IFRS 2013 Updates

7/30/2019 IFRS 2013 Updates

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Ernst & Young IFRS Core Tools

April 2012

IFRS Update

of standards and interpretations in issue

at 31 March 2012


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IFRS Update of standards and interpretations in issue at 31 March 2012 1

Contents

Introduction 2

Section 1: New pronouncements issued as at 31 March 2012 4

Table of mandatory application 4

IFRS 1 First-time Adoption of International Financial Reporting Standards Limited

Exemption from Comparative IFRS 7 Disclosures for First-time Adopters 6

IFRS 1 First-time Adoption of International Financial Reporting Standards

(Amendment) Severe Hyperinflation and Removal of Fixed Dates

for First-time Adopters 6

IFRS 1 Government Loans Amendments to IFRS 1 7

IFRS 7 Financial Instruments: Disclosures (Amendment) 7

IFRS 7 Disclosures Offsetting Financial Assets and Financial Liabilities

Amendments to IFRS 7 8

IFRS 9 Financial Instruments Classification and Measurement 9

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements 10

IFRS 11 Joint Arrangements, IAS 28 Investments in Associates and Joint Ventures 11

IFRS 12 Disclosure of Interests in Other Entities 12

IFRS 13 Fair Value Measurement 12IAS 1 Presentation of Items of Other Comprehensive Income Amendments to IAS 1 13

IAS 12 Income Taxes (Amendment) Deferred Taxes: Recovery of Underlying Assets 13

IAS 19 Employee Benefits (Revised) 14

IAS 24 Related Party Disclosures (Revised) 14

IAS 32 Offsetting Financial Assets and Financial Liabilities Amendments to IAS 32 15

IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment) 15

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 16

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 16

Improvements to International Financial Reporting Standards (issued 2010) 17

Section 2: Items not taken onto the Interpretations Committees agenda 20

Section 3: Expected future pronouncements from the IASB 26


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IFRS Update of standards and interpretations in issue at 31 March 20122

Introduction

Companies reporting under International Financial Reporting

Standards (IFRS) continue to face a steady ow of new standards

and interpretations. The volume of changes to IFRS has been

signicant and is likely to continue in the foreseeable future.

The nature of the changes ranges from signicant amendments of

fundamental principles to some minor changes included in the

annual improvements process (AIP). They will affect many

different areas of accounting ranging from the presentation of

nancial statements to changes to particular elements such as

nancial instruments and employee benets.

Some of the changes have implications that go beyond matters of

accounting, potentially also impacting the information systems of

many companies. Furthermore, the changes may impact business

decisions, such as the creation of joint arrangements or the

structuring of particular transactions.

The challenge for preparers is to gain an understanding of what

lies ahead.

Purpose of this publication

This publication provides an overview of the upcoming changes in

standards and interpretations. It does not attempt to provide an

in-depth analysis or discussion of the topics. Rather, the objective isto highlight key aspects of these changes. Reference should be

made to the text of the standards and/or interpretations before

taking any decisions or actions.

This publication includes all changes nalised by 31 March 2012.

The Table of Contents lists all of the changes, which are presented

in the following order:

Section 1: All new pronouncements issued as at 31 March 2012

that are applicable for years ended April 2012 and thereafter.

Section 2: Items that have not been taken onto the International

Financial Reporting Standards Interpretations Committees

(Interpretations Committee) agenda and the reason for theirrejection.

Section 3: Proposed future pronouncements that are expected to

be issued as standards or interpretations based on the International

Accounting Standards Boards (IASB) current work plan.

Section 1 provides a high-level overview of the key requirements

of each new pronouncement issued by the IASB and

interpretations issued by the Interpretations Committee. This

overview provides a summary of the transitional requirements

and a brief discussion of the potential impact that the changes

may have on an entitys nancial statements.

This section is presented in the numerical order of the standards

and interpretations, except the AIP. All AIP amendments are

presented at the end of Section 1.

In addition, a table comparing mandatory application for different

year ends is presented at the commencement of Section 1. Allstandards and interpretations are presented in order of their

effective dates. However, certain standards may contain

provisions that would allow entities to adopt in earlier periods.

When a standard or interpretation has been issued, but has yet to

be applied by an entity, IAS 8Accounting Policies, Changes in

Accounting Estimates and Errors requires the entity to disclose

any known (or reasonably estimable) information relevant to

understanding the possible impact that the new pronouncement

will have on the nancial statements, or indicate the reason for

not doing so. All such standards, if not early adopted, are

indicated in light and mid-grey on the table at the commencement

of Section 1.

Section 2 provides a summary of the agenda rejection notices

published in the IFRIC Update.1 In certain rejection notices, the

Interpretations Committee refers to the existing IFRS or

interpretations that provide adequate guidance. While these

rejection notices are only considered as Level 3 as authoritative

literature, they do provide a view on the application of the

standards.

Section 3 considers future expected pronouncements from the

IASB and Interpretations Committee. If a standard or

interpretation is published prior to the date on which the nancial

statements are authorised for issue, an entity will need to complywith IAS 8 disclosures on standards issued but not yet effective.

1 The IFRIC Update is available on the IASBs website at http://www.ifrs.org/Updates/IFRIC+Updates/IFRIC+Updates.htm.


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IFRS Core Tools

This publication details a number of new standards and

interpretations that contribute to a signicant amount of

accounting change in the next three years and beyond. Frequent

changes to IFRS add to the complexity entities face when

approaching the nancial reporting cycle.

Ernst & Youngs IFRS Core Tools provide the starting point for

assessing the impact of these changes to IFRS.

IFRS Core Tools include a number of practical building blocks that

can help the user to navigate the changing landscape of IFRS. Inaddition to this publication, IFRS Update, they include the

publications described below:

International GAAP Disclosure Checklist

Our 2012 International GAAP Disclosure Checklist captures

the currently applicable disclosure requirements, as well as those

of standards and interpretations that are permitted to be adopted

early, for all standards/interpretations that are issued at 31 March

2012. This tool assists preparers to comply with IFRS in their

interim and year-end IFRS nancial statements.

Good Group (International) Limited

Our publication, Good Group (International) Limited, is an

illustrative set of nancial statements (both interim and annual)incorporating new disclosures that arise from the changes

required by standards effective for December 2011 year-ends and

June 2012 interim periods. These illustrative nancial statements

can also assist in understanding the impact changes may have on

the nancial statements.

This publication is supplemented by illustrative nancial

statements that are aimed at specic sectors and industries.

These now include:

Good Bank (International) Limited

Good Construction (International) Limited

Good First-time Adopter (International) Limited Good Insurance (International) Limited

Good Investment Fund Limited (Equities)

Good Investment Fund Limited (Liabilities)

Good Mining (International) Limited

Good Petroleum (International) Limited

Good Real Estate Group (International) Limited

Also available from Ernst & Young:

International GAAP 20122

Our International GAAP 2012 is a comprehensive guide to

interpreting and implementing IFRS. It includes standards and

interpretations mentioned in this publication that were issued

prior to September 2011, and it provides examples that illustrate

how the requirements are applied.

Other Ernst & Young publications

References to other Ernst & Young publications that contain

further details and discussion on these topics are included

throughout the IFRS Update, all of which can be downloaded from

our website www.ey.com/ifrs.

