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IASB publishes proposed amendment to IFRS 16

27 Nov 2020

The International Accounting Standards Board (IASB) has published an exposure draft 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)' that aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 to the lease liability that arises in a sale and leaseback transaction. Comments are requested by 29 March 2021.



The IFRS Interpretations Committee received a submission about IFRS 16 Leases and a sale and leaseback transaction with variable payments that do not depend on an index or rate and came to the conclusion (and the IASB agreed) that it would be beneficial to amend IFRS 16 to specify how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 to the lease liability that arises in the sale and leaseback transaction.

The IASB has now published an exposure draft (ED) of a proposed clarifying amendment.


Suggested changes

The IASB proposes in ED/2020/4 Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16) to improve the sale and leaseback requirements in IFRS 16 by specifying how to apply paragraphs 36–38 of IFRS 16 in subsequently measuring the lease liability that arises in a sale and leaseback transaction. Specifically, the ED proposes that a seller-lessee

  • when applying the IFRS 16 requirements for measuring the right-of-use asset and lease liability arising from the leaseback, determines the proportion of the asset sold that relates to the right of use retained by comparing the discounted present value of the expected payments for the lease to the fair value of the asset sold and
  • subsequently measures the lease liability by reducing the carrying amount to reflect the expected payments for the lease.

A seller-lessee would apply the proposed amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, except when such application to sale and leaseback transactions with variable lease payments would be possible only with the use of hindsight.

The amendment would also add two illustrative examples to IFRS 16

Comments on the proposed changes are requested by 29 March 2021.


Effective date

The exposure draft does not contain a proposed effective date as the IASB intends to decide on this after exposure. Early application would be permitted.


Additional information

Please click for:


Report on the autumn 2020 IFASS meeting

27 Nov 2020

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held by remote participation on 30 September and 1 October 2020.

As reported earlier, among the topics discussed at the meeting were intangibles and the going concern assumption.

The full list of topics discussed at the meeting was:

  • Issues surrounding separate financial statements
    • Presentations by Brazil, Italy, and Korea
  • Primary financial statements
    • Presentations by EFRAG and Korea on the IASB exposure draft
  • Cryptoassets
    • EFRAG discussion paper on the accounting for cryptoassets
  • Intangibles
    • Joint paper by Canada, Germany, Japan, UK and US
  • Going Concern
    • Presentations by Australia and New Zealand
  • International financial reporting for non-profit organisations
  • IPSASB update
  • Fintech application and accounting standards
    • Presentation by Taiwan
  • Impact of COVID-19 in Sri Lanka
    • Presentation by Sri Lanka

The next meeting is to be held on 8-9 March 2021; the meeting format is yet to be decided.

Please click for the full report from the meeting.

Agenda for the upcoming Emerging Economies Group meeting

26 Nov 2020

The IASB Emerging Economies Group (EEG) will meet via video conference on 30 November and 1 December 2020. An agenda for the meeting is now available.

The agenda for the meeting is summarised below:

Monday 30 November 2020 (11:00-15:45)

  • Welcome
  • Disclosure initiative — Accounting policies
    • Overview of the forthcoming amendments
  • Disclosure initiative — Subsidiaries that are SMEs
    • Update on the project
  • Disclosure initiative – Targeted standards-level review of disclosures
    • Overview of forthcoming proposals
  • Applying IFRSs in 2020
    • Discussion on the impact of Covid-19
  • Lack of exchangeability
    • Overview of forthcoming proposals

Tuesday 1 December 2020 (11:00-15:30)

  • Goodwill and impairment
    • Feedback from the EEG members on the discussion paper
  • Update on IASB projects
  • Post-implementation review of IFRS 10-12
    • Overview of the forthcoming request for information

    Agenda papers from this meeting are available on the IASB's website.

    IIRC and SASB intend to merge

    25 Nov 2020

    The International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) have announced their intention to merge into the Value Reporting Foundation, a unified organisation intended to provide investors and corporates with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards.

