Documents issued during the quarter ended 30 June 2025 

During the quarter ended 30 June 2025, the IASB issued the final standards listed below:

Document: Practice statement

Date issued: 23 June

Title: Management commentary

Effective date: 23 June 2025

Document: Request for information

Date issued: 17 June

Title: Post-implementation Review of IFRS 16 Leases

Effective date: Open for comment until 15 October

During the quarter ended 30 June 2025, on 14 April, the IFRS Interpretations Committee (IFRIC) issued the final agenda decisions listed below, which were described in the April 2025 RSM IFRS Newsletter available here:

IASB Meetings

The following is a summarized update of key matters arising from the discussions and decisions taken by the IASB at its meetings on the following dates: 

• 8-9 April 2025
• 19-22 May 2025
• 16-18 June 2025

The full update, as published by the IASB, can be found here.

Research and standard setting

Post-implementation review of IFRS 16 Leases

After approving the publication of the request for information for public comment; and setting a 120-day comment period, the IASB published the request for information on 17 June 2025.

Business combinations—disclosures, goodwill and impairment

The IASB tentatively decided the following regarding its proposals to add, amend and remove requirements in IFRS 3 Business Combinations.

For the proposals relating to the contribution of an acquired business, the IASB tentatively decided:

a)    to withdraw the proposal to specify that combined entity information is an accounting policy;
b)    to add a requirement for an entity to disclose the basis on which it has prepared combined entity information;
c)    to retain the proposal to explain the purpose of the requirement for combined entity information;
d)    to retain the proposal to specify that the amount of profit or loss is the amount of operating profit or loss as defined in IFRS 18 Presentation and Disclosure in Financial Statements, and
e)    to retain the proposal not to provide application guidance on how to prepare combined entity information for the contribution of an acquired business.

The IASB also tentatively decided to retain the proposals:

a)    to replace the requirement to disclose the primary reasons for a business combination with a requirement to disclose the strategic rationale for a business combination; and
b)    to improve the quality of information an entity discloses about pension and financing liabilities assumed in a business combination; and
c)    to delete the disclosure requirements in IFRS 3 related to acquired receivable, subsequent deferred tax adjustments and subsequent material gains or losses.

Rate-regulated activities

The IASB tentatively decided that the prospective Accounting Standard would:

a)    include no requirements for a minimum interest rate;
b)    include a requirement for an entity to disclose quantitative information, using time bands, about when it expects to recover regulatory assets and fulfil regulatory liabilities. The entity would be required to disaggregate the quantitative information between regulatory assets and regulatory liabilities for which the regulatory agreement provides and not or charges and not a regulatory interest rate;
c)    include a requirement for an entity to provide the quantitative information described in (b) using:
i.    undiscounted cash flows; and
ii.    reasonable and supportable assumptions about the timing of future cash flows that are consistent between periods.
d)    clarify that assumptions about market variables used in the estimates of future cash flows:
i.    should be consistent with observable market prices at the measurement date; and
ii.    should not take into account the effects of possible future changes in market variables.
e)    include transitional requirements for interim financial statements.
f)    include no requirement for an entity to disclose whether it receives regulatory returns on an asset not yet available for use.

Equity method

The IASB decided:

a)    to keep the project’s objectives unchanged;
b)    to consider adding application questions to the project’s scope only if they can be resolved in a timely manner and would not result in re-exposure of the proposals in the Exposure Draft;
c)    to proceed with redeliberating the proposals in the Exposure Draft; and
d)    not to describe a project on a fundamental review of the equity method in the request for information on the IASB’s fourth agenda consultation.

Amortised cost measurement

The IASB decided to move the project from the research program to the standard-setting work plan.
Intangible assets

The IASB decided the objectives of the project are:

a)    to improve the usefulness of information provided in the financial statements; and
b)    to update IAS 38 Intangible Assets, in particular to make it more suitable for newer types of intangible items and new ways of using them.

The IASB also decided the prioritization of broad groups of topics in three steps from assessing user needs to accounting and disclosure requirements.

The IASB also tentatively decided:

a)    to explore improving measurement of intangibles;
b)    to consider whether to explore reporting a broader range of intangible items in the financial statements; and
c)    not to explore:
i.    accounting for intangible assets covered by other IFRS Accounting Standards; or
ii.    consistency of labels for intangible items.