2 International GAAP is a registered trademark of Ernst & Young LLP.


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Section 1: New pronouncements issued asat 31 March 2012

Table of mandatory application

Amendment/New Standard

IFRS 1 First-time Adoption of International Financial Reporting Standards Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

AIP IFRS 3 Business Combinations Transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised IFRS

AIP IFRS 3 Business Combinations Measurement of non-controlling interests

AIP IFRS 3 Business Combinations Un-replaced and voluntarily replaced share-based payment awards

AIP IAS 27 Consolidated and Separate Financial Statements Transition requirements for amendments made as a result of IAS 27 Consolidated and Separate Financial Statements

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

IAS 24 Related Party Disclosures (Revised)

IFRIC 14 Prepayments of a Minimum Funding Requirement(Amendment)

AIP IFRS 1 First-time Adoption of International Financial Reporting Standards Accounting policy changes in the year of adoption

AIP IFRS 1 First-time Adoption of International Financial Reporting Standards Revaluation basis as deemed cost

AIP IFRS 1 First-time Adoption of International Financial Reporting Standards Use of deemed cost for operations subject to rate regulation

AIP IFRS 7 Financial Instruments Disclosures Clarication of disclosures

AIP IAS 1 Presentation of Financial Statements Clarication of statement of changes in equity

AIP IAS 34 Interim Financial Reporting Signicant events and transactions

AIP IFRIC 13 Customer Loyalty Programmes Fair value of award credits

IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) Severe Hyperination and Removal of Fixed Dates for First-time Adopters

IFRS 7 Financial Instruments: Disclosures (Amendment)

IAS 12 Income Taxes (Amendment) Deferred Taxes: Recovery of Underlying Assets

IAS 1 Presentation of Items of Other Comprehensive Income Amendments to IAS 1

IFRS 1 Government Loans Amendments to IFRS 1

IFRS 7 Disclosures Offsetting Financial Assets and Financial Liabilities Amendments to IFRS 7

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

IFRS 11Joint Arrangements, IAS 28 Investments in Associates and Joint Ventures

IFRS 12 Disclosures of Interests in Other Entities

IFRS 13 Fair Value Measurement

IAS 19 Employee Benets (Revised)

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

IAS 32 Offsetting Financial Assets and Financial Liabilities Amendments to IAS 32

IFRS 9 Financial Instruments Classication and Measurement


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Effective Date* Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Page

1 Jul 2010 6

1 Jul 2010 17

1 Jul 2010 18

1 Jul 2010 18

1 Jul 2010 19

1 Jul 2010 16

1 Jan 2011 14

1 Jan 2011 15

1 Jan 2011 17

1 Jan 2011 17

1 Jan 2011 17

1 Jan 2011 18

1 Jan 2011 19

1 Jan 2011 19

1 Jan 2011 19

1 Jul 2011 6

1 Jul 2011 7

1 Jan 2012 13

1 Jul 2012 13

1 Jan 2013 7

1 Jan 2013 8

1 Jan 2013 10

1 Jan 2013 11

1 Jan 2013 12

1 Jan 2013 12

1 Jan 2013 14

1 Jan 2013 16

1 Jan 2014 15

1 Jan 2015 9

AIP Annual IFRS Improvements Process

* Effective for annual periods beginning on or after this date

Pronouncements already effective for the previous reporting period

New pronouncements effective for the current reporting period

New pronouncements, which will become effective for the next reporting period

New pronouncements, which will become effective in periods subsequent to the next reporting period


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IFRS 1 First-time Adoption of International Financial

Reporting Standards Limited Exemption from

Comparative IFRS 7 Disclosures for First-time

Adopters

Effective for annual periods beginning on or after 1 July 2010.

Key requirements

IFRS 1 has been amended to allow rst-time adopters to utilise

the transitional provisions of IFRS 7 Financial Instruments:

Disclosures as they relate to the March 2009 amendments to the

standard. These provisions give relief from providing comparativeinformation.

Transition

The amendments may be applied earlier than the effective date,

in which case, this must be disclosed.

Impact

The amendments should provide relief to rst-time adopters,

by reducing the cost and resources required to provide certain

comparative disclosures.


Supplement to IFRS OutlookIssue 66: Amendments to

nancial instrument disclosure exemptions (February 2010)EYG no. AU0442.

IFRS 1 First-time Adoption of International Financial

Reporting Standards (Amendment) Severe

Hyperination and Removal of Fixed Dates for

First-time Adopters


Key requirements

The IASB has provided guidance on how an entity should resume

presenting IFRS nancial statements when its functional currency

ceases to be subject to severe hyperination.

When an entitys date of transition to IFRS is on, or after, thedate its functional currency ceases to be subject to severe

hyperination (the functional currency normalisation date), the

entity may elect to measure all assets and liabilities held before

the functional currencys normalisation date, that were subject to

severe hyperination, at fair value on the date of transition to

IFRS. This fair value may be used as the deemed cost of those

assets and liabilities in the opening IFRS statement of nancial

position.

The amendment also removes the legacy xed dates in IFRS 1

relating to derecognition and day one gain or loss transactions.

In the amended standard these dates coincide with the date of

transition to IFRS.

Transition

The amendments may be applied earlier than the effective date,

in which case, this must be disclosed.

Impact

The deemed cost exemption for entities that have been subject to

severe hyperination provides signicant relief to such entities in

these economies. Having been unable to report under IFRS, the

exemption allows for these entities to recommence reporting under

IFRS. However, the entities will have to perform a fair value exercise

on affected assets and liabilities in order to make use of this

exemption.

The removal of xed dates relating to derecognition and day one

gain or loss transactions may provide relief to rst-time adopters by

reducing the cost and resources required to retrospectively restate

past transactions.


Supplement to IFRS Outlook Issue 92:First-time adoption of IFRS:

severe hyperination and removal of xed dates (December 2010)

EYG no. AU0728.


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IFRS 1 Government Loans Amendments to IFRS 1

Effective for annual periods beginning on or after 1 January 2013.

Key requirements

The IASB has added an exception to the retrospective application

of IFRS 9 Financial Instruments (or IAS 39 Financial Instruments:

Recognition and Measurement, as applicable) and IAS 20

Accounting for Government Grants and Disclosure of Government

Assistance. These amendments require rst-time adopters to

apply the requirements of IAS 20 prospectively to government

loans existing at the date of transition to IFRS. However, entities

may choose to apply the requirements of IFRS 9 (or IAS 39, asapplicable) and IAS 20 to government loans retrospectively if the

information needed to do so had been obtained at the time of

initially accounting for that loan.

The exception would give rst-time adopters relief from

retrospective measurement of government loans with a below-

market rate of interest. As a result of not applying IFRS 9 (or

IAS 39, as applicable) and IAS 20 retrospectively, rst-time

adopters would not have to recognise the corresponding benet

of a below-market rate government loan as a government grant.

Transition

The amendments may be applied earlier than the effective date,in which case, this must be disclosed.

Impact

These amendments give rst-time adopters the same relief as

existing preparers of IFRS nancial statements and therefore will

reduce the cost of transition to IFRS.

IFRS 7 Financial Instruments: Disclosures

(Amendment)


Key requirements

The amendment requires additional quantitative and qualitative

disclosures relating to transfers of nancial assets, when:

Financial assets are derecognised in their entirety, but the

entity has a continuing involvement in them (e.g., options or

guarantees on the transferred assets)

Financial assets are not derecognised in their entiretyTransition

The amendment may be applied earlier than the effective date

and this must be disclosed. Comparative disclosures are not

required for any period beginning before the effective date.

