video conference on 15 May 2020 for a supplementary meeting and on 20–21 May 2020 for its regular meeting. We have posted our pre-meeting summaries for the meetings 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.

IASB Supplementary Meeting

The IASB is holding a supplementary meeting on 15 May 2020 to consider feedback on its proposal to amend IFRS 16 in response to COVID-19.  

The staff recommend that the Board finalise the proposed amendments, but allow the expedient to be applied to COVID-19-related rent concessions to payments originally due on or before 30 June 2021; require disclosure of the amount recognised in profit or loss to reflect changes in lease payments that arise from COVID-19-related rent concessions; and specify that in the reporting period in which a lessee first applies the amendment, it is not required to disclose the amount of the adjustment for each line item affected or its effect on earnings per share.

The staff recommend that the Board take no further action in response to requests to provide similar relief to lessors.  If the Board agrees with its recommendations, the staff expect issuing a final amendment on or around 28 May 2020.

IASB Meeting

The IASB is meeting on Wednesday 20 and Thursday 21 May 2020.

Amendments to IFRS 17 Insurance Contracts: The amendments to IFRS 17 are being finalised by the staff. During this process the staff identified five (sweep) issues for which the staff are recommending that that make additional changes to the Standard.

Maintenance and Consistent Application: Sale and leaseback with variable payments: At its April 2020 meeting, the Board decided to amend IFRS 16 for sale and leaseback transactions when the lease has variable payments. At this meeting the staff are recommending that the proposed amendment be applied retrospectively in accordance with IAS 8, except when hindsight is required, and that early application be permitted.

Disclosure Initiative—Accounting policies: The staff recommend that the Board finalise the proposal to require entities to disclose ‘material’ accounting policies instead of ‘significant’ accounting policies, with minor changes. The finalisation should not be delayed to align with any changes arising from the ED General Presentation and Disclosures. However, the staff will consider whether to align the effective date of this amendment with the amendments to IAS 8 under the Accounting Policies and Accounting Estimates project.

Management Commentary: The discussion will continue to focus on disclosure objectives and the type of information that would support those objectives. There are two areas this month: risk and the external evironment.

Research Programme update: The staff will update the Board on the research programme, including recent the changes to the timetable and priorities.

There will also be an oral update of IBOR Reform and the Effects on Financial Reporting.

More information

Our pre-meeting summaries are available on our May meeting notes and supplementary meeting notes pages and will be supplemented with our popular meeting notes after the meeting.

IFRS Foundation Trustee discusses sustainability reporting

13 May 2020

In a virtual presentation at the Green and Sustainable Finance Cross-Agency Steering Group meeting, IFRS Foundation Trustee Teresa Ko discussed the possible roles the IFRS Foundation may have for the development of internationally recognised standards on sustainability reporting.

Specifically, Ms Ko discussed:

  • Background on how the IFRS Foundation started and its role in the development of the IFRS Standards.
  • Current state of sustainability report where there are over 650 different metric available and the desire by many to consolidate the metrics into a global comparable framework.
  • Actions taken by (1) the IASB which include the update to its Practice Statement Management Commentary and (2) the Trustees which include the establishment of a working group to determine the role of the IFRS Foundation in sustainability reporting.

The full presentation is available on the IASB’s website.

Summary of the April 2020 ASAF meeting now available

11 May 2020

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held via remote participation on 2 April 2020.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

  • IBOR reform and its effects on financial reporting — Phase 2 (1–12): The ASAF were provided with an overview of the IASB’s proposed amendments for the forthcoming Exposure Draft Interest Rate Benchmark Reform — Phase 2 and gave their initial views to the expected proposals, which they were in broad agreement. In addition, the ASAF members provided feedback on what constitutes a ‘modification’ of financial assets and financial liabilities, disclosures, and other topics.
  • Update on agenda planning (13–17): The ASAF was given an update on the IASB’s work plan and the change of timelines of various projects due to the coronavirus pandemic. The ASAF expects its next meeting to be held in July 2020 and will likely be virtual.
  • Goodwill and Impairment (18–25): The ASAF were provided with an overview of the IASB’s preliminary views on Discussion Paper Business Combinations — Disclosures, Goodwill and Impairment and provided recommendations on how to conduct outreach and fieldwork activities.
  • Better Communication — Primary Financial Statements (26–46): The ASAF discussed topics related to the proposals in Exposure Draft General Presentation and Disclosures. Topics discussed include subtotals and categories in the statement of profit or loss, disaggregation, management performance measures, and statement of cash flows.

