July 2026 – Your Global Summary of IFRS News and Developments

LATEST DEVELOPMENTS FROM THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)

Documents issued during the quarter ended 30 June 2026

During the quarter ended 30 June 2026, the IASB issued IFRS 20 Regulatory Assets and Regulatory Liabilities, a new Accounting Standard for companies subject to a specific type of rate regulation. It aims to help investors better understand how that rate regulation affects a company’s financial performance, financial position and its prospects for future cash flows. IFRS 20 was issued on 27 May 2026; it supersedes IFRS 14 Regulatory Deferral Accounts and is effective for annual reporting periods beginning on or after 1 January 2029, with earlier application permitted.

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:

20-22 April 2026

18-20 May 2026

22-24 June 2026

The full updates, as published by the IASB, can be found at the IASB Updates archive here.

Research and standard setting

Financial Instruments with Characteristics of Equity (Agenda Paper 5)

In April 2026, the IASB continued redeliberating the proposed requirements in the Exposure Draft Financial Instruments with Characteristics of Equity. The IASB tentatively decided to proceed with the proposed requirements set out in the Exposure Draft related to the classification of financial instruments containing contingent settlement provisions, including:

clarifying that the requirements in paragraph 25 of IAS 32 apply to a financial instrument (or a component of one) that could require settlement giving rise to a financial liability only as a result of the occurrence or non-occurrence of an uncertain future event that is beyond the control of both the issuer and the holder.
clarifying that, for the purposes of an entity applying paragraph 36 of IAS 32, dividend payments are recognised as expenses if shares are wholly classified (instead of recognised) as liabilities to resolve an inconsistency within the Standard.

The IASB tentatively decided not to proceed with the proposed requirements related to the measurement of the financial liability arising from a contingent settlement provision as part of the project on Financial Instruments with Characteristics of Equity, but as part of the project on Amortised Cost Measurement.

Post-implementation Review of IFRS 16 Leases (Agenda Paper 7)

In April 2026, the Board tentatively decided to explore requiring lessees to disclose the components of the total cash outflow for leases together with the line item in the statement of cash flows in which each component is presented and tentatively decided to explore this matter in its project on the Statement of Cash Flows and Related Matters. The IASB tentatively decided to take no action in response to stakeholder feedback on other issues (the classification and presentation of lease-related cash flows by lessees, the lack of comparability between the cash flows of lessees and those of entities that borrow to buy assets, the usefulness of information about lessees’ lease-related cash flows).

In June 2026 the IASB tentatively decided to add to its project pipeline a narrow-scope project to clarify how a lessee applies the requirements in IFRS 16 and IFRS 9 Financial Instruments to account for a rent concession (in which the only change to the lease contract is the lessor’s forgiveness of lease payments due from the lessee under that contract).

Amortised Cost Measurement (Agenda Paper 11)

In April 2026, the IASB tentatively decided to amend paragraph B5.4.5 of IFRS 9 Financial Instruments to require that an entity adjusts the effective interest rate (EIR) to account for a re-estimation of the contractual cash flows of a financial asset or a financial liability that provides consideration for the time value of money or for the credit risk.

In June 2026 the IASB tentatively decided to propose that an entity would determine whether a modification of a financial instrument is substantial based on a holistic analysis of the changes in the contractual cash flows. The entity would consider qualitative and quantitative factors as part of this analysis. The ‘10 per cent test’ as described in paragraph B3.3.6 of IFRS 9 could supplement the analysis but would not be the decisive factor in isolation. The factors an entity would consider in determining whether a modification is substantial include, but are not limited to:

a change in the currency in which principal or interest is denominated, which would suggest the modification is substantial.
a change in cash flow characteristics that alters the assessment of whether the cash flows are solely payments of principal and interest for a financial asset, or whether an embedded derivative is separated from the host contract for a financial liability. Such a change would suggest the modification is substantial.
a change in borrower counterparty, which would suggest the modification is substantial, unless the change is between entities under common control.
the reason for the modification. A commercial renegotiation to reset the financial instrument to current market terms would suggest the modification is substantial. Conversely, a modification attributable to the borrower’s financial difficulty would suggest the modification is not substantial.

The IASB further tentatively decided to propose that the relevance of a specific factor, and its weight compared to other factors, would depend on the type of financial instrument, the characteristics of the financial instrument and general economic conditions. An entity would be required to consider reasonable and supportable information that is available without undue cost or effort and that is relevant for the particular financial instrument being assessed.

Equity Method (Agenda Paper 13)

In April 2026, the IASB tentatively decided to confirm the proposal to include in the carrying amount of the investment the deferred tax effects related to adjusting the investor’s share of the associate’s identifiable assets and liabilities to fair value.

