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IFRS update for
fnancial years ending
31 December 2010
(including all standards and interpretations
issued at 30 September 2010)
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2 IFRS update for nancial years ending 31 December 20102008 International Financial Reporting Standards update2
Contents
Introduction 3
Section 1: New and amended standards and interpretations applicable
to the December 2010 year-end 5
IFRS 1 First-time Adoption of International Financial Reporting
Standards — Additional Exemptions for First-time Adopters (Amendments) 5
IFRS 2 Group Cash-settled Share-based Payment Arrangements 5
IFRS 3 Business Combinations (Revised) 6
IAS 27 Consolidated and Separate Financial Statements (Amendment) 7
IAS 39 Financial Instruments: Recognition and Measurement — Eligible
hedged items (Amendments) 7
IFRIC 17 Distributions of Non-cash Assets to Owners 8
Improvements to International Financial Reporting Standards
(issued 2008) 9
Improvements to International Financial Reporting Standards
(issued 2009) 10
Section 2: New and amended standards and interpretations
applicable to December 2011 year-ends 12
IFRS 1 First-time Adoption of International Financial Reporting Standards
— Limited Exemption from Comparative IFRS 7 Disclosures
for First-time Adopters 12
IAS 24 Related Party Disclosures (Revised) 12
IAS 32 Financial Instruments: Presentation — Classification of
Rights Issues (Amendment) 13
IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment) 13
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 14
Improvements to International Financial Reporting Standards
(issued 2009) 15
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3IFRS update for nancial years ending 31 December 20102008 International Financial Reporting Standards update 3
Section 3: New and amended standards and interpretations issued
that are effective subsequent to December 2011 year-ends 18
IFRS 9 Financial Instruments 18
Section 4: Items not taken onto the Interpretations Committee
agenda where the Interpretations Committee has provided
guidance on the interpretation of IFRS 19
Section 5: Exposure drafts of new and amended standards
and interpretations that are still to be issued as standards
and interpretations 23
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IFRS update for nancial years ending 31 December 20103
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 is signicant
and is likely to continue in the foreseeable future.
The nature of the changes ranges from signicant amendments
to fundamental principles to some minor changes included in the
annual improvements process. They will affect many differentareas of accounting such as the presentation of nancial
statements, accounting for employee benets and business
combinations.
Some of the changes have implications that go beyond matters
of accounting, potentially also impacting the IT systems of many
companies. Furthermore, these changes may impact business
decisions, such as the design of share-based payment plans or
the structuring of transactions.
The challenge for preparers will be to gain an understanding of
what lies ahead.
Purpose of this publicationThis publication provides an overview of the upcoming changes
in standards and interpretations for entities that have a
December year-end. The publication does not attempt to provide
an in-depth analysis or discussion of the topics. Rather, the
objective is to highlight key aspects of these changes. Reference
should be made to the text of the standards and interpretations
before taking any decisions or actions.
As many of the changes which come into effect in the future,
this publication focuses, in particular, on December 2010
reporting, but also considers the effect on December 2011
reporting and beyond.
This publication includes all changes nalised by 30 September
2010. The Table of Contents contains the list of all such
changes, which are presented in the following order:
Section 1: New and amended standards and new interpretations
that must be applied to nancial years ending December 2010.
Section 2: New and amended standards and new interpretations
that must be applied to nancial years ending December 2011,
although entities may elect to apply some of these in an earlier
period.
Section 3: New and amended standards and new interpretations
issued that are effective subsequent to December 2011
year-ends, although entities may elect to apply some of these in
an earlier period.
Section 4: Items not taken onto the International Financial
Reporting Standards Interpretations Committee (Interpretations
Committee) agenda, when the reason for the rejection providessome accounting guidance that assists with the interpretation
and application of IFRS.
Section 5: Exposure drafts of new and amended standards and
interpretations that are still to be nalised.
Sections 1 and 2 provide a high-level overview of the key
requirements of each new and amended standard issued by
the International Accounting Standards Board (IASB) and
interpretations issued by the Interpretations Committee. This
overview provides a summary of the transitional requirements
and a brief discussion of the impacts that the changes may have
on an entity’s nancial statements. These sections are presentedin a numerical order affecting 31 December 2010 and 2011
year-ends, based on the effective dates contained within the
standards (albeit that there are provisions that allow entities to
adopt in earlier periods).
Where a standard or interpretation has been issued, but an
entity has yet to apply it, IAS 8 Accounting 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 standard or
interpretation will have on the nancial statements when it is
initially applied. Therefore, management must disclose, in
the December 2010 report, the impact of the standards andinterpretations noted in Sections 2 and 3, or indicate the reason
for not doing so.
