IFRS News

PUBLICATIONS AND ANNOUNCEMENTS

IFRS INTERPRETATIONS COMMITTEE LATEST DECISIONS SUMMARY

Items on the current agenda

Committee’s tentative agenda decisions

• Sale of output by a joint operator (IFRS 11 Joint Arrangements):

• Physical settlement of contracts to buy or sell a non-financial item (IFRS 9 Financial Instruments):

• Over time transfer of constructed good (IAS 23 Borrowing Costs):

• Customer’s right to access the supplier’s software hosted on the cloud (IAS 38 Intangible Assets):

• A contract that conveys to the customer only the right to receive access to the supplier’s application software in the future is a service contract.
• A software lease is a licensing agreement within the scope of IAS 38, and not of IFRS 16.
• if the customer has the right to use software, it recognises that right-of-use as an intangible asset at the contract commencement date, and the intangible asset is measured initially at cost as required by IAS 38.
• Credit enhancement in the measurement of expected credit losses (IFRS 9 Financial Instruments):

• Curing of a credit-impaired financial asset (IFRS 9 Financial Instruments):

INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) LATEST DECISIONS SUMMARY

IFRS 17 Insurance Contracts

Primary Financial Statements

• Not to require presentation of EBITDA in the statement(s) of financial performance, nor its disclosure in the notes. However, the Board asked staff to propose a description or definition of EBITDA based on operating profit before depreciation and amortization.

Implementation

• IAS 16 Property, Plant and Equipment:

• Cryptocurrencies

• IAS 37 Provisions, Contingent Liabilities and Contingent Assets:

Management Commentary

Exposure Draft, IAS 1 Presentation of Financial Statements

• A liability should be classified as current if an entity does not have a right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period.
• To add a reminder that an entity’s right to defer settlement must have substance.
• To clarify that an entity’s right to defer settlement is not affected by:
Management’s expectations about whether the entity will exercise the right; and
Settlement of a liability between the end of the reporting period and the date the financial statements are authorized for issue.

Updating a Reference to the Conceptual Framework, IFRS 3 Business Combinations

Rate-regulated Activities

• Interactions between the model and IFRS Standards:
The measurement requirements of IAS 36 Impairment of Assets and IFRS 5 Non-current Assets Held for Sales and Discontinued Operations should not be applied to regulatory assets and regulatory liabilities.
The model should include application guidance, but not an explicit statement, about its interaction with IAS 12 Income Taxes.
The model should not carry forward the related presentation and disclosure requirement in IFRS 14 Regulatory Deferral Accounts.
Any requirements and application guidance on interactions between the model and other IFRS should be included in a future Standard on rate-regulated activities, rather than adding to those other Standards.
• Presentation and disclosure decisions:
An entity should present regulatory assets and liabilities as separate line items, apply IAS 1, classifying as current or non-current, and offset regulatory assets and liabilities only when they are expected to lead to adjustments to the same future rate(s) charged to customers.
An entity should present regulatory income and expenses in profit or loss rather than in other comprehensive income, netted as separate line items, and immediately below the revenue line item(s) required by IAS 1.
An entity would not be prohibited from disaggregating the required line items and presenting additional line items or subtotals in the primary financial statements when it is relevant to an understanding of the entity’s financial position or performance as required by IAS 1.
• Disclosure objectives and requirements and illustrative disclosures
The overall disclosure objective for defined rate regulation should be focused on the effects that the transactions or other events that give rise to regulatory timing differences have on an entity’s financial performance and financial position.
The specific disclosure objectives should focus on information to help users of financial statements:
To understand the effects of regulatory timing differences on the entity’s financial performance by distinguishing between: (1) fluctuations in revenue and expenses compensated for through the rate-adjustment mechanism; and (2) fluctuations in revenue and expenses for which there is no such compensation;
To understand and assess the amount, timing and uncertainty of (prospects for) future cash flows that will result from the entity’s regulatory assets and regulatory liabilities; and
To understand how the entity’s financial position was affected during the period by transactions or other events that caused changes in the carrying amounts of regulatory assets and regulatory liabilities.
An entity should disclose
A breakdown of the regulatory income or expense line item in profit or loss into defined components,
A maturity analysis of the carrying amounts of regulatory assets and liabilities at the end of the period,
The discount rate(s) used to discount the estimated cash flows reflected in the carrying amounts of regulatory assets and liabilities at the end of the period, and
A reconciliation of the carrying amount of regulatory assets and liabilities from the beginning to the end of the period.
The entity should assess whether the information provided through the disclosure requirements is sufficient to meet the overall disclosure objective.