Four Standards amended under Annual Improvements to IFRS Standards 2015-2017 Cycle

On 12 December 2017, the IASB issued the following narrow-scope amendments, effective for annual reporting periods beginning on or after 1 January 2019, with earlier application permitted: 

StandardSubject of clarifying amendment
IFRS 3 Business CombinationsPreviously held interest in a joint operation is remeasured on acquisition of control
IFRS 11 Joint ArrangementsPreviously held interest in a joint operation is not remeasured on acquisition of joint control
IAS 12 Income TaxesIncome tax consequences of dividend payments are all accounted for in the same way
IAS 23 Borrowing CostsAny borrowing originally made to develop an asset is treated as part of general borrowings when the asset is ready for its intended use or sale


For more information: http://www.ifrs.org/news-and-events/2017/12/international-accounting-standards-board-issues-annual-improvements-to-ifrs-standards/

New guidance on the IFRS for SMEs Standard

On 14 December 2017, the IFRS Foundation issued non-mandatory guidance - in the form of a question-and-answer document (Q&A) as developed by the SME Implementation Group (SMEIG) – advising on the accounting for financial guarantee contracts in individual or separate financial statements of the issuer.

For more information: http://www.ifrs.org/-/media/feature/groups/smes/qas/final-q-and-a-2017-12.pdf


The following is a summarised update on the main tentative decisions taken by the IASB at its meeting on 13-14 December 2017. In addition, the Board discussed the approach to its Dynamic Risk Management project, a summary of the comments received on its discussion paper relative to Principles of Disclosure, operational issues relative to its Rate-regulated Activities project, and other implementation and maintenance projects (IAS 37, IAS 8, IAS 16, IFRS 1).

For more detailed and comprehensive information on the IASB’s discussions: http://www.ifrs.org/news-and-events/updates/iasb-updates/december-2017/

Primary Financial Statements (discussion paper or exposure draft due H1/2018)

  • A management performance measure should be identified by the reporting entity, and presented:
    • as a subtotal in the statement(s) of financial performance, if it fits in the Board's proposed structure for the statement(s) and satisfies the requirements in IAS 1 for subtotals, or
    • otherwise in a separate reconciliation with a measure that is defined in IFRS Standards
  • In relation to the statement of cash flows for non-financial entities:
    • current options in IAS 7 for the classification of interest and dividends paid and of interest and dividends received are to be replaced with a single prescribed classification for each of these items
    • (i) interest incurred on financing activities, (ii) interest paid that is capitalised as part of the cost of an asset, and (iii) dividends paid should all be classified as financing cash flows
    • the definition of ‘investing activities’ in IAS 7 is to be amended in order to clarify that interest and dividends received should be classified as investing cash flows
  • The starting point for the indirect reconciliation of cash flows from operating activities should be the subtotal ‘profit before investing, financing and income tax’.
  • The operating section of the statement of cash flows is not to be aligned with a corresponding section in the statement(s) of financial performance.

Goodwill and Impairment (discussion paper or exposure draft due H1/2018)

  • The following possible approaches are considered to be outside the scope of the project:
    • requiring disclosure of a measure of total assets and liabilities for each reportable segment
    • reviewing the drafting of the disclosure requirements in IFRS 3
  • The following approaches are not to be pursued:
    • reintroducing amortisation of goodwill (‘GW’)
    • providing relief from the mandatory annual quantitative impairment testing of GW
    • allowing GW to be tested for impairment at the entity-level or at the level of reportable segments
    • requiring disclosure of the payback period of an investment in a business combination (‘BC’)
    • changing the current requirement of using higher of value in use and fair value less costs of disposal to using a single method as the sole basis for determining the recoverable amount
  • The following ways of improving the application of IAS 36 are under consideration by the Board:
  • using the unrecognised headroom - a proxy for a measurement of internally-generated GW, i.e. the excess of the recoverable amount over the carrying amount – of a (group of) cash‑generating unit(s) (‘CGU’) as an additional input in the impairment testing of GW
  • introducing additional disclosure requirements:
    • annual information about the headroom in a CGU to which GW is allocated for impairment testing
    • a breakdown of GW by past BC, explaining why its carrying amount is recoverable
    • the reasons for paying a premium that exceeds the value of the net identifiable assets acquired in a BC, key assumptions or targets supporting the purchase consideration, and a comparison of actual performance with those assumptions or targets

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

The scope of the project includes, in addition to previous decisions[1], transactions involving transfers of one or more businesses where all of the combining parties are ultimately controlled by the same party(ies), and the transactions are (i) either preceded by an external acquisition and/or followed by an external sale of one or more of the combining parties, or (ii) conditional on a future sale such as in an initial public offering.  


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)


[1] In October 2017, the Board clarified that the scope of the BCUCC 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).