Financial instruments with Characteristics of Equity

The IASB made several tentative decisions relating to the proposed amendments to:

a)    the presentation requirements of equity instruments in IFRS 18 Presentation and Disclosure in Financial Statements, with:
i.    a disaggregated presentation in the statement of profit or loss between ordinary shareholders, participating rights holders and non-participating rights holders, accompanied by a definition for each category;
ii.    the replacement of the proposed presentation requirements related to the statement of financial position and the statement of changes in equity by disclosure requirements added to IFRS 7 and IFRS 18.
b)    the disclosure requirements in IFRS 7 Financial Instruments: Disclosures with several disclosure requirements set out in the Exposure Draft being retained, relating to:
i.    the objective, scope and general principles;
ii.    the nature of claims against an entity;
iii.    terms and conditions; and
iv.    maximum dilution of ordinary shares.
c)    Disclosure requirements for eligible subsidiaries in IFRS 19 Subsidiaries without Public Accountability: Disclosures, related to:
i.    the nature of claims against a subsidiary and the terms and conditions, compound financial instruments being within the scope of the proposed disclosure requirements related to terms and conditions;
ii.    the presentation of equity instruments, with different requirements for equity instruments with participating rights and non-participating rights.

As for the timing for issuing the proposed amendments, the IASB tentatively decided not to expedite the issuance of those related to presentation and disclosure ahead of those related to classification and other disclosures.
 

Statement of cash flows and related matters

The IASB decided the scope of the project:

In the project:

• Disaggregation of cash flow information
• Reporting of information about non-cash transactions
• Transparency of information communicated about cash flow measures not specified in IFRS Accounting Standards
• Consistent application of requirements to classify cash flows as operating, investing or financing
• Consistent application of the definition of ‘cash equivalents’

Not in the project:

• Redefine operating, investing and financing categories
• Align the classification of cash flows in the statement of cash flows with the classification in the statement of profit or loss set out in IFRS 18
• Define ‘growth and maintenance capital expenditures’
• Define ‘free cash flows’ or ‘net debt’
• Expand the definition of ‘cash and cash equivalents’
• Develop new requirements for cash flow information by segment
• Develop specific requirements for offsetting cash flows
• Develop alternatives to a statement of cash flows
• Amend the requirement to present operating activities using the direct or the indirect method

As for the statement of cash flows for financial institutions, the IASB decided it will approach it by considering:

a)    improvements to the statement of cash flows generally before deciding how any changes might apply to the requirements for financial institutions;
b)    exemptions for financial institutions from some or all of the requirements for presenting a statement of cash flows; and
c)    any presentation or supplementary disclosure requirements specific to financial institutions that might enhance the usefulness of information about cash flows for such entities.

Maintenance and consistent application

Translation to a Hyperinflationary Presentation Currency (IAS 21)

Based on its discussion on stakeholder feedback on its Exposure Draft Translation to a Hyperinflationary Presentation Currency, the IASB tentatively decided:

a)    not to include translation to a hyperinflationary presentation currency in its broader considerations around a possible project on hyperinflation;
b)    a proposed translation method, including the translation of comparative amounts;
c)    different disclosures to require;
d)    disclosure and transition requirements for a subsidiary that applies IFRS 19;
e)    a first application for annual reporting periods beginning on or after 1 January 2027, early application being permitted;
f)    to issue the amendments in the fourth quarter of 2025 without re-exposure.

Climate-related and Other Uncertainties in the Financial Statements 

Regarding the proposals set out in the Exposure Draft Climate-related and Other Uncertainties in the Financial Statements, the IASB tentatively decided:

a)    to proceed with issuing examples 1–4 and 6–8, with changes to address specific concerns raised by respondents;
b)    to issue those examples as illustrative examples accompanying IFRS Accounting Standards;
c)    not to proceed with issuing Example 5;
d)    to retain the project’s objective, which covers climate-related and other uncertainties, and develop no additional examples;
e)    to explain that the illustrative examples would not have an effective date but the IASB expects an entity to be entitled to sufficient time to implement any changes to the information disclosed in its financial statements as a result of the issuance of the illustrative examples;
f)    to discuss additional work to facilitate connected financial reporting.

The issuance of the illustrative examples is expected in October 2025 without re-exposure, but with two members who might dissent.

Agenda decisions of the IFRS Interpretations Committee

The IASB considered the following agenda decisions of the IFRS-IC, without any member objecting to the decision:

a)    Guarantees Issued on Obligations of Other Entities.
b)    Recognition of Revenue from Tuition Fees (IFRS 15 Revenue from Contracts with Customers).
c)    Recognition of Intangible Assets Resulting from Climate-related Expenditure (IAS 38 Intangible Assets).

Those decisions were published in April 2025 in an addendum to IFRIC Update March 2025 and described in the April 2025 RSM IFRS Newsletter available here.

As for the 10 agenda decisions relating to the update of references to IAS 1, which will be superseded by IFRS 18, the IASB decided to ask the Committee:

a)    to consider how an entity would apply the requirements in IFRS 18 to the fact pattern described in Agenda Decision Supply Chain Financing Arrangements—Reverse Factoring; and
b)    to consider replacing only the references to IAS 1 in the nine other agenda decisions with references to the new or amended requirements in IFRS 18.

IFRS Interpretations Committee (IFRIC) Latest decisions summary

The following is a summary of key matters arising from the discussions and decisions taken by the IFRIC at its meeting on 25 June 2025. The June IFRIC Update is available here.

