Documents issued during the quarter ended 31 December 2025 

During the quarter ended 31 December 2025, the IASB did not issue any new documents.

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: 

• 29 - 30 October 2025
• 17- 18 November 2025
• 8-11 December 2025

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

Research and standard setting

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

The IASB continued discussions on outstanding matters related to extending the requirements for management-defined performance measures (MPMs) to include cash flow measures, improving consistency in classifying cash flows as operating, investing or financing and improving consistency in presenting cash flows from continuing and discontinued operations.

Improving the transparency of information about cash flow measures (Agenda Paper 20A)

The IASB tentatively decided to propose including requirements for MPMs for cash flow measures in IFRS 18 Presentation and Disclosure in Financial Statements and not included IAS 7 Statement of Cash Flows, as well as extending the definition of MPMs in paragraph 117 of IFRS 18 from ‘a subtotal of income and expenses’ to ‘a subtotal of income and expenses or a subtotal of cash inflows and outflows’. 

The board agreed to include further application guidance in the standard to clarify:

• That subtotals combining income and expenses and cash flows are MPMs,
• The requirement of an entity to disclose the effects of income tax and non-controlling interests for reconciling items if reconciling an MPM that is a subtotal of income and expenses.
• The requirement for an entity to disclose the effects of income tax and non-controlling interest for reconciling items if reconciling an MPM that is a subtotal of income and expenses and cash flows to a subtotal in the statement of profit or loss
• That some subtotals of cash inflows and outflows are not MPMs, including subtotals for operating, investing and financing categories

The board also agreed on extending the disclosure requirement for each reconciling item an entity be required to disclose the amount(s) related to each line item in the statement to which the MPM is reconciled.

Presentation of cash flows from continuing and discontinued operations (Agenda Paper 20C)

The IASB tentatively decided to propose requiring an entity to present cash flows from discontinued operations in a separate category of the statement of cash flows.

Equity Method (Agenda Paper 13)

The IASB resumed discussed proposals in the Exposure Draft Equity Method of Accounting – IAS 28 Investments in Associates and Joint Ventures (revised 202x). 

Measurement of the cost of an associate 

The IASB decided to proceed with its proposals to require an investor or joint venturer on obtaining significant influence or joint control to:

a.    measure the cost of an associate or a joint venture at the fair value of the consideration transferred, including the fair value of any previously held interest in the associate or joint venture; and

b.    recognise contingent consideration as part of the consideration transferred and measure it at fair value.

Following obtaining significant influence or joint control:

a)    not to remeasure contingent consideration classified as an equity instrument;

b)    to measure other contingent consideration at fair value at each reporting date; and

c)    to recognise changes in fair value in profit or loss.

When purchasing an additional ownership interest in an associate or joint venture – to apply the requirements described as above 

The IASB also tentatively decided to define contingent consideration based on the definition set out in IFRS 3 Business Combinations.

Purchases of an additional ownership interest

The IASB decided to proceed with its proposal to require an investor or joint venturer, at the date of purchase of an additional ownership interest, to measure that interest at the fair value of the consideration transferred and the carrying amount of the investment its additional share of the fair value of the associate’s or joint venture’s identifiable assets and liabilities.

The board also tentatively decided to extend the measurement period described in paragraph 45 of IFRS 3 to when an investor obtains significant influence or joint control over an associate or joint venture or purchases an additional ownership interest in an associate or joint venture.

Disposal of a portion of an investment in an associate

The board decided on proposals to require an investor or joint venturer disposing of a portion of an investment to measure the disposed portion as a percentage of the carrying amount of the investment (calculated as the disposed ownership interest divided by the total ownership interest); and recognise the difference between the consideration received and the portion derecognised as a gain or loss in profit or loss.

Acquisition-related costs 

The IASB resolved to require acquisition-related costs incurred by an investor or joint venturer to obtain significant influence or joint control, or to purchase an additional ownership interest in an associate or joint venture to be recognised as an expense in profit or loss in the period in which the costs are incurred.

Maintenance and consistent application

Amendments to the Fair Value Option (IAS 28)

Potential amendments to the scope of the fair value option (IAS 28)

The IASB decided to clarify, in paragraphs 18–19 of IAS 28, that ‘similar entities’ include entities that invest in associates and joint ventures as a main business activity.

Provisions – Targeted Improvements

The IASB redeliberated its proposals in the Exposure Draft Provisions – Targeted Improvements related to relating to the recognition and measurement of provisions. The discussion was broken out into two topics:

• the proposed requirement for an entity to have a present obligation to transfer an economic resource as a result of a past event
• the proposed clarification of the costs an entity includes in estimating the future expenditure required to settle an obligation

Recognition – Legal obligations

The IASB tentatively decided to revise the criteria proposed in the Exposure Draft for concluding that an entity has no practical ability to avoid discharging a legal responsibility. 

The revised criteria would require that either the counterparty have a right to ask a judicial body to force the entity to discharge the responsibility or to pay a penalty or compensation for failing to do so, or the counterparty have a right to take another form of action against the entity for failing to discharge the responsibility and, as a result, the economic consequences for the entity of not discharging the responsibility are expected to be significantly worse than the costs of discharging it.

Measurement – Costs to include

The IASB tentatively decided to retain the proposed requirement that the expenditure required to settle an obligation comprise the costs that relate directly to the obligation, which consist of both:

a)    the incremental costs of settling that obligation; and

b)    an allocation of other costs that relate directly to settling obligations of that type.

The board also agreed to restrict the scope of the requirement described above to obligations to transfer goods or services, and to clarify that the requirement applies to the measurement of those goods or services.

Fair Value Option for Investments in Associates and Joint Ventures Held by Specified Entities

The IASB resolved to add a maintenance project to its work plan to explore narrow-scope amendments to the scope of paragraphs 18–19 of IAS 28 Investments in Associates and Joint Ventures.

