Documents issued during the quarter ended 30 September 2025 

During the quarter ended 30 September 2025, the IASB issued the following:

Document: Practice statement

Date issued: 21 August

Title: Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures

Effective date: 1 January 2027

When IFRS 19 was first issued in May 2024, it only included the standards and changes to IFRS that were in force until February 2021. Please be advised that, due to the changes, the current standards now include those issued between February 2021 and May 2024.

During the quarter ended 30 September 2025, on 14 April, the IFRS Interpretations Committee (IFRIC) did not issue any final agenda decisions. 

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: 

• 22-24 July 2025
• 23-25 September 2025

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

Research and standard setting

Business Combinations – Disclosures, Goodwill and Impairment

The IASB tentatively decided the following regarding its proposals to add, amend and remove requirements in its Exposure Draft Business Combinations – Disclosures, Goodwill and Impairment.

In its discussion of proposed amendments to IAS 36, Impairment of Assets, the IASB tentatively decided to retain the proposals to:

a)    require an entity to disclose the reportable segment in which a cash-generating unit or group of cash-generating units containing goodwill is included.

b)    remove the requirement for an entity to use pre-tax cash flows and a pre-tax discount rate for calculating value in use; and

c)    require an entity to disclose whether the discount rate used in calculating value in use is pre-tax or post-tax.

Statement of Cash Flows and Related Matters

As part of a discussion of how the requirements for management-defined performance measures (MPMs) in IFRS 18, Presentation and Disclosure in Financial Statements (This was originally applicable only to performance measures in the income statement) could be extended to cash flow measures, the IASB tentatively decided to propose extending the IFRS 18 MPM requirements to the statement of cash flows not specified in IFRS Accounting Standards. The proposed requirements would apply to cash flow measures, subject to the definition of an MPM and the applicability of the related disclosure requirements.

The IASB also tentatively decided to propose applying to cash flow measures (without changes) the parts of the definition of an MPM that describe an MPM as a measure that 

a)    an entity uses in public communications outside financial statements; and

b)    an entity uses to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole.

The IASB also tentatively decided to 

• extend the rebuttable presumption for MPMs in IFRS 18 so that it also applies to cash flow measures.
• propose extending the disclosure objective for MPMs and specific disclosure requirements for MPMs in IFRS 18 to also apply to cash flow measures.
• not propose extending to cash flow measures the requirement for an entity to disclose the income tax effect and the effect on non-controlling interests for each item disclosed in the reconciliation between MPMs and the most directly comparable subtotal or total specified by IFRS Accounting Standards.

For the proposals relating to the disaggregation of cash flow information, the IASB tentatively decided:

a)    to strengthen the link between 

i.    the statement of cash flows and

ii.    information presented or disclosed in other parts of the financial statements in accordance with IFRS Accounting Standards other than IAS 7, Statement of Cash Flows 

b)    to improve the consistency of the presentation of cash flows from discontinued operations. 

The decisions described are tentative and will be incorporated into the next package of Exposure Draft improvements to IAS 7 and IFRS 18, scheduled for publication in 2026. Their effective application will likely align with the effective date of IFRS 18 (January 1, 2027), with early application permitted.

Financial instruments with Characteristics of Equity

The IASB tentatively decided to withdraw the requirements proposed in the Exposure Draft related to the effects of relevant laws or regulations on the classification of financial instruments.

The IASB made several tentative decisions relating to two classification topics:

a)    The IASB tentatively decided to proceed with the proposed requirements on the reclassification of financial liabilities and equity instruments, subject to targeted refinements that would

i.    clarify that the requirements would apply to changes that do not (a) create or extinguish contractual rights and obligations or (b) modify the contractual terms 

ii.    further clarify that the term “circumstances external to the contractual arrangement” refers to events that 

1. Arise after a financial instrument is classified and
2. Are significant to the entity’s operations

iii.    require an entity to reclassify a financial instrument containing an obligation to deliver its own equity instruments from financial liability to equity when the substance of the contractual arrangement changes

Additionally, the IASB tentatively decided to proceed with the proposed factors-based approach subject to drafting improvements and clarification of the principles underlying that proposed approach.

Amortised cost measurement

The IASB tentatively decided to take no further action on the issue of how an entity applies the requirements of IFRS 9, Financial Instruments, when determining the effective interest rate if a financial instrument has conditions attached to the contractual interest rate. 

Equity Method

The IASB began redeliberation on the proposals in the Exposure Draft and reached the following tentative decisions:

• The scope of the project will be expanded to address how an investor should recognize acquisition-related costs when applying the equity method
• The scope will not be expanded to address (a) obtaining significant influence over an associate that does not constitute a business or (b) the qualifying criteria for using the fair value option in paragraphs 18-19 of IAS 28 (although the Board will explore whether those paragraphs should be clarified).
• The Board will explore providing relief from the tentative position in the Exposure Draft related to how to apply the equity method when acquiring an additional interest in an associate while retaining significant influence.

