As IFRS (International Financial Reporting Standards) are evolving fast, we continue our focus on the latest IASB’s (International Accounting Standards Board) updates. Since our last blog published in July 2017, the following publications have been issued by the IASB:
Limited amendments to the accounting for financial instruments
The narrow-scope amendments to IFRS 9 Financial Instruments and to IAS 28 Investments in Associates and Joint Ventures intend to aid implementation. The amendments to the financial instruments Standard, IFRS 9, allow companies to measure particular prepayable financial assets with negative compensation at amortized cost or at fair value through other comprehensive income if a specified condition is met—instead of at fair value through profit or loss. The amendments to IAS 28 Investments in Associates and Joint Ventures clarify that companies account for long-term interests in an associate or joint venture—to which the equity method is not applied—using IFRS 9.
The final amendments also contain (in the Basis for Conclusions) a clarification regarding the accounting for a modification or exchange of a financial liability measured at amortized cost that does not result in the derecognition of the financial liability. The IASB clarifies that the amortized cost amount should be adjusted with a corresponding impact in profit or loss. Currently, most companies adjusted the effective interest rate in such cases, without any immediate effect in profit or loss.
Annual Improvements to IFRS Standards 2015–2017 Cycle
Annual improvements are part of the Board’s process for maintaining IFRS Standards and contain Interpretations that are minor or narrow in scope. Amendments made as part of this process either clarify the wording in an IFRS Standard or correct relatively minor oversights or conflicts between existing requirements of IFRS Standards.
The 2015-2017 cycle brings amendments to the following standards:
- IFRS 3 (Business Combinations) and IFRS 11 (Joint Arrangements): a company should remeasure its previously held interest in a joint operation when it obtains control of the business but not when it obtains joint control of the business.
- IAS 12 (Income Taxes): all income tax consequences of dividend payments should be accounted for in the same way.
- IAS 23 (Borrowing Costs): a company should treat as part of general borrowings any borrowing originally made to develop an asset when the asset is ready for its intended use or sale.
The other H1-2017 publications are only proposals that do not call for comments at that stage.
Update of the Board’s Work Plan
The latest workplan published on 2017 December, 18th is available here on the official IFRS website.
As regards the publications expected for H1-2018, we will pay particular attention to the final revision of the Conceptual Framework (expected March 2018) and to the discussion paper or exposure draft regarding the primary financial statements.
We will get back to these projects in our next blog. Stay tuned!