Impact

The amended disclosures are more extensive and onerous than

previous disclosures. Consequently, entities may need to modify

management information systems and internal controls to be able

to extract the necessary quantitative information to prepare the

disclosures.

Other Ernst & Young publicationsSupplement to IFRS Outlook Issue 97: IFRS 7 Financial

Instruments: Disclosures impending changes effective for 2011

and 2012 (March 2011) EYG no. AU0785.

Supplement to IFRS Outlook Issue 85:New disclosures for

derecognition of nancial instruments (October 2010)

EYG no. AU0654.


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IFRS 7 Disclosures Offsetting Financial Assets and

Financial Liabilities Amendments to IFRS 7


Key requirements

These amendments require an entity to disclose information

about rights of set-off and related arrangements (e.g., collateral

agreements). The disclosures would provide users with

information that is useful in evaluating the effect of netting

arrangements on an entitys nancial position. The new

disclosures are required for all recognised nancial instruments

that are set off in accordance with IAS 32 Financial Instruments:

Presentation. The disclosures also apply to recognised nancial

instruments that are subject to an enforceable master netting

arrangement or similar agreement, irrespective of whether

they are set off in accordance with IAS 32.

Transition

These amendments are applied retrospectively in accordance with

IAS 8. They do not refer to the ability to adopt early. However, if

an entity chooses to early adopt IAS 32 Offsetting Financial Assets

and Financial Liabilities Amendments to IAS 32, it also must

make the disclosure required by IFRS 7 Disclosures Offsetting

Financial Assets and Financial liabilities Amendments to IFRS 7.

Impact

In order to extract the necessary data to prepare the new

disclosures, entities (in particular banks) may need to modify

management information systems and internal controls, including

linking their credit systems to accounting systems. Such

modications need to be executed as soon as possible in light

of the 2013 mandatory effective date and the requirement to

apply these disclosures retrospectively.


IFRS Developments Issue 22:Offsetting of nancial instruments

(December 2011) EYG no. AU1053.


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IFRS 9 Financial Instruments Classication and

Measurement

IFRS 9 for nancial assets was rst published in November 2009

and was later updated in October 2010 to include nancial

liabilities. These pronouncements initially required the adoption

of the standard for annual periods on or after 1 January 2013.

Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and

Transition Disclosures, issued in December 2011, moved the

mandatory effective date of both the 2009 and 2010 versions

of IFRS 9 from 1 January 2013 to 1 January 2015.

Key requirements

The rst phase of IFRS 9 addresses the classication and

measurement of nancial instruments (Phase 1). The Boards

work on the other phases is ongoing and includes impairment

of nancial instruments and hedge accounting, with a view to

replacing IAS 39 in its entirety. Phase 1 of IFRS 9 applies to all

nancial instruments within the scope of IAS 39.

Financial assets

All nancial assets are measured at fair value at initial recognition.

Debt instruments may, if the Fair Value Option (FVO) is not invoked,

be subsequently measured at amortised cost if:

The asset is held within a business model that has the objectiveto hold the assets to collect the contractual cash ows

And

The contractual terms of the nancial asset give rise, on

specied dates, to cash ows that are solely payments of

principal and interest on the principal outstanding.

All other debt instruments are subsequently measured at fair

value.

All equity investment nancial assets are measured at fair value

either through other comprehensive income (OCI) or prot or loss.

Equity instruments held for trading must be measured at fair

value through prot or loss. However, entities have an irrevocablechoice by instrument for all other equity nancial assets.

Financial liabilities

For FVO liabilities, the amount of change in the fair value of a

liability that is attributable to changes in credit risk must be

presented in OCI. The remainder of the change in fair value is

presented in prot or loss, unless presentation of the fair value

change in respect of the liabilitys credit risk in OCI would create

or enlarge an accounting mismatch in prot or loss.

All other IAS 39 classication and measurement requirements for

nancial liabilities have been carried forward into IFRS 9, including

the embedded derivative separation rules and the criteria for using

the FVO.

Transition

The entity may choose to apply the classication and the

measurement requirements of IFRS 9 retrospectively, in

accordance with the requirements of IAS 8. However, the

restatement of comparative period nancial statements is

not required.

IFRS 7 has been amended to require additional disclosures on

transition from IAS 39 to IFRS 9. The new disclosures are either

required or permitted on the basis of the entitys date of transition

and whether the entity chooses to restate prior periods.

Early application of the nancial asset requirements is permitted.Early application of the nancial liabilities requirements is

permitted if the entity also applies the requirements for nancial

assets. Early application must be disclosed.

Impact

Phase 1 of IFRS 9 will have a signicant impact on:

The classication and measurement of nancial assets

Reporting for entities that have designated liabilities using

the FVO

For entities considering early adoption, there are a number of

benets and challenges that should be considered. Careful

planning for this transition will be necessary.


Applying IFRS IFRS 9 New mandatory effective date and

transition disclosures (January 2012) EYG no. AU1067.

Implementing Phase 1 of IFRS 9 Second edition (July 2011)

EYG no. AU0897.

Supplement to IFRS Outlook Issue 89: IASB completes Phase 1 of

IFRS 9: Financial Instruments Classication and Measurement

(October 2010) EYG no. AU0680.

Supplement to IFRS Outlook Issue 60: IASB publishes IFRS 9

Phase 1 of new standard to replace IAS 39 (November 2009)EYG no. AU0387.


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IFRS 10 Consolidated Financial Statements, IAS 27

Separate Financial Statements


Key requirements

IFRS 10 replaces the portion of IAS 27 that addresses the

accounting for consolidated nancial statements. It also addresses

the issues raised in SIC-12 Consolidation Special Purpose

Entities which resulted in SIC-12 being withdrawn. IAS 27, as

revised, is limited to the accounting for investments in

subsidiaries, joint ventures, and associates in separate nancial

statements.

IFRS 10 does not change consolidation procedures (i.e., how to

consolidate an entity). Rather, IFRS 10 changes whether an entity is

consolidated by revising the denition of control. Control exists

when an investor has:

Power over the investee (dened in IFRS 10 as when the

investor has existing rights that give it the current ability to

direct the relevant activities)

Exposure, or rights, to variable returns from its involvement

with the investee

And

The ability to use its power over the investee to affect theamount of the investors returns.

IFRS 10 also provides a number of clarications on applying this

new denition of control, including the following key points:

An investor is any party that potentially controls an investee;

such party need not hold an equity investment to be considered

an investor.

An investor may have control over an investee even when it has

less than a majority of the voting rights of that investee

(sometimes referred to as de facto control).

Exposure to risks and rewards is an indicator of control, but

does not in itself constitute control. When decision-making rights have been delegated or are being

held for the benet of others, it is necessary to assess whether

a decision-maker is a principal or an agent to determine

whether it has control.

Consolidation is required until such time as control ceases,

even if control is temporary.

Transition

The new standard is applied retrospectively in accordance with the

requirements of IAS 8 for changes in accounting policy, with some

relief being provided.