Maintenance and consistent application

Provisions – Targeted Improvements

The IASB redeliberated its proposals in the Exposure Draft Provisions – Targeted Improvements related to the rate an entity used to discount future expenditure to its present value. The discussion was broken out into three topics:

1.    Discount rates – Required rates

The IASB tentatively decided

a)    to retain the proposal to require an entity to discount a provision at a rate that reflects the time value of money – represented by a risk-free rate – with no adjustment for the effect of non-performance risk;

b)    to add no application guidance to IAS 37 Provisions, Contingent Liabilities and Contingent Assets on how an entity determines an appropriate risk-free discount rate;

c)    to clarify in IAS 37 that the best estimate of the expenditure required to settle an obligation is not reduced to reflect the effect of non-performance risk; and

d)    to add no requirements on the use of real or nominal discount rates in measuring a provision.

2.    Discount rates – Interaction with IFRS 3

a)    An exception to the initial measurement principle will be added that:

1. Applies to provisions other than contingent liabilities within the scope of IAS 37 and
2. Requires an acquirer to measure these provisions at the acquisition date using the measurement requirements in IAS 37, rather than at acquisition date fair value

3.    Discount rates – Disclosure

The IASB tentatively decided:

i.    to retain the proposal to require an entity applying IAS 37 to disclose the discount rate(s) used in measuring a provision; and the approach used to determine the rate(s);

ii.    to add no further disclosure requirements to IAS 37; and

iii.    to retain the proposals to require subsidiaries applying IFRS 19 Subsidiaries without Public Accountability: Disclosures to disclose the discount rate(s) used in measuring a provision; but not to require them to disclose the approach used to determine the rate(s).

Agenda decisions of the IFRS Interpretations Committee

The IASB considered an agenda decision of the IFRS-IC related to Assessing Indicators of Hyperinflationary Economies, without any member objecting to the decision. 

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 September 2025. The September IFRIC Update is available here.

Committee’s tentative agenda decisions

The following tentative agenda decisions are open for comment until 25 November 2025.

Classification of a Foreign Exchange Difference from an Intergroup Monetary Liability (or Asset) (IFRS 18) 

The Committee received a request about the classification of a foreign exchange difference from an intergroup monetary liability (or asset). The request asked how an entity applying paragraph B65 of IFRs 18 would classify a foreign exchange difference if the income and expenses from the intragroup monetary liability 9or asset) that gave rise to the foreign exchange difference have been eliminated on consolidation.

Despite differing views of the Committee members, the Committee [decided] not to add a standard-setting project to the work plan.

Economic Benefits from use of a Battery under an Offtake Arrangement (IFRS 16) 

The Committee received requests about how an entity applies the requirements of paragraph B9(a) of IFRS 16 – specifically, how an entity determines whether a customer has the right to obtain substantially all of the economic benefits from use of an identified asset, using an example of a battery offtake arrangement. In this example, a battery owner and an electricity retailer enter into a battery offtake arrangement under which the battery owner retains custody of the battery but is contractually obligated to operate it in accordance with the instructions of the electricity retailer. Those instructions cover 100% of the capacity of the battery, which cannot be substituted.

In the Committee’s opinion, the principles and requirements of IFRS 16 provide an adequate basis for an electricity retailer to determine whether it has the right to obtain substantially all of the economic benefits from use of the battery. Consequently, the Committee [decided] not to add a standard-setting project to the work plan.

Other matters

When discussing the IASB’s Business Combinations – Disclosures, Goodwill and Impairment project, the IFRIC provided views on 

• Making refinements to the scope of the proposed exemption from disclosing some items of information .
• Including examples of situations in which the exemption can be applied
• Developing an example to illustrate the potential of a cash-generating unit to be restructured, improved or enhanced

QUERY OF THE MONTH 

Debt Forgiveness between a parent and a subsidiary

A subsidiary is part of a group, whose parent entity is in another country. The parent entity provided a loan of $10m to its subsidiary to establish the business. Now that loan is to be forgiven.

Question: 

How should this be accounted for? 

Debt forgiveness between non-related entities is usually treated as income in the recipient entity, and as an expense in the entity forgiving the loan. However, when both entities are part of the same group, then it can be a little more complicated.

Under the accounting framework, transactions with owners in their capacity as owners do not represent income or expenses, and no gain or loss can be recognised, as the basic definition of “income” and “expenses” is not met. The substance of the transaction is that the parent company has made an investment in its subsidiary.

The debt forgiveness would therefore be recognised as an increase in the cost of the investment in the subsidiary in the parent entity, and as an increase in equity in the subsidiary. No profit or loss would be recognised in either entity.

This would apply only in the stand-alone financial statements of each company. The above transactions would be eliminated through a consolidation adjustment as part of the preparation of the parent’s consolidated financial statements.

While the example above covers a transaction between a parent and a subsidiary, the same principle can also apply to similar transactions between commonly controlled entities. This is particularly the case where the subsidiary forgiving the debt is acting on the instructions of the common ultimate parent entity, as the substance of the transaction is a capital contribution to the entity whose debt is being forgiven.