Initial consideration: IFRS 3 Business Combinations—Payment Contingent on Continued Employment during Handover Periods: The IFRS IC received a submission about how an entity accounts for payments (as part of the acquisition agreement) to the sellers of an acquired business. The payments and continued employment aim to ensure the appropriate transfer of knowledge from the sellers to the new management team. The sellers are remunerated for their services at a level comparable to other management executives, but some of the consideration for the shares is withheld until the handover is complete and is forfeited if the individual leaves employment before completion of the handover. The sellers are also entitled to additional payments that are contingent upon meeting a specified level of financial performance and the continued employment during a limited period. The submitter asked whether the entity may split the accounting for the additional payments between remuneration for post-combination services, and additional consideration for the business combination. The staff outreach identified no diversity in accounting treatment. It appears that the accounting described in the agenda decision published in January 2013 is the treatment enforced by the auditors and regulators, although some respondents said some stakeholders disagreed with the outcome because it does not always reflect the economic substance of the arrangement and could even result in recognising a gain from a bargain purchase. The IFRS IC decided to publish a tentative agenda decision stating that no further action is required.

Comment letters on tentative agenda decision: IFRS 17 Insurance Contracts— Premium Receivable from an Intermediary: In its March 2023 meeting, the IFRS IC discussed a submission about how an issuer accounts for premiums receivable from an intermediary. The submission asked, when the policyholder pays the premiums to the intermediary, whether the insurer is required to recognise the premiums receivable from an intermediary as a separate financial asset under IFRS 9 and remove these premiums from the measurement of the group of insurance contracts under IFRS 17. The IFRS IC concluded there is an accounting policy choice that premiums receivables remain in the measurement of a group of insurance contracts under IFRS 17 until recovered or settled in cash (View 1) or it is removed from the measurement of the group of insurance contracts and is recognised as a separate financial asset under IFRS 9 (View 2). 16 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision and agreed not recommending the IASB to consider adding a standard-setting project to the work plan. The IFRS IC decided to finalise the agenda decision, with some editorial changes.

Comment letters on tentative agenda decision: Homes and Home Loans Provided to Employees: In its March 2023 meeting, the IFRS IC discussed a submission about how an entity accounts for homes and loans to buy homes provided to its employees. Two fact patterns have been submitted: employee home ownership plans and employee home loans. The IFRS IC concluded that such fact patterns may not be widespread, and the amount involved may not be material. The IFRS IC therefore decided not to add this item to the standard-setting work plan and instead to publish an agenda decision. Seven comment letters were received and most of the respondents agreed with the IFRS IC’s conclusion not to add a standard-setting project to the work plan. The IFRS IC decided to finalise the agenda decision, with some editorial changes.

Comment letters on tentative agenda decision: IFRS 9 Financial Instruments—Guarantee over a Derivative Contract: In its March 2023 meeting, the IFRS IC discussed a submission on how to assess whether an issuer accounts for a guarantee written over a derivative contract as a financial guarantee contract or a derivative. The IFRS IC concluded that such a matter is not widespread, and the effect is not material and thus the IFRS IC decided not to add a standard-setting project to the work plan. Six comment letters were received, and all respondents agreed with the IFRS IC’s decision. The IFRS IC decided to finalise the agenda decision.

Work in progress: There was no new matter that has not yet been presented to the IFRS IC.

More In­for­ma­tion

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