Earlier application is permitted if the entity also applies the

requirements of IFRS 11Joint Arrangements, IFRS 12 Disclosure

of Interests in Other Entities, IAS 27 (as revised in 2011) and

IAS 28 Investments in Associates (as revised in 2011) at the

same time.

Impact

IFRS 10 creates a new, and broader, denition of control thanunder current IAS 27. This may result in changes to a consolidated

group (more or fewer entities being consolidated than under

current IFRS).

Assessing control will require a comprehensive understanding of

an investees purpose and design, and the investors rights and

exposures to variable returns, as well as rights and returns held by

other investors. This may require input from sources outside of

the accounting function, such as operational personnel and legal

counsel, and information external to the entity. It will also require

signicant judgement of the facts and circumstances.

Other Ernst & Young publicationsApplying IFRS: Challenges in adopting and applying IFRS 10

(September 2011) EYG no. AU0920.

IFRS Practical Matters: What do the new consolidation, joint

arrangements and disclosures accounting standards mean to you?

(June 2011) EYG no. AU0853.

IFRS Developments Issue 1: IASB issues three new standards:

Consolidated Financial Statements, Joint Arrangements,

and Disclosure of Interests in Other Entities (May 2011)

EYG no. AU0839.


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IFRS 11 Joint Arrangements, IAS 28 Investments in

Associates and Joint Ventures


Key requirements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and

SIC-13Jointly-controlled Entities Non-monetary Contributions

by Venturers. Joint control under IFRS 11 is dened as the

contractually agreed sharing of control of an arrangement, which

exists only when the decisions about the relevant activities require

the unanimous consent of the parties sharing control. The

reference to control in joint control refers to the denition

of control in IFRS 10.

IFRS 11 also changes the accounting for joint arrangements by

moving from three categories under IAS 31 to the following two

categories:

Joint operation An arrangement in which the parties with joint

control have rights to the assets and obligations for the liabilities

relating to that arrangement. Joint operations are accounted for

by showing the partys interest in the assets, liabilities, revenues

and expenses, and/or its relative share of jointly controlled assets,

liabilities, revenue and expenses, if any.

Joint venture An arrangement in which the parties with joint

control have rights to the net assets of the arrangement. Joint

ventures are accounted for using the equity accounting method.

The option to account for joint ventures (as newly dened) using

proportionate consolidation has been removed.

Under this new classication, the structure of the joint

arrangement is not the only factor considered when classifying

the joint arrangement as either a joint operation or a joint

venture, which is a change from IAS 31. Under IFRS 11, parties

are required to considered whether a separate vehicle exists and,

if so, the legal form of the separate vehicle, the contractual terms

and conditions, and other facts and circumstances.

In addition, IAS 28 was amended to include the application of the

equity method to investments in joint ventures.

Transition

IFRS 11 must be applied using a modied retrospective approach.

Early application of IFRS 11 is permitted, provided that an entity

also applies the requirements of IFRS 10, IFRS 12, IAS 27 (as

revised in 2011) and IAS 28 (as revised in 2011) at the same

time.

Impact

IFRS 11 represents a signicant change for parties currently

accounting for interests in jointly controlled entities using

proportionate consolidation, if such arrangements are classied

as joint ventures under IFRS 11. It is also possible that

arrangements that were previously considered to be jointly

controlled entities will be considered joint operations under

IFRS 11, which would affect the accounting for such entities.

Since the denition of control in joint control refers to the new

concepts in IFRS 10, it is possible that what is considered a joint

arrangement under IFRS 11 will change. Signicant judgement offacts and circumstances may be required to assess whether joint

control exists and to determine the classication of the

arrangement.


Applying IFRS: Challenges in adopting and applying IFRS 11

(September 2011) EYG no. AU0921.





Consolidated Financial Statements, Joint Arrangements,and Disclosure of Interests in Other Entities (May 2011)

EYG no. AU0839.


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IFRS 12 Disclosure of Interests in Other Entities


Key requirements

IFRS 12 applies to an entity that has an interest in subsidiaries,

joint arrangements, associates and/or structured entities. Many of

the disclosure requirements of IFRS 12 were previously included

in IAS 27, IAS 31, and IAS 28, while others are new.

The objective of the new disclosure requirements is to help the

users of nancial statements understand the following:

The effects of an entitys interests in other entities on itsnancial position, nancial performance and cash ows

The nature of, and the risks associated with, the entitys

interest in other entities

Some of the more extensive qualitative and quantitative disclosures

of IFRS 12 include:

Summarised nancial information for each of its subsidiaries

that have non-controlling interests that are material to the

reporting entity

Signicant judgements used by management in determining

control, joint control and signicant inuence, and the type

of joint arrangement (i.e., joint operation or joint venture),

if applicable

Summarised nancial information for each individually material

joint venture and associate

Nature of the risks associated with an entitys interests in

unconsolidated structured entities, and changes to those risks.

Transition

IFRS 12 must be applied retrospectively in accordance with the

requirements of IAS 8 for changes in accounting policy, with

comparative disclosures required.

An entity may early adopt IFRS 12 before adopting IFRS 10,

IFRS 11, IAS 27 and IAS 28. Entities are also encouraged to

provide some of the information voluntarily without necessarily

adopting all of IFRS 12 before its effective date.

Impact

The new disclosures will assist users to make their own

assessment of the nancial impact were management to reach

a different conclusion regarding consolidation. Additional

procedures and changes to systems may be required to gather

information for the preparation of the additional disclosures.



Consolidated Financial Statements, Joint Arrangements,

and Disclosure of Interests in Other Entities (May 2011)EYG no. AU0839.




IFRS 13 Fair Value Measurement


Key requirements

IFRS 13 does not affect when fair value is used, but rather

describes how to measure fair value where fair value is required or

permitted by IFRS.

Fair value under IFRS 13 is dened as the price that would be

received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement

date (i.e., an exit price). Fair value as used in IFRS 2 Share-

based Payments and IAS 17 Leases is excluded from the scope of

IFRS 13.

The standard provides clarication on a number of areas, including

the following:

Concepts of highest and best use and valuation premise

are relevant only for non-nancial assets and liabilities

Market participants are assumed to transact in a way that

maximises value in situations where the unit of account for the

item being measured is not clear from other IFRS

The impact of blockage discounts is prohibited in all fair value

measurements

A description of how to measure fair value when a market

becomes less active.

New disclosures related to fair value measurements are also

required to help users understand the valuation techniques and

inputs used to develop fair value measurements and the effect of

fair value measurements on prot or loss.

Transition

IFRS 13 is applied prospectively. Early application is permitted

and must be disclosed.

Impact

Specic requirements relating to the highest and best use and the

principal market may require entities to re-evaluate their

processes and procedures for determining fair value, and assess

whether they have the appropriate expertise.


IFRS Developments Issue 2: Fair value measurement guidance

converges (May 2011)EYG no. AU0840.


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IAS 1 Presentation of Items of Other Comprehensive

Income Amendments to IAS 1


Key requirements

The amendments to IAS 1 change the grouping of items

presented in OCI. Items that would be reclassied (or recycled) to

prot or loss at a future point in time (for example, upon

derecognition or settlement) would be presented separately from

items that will never be reclassied.

The amendments do not change the nature of the items that arecurrently recognised in OCI, nor do they impact the determination

of whether items in OCI are reclassied through prot or loss in

future periods.