    The merger is aimed at advancing the work of CDP, CDSB, GRI, IIRC and SASB who in September 2020 released a statement of intent to work together towards comprehensive corporate reporting in a comprehensive corporate reporting system.

    The press release notes that Value Reporting Foundation will maintain the IIRC integrated reporting framework that describes all relevant value creation topics and the approach to integrating them in corporate reporting while the SASB standards provide the precise definitions of the data that should be reported for these topics in each industry. The framework and the standards will remain complementary tools with the Value Reporting Foundation facilitating the use of both together.

    The merger responds to the ever increasing calls from global investors and corporates to simplify the corporate reporting landscape by having a globally aligned reporting system. The press release stresses that the Value Reporting Foundation, which will be formed by mid-2021, stands ready to work with the IFRS Foundation, IOSCO, EFRAG, CDP, CDSB, and GRI, and others to work towards a set of global and globally accepted standards.

    Please click to access the full press release on the SASB website (an identical press release is available on the IIRC website).

    GRI and CDSB have posted congratulatory notes to their websites.

    IASB issues podcast on latest Board developments (November 2020)

    24 Nov 2020

    The IASB has released a podcast featuring IASB Chair Hans Hoogervorst and IASB Vice-Chair Sue Lloyd discussing deliberations at the November 2020 IASB meeting.

    The podcast discusses:

    • the joint education session with the FASB;
    • Post-implementation review of IFRS 10-12;
    • Management commentary;
    • Subsidiaries that are SMEs; and
    • Maintenance and consistent application.

    The podcast (12 minutes) can be accessed through the press release on the IASB website.

    The detailed notes taken by Deloitte observers at the meeting are available here.

    IFRS Foundation publishes proposed IFRS Taxonomy update

    24 Nov 2020

    The IASB has published PTU/2020/5 'IFRS Taxonomy 2020 — 'General Improvements and Common Practice — IAS 19 'Employee Benefits'''.

    The proposed update includes elements to reflect common reporting practice and new and amended labels to clarify the accounting meaning and intended use of some existing elements.

    For more information, see the press release and proposed update on the IASB’s website. Comments are requested by 26 January 2021.

    We comment on the tentative agenda decision on sale and leaseback in a corporate wrapper

    24 Nov 2020

    We have commented on the IFRS Interpretations Committee's publication in the September 2020 'IFRIC Update' of the tentative decision not to take onto the Committee’s agenda the request for clarification on the applicability of the sale and leaseback requirements in IFRS 16 to a transaction in which an entity sells its equity interest in a subsidiary that holds one asset and leases that asset back.

    We agree that the Committee’s conclusions as laid out in the agenda decision reflect the requirements of IFRS 10 and IFRS 16 in relation to the specific fact pattern presented therein. However, we strongly suggest that in addition to this decision the Board takes on a broader project to address the treatment of the sale of corporate wrappers, in particular when, if ever, these should be accounted for as sales of assets rather than subsidiaries.

    Please click to download the full comment letter here.

    Summary of the October 2020 joint CMAC-GPF meeting

    24 Nov 2020

    Representatives from the International Accounting Standards Board (IASB) met with both the Capital Markets Advisory Council (CMAC) and Global Preparers Forum (GPF) by video conference on 8 October 2020. Notes and recordings from the joint meeting have now been released.

    The topics discussed at the meeting included:

    • Business combinations — Disclosures, goodwill and impairment
    • Primary financial statements

    There was also an update session on COVID-19 related matters.

    The meeting summary on the IASB website only covers the first two topics, however, the meeting page offers recordings of all three topics.

    The next CMAC meeting will be held on 11 March 2021 .The next GPF meeting is proposed to be held on 12 March 2021.

    December 2020 IFRS Interpretations Committee meeting agenda posted

    20 Nov 2020

    The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 1-2 December 2020.

    The Committee will discuss the following:

    • Administrative matters
    • IAS 1 — Classification of debt with covenants as current or non-current
    • IAS 19 — Attributing benefit to periods of service
    • Supply chain financing arrangements — reverse factoring
    • IAS 38 — Configuration or customisation costs in a cloud computing arrangement
    • IFRS 9 — Hedging variability in cash flows due to real interest rates
    • Work in progress

    The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries as well as observer notes from the meeting on this page as they become available.