Committee’s tentative agenda decisions

The following tentative agenda decisions are open for comment until 6 October 2025.

Determining and Accounting for Transaction Costs (IFRS 9 Financial Instruments)

The Committee received a request about how an entity determines whether costs that are directly attributable to the origination or issuance of a financial instrument but are incurred before entering into the contractual arrangement are ‘incremental’ and, therefore, meet the definition of transaction costs in Appendix A of IFRS 9. The request asked, in particular, how to account for such costs when they are incurred before the financial year-end and the contractual arrangement entered into after the financial year-end.

Evidence gathered by the Committee indicates no diversity in applying IFRS 9 on this matter. Feedback suggests that:

a)    costs that are directly attributable to the origination or issuance of a financial instrument but are incurred before entering into the contractual arrangement, can be incremental and, accordingly, can meet the definition of transaction costs in IFRS 9; and
b)    transaction costs are recognized in the statement of financial position, often as prepayments or other assets.

Based on its findings, the Committee concluded that the matter described in the request does not have widespread effect and [decided] not to add a standard-setting project to the work plan.

Embedded Prepayment Option (IFRS 9 Financial Instruments)

The Committee received a request about the application of the requirements in paragraph B4.3.5 (e) (ii) of IFRS 9 to determine whether to separate an embedded prepayment option in a loan contract, and more specifically whether ‘the entity’ in this paragraph should be read to refer to ‘the lender’ or ‘the reporting entity’, that is, the borrower.

Evidence gathered by the Committee to date indicates no diversity in practice with regards to interpreting the term ‘the entity’ in that paragraph. Feedback suggests that stakeholders read the requirements as referring to the lender.

Based on its findings, the Committee concluded that the matter described in the request does not have widespread effect and [decided] not to add a standard-setting project to the work plan.

Updates to Committee agenda decisions for IFRS 18

The IASB asked the Committee to review the following nine agenda decisions that refer to general requirements about presentation, materiality and aggregation of information in the financial statements to consider replacing references to IAS 1 Presentation of Financial Statements with references to the new or amended requirements in IFRS 18 Presentation and Disclosure in Financial Statements:

• Disclosure of Revenues and Expenses for Reportable Segments (IFRS 8 Operating Segments);
• Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows);
• Subsequent Expenditure on Biological Assets (IAS 41 Agriculture);
• Disclosure of Changes in Liabilities Arising from Financing Activities (IAS 7 Statement of Cash Flows);
• Physical Settlement of Contracts to Buy or Sell a Non-financial Item (IFRS 9 Financial Instruments);
• Income and expenses arising on financial instruments with a negative yield—presentation in the statement of comprehensive income (IAS 39 Financial Instruments: Recognition and Measurement and IAS 1 Presentation of Financial Statements);
• Presentation of payments on non-income taxes (IAS 1 Presentation of Financial Statements and IAS 12 Income Taxes);
• Classification of tonnage taxes (IAS 12 Income Taxes); and
• Normal operating cycle (IAS 1 Presentation of Financial Statements).

The IASB also asked the Committee to consider explaining how an entity applies the requirements in IFRS 18 to the fact pattern in the Agenda Decision Supply Chain Financing Arrangements—Reverse Factoring.

The IFRIC displays in the update, with mark-up changes, how it proposes to update the decisions accordingly.

Agenda decisions for the IASB's consideration

The Committee considered feedback on the tentative agenda decision published in the November 2024 IFRIC Update about applying IAS 29 Financial Reporting in Hyperinflationary Economies to identify when an economy becomes hyperinflationary. The Committee concluded its discussions on that agenda decision. The conclusion was that the matter described in the submission does not have widespread effect. Consequently, the Committee [decided] not to add a standard-setting project to the work plan. The IASB will consider this decision at its July 2025 meeting.

Other matters

When discussing the IASB’s Business Combinations—Disclosures, Goodwill and Impairment project, the IFRIC provided views on a possible rebuttable presumption approach to identify business combinations and the proposed operating profit threshold.

QUERY OF THE MONTH 

Classification of liabilities as current or non-current and covenants

An entity classifies a long-term loan as non-current. The loan is subject to covenants, that shall be satisfied at the end of the reporting period. A breach of covenants entitles the lender to request payment anytime after the breach is notified, which notification shall be issued within 6 months after the end of the reporting period.

At year-end, the entity does not comply with the covenant condition and obtains a waiver from the lender after the reporting period and before the financial statements are authorized for issue.

Question

How shall the loan be classified in the statement of financial position at the end of the reporting period?

The loan shall be classified as current according to paragraph 74 of IAS 1 Presentation of Financial Statements: “When an entity breaches covenant of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand, it classifies the liability as current, even if the lender agreed, after the reporting period and before the authorisation of the financial statements for issue, not to demand payment as a consequence of the breach. An entity classifies the liability as current because, at the end of the reporting period, it does not have the right to defer its settlement for at least twelve months after that date.”