Transition

These amendments are applied retrospectively in accordance with

the requirements of IAS 8 for changes in accounting policy. Earlier

application is permitted and must be disclosed.

Impact

Although the change in presentation of OCI is relatively minor

with respect to the overall nancial statements, it will assist users

to identify more easily the potential impact that OCI items may

have on future prot or loss.


IFRS Developments Issue 7: Changes to the presentation of other

comprehensive income amendments to IAS 1 (June 2011)

EYG no. AU0787.

IAS 12 Income Taxes (Amendment) Deferred Taxes:

Recovery of Underlying Assets


Key requirements

The amendment to IAS 12 introduces a rebuttable presumption

that deferred tax on investment properties measured at fair value

will be recognised on a sale basis, unless an entity has a business

model that would indicate the investment property will be

consumed in the business. If consumed, an own use basis must be

adopted.

The amendment also introduces the requirement that deferred

tax on non-depreciable assets measured using the revaluation

model in IAS 16 should always be measured on a sale basis.

As a result of this amendment, SIC-21 Income Taxes Recovery

of Revalued Non-Depreciable Assets has been withdrawn.

Transition

This amendment is applied retrospectively, in accordance with the

requirements of IAS 8 for changes in accounting policy. Earlier

application is permitted and must be disclosed.

Impact

In certain jurisdictions entities have noted difculties in applyingthe principles of IAS 12 to certain investment properties. This

amendment is intended to give guidance on the tax rate that

should be applied.


Supplement to IFRS Outlook Issue 93: Amendments to IAS 12

Income Taxes (December 2010) EYG no. AU0729.


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IAS 19 Employee Benets (Revised)


Key requirements

The revised standard includes a number of amendments that range

from fundamental changes to simple clarications and re-wording.

The more signicant changes include the following:

For dened benet plans, the ability to defer recognition of

actuarial gains and losses (i.e., the corridor approach) has been

removed. As revised, actuarial gains and losses are recognised in

OCI as they occur. Amounts recorded in prot or loss are limited

to current and past service costs, gains or losses on settlements,and net interest income (expense). All other changes in the net

dened benet asset (liability) are recognised in OCI with no

subsequent recycling to prot or loss.

Objectives for disclosures of dened benet plans are explicitly

stated in the revised standard, along with new or revised

disclosure requirements. These new disclosures include

quantitative information about the sensitivity of the dened

benet obligation to a reasonably possible change in each

signicant actuarial assumption.

Termination benets will be recognised at the earlier of

when the offer of termination cannot be withdrawn, or

when the related restructuring costs are recognised under

IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

The distinction between short-term and other long-term

employee benets will be based on the expected timing of

settlement rather than the employees entitlement to the

benets.

Transition

The revised standard is applied retrospectively in accordance with

the requirements of IAS 8 for changes in accounting policy. There

are limited exceptions for restating assets outside the scope of

IAS 19 and presenting sensitivity disclosures for comparative

periods in the period the amendments are rst effective. Earlyapplication is permitted and must be disclosed.

Impact

These changes represent a signicant further step in reporting

gains and losses outside of prot and loss, with no subsequent

recycling. Actuarial gains and losses will be excluded permanently

from earnings.


Applying IFRS: Implementing the 2011 revisions to employee

benets (November 2011) EYG no. AU1007.

IFRS Developments Issue 6: Signicant changes to accounting for

pensions (June 2011) EYG no. AU0888.

IAS 24 Related Party Disclosures (Revised)


Key requirements

The denition of a related party has been claried to simplify the

identication of related party relationships, particularly in relation

to signicant inuence and joint control.

A partial exemption from the disclosures has been included for

government-related entities, whereby the general disclosure

requirements of IAS 24 will not apply. Instead, alternative

disclosures have been included, requiring: The name of the government and the nature of its relationship

with the reporting entity

The nature and amount of individually signicant transactions

A qualitative or quantitative indication of the extent of other

transactions that are collectively signicant.

Transition

This amendment is applied retrospectively, in accordance with

IAS 8. Earlier application is permitted for either the partial

exemption for government-related entities or the entire revised

standard, with disclosure of such fact.

ImpactEntities will need to consider the revised denition of related

parties to ensure that all relevant information is still being

captured. The reduced disclosures for government-related entities

may provide some relief to such entities. However, a substantial

amount of work is likely to be required to identify relationships

caused by the amended denitions and to ensure information is

captured for the disclosures that are required under the revised

standard.


Supplement to IFRS Outlook Issue 59: Related Party Disclosures

Amendments to IAS 24 (November 2009)EYG no. AU0386.


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IAS 32 Offsetting Financial Assets and Financial

liabilities Amendments to IAS 32


Key requirements

These amendments clarify the meaning of currently has a legally

enforceable right to set-off. The amendments also clarify the

application of the IAS 32 offsetting criteria to settlement systems

(such as central clearing house systems) which apply gross

settlement mechanisms that are not simultaneous.

IAS 32 paragraph 42(a) requires that a nancial asset and anancial liability shall be offset ... when, and only when, an entity

currently has a legally enforceable right to set off the recognised

amounts The amendments clarify that rights of set-off must

not only be legally enforceable in the normal course of business,

but must also be enforceable in the event of default and the event

of bankruptcy or insolvency of all of the counterparties to the

contract, including the reporting entity itself. The amendments

also clarify that rights of set-off must not be contingent on a

future event.

The IAS 32 offsetting criteria require the reporting entity to intend

either to settle on a net basis, or to realise the asset and settle the

liability simultaneously. The amendments clarify that only grosssettlement mechanisms with features that eliminate or result in

insignicant credit and liquidity risk and that process receivables

and payables in a single settlement process or cycle would be, in

effect, equivalent to net settlement and, therefore, meet the net

settlement criterion.

Transition

These amendments are applied retrospectively, in accordance with

IAS 8. Early application is permitted. However, if an entity chooses

to early adopt, it must disclose that fact and also make the

disclosure required by IFRS 7 Disclosures Offsetting Financial

Assets and Financial liabilities Amendments to IFRS 7.

Impact

Entities will need to review legal documentation and settlement

procedures, including those applied by the central clearing houses

they deal with to ensure that offsetting of nancial instruments is

still possible under the new criteria. Changes in offsetting may

have a signicant impact on nancial presentation. The effect on

leverage ratios, regulatory capital requirements, etc., will need to

be considered by management.


IFRS Developments Issue 22: Offsetting of nancial instruments

(December 2011) EYG no. AU1053.

IFRIC 14 Prepayments of a Minimum Funding

Requirement (Amendment)


Key requirements

The amendment to IFRIC 14 provides further guidance on

assessing the recoverable amount of a net pension asset. The

amendment permits an entity to treat the prepayment of a

minimum funding requirement as an asset.

Transition

This amendment is applied retrospectively to the beginning of theearliest period presented in the rst nancial statements in which

the entity originally applied IFRIC 14.

Impact

Entities will need to determine whether prepayments made will

need to be re-assessed for their impact on the recoverability of

pension assets. Entities applying the corridor approach to

recognise actuarial gains and losses will also need to take account

of the interaction between the corridor and the recoverability of

the plan assets.


Supplement to IFRS Outlook Issue 64: Prepayments of a minimum

funding requirement amendments to IFRIC 14 (November 2009)

EYG no. AU0407.