A full summary of the meeting is available on the IASB's website.

EFRAG draft comment letter on deferral of IAS 1 effective date ED

08 May 2020

The European Financial Reporting Advisory Group (EFRAG) has published a draft comment letter on the IASB exposure draft ED/2020/3 '3 Classification of Liabilities — Deferral of Effective Date (Proposed amendment to IAS 1)'.

In the draft comment letter, EFRAG agrees with the proposals in the exposure draft published on 4 May 2020 that would defer the effective date of the January 2020 amendments to IAS 1 by one year.

EFRAG acknowledges that there may be related operational consequences of the amendments, but opines that the advantages of a deferral during this time of significant disruption due to COVID-19 would outweigh the disadvantages, as earlier application of the amendments will continue to be permitted. ​

Comments on EFRAG's draft comment letter are requested by 25 May 2020. For more information, see the press release and the draft comment letter on the EFRAG website.

Collections of COVID-19 resources

08 May 2020

Global responses to the coronavirus disease 2019 (COVID-19) outbreak continue to rapidly evolve. Numerous publications and announcements of developments have sprung up around the world. Since it has become more and more difficult to follow all of them, we have put together a meta-collection of collections that we found helpful and worth browsing.

Please note that the collections do in part overlap - especially the IASB statements on IFRS 9 and IFRS 16 are included in almost all of them. Please be also aware that these collections will continue to be updated throughout the crisis. This page was last updated on 2 September 2020.

Organisation Collection link Main focus

I n t e r n a t i o n a l

International Federation of Accountants (IFAC) COVID-19 Resources from IFAC's Network global
Global Public Policy Committe (GPPC) Government/regulator response to impact of coronavirus on reporting and audit matter global, regulatory
International Auditing and Assurance Standards Board (IAASB) Guidance for Auditors During the Coronavirus Pandemic global, audit
Association of Chartered Certified Accountants (ACCA) Coronavirus – Information and resources accountants in practice and in business, students
Financial Stability Board (FSB)
Addressing financial stability risks of COVID-19 global, financial stability
Organisation for Economic Co-operation and Development (OECD) Tackling coronavirus (COVID‑19) impacts of the coronavirus pandemic on lives and societies in general

R e g i o n a l

Accountancy Europe Coronavirus resources for European accountants Europe, general
Accountancy Europe Coronavirus crisis resources – Banks Europe, banks
Accountancy Europe Coronavirus crisis: country responses to the implications on reporting local European
European Securities and Markets Authority (ESMA) COVID-19 Europe
European Federation of Accountants and Auditors for SMEs (EFAA) COVID-19: Guidance for SMPs Europe, audit

N a t i o n a l

Financial Accounting Standards Board (FASB) FASB Response to COVID-19 US
American Institute of Certified Public Accountants (AICPA) Coronavirus (COVID-19) Resource Center US
Center for Audit Quality (CAQ) COVID-19 – Auditing Profession Resources US, audit
Accounting Standards Board of Canada (AcSB) AcSB COVID-19 Resources Canada, series of articles on individual accounting problems in the context of COVID-19
Chartered Professional Accountants Canada (CPA) COVID-19: Resources related to reporting and audit Canada
South African Institute of Chartered Accountants (SAICA)
COVID-19 Hub South Africa, series of educational material on individual accounting problems in the context of COVID-19
Integrated Reporting Committee (IRC) of South Africa Reporting in a Time of Crisis South Africa, integrated reporting
Financial Reporting Council (FRC), UK FRC COVID-19 Response UK
Institute of Chartered Accountants in England and Wales (ICAEW) Coronavirus UK
Institute of Chartered Accountants of Scotland (ICAS) Accounts, Audit and Corporate Reporting UK
Deloitte UK
Regulatory, monetary and fiscal policy initiatives in response to the COVID-19 pandemic UK and pan-EU
Institute of Chartered Accountants of India (ICAI) COVID-19 Accounting Guidance of ICAI and IASB India
Hong Kong Institute of Certified Public Accountants (HKICPA) COVID-19 – CPA Information Centre Hong Kong
Australian Accounting Standards Board (AASB) Coronavirus (COVID-19) Guidance Australia
New Zealand External Reporting Board (XRB) Implications for Financial Reporting New Zealand
Chartered Accountants Australia and New Zealand (CAANZ) COVID-19 links Australia and New Zealand
Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Accounting implications of the impact of COVID-19 pandemic Islamic accounting

If you are aware of additional collections that would be of interest to an international financial reporting audience, please feel free to contact us.

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