For example, suppose an employee is granted 100 share options, which will vest in instalments of 25 share options at the end of each year over the next four years. To apply the requirements of the IFRS, the entity should treat each instalment as a separate share option grant, because each instalment has a different vesting period, and hence the fair value of each instalment will differ (because the length of the vesting period affects, for example, the likely timing of cash flows arising from the exercise of the options).

There may be opportunities for aggressive earnings management by companies. For example, management may wish to set an advantageous starting figure for earnings under IFRSs in the year of transition, conscious of the implications for future years. This could involve setting the figure as low as possible in the year of such a major change, while attention is focussed on the changeover itself, so giving leeway for flattering increases in earnings in future years.

AGENDA OF THE IASB MEETING 21-24 SEPTEMBER 2004

Tuesday 21 September

• Morning: Educational session on IAS 12 Income Taxes - 'backwards tracing'
• Morning: Educational session on IFRIC Concessions
• Afternoon: Financial Instruments: the Fair Value Option – Consideration of comments on the exposure draft
• Afternoon: IFRS 3 - Combinations involving Mutual Entities and By Contract – Consideration of comments on the exposure draft
• Afternoon: IFRIC Update – Issues arising from the IFRIC meetings held in July and September 2004.

Wednesday 22 September

• Morning: Educational session on Insurance
• Afternoon: Accounting Concepts – initial consideration of this topic
• Afternoon: Business Combinations Phase II – Issues related to the proposed fair value hierarchy and combinations involving mutual entities

Thursday 23 September

• Morning: Financial Reporting by Small and Medium-sized Entities
• Morning: Share-based Payment – Update on the FASB's re-deliberations of proposals contained in the FASB exposure draft on share-based payment, issued in March 2004.
• Afternoon: Convergence: Discontinued Operations (IFRS 5)
• Afternoon: Convergence: Employee Benefits (IAS 19)
• Afternoon: Convergence: Income Taxes (IAS 12)

Friday 24 September

• Morning: Proposed Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
• Morning: ED 6 Exploration for and Evaluation of Mineral Resources – Discussion of (a) the level at which impairment of exploration and evaluation assets should be assessed and whether ED 6's 'special cash-generating unit' should be retained and (b) any issues arising from Board members' review of a pre-ballot draft of the IFRS.
• Morning: IASB Due Process – The Board will consider a staff analysis of comments received on the IASB's proposed revised due process and procedures.

MEETINGS WITH STANDARD SETTERS 27-29 SEPTEMBER 2004

Monday 27 September 2004

• Morning: Meeting with national standard-setters
• Afternoon: Meeting with world standard-setters

• All day: Meeting with world standard-setters

• Morning: Meeting with national standard-setters

AGENDA OF THE IFRIC MEETING 2-3 SEPTEMBER 2004

• Service Concession Arrangements
• D3 Determining Whether an Arrangement Contains a Lease – Continued analysis of comment letters on D3
• D1 Emission Rights – Discussion of how the IASB's expected amendments to IAS 20 Accounting for Government Grants and Disclosure of Government Assistance affect the consensus in D1 Emission Rights.
• Waste Electronic and Electrical Equipment
• Interests in Decommissioning, Restoration and Environmental Rehabilitation Funds

September

22 to 24

27

London

Wed-Fri 1 to 3

Brussels

October

18 to 22

Norwalk

Wed-Fri 6 to 8

Brussels

November

15 to 17

18/19

London

Wed-Fri 3 to 5

Brussels

December

15 to 17

London

Tue-Thu 7 to 9

Brussels

January

17 to 21

London

Wed-Fri 12 to 14

Brussels

February

14 to 18

10/11

London

Mon-Wed 7 to 9

Brussels

March

14 to 18

London

Wed-Fri 9 to 11

Brussels

April

18 to 22

London

Wed-Fri 13 to 15

Brussels

May

16 to 20

London

Wed-Fri 11 to 13

Brussels

June

20 to 24

27/28

London

Wed-Fri 15 to 17

Brussels

July

18 to 22

London

Mon-Wed 11 to 13

Brussels

August

September

19 to 23

26/27

London

Wed-Fri 7 to 9

Brussels

October

17 to 21

Norwalk

Wed-Fri 5 to 7

Brussels

November

14 to 18

10/11

London

Tue-Thu 8 to 10

Brussels

December

12 to 16

London

Wed-Fri 7 to 9

Brussels

• The equity interests of noncontrolling shareholders in subsidiaries would be presented in equity (IAS 27 already requires this).
• Net income or loss and each component of other comprehensive income would be attributed to the controlling and noncontrolling interests based on relative ownership interests unless the controlling and noncontrolling interests have entered into an arrangement that requires a different attribution.
• Losses attributable to the noncontrolling interest in excess of the noncontrolling interest in the equity capital of the subsidiary would be attributed to the noncontrolling interest rather than to the controlling interest.
• Changes in ownership interests in the subsidiary after control is obtained that do not result in a loss of control of the subsidiary would be accounted for as capital transactions. The difference between the amount by which the noncontrolling interest is adjusted and the consideration paid or received, if any, would be recognised as additional paid-in capital (no gain or loss). Thus, the acquisition of some or all of the noncontrolling interests in a subsidiary would not be accounted for by the purchase method as in current practice.
• At the time the parent obtains control of the subsidiary, the assets (including goodwill) and liabilities of the subsidiary would be recorded at their fair values.
• On the date control of a subsidiary is lost, any retained noncontrolling investment in a former subsidiary would be remeasured to its fair value and a gain or loss, if any, would be recognized in consolidated income.