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IFRIC 19 Extinguishing Financial Liabilities with Equity

Instruments


Key requirements

IFRIC 19 claries that equity instruments issued to a creditor to

extinguish a nancial liability are consideration paid in accordance

with paragraph 41 of IAS 39. The equity instruments issued are

measured at their fair value, unless this cannot be reliably

measured, in which case, they are measured at the fair value of

the liability extinguished. Any gain or loss is recognised

immediately in prot or loss.

If only part of a nancial liability is extinguished, the entity needs

to determine whether part of the consideration paid relates to a

modication of the liability outstanding. If so, the consideration

paid is allocated between both components.

The interpretation does not apply when the creditor is acting in

the capacity of a shareholder, in common control transactions, or

when the issue of equity shares was part of the original terms of

the liability.

Transition

This interpretation is applied retrospectively, in accordance with

IAS 8 from the beginning of the earliest comparative period

presented if the amendment results in a change in accounting

policy. Earlier application is permitted and must be disclosed.

Impact

In many cases, IFRIC 19 will result in a gain recognised in prot or

loss as the fair value of the equity issued will often be less than the

carrying value of the liability. Determining the fair value of the

equity may be difcult if the shares are not actively traded. As the

interpretation is applied retrospectively, determining past fair

values may be particularly difcult.

When these transactions occur within the same group, entities will

need to develop an appropriate accounting policy as commoncontrol transactions are scoped out of the interpretation.


Supplement to IFRS Outlook Issue 62: Extinguishing nancial

liabilities with equity instruments (November 2009)

EYG no. AU0405.

IFRIC 20 Stripping Costs in the Production Phase of a

Surface Mine


Key requirements

This Interpretation applies to waste removal (stripping) costs

incurred in surface mining activity, during the production phase of

the mine.

If the benet from the stripping activity will be realised in the

current period, an entity is required to account for the stripping

activity costs as part of the cost of inventory. When the benetis the improved access to ore, the entity should recognise these

costs as a non-current asset, only if certain criteria are met.

This is referred to as the stripping activity asset. The stripping

activity asset is accounted for as an addition to, or as an

enhancement of, an existing asset.

If the costs of the stripping activity asset and the inventory

produced are not separately identiable, the entity allocates the

cost between the two assets using an allocation method based on

a relevant production measure.

After initial recognition, the stripping activity asset is carried at its

cost or revalued amount less depreciation or amortisation and less

impairment losses, in the same way as the existing asset of which

it is a part.

Transition

This Interpretation is applied to production stripping costs

incurred on or after the beginning of the earliest period presented.

The Interpretation does not require full retrospective application.

Instead it provides a practical expedient for any stripping costs

incurred and capitalised prior to that date.

Earlier application is permitted and must be disclosed.

Impact

IFRIC 20 represents a change from the current life of mineaverage strip ratio approach used by many mining and metals

entities reporting under IFRS. Depending on the specic facts and

circumstances of an entitys mines, these changes may impact

both nancial position and prot or loss. In addition, changes may

also be required to processes, procedures and systems of the

reporting entity.


IFRS Developments for Mining & Metals: Accounting for waste

removal costs (October 2011) EYG no. AU0979.


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IFRS 1 First-time

Adoption of International

Financial Reporting

Standards

Accounting policy changes in the year of adoption

The amendment claries that, if a rst-time adopter changes its accounting policies or its use ofthe exemptions in IFRS 1 after it has published an interim nancial report in accordance withIAS 34 Interim Financial Reporting, it must explain those changes and update the reconciliationsbetween previous GAAP and IFRS.

Applicable to annual periods beginning on or after 1 January 2011. Earlier application is permittedand must be disclosed.

IFRS 1 First-timeAdoption of InternationalFinancial ReportingStandards

Revaluation basis as deemed cost

The amendment allows rst-time adopters to use an event-driven fair value as deemed cost, even ifthe event occurs after the date of transition, but before the rst IFRS nancial statements are issued.When such re-measurement occurs after the date of transition to IFRS, but during the period covered byits rst IFRS nancial statements, the adjustment is recognised directly in retained earnings (or ifappropriate, another category of equity).

Applicable to annual periods beginning on or after 1 January 2011. Entities that adopted IFRS inprevious periods are permitted to apply the amendment retrospectively in the rst annual period afterthe amendment is effective, with disclosure of such fact.

IFRS 1 First-timeAdoption of InternationalFinancial ReportingStandards

Use of deemed cost for operations subject to rate regulation

The amendment expands the scope of deemed cost for property, plant and equipment or intangibleassets to include items subject to rate regulated activities. The exemption will be applied on anitem-by-item basis. All assets to which the deemed cost exemption is applied will also need to betested for impairment at the date of transition.

The amendment allows entities with rate-regulated activities to use the carrying amount of theirproperty, plant and equipment and intangible balances from their previous GAAP as their deemedcost upon transition to IFRS. These balances may include amounts that would not be permittedfor capitalisation under IAS 16 Property, Plant and Equipment, IAS 23 Borrowing Costs andIAS 38 Intangible Assets.

Applicable to annual periods beginning on or after 1 January 2011. Earlier application is permittedand must be disclosed.

IFRS 3 BusinessCombinations

Transition requirements for contingent consideration from a business combination that occurred

before the effective date of the revised IFRS

The amendment claries that the amendments to IFRS 7, IAS 32 and IAS 39, which eliminate theexemption for contingent consideration, do not apply to contingent consideration that arose frombusiness combinations whose acquisition dates precede the application of IFRS 3 (as revised in 2008).

The amendment is applicable to annual periods beginning on or after 1 July 2010. The amendment isapplied retrospectively, in accordance with the requirements of IAS 8 for changes in accounting policy.

Improvements to International Financial Reporting

Standards (issued 2010)

Key requirements

The annual improvements process has been adopted by the IASB

to deal with non-urgent but necessary amendments to IFRS (the

annual improvements).

In this third edition of the annual improvements, the IASB issued

eleven amendments to six standards and one interpretation,

summaries of which are provided below.


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Measurement of non-controlling interests (NCI)

The amendment limits the scope of the measurement choices for NCI. Only the components of NCI thatare present ownership interests that entitle their holders to a proportionate share of the entitys netassets, in the event of liquidation, are measured either:

At fair value

Or

At the present ownership instruments proportionate share of the acquirees identiable net assets.

Other components of NCI are measured at their acquisition date fair value, unless anothermeasurement basis is required by another IFRS (e.g., IFRS 2).

Applicable to annual periods beginning on or after 1 July 2010. The amendment is applied

prospectively from the date the entity applies IFRS 3 (revised 2008).


Un-replaced and voluntarily replaced share-based payment awards

The amendment requires an entity in a business combination to account for the replacement of theacquirees share-based payment transactions (whether obliged or voluntarily). These transactions needto be split between consideration paid as part of the business combination and post combinationexpenses. However, if the entity replaces the acquirees awards that expire as a consequence of thebusiness combination, these are recognised as post-combination expenses.

The amendment also species the accounting for share-based payment transactions that the acquirerdoes not exchange for its own awards:

If vested they are part of NCI and measured at their market-based measure.

If unvested they are measured at market-based value as if granted at the acquisition date, andallocated between NCI and post-combination expense.

The amendment is applicable to annual periods beginning on or after 1 July 2010. The amendment isapplied prospectively.