It also tentatively decided to confirm the proposal

that an investor is required to recognise a bargain purchase gain from the purchase of an additional ownership interest in profit or loss.
that an investor that has reduced the carrying amount of the investment to nil is not required to immediately recognise losses not recognised on its previously held investment when it purchases an additional ownership interest.

In May 2026 the IASB tentatively decided to confirm the proposal in the Exposure Draft that an investor would first recognise its share of an associate’s profit or loss and then the share of the associate’s other comprehensive income, if both shares are losses and in aggregate exceed the carrying amount of the net investment in the associate. The IASB tentatively decided to withdraw the proposal in the Exposure Draft that an investor would continue to recognise its share of an associate’s profit or loss and its share of the associate’s other comprehensive income after the investor has reduced the net investment to nil. In addition, the IASB decided not to add to the scope of the project a question on whether an investor, on resuming the recognition of its share of profit after the investment has been reduced to nil, should first recognise its share of an associate’s profit or loss or its share of the associate’s other comprehensive income. Concerning application questions on inconsistency between IAS 28 and IFRS 10 the IASB tentatively decided:

to introduce an accounting policy choice that permits an investor to choose either full or restricted recognition of gains or losses on all transactions with associates, except for gains or losses on transfer of businesses, which would be recognised in full;
to confirm its proposal in the Exposure Draft to withdraw the amendments in Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (2014); and
to amend IFRS 10 to require an investor that chooses to restrict gains and losses on transactions with associates to also restrict gains and losses on the loss of a control of a subsidiary that is not a business.

The IASB also tentatively decided on mandatory notes disclosures for each accounting policy option, especially certain disclosures about the amounts of (restricted) gains and losses.

In June 2026 the IASB tentatively decided on separate financial statements inter alia that

an investor that applies the equity method to associates or joint ventures in its separate financial statements may choose either to restrict recognition of gains or losses (except for gains or losses on transfer of businesses, which would be recognised in full) or to recognise gains and losses in full on all transactions with associates. The investor need not apply the same accounting policy to the recognition of gains and losses on transactions with associates in its consolidated and separate financial statements.
a parent that applies the equity method to subsidiaries in its separate financial statements may choose either to restrict the recognition of gains or losses or to recognise gains and losses in full on all transactions with subsidiaries.

Concerning the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities the IASB tentatively decided to confirm its proposals in the Exposure Draft

to require an investor to disclose gains or losses from other changes in its ownership interest, information about contingent consideration arrangements and a reconciliation between the opening and closing carrying amount for its associates; and
to introduce a disclosure objective to disclose information that would enable users of financial statements to understand changes in the carrying amount of investment in associates.

The IASB additionally tentatively decided that, if an investor applies the relief from measuring at fair value the additional share of the associate’s or joint venturer’s identifiable assets and liabilities, when purchasing an additional ownership interest and retaining significant influence, the investor discloses the use of that relief.

Concerning the disclosure requirements in IFRS 19 Subsidiaries without Public Accountability: Disclosures the IASB tentatively decided

that an eligible subsidiary is not required to disclose a reconciliation between the opening and closing carrying amount of its associates,
is required to disclose information about contingent consideration arrangements.
is not required to disclose the use of the relief from measuring at fair value the additional share of an associate’s identifiable assets and liabilities.

Business Combinations - Disclosures, Goodwill and Impairment - (Agenda Paper 18)

In April 2026, the IASB tentatively decided to retain the proposal to require an entity to disclose performance information for only a subset of business combinations. The IASB also tentatively decided to proceed with a threshold approach to identify the subset. In relation to the design of the threshold approach, the IASB tentatively decided to retain the proposed revenue and asset thresholds, to remove the proposed operating profit threshold, to retain the proposal to set the quantitative thresholds at 10% and to remove the proposed qualitative thresholds.

The IASB tentatively decided to retain the exemption from disclosing some information in specific circumstances and not to refine the wording of the exemption to cover other circumstances suggested by respondents. As far as the application is concerned the Board tentatively decided amongst others to refine the wording to exempt entities from disclosing information that would result in a breach of statutory legal or regulatory requirements, to remove the proposal requiring an entity to disclose the reason for applying the exemption and not to include a statement specifying that the exemption is to be applied only in ‘extremely rare circumstances’.

The IASB further tentatively decided to retain the proposal to remove from IAS 36 Impairment of Assets the requirement for an entity to exclude cash flows from uncommitted future restructurings and asset enhancements when calculating value in use.

Statement of Cash Flows and Related Matters (Agenda Paper 20)

At its April 2026 meeting, the IASB tentatively decided to propose including, in the definition of cash equivalents, the requirement for cash equivalents to be held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

In May 2026 the IASB met to discuss improving disaggregation of cash flow information by strengthening its link with other information. It tentatively decided amongst others to propose adding application guidance on aggregating and disaggregating line items in the statement of cash flows that requires an entity:

to use, as the basis for disaggregating line items in the statement of cash flows, the disaggregation of related line items of assets or liabilities presented in the statement of financial position and
to disclose how the disaggregation of line items in the statement of cash flows differs from the disaggregation of related line items in the statement of financial position, if applicable.

