IFRS 9 amended for the classification of particular prepayable financial assets

On 12 October 2017, the IASB issued an amendment - effective from 1 January 2019, with early application permitted - to the new financial instruments Standard allowing particular prepayable financial assets with so-called negative compensation to be measured at amortised cost or at fair value through other comprehensive income (instead of at fair value through profit or loss) if a specified condition is met. In addition, the amended Basis for Conclusions clarifies the requirements in IFRS 9 for adjusting the amortised cost of a financial liability when a modification or exchange does not result in its derecognition (as opposed to adjusting the effective interest rate).

For more information:

IAS 28 amended for the accounting for ‘long-term interests’

On 12 October 2017, the IASB issued an amendment to IAS 28 - effective from 1 January 2019, with early application permitted – clarifying that long-term interests in an associate or joint venture that, in substance, form part of the entity’s net investment but to which the equity method is not applied are accounted for using IFRS 9. In addition, the Board issued an example that illustrates the application of the requirements in IFRS 9 and IAS 28 to such long-term interests.

For more information:

Case study report on disclosure improvements

On 5 October 2017, the IFRS Foundation published a report containing six case studies that show how companies from varied industries in different parts of the world have improved communication in their IFRS financial statements, with the aim of illustrating how to make disclosures more meaningful for better communication in financial reporting, and inspiring others to do so.

For more information:


The following is a summarised update on the main tentative decisions taken by the IASB at its meeting on 24-25 October 2017. In addition, the Board discussed Goodwill and Impairment, Rate-regulated Activities, and due process steps on its projects to amend IAS 8 for accounting policy changes (exposure draft expected Q1/2018) and to develop the IFRS Taxonomy Update for IFRS 17 Insurance Contracts (expected December 2017).

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

Conceptual Framework (final due Q1/2018)

In relation to the concepts supporting the liability definition, the drafting is to be improved to clarify in particular the following[i]:

  • Each of the three criteria listed in the introduction to the ‘definition of a liability’ section must be satisfied to meet the definition of a liability (i.e. the entity must have an obligation, the obligation must be to transfer an economic resource, and the obligation must be a present obligation that exists as a result of past events).
  • An entity does not have a present obligation to transfer an economic resource if it has not yet received economic benefits, or taken an action, that will or may require it to transfer that resource—even if it already has no practical ability to avoid receiving those benefits or taking that action in the future. Before receiving those benefits or taking that action, the entity may have an executory contract.

Definition of a Business (amendments to IFRS 3 due H1/2018)

In addition to confirming its previous tentative decisions made in April and June 2017 (see our respective newsletters and, the Board tentatively decided the following:

  • To clarify that:
    • an entity is permitted, but not required, to carry out the ‘screening test’
    • if the test identifies an asset purchase, no further assessment is needed (but not prohibited)
    • if the test does not identify an asset purchase, the entity must carry out a further assessment; that same assessment must be carried out if the entity elected not to apply the screening test.
    • gross assets considered in the screening test exclude cash and cash equivalents acquired.
  • Not to retain Illustrative Example J ‘Acquisition of oil and gas operations’ proposed in the exposure draft that illustrates whether an acquired set of assets is a business when no workforce is acquired.
  • That the forthcoming amendments to IFRS 3 should apply to business combinations with an acquisition date that is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020, with earlier application permitted.

Business Combinations under Common Control (discussion paper due H2/2018)

The scope of the project includes transactions under common control in which a reporting entity obtains control of one or more businesses, regardless of whether IFRS 3 would identify the reporting entity as the acquirer (eg a Newco in a group restructuring).


15 January 2018ED/2017/5 - Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8)
15 January 2018ED/2017/6 - Definition of Material (Proposed amendments to IAS 1 and IAS 8)



On 16 October 2017, RSM International submitted a letter of comment to the IASB on its Exposure Draft ED/2017/4 Property, Plant and Equipment— Proceeds before Intended Use (Proposed amendments to IAS 16)


[i] This is to address concerns raised by reviewers of the pre-ballot draft as the current wording would lead to a conclusion that an entity has a present obligation for all future costs (into perpetuity) that it will have no practical ability to avoid as a going concern (e.g. payments required to maintain future production capacity such as salaries or repairs and maintenance, future losses, future years’ taxes and levies, etc.). An entity would be viewed as having a present obligation for all future costs that it has no practical ability to avoid—even costs that cannot yet be attributed to past events. Such a conclusion would be inconsistent with the Board’s previous decisions and with the fundamental concept that a liability must exist as a result of past events.