Issue 53 – IFRS News In Brief


Proposed Interpretation for uncertainty over income tax treatments open for comment until 19 January 2016

On 21 October 2015, the IFRS Interpretations Committee published a draft Interpretation of IAS 12  aimed at providing guidance on how uncertainty over income tax treatments should affect the accounting for income taxes.

For more information:

Proposed Interpretation for foreign currency transactions and advance consideration open for comment until 19 January 2016

On 21 October 2015, the IFRS Interpretations Committee published a draft Interpretation of IAS 21 aimed at providing guidance on which exchange rate should be used to report foreign currency transactions when payment is made or received in advance.

For more information:

Proposed guidance on applying the concept of materiality open for comment until 26 February 2016

On 28 October 2015, the IASB published a draft Practice Statement (i.e. non-mandatory guidance) aimed at providing explanations and examples to help management apply the concept of materiality, in particular to ensure that financial statements include all the financial information that could influence users’ investment decisions, present material information in a clear and effective way, and exclude information that is not material.

For more information:



The following is a summarised update on the main provisional decisions taken by the IASB at its meeting on 20-22 October 2015. In addition, the Board held education sessions and discussions on due processes and other topics (e.g. pollutant pricing mechanisms, activities of the Transition Resource Group for impairment of financial instruments, financial instruments with characteristics of equity, disclosure initiative, goodwill and impairment, etc.).

For more detailed and comprehensive information on the Board’s discussions:

Leases (new IFRS due early 2016)

  • A lease modification that extends the use of an underlying asset should be accounted for as a continuation of the existing lease (i.e. not as a separate new lease).
  • The discount rate for a floating interest rate lease should be updated by a lessee when the lease payments are revised due to a change in the interest rate.
  • An initial estimate of costs to be incurred by a lessee for restoration obligations associated with a lease should be accounted for in accordance with IAS 37 and included in the measurement of the right-of-use (ROU) asset; any subsequent changes in the obligation should be accounted for as an adjustment to the ROU asset’s carrying amount in accordance with IFRIC 1.
  • IFRS 3 would not require an acquirer to recognise assets or liabilities for short-term leases and leases of low-value assets in which the acquiree is the lessee.
  • For leases in the scope of IFRS 5, the only disclosures that would be required are the IFRS 5 ones.
  • The new Standard would become effective for annual periods beginning on or after 1 January 2019, with early application permitted only if the entity also applies IFRS 15 simultaneously or before.

Insurance Contracts (new IFRS due in 2016)

  • When an entity that has previously applied IFRS 9 first applies the new insurance contracts Standard (‘the new Standard’), it would be permitted to newly assess the business model for managing financial assets that are designated as related to insurance contracts (in the scope of IFRS 4 or of the new Standard).
  • Such transition relief - as well as the one allowing designation/de-designation of financial assets under the fair value option or the other comprehensive income (OCI) presentation election for investments in equity instruments - should be based on the facts and circumstances that exist on the date of initial application of the new Standard.
  • Transition reliefs would be applied retrospectively with the cumulative effect of any changes in classification and measurement of the financial assets recognised in the opening balance of retained earnings or accumulated OCI.
  • Specific disclosures would be required for the transition reliefs.
  • Restatement of comparative information would be permitted only if no hindsight is needed.
  • Most of the 2013 ED proposals related to presentation and disclosures for insurance contracts would be retained in the new Standard, with a few additions.

Annual Improvements to IFRSs 2015–2017 Cycle (exposure draft due in 2016)

IAS 23 would be amended to clarify the calculation of the capitalisation rate on general borrowings to be applied to qualifying assets; in particular, specific borrowings should be transferred to the general borrowings pool once the construction of the qualifying asset has been completed.

Remeasurement of previously held interests in joint arrangements (exposure draft due in 2016)

  • IFRS 3 would be amended to clarify that previously held interests should be remeasured when an entity obtains control over a joint operation that meets the definition of a business (i.e. such transaction represents a significant economic event).
  • IFRS 11 would be amended to clarify that previously held interests should not be remeasured when an entity that was previously a party to a joint operation obtains joint control over the joint operation that meets the definition of a business (i.e. such transaction does not represent a significant economic event).

Definition of a business (proposals to amend IFRS 3)

  • To be considered a business, an acquired set of activities and assets (a set) should include, at a minimum, an input and a substantive process that together contribute to the ability to create outputs.
  • The requirement that a set is a business if market participants can replace the missing elements and continue to produce outputs would be removed.
  • A set in which substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets would not be considered as a business.
  • The definition of outputs would be revised to focus on goods and services provided to customers.
  • Additional examples would help preparers to interpret what is considered a business



25 November 2015 ED/2015/3 - Conceptual Framework for Financial Reporting
25 November 2015 ED/2015/4 - Updating References to the Conceptual Framework (Proposed amendments to IFRS 2, IFRS 3, IFRS 4, IFRS 6, IAS 1, IAS 8, IAS 34, SIC-27 and SIC-32)
30 November 2015 Request for Views - Trustees' Review of Structure and Effectiveness: Issues for the Review
31 December 2015 Request for Views -2015 Agenda Consultation
19 January 2016 DI/2015/1 - Uncertainty over Income Tax Treatments
19 January 2016 DI/2015/2 - Foreign Currency Transactions and Advance Consideration
26 February 2016 ED/2015/8 - IFRS Practice Statement: Application of Materiality to Financial Statements


On 8 October 2015, RSM International submitted two letters of comments to the IASB respectively on:


On 28 October 2015, RSM International submitted a letter of comment to the IASB on ED/2015/6 Clarifications to IFRS 15

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