The IASB also tentatively decided to propose clarifying the disclosure objective in paragraph 44A of IAS 7 Statement of Cash Flows. The IASB further tentatively decided, in line with its previous decision, not to explore developing additional requirements for an entity to disclose information about its net debt.

In June 2026 the IASB tentatively decided to propose requiring an entity to classify cash flows from a derivative used to manage identified risks (and not designated in a hedging relationship in accordance with IFRS 9 Financial Instruments) in the same manner as the cash flows from the item(s) whose identified risks are being managed. This approach would align the classification with that for derivatives designated in a hedging relationship in accordance with IFRS 9. If classifying these cash flows would involve undue cost or effort, the IASB tentatively decided to classify them as cash flows from operating activities. The IASB further tentatively decided to propose requiring an entity to classify cash flows from a derivative not used to manage identified risks as cash flows from financing activities, if the derivative relates to a transaction that involves only the raising of finance.

Regarding Cash flows from government grants the IASB tentatively decided to classify receipts from government grants for a grant related to assets as investing activities and for a grant related to income as operating activities (both as defined in IAS 20 Accounting for Government Grants and Disclosure of Government Assistance). The entity has to present receipts from government grants related to assets on a gross basis.

Risk Mitigation Accounting (Agenda Paper 4)

In May 2026 the IASB decided to extend the comment letter deadline to 30 November 2026 to align it with the final submission date for the fieldwork results.

Maintenance and consistent application

IFRS 18 activities (Agenda Paper 12A, 12D, 12E, 12F)

In April 2026, the IASB did not object to the following IFRS 18 Agenda Decisions from the IFRS Interpretations

Committee’s meeting in March 2026:

Classification of a Foreign Exchange Difference from an Intragroup Monetary Liability (or Asset),
Assessment of a Specified Main Business Activity for the Purposes of the Separate Financial Statements of a Parent
Scope of the Requirement to Disclose Expenses by Nature.
Classification of Gains and Losses on a Derivative Managing a Foreign Currency Exposure

In May 2026 the Board decided to explore amending IFRS 18 to require or allow an entity to classify in the income taxes category of the statement of profit or loss non-income tax charges that meet the definition of ‘covered taxes’ under the Organisation for Economic Co-operation and Development’s Pillar Two model rules. Due to five IASB members indicating an intention to vote against such an amendment, the Board decided in June 2026 to explore alternative ways to require an entity to classify specific non-income tax charges in the income taxes category of the statement of profit or loss.

IAS 28- Amendments to the Fair Value Option (Agenda Paper 12E-G)

The IASB tentatively decided in May 2026 to finalise its proposals

to clarify that an entity that has a main business activity of investing in particular types of assets (as set out in paragraph 49(a) of IFRS 18) is eligible to elect the fair value option in IAS 28; and
to require an entity to apply the amendments to IAS 28 at the same time, and on the same basis, as it applies IFRS 18.

Provisions - Targeted Improvements (Agenda Paper 22)

Concerning the ‘past-event’ recognition condition the IASB tentatively decided in May 2026 to make the constraining presumption non-rebuttable; and to express the resulting application requirements as:

general requirement - the past-event condition is met when an entity has obtained the economic benefit or conducted the activity required by levy legislation for a levy to be payable (the relevant economic benefit or activity); and
supporting principle - if more than one economic benefit or activity is required for a levy to be payable, the relevant economic benefit or activity is the one that best reflects the economic benefit or activity the government is seeking to levy.

Therefore, the IASB tentatively decided to omit from IAS 37 Provisions, Contingent Liabilities and Contingent Assets the requirement proposed in paragraph 14Q of the Exposure Draft.

Other activities concerning IFRS 16 and IAS 1 (Agenda Paper 12B, 12C)

In its April 2026 meeting the IASB did not object to the IFRS Interpretations Committee’s Agenda Decisions Economic Benefits from Use of a Battery under an Offtake Arrangement (IFRS 16) and Fair Presentation and Compliance with IFRS Accounting Standards (IAS 1).

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 16-17 June 2026. The June IFRIC Update is available on the IFRS Foundation website here. All tentative agenda decisions are open for comment until 9 September 2026.

Committee’s tentative agenda decisions

Management-defined Performance Measures —Hypothetical Income and Expenses (IFRS 18 Presentation and Disclosure in Financial Statements)—Agenda Paper 2

The Committee received a request asking whether a performance measure that includes hypothetical income and expenses can meet the definition of a management-defined performance measure in IFRS18.