IFRS 7 FinancialInstruments: Disclosures

Clarication of disclosures

The amendment emphasises the interaction between quantitative and qualitative disclosures and thenature and extent of risks associated with nancial instruments.

The amendments to quantitative and credit risk disclosures:

Clarify that only nancial assets with carrying amounts that do not reect the maximum exposure tocredit risk need to provide further disclosure of the amount that represents the maximum exposureto such risk

Require, for all nancial assets, disclosure of the nancial effect of collateral held as security andother credit enhancements, including the amount that best represents the maximum exposure to

credit risk (e.g., a description of the extent to which collateral mitigates credit risk) Remove the disclosure requirement of the collateral held as security, other credit enhancements and

an estimate of their fair value for nancial assets that are past due but not impaired, and nancialassets that are individually determined to be impaired

Remove the requirement to specically disclose nancial assets renegotiated to avoid becoming pastdue or impaired

Clarify that the additional disclosure required for nancial assets obtained by taking possession ofcollateral or other credit enhancements are only applicable to assets held at the reporting date.

Applicable to annual periods beginning on or after 1 January 2011. The amendment is appliedretrospectively, in accordance with the requirements of IAS 8 for changes in accounting policy.

Further information about this amendment can be found in Ernst & Youngs publication Supplement toIFRS Outlook Issue 97: IFRS 7 Financial Instruments: Disclosures Impending changes effective for2011 and 2012 (March 2011) EYG no. AU0785.


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IAS 1 Presentation ofFinancial Statements

Clarication of statement of changes in equity

The amendment claries that an entity will present an analysis of OCI for each component of equity,either in the statement of changes in equity or in the notes to the nancial statements.


IAS 27 Consolidated andSeparate FinancialStatements

Transition requirements for amendments made as a result of IAS 27 Consolidated and Separate

Financial Statements

The amendment claries that the consequential amendments from IAS 27 made to IAS 21 The Effect ofChanges in Foreign Exchange Rates, IAS 28 and IAS 31 apply prospectively for annual periods beginningon or after 1 July 2009 or earlier when IAS 27 is applied earlier.

The amendment is applicable to annual periods beginning on or after 1 July 2010. The amendment isapplied retrospectively, in accordance with the requirements of IAS 8 for changes in accounting policy.

IAS 34 Interim FinancialReporting

Signicant events and transactions

The amendment provides guidance to illustrate how to apply the disclosure principles in IAS 34 andrequires additional disclosures of:

The circumstances likely to affect fair values of nancial instruments and their classication

Transfers of nancial instruments between different levels of the fair value hierarchy

Changes in classication of nancial assets

Changes in contingent liabilities and assets

The amendment is applicable to periods beginning on or after 1 January 2011. The amendment isapplied retrospectively, in accordance with the requirements of IAS 8 for changes in accounting policy.

IFRIC 13 CustomerLoyalty Programmes

Fair value of award credits

The amendment claries that when the fair value of award credits is measured based on the value ofthe awards for which they could be redeemed, the amount of discounts or incentives otherwise grantedto customers not participating in the award credit scheme is to be taken into account.



Supplement to IFRS Outlook Issue 71: Improvements to IFRSs 2010 (May 2010) EYG no. AU0530.


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Since the publication of the IFRS Update for nancial year ending

30 June 2011, the Interpretations Committee has deliberated a

number of items. Certain items were published in the IASBs

IFRIC Update as not having been added to the Interpretations

Committees agenda, together with the reason for not doing so.

For some of these items, the Interpretations Committee included

further information about how the standards should be applied.

This guidance does not constitute an interpretation, but rather,

provides additional information on the issues raised and the

Interpretations Committees views on how the standards and

current interpretations are to be applied.

The table below only summarises topics that the Interpretation

Committee decided not to take onto its agenda. The full list of

items considered by the Interpretations Committee during its

meetings can be found in the IFRIC Update on the IASBs website.3

Final dateconsidered

Issue Summary of reasons given for not adding issue to theInterpretations Committees agenda

July 2011 IAS 16 Property, Plant and Equipment Cost of testing

The Interpretations Committee received a request to clarify whetherthe sales proceeds from one asset in a group of assets could be offsetagainst the costs of testing the other assets in the group that were notyet available for use. In the fact pattern, the asset group is subject toregulation that requires it to identify a commercial production datefor the whole of the group.

The Interpretations Committee noted that:

Paragraph 17(e) of IAS 16 applies separately to each item ofproperty, plant and equipment.

The commercial production date for the asset group referred toin the submission is a different concept from the available for use

assessment in paragraph 16(b) of IAS 16. The guidance in IAS 16 is sufcient to identify the date at which an

item of property, plant and equipment is available for use suchthat proceeds that reduce costs of testing an asset can bedistinguished from revenue from commercial production.

July 2011 IAS 19 Employee Benets Denedcontribution plans with vestingconditions

The Interpretations Committee was asked whether contributions todened benet plans with vesting conditions should be recognised as anexpense in the period in which they are paid or over the vesting period. Inthe examples given in the submission, the employees failure to meet avesting condition could result in the refund of contributions to, orreductions in future contributions by, the employer.


The classication of the plan is not affected by vesting conditions ifthe employer is not required to make additional contributions tocover shortfalls because of these vesting conditions.

Each contribution to a dened contribution plan is to be recognisedeither as an expense or a liability (accrued expense) over the periodof service that obliges the employer to pay the contribution to thedened contribution plan.

The period of service that obliges the employer to pay thecontribution to the dened contribution plan is distinguished fromthe period of service that entitles an employee to receive the benetfrom the dened contribution plan (i.e., the vesting period), althoughboth periods may be coincident in some circumstances.

Refunds are recognised as an asset and as income when the entity/employer becomes entitled to the refunds.

Section 2: Items not taken onto the InterpretationsCommittees agenda

3 The IFRIC Update is available at http://www.ifrs.org/Updates/IFRIC+Updates/IFRIC+Updates.htm.


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September 2011 IFRS 3 Business Combinations Acquirer in a reverse acquisition

The Interpretations Committee received a request for guidance onwhether a business that is not a legal entity could be considered to bethe acquirer in a reverse acquisition under IFRS 3.

The Interpretations Committee observed that both IFRS and thecurrent Conceptual Framework do not require a reporting entity to

be a legal entity. Consequently, the Interpretations Committee notedthat an acquirer that is a reporting entity, but not a legal entity, canbe considered to be the acquirer in a reverse acquisition.

September 2011 IAS 27 Consolidated and SeparateFinancial Statements Groupreorganisations in separate nancialstatements

The Interpretations Committee received a request to clarify theaccounting for reorganisations of groups that result in a newintermediate parent having more than one direct subsidiary. Therequest addresses the accounting of the new intermediate parent forits investments in subsidiaries when it accounts for these investmentsin its separate nancial statements at cost.


The normal basis for determining the cost of an investment in asubsidiary has to be applied to reorganisations that result in thenew intermediate parent having more than one direct subsidiary.Paragraphs 38B and 38C of IAS 27 (amended 2008) or paragraphs

13 and 14 of IAS 27 (revised 2011) apply only when the assetsand liabilities of the new group and the original group (or originalentity) are the same before and after the reorganisation. Thiscondition is not met in reorganisations that result in the newintermediate parent having more than one direct subsidiary.Therefore, these paragraphs in IAS 27 do not apply to suchreorganisations as those presented in the InterpretationsCommittee submission.