    November 2020 IASB meeting notes posted

    20 Nov 2020

    The IASB met via video conference on 18 November 2020 to discuss five topics and on 19 November it met with the FASB in an educational meeting. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

    IASB meeting

    Board work plan update: Last month the Board decided to begin the post-implementation review (PIR) of the IFRS 9 classification and measurement requirements and reconsider at a later date when to begin the PIRs of the IFRS 9 impairment and hedge accounting requirements and of IFRS 15. The Board will consider the start dates of those PIRs in the second half of 2021.

    Post-implementation review of IFRS 10, IFRS 11 and IFRS 12: The Board confirmed the publication of the request for information (RFI), with a 150-day comment period (rather than the 180 days recommended by the staff). The RFI is expected to be published in December.

    Maintenance and Consistent Application—Deferred Tax related to Assets and Liabilities arising from a Single Transaction: The Board is finalising amendments to IAS 12. The amendments are expected to be published in the second quarter of 2021 and will have an effective date of 1 January 2023.

    Management Commentary: The staff raised some issues identified during drafting of the Exposure Draft (“sweep issues”). The Board decided that entities not applying IFRS Standards should be permitted to apply the Practice Statement. They also decided to use the term ‘accuracy’ rather than ‘freedom of error, emphasising that it applies to quantitative and qualitative information.

    Disclosure Initiative, Subsidiaries that are SMEs: The IASB is developing a Standard setting out reduced disclosure requirements for subsidiaries apply IFRS Standards but meet the definition of an SME. The Board decided to have exceptions to the process for adapting disclosure requirements when preparing the analysis of adaptions to the disclosure requirements of the IFRS for SMEs Standard.  

    For an analysis of how the IASB work plan has changed after this meeting, please see

    Joint IASB—FASB education meeting

    The boards updated each other on individual projects that partially or entirely overlap with a project of the other board. The purpose of the meeting was to share information. As such, no decisions were made.

    COVID-19: The boards explained the steps they have taken to respond to the COVID-19, such as implementation and educational guidance and adjustments to their work plans. Much of the discussion focused on the accounting for government grants.

    Leases other than COVID-19: The IASB staff explained the recent application questions discussed by the IFRS Interpretations Committee and narrow-scope standard-setting that has been initiated with regard to sale and leaseback transactions. The FASB is monitoring the implementation of its equivalent Standard and in July 2020 added a project to its technical agenda to address issues on which the FASB can act because it already has sufficient information from stakeholders. Both boards highlighted that they should continue to strive for as much convergence as possible between the respective Standards.

    Goodwill and Impairment: Both the FASB and the IASB have on their respective agendas projects covering accounting for goodwill. Those projects do not constitute a joint project. However, both boards previously decided to monitor each other’s work because of the largely converged accounting models for business combinations. The FASB’s project is in an active project phase while the IASB’s project is in a research phase.

    The initial discussion focused on the IASB’s preliminary view that an entity should be required to disclose the metrics that management (the chief operating decision maker or ‘CODM’ as described in IFRS 8) will use to monitor whether the objectives of the acquisition are met. The boards also discussed the subsequent accounting for goodwill.

    Supply chain financing: The IASB described the issues that have been submitted to the IFRS Interpretations Committee, and the tentative agenda decision it has published. The IASB also outlined a possible narrow-scope standard-setting project in early 2021. The Big 4 firms submitted an agenda request to the FASB in October 2019 for guidance on disclosure and cash flow statement presentation of supplier finance programmes involving trade payables. Having undertaken research and outreach, the FASB decided in October 2020 to add a project to its agenda to develop disclosure requirements related to supplier finance programmes involving trade payables (a narrow scope). The FASB noted that there is increased disclosure in the US as a consequence of SEC staff speeches and guidance that encourages qualitative and quantitative disclosures in MD&A.

    Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

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