IASB consults on minor IFRS improvements

The International Accounting Standards Board (IASB) has opened a three-month consultation on proposed narrow-scope amendments to four IFRS standards

This is part of the standard setter’s regular cycle of maintenance and improvements to the standards. Annual improvements are limited to changes that either clarify the wording in an International Financial Reporting Standard (IFRS) or correct relatively minor unintended consequences, oversights or conflicts between requirements in the standards, and often arise from questions submitted to the IFRS Interpretations Committee.

One of the four proposed amendments included in this year’s annual improvements consultation document relates to IFRS 1, First-time Adoption of International Financial Reporting Standards. It concerns simplifying the application of IFRS 1 by a subsidiary that becomes a first-time adopter of IFRS standards after its parent company has already adopted them.

The proposed amendment relates to the measurement of cumulative translation differences. This will require a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to IFRS.

There is also a proposed clarification of IFRS 9 Financial Instruments, covering the fees a company includes in assessing the terms of a new or modified financial liability to determine whether to derecognise a financial liability. IASB wants to clarify the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

For IFRS 16 Leases, IASB plans to amend one of the illustrative examples on lease incentives which is liable to cause some confusion. The proposed amendment would remove from example 13 the illustration of payments from the lessor relating to leasehold improvements.

The other proposed change is to IAS 41 Agriculture, where IASB is seeking to align the fair value measurement requirements in IAS 41 with those in other IFRS standards. It proposes to remove the requirement in paragraph 22 of IAS 41 for entities to exclude cashflows for taxation when measuring fair value applying IAS 41.

The comment deadline is 20 August 2019.

IASB Exposure draft, Annual Improvements to IFRS Standards 2018–2020

Pat Sweet

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