The guidance in paragraphs 38B and 38C of IAS 27 (amended2008) or paragraphs 13 and 14 of IAS 27 (revised 2011) cannotbe applied to reorganisations that result in the new intermediateparent having more than one direct subsidiary by analogy, becausethis guidance is an exception to the normal basis for determiningthe cost of an investment in a subsidiary.


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24 IFRS Update of standards and interpretations in issue at 31 March 2012



September 2011 IFRS 3 Business Combinations Business combinations involvingnewly formed entities: factorsaffecting the identication of theacquirer

The Interpretations Committee received a request for guidance on thecircumstances or factors that are relevant when identifying anacquirer in a business combination under IFRS 3. Specically, thesubmitter described a fact pattern in which a group plans to spin offtwo of its subsidiaries using a new entity (Newco). Newco will acquirethese subsidiaries for cash from the parent company (Entity A) onlyon the condition of the occurrence of Newcos initial public offering(IPO). The cash paid by Newco to Entity A to acquire the subsidiaries

is raised through the IPO. After the IPO occurs, Entity A loses controlof Newco. If the IPO does not take place, Newco will not acquire thesubsidiaries.

The Interpretations Committee observed that the accounting for afact pattern involving the creation of a newly formed entity is toobroad to be addressed through an interpretation or through anannual improvement. Consequently, the Interpretations Committeerecommended this be addressed in the IASBs project on commoncontrol transactions.

September 2011 IFRS 3 Business Combinations Business combinations involvingnewly formed entities: business

combinations under common control

The Interpretations Committee was asked for guidance on accountingfor common control transactions. More specically, the submissiondescribed a fact pattern that illustrated a type of common control

transaction in which the parent company (Entity A), which is whollyowned by Shareholder A, transfers a business (Business A) to a newentity (referred to as Newco), also wholly owned by Shareholder A.The submission requested clarication on (a) the accounting at thetime of the transfer of the business to Newco; and (b) whether aninitial public offering (IPO) of Newco, which might occur after thetransfer of Business A to Newco, was considered to be relevant inanalysing the transaction under IFRS 3.

The Interpretations Committee observed that the accounting forcommon control transactions is too broad to be addressed through aninterpretation or through an annual improvement. Consequently, the

Interpretations Committee recommended this be addressed in theIASBs project on common control transactions.


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25IFRS Update of standards and interpretations in issue at 31 March 2012



November 2011 IAS 12 Income Taxes Rebuttablepresumption to determine themanner of recovery

Paragraph 51C of IAS 12 contains a rebuttable presumption, for thepurposes of recognising deferred tax, that the carrying amount of aninvestment property measured at fair value will be recovered through

sale. The Interpretations Committee was asked to clarify whether thatpresumption can be rebutted in cases other than the case described inparagraph 51C.


A presumption is a matter of consistently applying a principle (or anexception) in IFRSs in the absence of acceptable reasons to thecontrary and that it is rebutted when there is sufcient evidence toovercome the presumption.

Because paragraph 51C is expressed as a rebuttable presumptionand the sentence explaining the rebuttal of the presumption doesnot express the rebuttal as if and only if, the presumption inparagraph 51C of IAS 12 is rebutted in other circumstances as well,provided that sufcient evidence is available to support thatrebuttal.

January 2012 IAS 19 Employee Benets Applyingthe denition of termination benetsto Altersteilzeit plans

The Interpretations Committee received a request for guidanceregarding the application of IAS 19 (2011) to Altersteilzeit plans(ATZ plans) in Germany. ATZ plans are early retirement programmes

designed to create an incentive for employees to transition intoretirement before their legal retirement age. ATZ plans offer bonuspayments to employees in exchange for a 50% reduction in workinghours. Their employment is terminated at the end of a requiredservice period. The bonus payments are wholly conditional on thecompletion of the required service period. Eligibility for the benetwould be on the basis of the employees age, but would also typicallyinclude a past service requirement.

The Interpretations Committee noted that, based on the fact patterndescribed above:

ATZ plans have attributes of both required service and terminationbenets.

Consistent with paragraph 162(a) of IAS 19 (2011), the fact thatthe bonus payments are wholly conditional upon completion of anemployee service over a period indicates that the benets are inexchange for that service. Therefore, they do not meet thedenition of termination benets.


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26 IFRS Update of standards and interpretations in issue at 31 March 2012

Section 3: Expected future pronouncements fromthe IASB

The IASB is currently working on a number of projects and

interpretations, some of which are expected to be issued by the

end of 2012 or in 2013. Therefore, users of this publication are

advised to verify that there has been no change in the IFRS

requirements between 31 March 2012 and the date on which

their nancial statements are authorised for issue.

Any standards or interpretations that are issued, but not yet

effective, need to be considered in the disclosure requirements of

a reporting entity as set out in IAS 8. This includes disclosing the

known or reasonably estimable impact that initial application of

the IFRS is expected to have on the entitys nancial statements.

If the impact is not known or reasonably estimable, disclosures of

this fact must also be made.

The table below sets out an estimated timeline of the changes to

IFRS as a result of the ongoing IASB projects. Many of these

projects are joint projects between the IASB and the US Financial

Accounting Standards Board (FASB).

Please note that this timeline is subject to change by the IASB.

Full details are available on the IASB website.

Ongoing IASB projects4 Q2 2012 Q3 2012 Q4 2012

Financial instruments

Classication and measurement5 Exposure period6

Impairment5 Re-exposure6

General hedge accounting Review draft Final IFRS

Macro hedge accounting Discussion paper or exposure draft6

Leases5 Re-exposure6

Revenue recognition5 Consider comments received

Insurance contracts5

Review draft or revised exposure draft6

Consolidation Investment entities Consider comments received

Transaction Guidance (Proposed

amendments to IFRS 10)Final IFRS

Annual improvements 2009 2011 Final IFRS

Annual improvements 2010 2012 Exposure draft6

Annual improvements 2011 2013 Exposure draft6

Post-implementation reviews

IFRS 8 Operating Segments Request for views

IFRS 3 Business Combinations Initiate review

4 The timeline and most up to date information for these projects can be found on the IASBs website

http://www.ifrs.org/Current+Projects/IASB+Projects/IASB+Work+Plan.htm. This is updated on a regular basis by the IASB.5 Projects developed jointly with the FASB.6 Timing of nal IFRS is not included on the IASB work plan. However, this is not expected to be published in 2012.

The IASB also has a number of other projects that are considered

important, but less urgent and, therefore, are not included in its

current work plan. These include nancial statement presentation,

nancial instruments with characteristics of equity, emissions

trading schemes, liabilities and income taxes). The IASB is

reviewing these projects as part of its agenda consultation process

and will provide a feedback statement during 2012.

Ernst & Young publications

Further information about these proposed new pronouncements

can be found in:

Joint Project Watch IASB/FASB joint projects from an IFRS

perspective (December 2011) EYG no. AU1073

IASB Projects A pocketbook guide (December 2011) EYG no.

AU1076

IFRS Developments Issue 8: Proposed improvements to IFRS

(June 2011) EYG no. AU0885

Publications on individual IASB projects can also be found at

www.ey.com/GL/en/Issues/IFRS/Publications.


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