The following topics were discussed.
Financial Instruments with Characteristics of Equity (FICE)
The IASB decided that no changes are made to the presentation requirements in IAS 32 for equity instruments or to specifically address financial liabilities containing contractual obligations to pay amounts based on the entity’s performance or changes in the entity’s net assets. However, the IASB decided that entities with these types of financial liabilities measured at fair value through profit or loss be required to disclose the total gains or losses recognised in profit or loss in each reporting period that arise from remeasuring such financial liabilities.
Work Plan
In the meeting, the staff set out its expectations that the IASB will conclude its post-implementation review (PIR) of the classification and measurement requirements in IFRS 9 with the publication of its Feedback Statement in December 2022. The staff also expects that the IASB will conclude its Disclosure Initiative—Targeted-Standards Level Review of Disclosures with the publication of its Project Summary in Q1 2023. In addition, the staff expects that the IASB will issue final amendments for International Tax Reform—Pillar Two Model Rules and Supplier Finance Arrangements in Q2 2023. No decisions were made.
Rate-regulated Activities
The IASB decided that an entity does not recognise inflation adjustments to the regulatory capital base as a regulatory asset. The IASB also decided that an entity recognises a regulatory asset (regulatory liability) relating to an allowable expense or performance incentive included in its regulatory capital base when the entity has an enforceable present right (obligation) to add (deduct) the allowable expense or performance incentive to (from) future regulated rates and there is a direct relationship between the entity’s regulatory capital base and its property, plant and equipment. An entity does not recognise a regulatory asset (regulatory liability) relating to an allowable expense or performance incentive included in its regulatory capital base when there is no direct relationship between the entity’s regulatory capital base and its property, plant and equipment.
Maintenance and consistent application
The IASB discussed matters raised in the feedback on the Exposure Draft (ED) Lack of Exchangeability. The IASB decided to proceed with its proposals in the ED with some changes. In particular, the IASB agreed to clarify for factors to consider when assessing exchangeability that an entity does not consider ‘unofficial markets’ in assessing exchangeability but, when exchangeability is lacking, it can use exchange rates from these markets to estimate the spot exchange rate and that all factors are to be considered holistically. For determining the spot exchange rate—the IASB decided to amend proposed paragraph 19A to state that an entity’s objective in estimating the spot exchange rate is to reflect at the measurement date the rate at which an orderly exchange transaction would take place between market participants under prevailing economic conditions.
Equity Method
In this session, the IASB discussed applying the preferred approach after purchase of an additional interest in an associate and two application questions. The IASB decided to proceed with the view that an investor is measuring a single investment in the associate rather than layers of the investment in the associate. The IASB also decided that an investor that has reduced its interest in an associate to zero does not recognise the unrecognised losses from the cost of the additional interest in the associate. Lastly, the IASB decided that an investor recognises its share of comprehensive income until its interest in the associate is reduced to zero.
Goodwill and Impairment
The IASB agreed to move the project from the research programme to the standard-setting work plan. The IASB decided to maintain its preliminary view and therefore to make no changes to the recognition criteria in IFRS 3 for identifiable intangible assets acquired in a business combination. The IASB decided against proceeding with its preliminary view to require an entity to present the amount of total equity excluding goodwill as a separate line item on its statement of financial position. The IASB decided not to consider additional topics suggested by respondents in this project, except for two topics related to possible improvements to the effectiveness of the impairment test of cash-generating units containing goodwill.
Digital Financial Reporting Strategy
The IASB discussed the strategic framework that is intended to provide strategic direction and boundaries to help identify possible digital financial reporting activities that the IASB could undertake and provide consistent language for communicating the digital financial reporting strategy. The IASB did not make any decisions.
Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures
The IASB confirmed its proposals in the draft Standard that the application of the disclosure requirements in IFRS 8, IFRS 17 and IAS 33 remain applicable for a subsidiary applying the Standard, and that an entity is permitted to apply reduced disclosure requirements for IAS 34 in the Standard. The IASB also decided to retain its proposal that a subsidiary applying the new Standard be required to disclose that it has applied the Standard in the same note as its explicit and unreserved statement of compliance with IFRS Accounting Standards.
An analysis of how the IASB’s work plan has changed as a result of the meeting is available here.
Please click to access the detailed notes taken by Deloitte observers for the entire meeting.