Leasing redeliberations end; controversy set to
The IASB and FASB ended their redeliberations of the leasing
project with tentative agreements on a number of issues relating to
presentation and disclosure.
However, there is likely to be dissent on a number of areas from
some members of both boards at the proposals in the revised
The revised exposure draft is due to be published late November
2012 and will have a 120-day comment period.
Boards aim to make revenue accounting less
The IASB and FASB at their July meeting reached tentative
decisions on identifying separate performance obligations,
performance obligations satisfied over time and onerous performance
obligations. They also discussed the accounting for licences but
did not reach any decisions.
Other key issues still to be redeliberated include the
"reasonably assured" constraint on recognition of
variable consideration, collectibility, time value of money,
contract combination and modification, disclosures and
For more information about the latest discussions, click here to see Straight away: Board
redeliberations to make proposed revenue standard less onerous or
SEC releases final report on IFRS work
The SEC staff has published its final report on its work plan
intended to help the SEC evaluate the implications of incorporating
IFRS into the US financial reporting system. However, the report
does not include a decision as to whether IFRS should or should not
be incorporated, or how such incorporation should occur. The IFRS
Foundation said in response that it "regrets" the report
was not accompanied by a recommended action plan.
The report does state that IFRS is generally perceived to be of
high quality, although there are areas where gaps remain (for
example, accounting for extractive industries, insurance and
rate-regulated industries) and inconsistencies in the application
of IFRS globally.
It also believes enhancements should be made to the IASB's
coordination with individual country standard setters and the
IASB's funding process.
IASB amends transition guidance for IFRS 10, 11 and
The IASB has issued an amendment to the transition requirements
in IFRS 10, 11 and 12. It clarifies that the date of initial
application is the first day of the annual period in which IFRS 10
is adopted; for example, January 1, 2013 for a calendar year entity
that adopts IFRS 10 in 2013. Entities adopting IFRS 10 should
assess control at the date of initial application; the treatment of
comparative figures depends on this assessment.
A key clarification in the amendment is that adjustments to
previous accounting are not required for investees that are
consolidated under both IFRS 10 and the previous guidance in IAS
27/SIC 12 as at the date of initial application, or investees that
will no longer be consolidated under both sets of guidance as at
the date of initial application.
Comparative disclosures will be required for IFRS 12 disclosures
in relation to subsidiaries, associates and joint arrangements.
However, this is limited only to the period that immediately
precedes the first annual period of IFRS 12 application.
Comparative disclosures are not required for interests in
unconsolidated structured entities. The amendment is effective for
annual periods beginning on or after January 1, 2013, consistent
with IFRS 10, 11 and 12. It will affect all reporting entities
(investors) that need to adopt IFRS 10, 11 or 12.
IFRS preparers should start considering the transition
amendment, and how they can use the exemptions granted to minimize
implementation costs of IFRS 10, 11 and 12. IFRS preparers should
also start collating the comparative disclosure information
required by the amendment.
IFRS IC discusses accounting for rate-regulated
The IFRS Interpretations Committee (IC) discussed in its May
meeting issues around rate-regulated activities, specifically:
whether customers within a regulatory jurisdiction can be
combined into a single unit of account and, if so
whether it would be appropriate to recognize assets and
liabilities arising out of regulation.
The IC staff recommended that the IASB should add this to its
agenda, given that the IASB has listed rate-regulated activities as
a potential project in its Agenda Consultation. However, there was
some concern that, if the IASB does not address it, the issues will
resurface at the IC. So the IC has deferred its decision until it
is clear whether the IASB will address the issue.
Entities that are subject to rate regulation might be affected
by the ongoing discussions. Management should continue to monitor
developments and engage with the IASB and IC on this topic.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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