Canada: Cannon Street Press

Last Updated: September 5 2012
Article by PWCs Financial Reporting

Leasing redeliberations end; controversy set to continue

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 exposure draft.

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 onerous

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 transition.

For more information about the latest discussions, click here to see Straight away: Board redeliberations to make proposed revenue standard less onerous or visit

SEC releases final report on IFRS work plan

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 12

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 activities

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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