The Committee concluded that such a performance measure can be a subtotal of income and expenses and can faithfully represent what it purports to represent—that is, management’s view of an aspect of financial performance of the entity as a whole. Such a measure only meets the definition of a management-defined performance measure if it meets all the relevant criteria in paragraph 117 of IFRS 18 and if all the requirements in paragraphs 121-125 of IFRS 18 are applied.

The Committee therefore concluded that the principles and requirements in IFRS 18 provide an adequate basis for an entity to determine whether a performance measure that includes hypothetical income and expenses can meet the definition of a management-defined performance measure. Consequently, the Committee decided that a standard-setting project is not needed to address the request.

Other tentative agenda decisions on IFRS 18 Presentation and Disclosure in Financial Statements

The Committee received several other requests concerning IFRS 18:

Management-defined Performance Measures —Public Communications—Agenda Paper 3

In this request the Committee was asked whether presentations provided on a confidential basis to a small number of identifiable shareholders or potential investors are public communications for the purpose of identifying a management-defined performance measure applying IFRS 18.

Classification of Income and Expenses from Cash and Cash Equivalents—Agenda Paper 4A

In this request the Committee was asked about how an entity classifies income and expenses from cash and cash equivalents in its consolidated statement of profit or loss if the entity has, alongside other business activities, a main business activity of:

investing in financial assets within the scope of paragraph 53(c) of IFRS 18; and
providing financing to customers.

Classification of Income and Expenses when an Entity Has a Main Business Activity of Providing Financing to Customers—Agenda Paper 4B

In this request the Committee was asked about how an entity that has a main business activity of providing financing to customers classifies income and expenses from liabilities that arise from transactions that involve only the raising of finance (referred to hereafter as specified liabilities) in its consolidated statement of profit or loss in accordance with paragraphs 65(a) and 66 of IFRS 18.

Assessment of Specified Main Business Activities for a Manufacturer-Lessor—Agenda Paper 6

In this request the Committee was asked about how an entity that is a manufacturer-lessor assesses whether, applying IFRS 18, the entity’s aggregated lease activity, comprising its finance lease and operating lease activities, is a main business activity of providing financing to customers.

Labels of Subtotals—Agenda Paper 7A

In this request the Committee was asked about the labelling of a subtotal in an entity’s statement of profit or loss, when that subtotal is also a management-defined performance measure (referred to as ‘the measure’). In particular, the request asked whether the label of the measure is required to explicitly list all the elements excluded from (or included in) the measure.

Presentation of Operating Expenses—Agenda Paper 7B

In this request the Committee was asked:

when an entity is required to use a ‘mixed presentation’—that is, a presentation in which an entity classifies and presents in line items in the statement of profit or loss some operating expenses based on their nature and others based on their function within the entity—applying paragraph 78 of IFRS 18; and
whether an entity can disaggregate expenses of the same nature and classify and present some of those expenses in line items comprising operating expenses aggregated on the basis of nature and others in line items comprising operating expenses aggregated on the basis of function.
The Committee concluded in all these IFRS 18 requests that the principles and requirements in IFRS 18 provide an adequate basis for applying the standard. Consequently, the Committee decided that a standard-setting project is not needed to address any of these requests.

Control Assessment for a Single-investor Fund (IFRS 10 Consolidated Financial Statements)—Agenda Paper 5

The Committee received a request about how an entity - the only investor in a fund other than the fund manager —assesses whether it has delegated decision-making authority to the fund manager, if the fund manager is an agent and does not control the fund.

The Committee concluded that the principles and requirements in IFRS 10 provide an adequate basis for the investor described in the fact pattern to assess whether it is automatically deemed to have delegated its decision-making authority to the fund manager. Consequently, the Committee decided that a standard-setting project is not needed to address the request.

QUERY OF THE MONTH

Determining and Accounting for Transaction Costs (IFRS 9)

Background

An entity intends to enter into a loan contract with a bank and incurs legal and advisory fees while analysing the terms and conditions of the proposed loan. The entity expects to proceed with the contract, but the loan contract has not been signed as of the date the entity’s financial statements are authorised for issue.

Question

Are these costs that are directly attributable to the origination or issuance of a financial instrument but are incurred before entering into the contractual arrangement ‘incremental’ and, therefore, do they meet the definition of transaction costs in Appendix A of IFRS 9? Does this also apply even if there is a possibility that the financial instrument might not be originated or issued?

Answer

Costs that are directly attributable to the origination or issuance of a financial instrument but are incurred before entering into the contractual arrangement are not precluded from being ‘incremental’ and, accordingly, could meet the definition of transaction costs in IFRS 9. Such transaction costs are recognised in the statement of financial position, often as prepayments or other assets (also see IFRIC update November 2025).

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July 2026 – Your Global Summary of IFRS News and Developments

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