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 25-26 November 2025. The November IFRIC Update is available here.

Committee’s tentative agenda decisions

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

Classification of Gains and Losses on a Derivative Managing a Foreign Currency Exposure (IFRS 18 Presentation and Disclosure in Financial Statements) – Agenda Paper 2

The Committee received a request about how an entity applies the requirements in paragraphs B70–B76 of IFRS 18 to classify gains or losses on a derivative financial instrument in its consolidated statement of profit or loss. The derivative is a forward contract that is used to manage the foreign currency risk of a net liability exposure, but is not designated as a hedging instrument applying IFRS 9 Financial Instruments.

The request asks how the entity, applying IFRS 18, classifies any gain or loss arising from the derivative in its consolidated statement of profit or loss.

The committee concluded that the principles and requirements in IFRS Accounting Standards provide an adequate basis for the classification of gains or losses on a derivative – in accordance with an entity’s risk management policy – that is used to manage an identified risk but is not designated as a hedging instrument applying IFRS 9. Consequently, the Committee decided not to add a standard-setting project to the work plan 

Fair Presentation and Compliance with IFRS Accounting Standards (IAS 1 Presentation of Financial Statements) – Agenda Paper 3

The Committee received a request about the application of the requirements in paragraphs 15– 24 of IAS 1 Presentation of Financial Statements [paragraphs 6A–6J of IAS 8 Basis of Preparation of Financial Statements] relating to fair presentation and compliance with IFRS Accounting Standards. Specifically the committee considered where an entity applying paragraph 19 of IAS 1 [paragraph 6E of IAS 8] departs from a requirement in an IFRS Accounting Standard. The request asks whether the entity is nonetheless required to comply with the requirement for fair presentation in paragraph 15 of IAS 1 [paragraph 6A of IAS 8].

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

Scope of the Requirement to Disclose Expenses by Nature (IFRS 18 Presentation and Disclosure in Financial Statements) – Agenda Paper 6

The Committee received a request about the scope of the requirements in paragraph 83 of IFRS 18.

Paragraph 75 of IFRS 18 requires an entity to present line items in the statement of profit or loss, including for:

a.    operating expenses (paragraph 75(a)(ii)); and

b.    amounts required by IFRS 9 Financial Instruments and IFRS 17 Insurance Contracts (paragraph 75(b)–(c)).

Paragraph 83 of IFRS 18 requires an entity that presents one or more line items comprising expenses classified by function in the operating category of the statement of profit or loss to also disclose, in a single note, the total and the amount included in each line item for depreciation, amortisation, employee benefits, impairment of non-financial assets (and reversals) and write-downs of inventories (and reversals).

The question asked whether the requirements in paragraph 83 of IFRS 18 apply only when an entity presents operating expenses listed in paragraph 75(a)(ii) of IFRS 18 by function in the operating category of the statement of profit or loss; or when an entity presents any expense by function in the operating category of the statement of profit or loss, including expenses listed in paragraph 75(b)–⁠(c) of IFRS 18.

The Committee concluded that the principles and requirements in IFRS 18 provide an adequate basis for an entity to determine the scope of the requirements in paragraph 83 of IFRS 18. Consequently, the Committee [decided] not to add a standard-setting project to the work plan.

Assessment of a Specified Main Business Activity for the purposes of the Separate Financial Statements of a Parent (IFRS 18 Presentation and Disclosure in Financial Statements) – Agenda Paper 7

The Committee received a request about how a parent applying IFRS 18 assesses, for the purpose of its separate financial statements, whether it has a specified main business activity – in the fact pattern described in the request, a main business activity of investing in unconsolidated subsidiaries.

The Committee concluded that the principles and requirements in IFRS 18 provide an adequate basis for the parent described in the request to assess, for the purposes of its separate financial statements, whether it has a specified main business activity – specifically, a main business activity of investing in unconsolidated subsidiaries. Consequently, the Committee decided not to add a standard-setting project to the work plan.

QUERY OF THE MONTH 

Share-based payments – Vesting Periods

Background

On 22 January 2025, employees were invited to participate in Long Term Incentive (LTI) and Short Term Incentive (STI) scheme for the year. This was deemed to be grant date, as all terms and conditions are set.
As part of the terms of the scheme, the service period of the employees are taken into account from 1 July 2024 to 30 June 2025 for the STI and 1 July 2024 to 30 June 2027 for the LTI.

Question

While the grant date per the award letter is 22 January 2025, should expensing of vesting period commence on 1 July 2024 or 22 January 2025?

Answer

For the STI and LTI, the expense should be recognised from 1 July 2024 onwards, based on the fact that the plans existed at that point in time and was included in the employee contracts, even though the exact terms were not yet confirmed. On 1 July 2024 the value should be estimated and then updated once the terms have been confirmed on the grant date.

The grant date is the date at which equity-settled awards are valued, but it is not necessarily the date from which they should be expensed. The following guidance supports the accounting treatment:

Service commencement date and grant date

The 'vesting period' is the period during which all of the specified vesting conditions are to be satisfied in order for the employees to be entitled unconditionally to the equity instrument. Normally, this is the period between grant date and the vesting date. IFRS 2.A

However, services are recognised when they are received and grant date may occur after the employees have begun rendering services. Grant date is a measurement date only. If grant date occurs after the service commencement date, then the entity estimates the grant-date fair value of the equity instruments for the purpose of recognising the services from the service commencement date until grant date. Once grant date has been established, the entity revises the earlier estimates so that the amounts recognised for services received are based on the grant-date fair value of the equity instruments. In our view, this revision should be treated as a change in estimate. IFRS 2.IG4