Section 3 provides an overview of the new or amended
standards and interpretations issued that affect years
subsequent to the December 2011 year-end.
Section 4 provides a summary of the reasons published in
the IFRIC Update of the issues on which the Interpretations
Committee was requested to provide an interpretation, but felt
that the existing IFRS or IFRIC interpretations included adequate
guidance. While these decisions are not authoritative, they
provide a view about the application of the standards.
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IFRS update for nancial years ending 31 December 2010 4
IFRS core tools
Frequent changes to IFRS add to the changes you face when
approaching your nancial reporting cycle. Our IFRS Core Tools
provide the starting point for assessing the impact of changes
to IFRS.
These tools include a number of practical building blocks thatcan help you to navigate the changing landscape of IFRS. They
include this publication, IFRS Update, and the following:
International GAAP Disclosure Checklist
Our 2010 International GAAP Disclosure Checklist assists with
the preparation of nancial statements in accordance with IFRS.
Good Group (International) Limited
Our publication Good Group (International) Limited, is an
illustrative set of nancial statements (both interim and annual)
incorporating all of the new disclosures that arise from the
changes required by standards effective for the December 2010
year-end. It can also assist in understanding the impact 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 Insurance (International) Limited
• Good Real Estate Group (International) Limited
• Good Investment Fund Limited
• Good Petroleum (International) Limited
• Good Mining (International) Limited
Also available from Ernst & Young:
International GAAP 2010
Our publication International GAAP 2010 is a comprehensive
analysis of all standards and interpretations, including those
mentioned in this publication, and it provides examples that
illustrate how the requirements are applied. This publication is
currently being updated and International GAAP 2011 will be
published within the next few months.
Ernst & Young IFRS Change Reporter 2010
Ernst & Young has developed a computer-based tool called IFRS
Change Reporter 2010. This tool is designed to be used by
Ernst & Young engagement teams to support companies,
reporting under IFRS, in making an assessment of the relevance
to them of the upcoming changes described in this publication.
This publication is also intended to facilitate the impact
assessment carried out with the help of that tool.
Other Ernst & Young publications
References to other Ernst & Young publications that containfurther details and discussion on these topics have also been
included, all of which can be downloaded from our website
www.ey.com/ifrs.
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IFRS update for nancial years ending 31 December 20105
Section 1: New and amended standards
and interpretations applicable to the
December 2010 year-end
IFRS 1 First-time Adoption of International Financial
Reporting Standards — Additional Exemptions for
First-time Adopters (Amendments)
Effective for annual periods beginning on or after 1 January 2010.
Key requirements
IFRS 1 has been amended to provide additional exemptions fromfull retrospective application of IFRS for the measurement of oil &
gas assets and leases as follows:
• Entities that have measured exploration and evaluation
assets, and assets in the development or production phases
using ‘full cost accounting’, can measure these assets at the
amounts determined under previous GAAP at the date of
transition. Where an entity uses this exemption it must test all
such assets for impairment at the date of transition to IFRS.
• Where an entity uses the above deemed cost exemption for
oil and gas assets, the related decommissioning and
restoration liabilities are measured at the date of transition in
accordance with IAS 37 Provisions, Contingent Liabilities andContingent Assets. Any adjustment of the carrying amount
under previous GAAP is recognised in retained earnings.
• Where an entity has, under previous GAAP, made the same
determination of whether an arrangement contains a lease as
required by IFRIC 4 Determining whether an Arrangement
contains a Lease, but that assessment was made at a date
other than that required by IFRIC 4, the entity does not need
to reassess that determination.
Transition
The amendments may be applied earlier than the effective date
and this fact must be disclosed.
Impact
The amendments will provide relief to entities with oil and gas
assets and leases that are rst-time adopters, by reducing the
cost of transition to IFRS.
Other Ernst & Young publications
Further information about this amendment can be found in
Ernst & Young’s publication Supplement to IFRS outlook Issue 52
(July 2009).
IFRS 2 Group Cash-settled Share-based Payment
Arrangements
Effective for annual periods beginning on or after 1 January 2010.
Key requirements
IFRS 2 has been amended to clarify the accounting for group
cash-settled share-based payment transactions, where asubsidiary receives goods or services from employees or
suppliers but the parent or another entity in the group pays for
those goods or services. The amendments clarify that the scope
of IFRS 2 includes such transactions. The amendment
incorporates the guidance from IFRIC 8 Scope of IFRS 2 and
IFRIC 11 Group and Treasury Share Transactions and hence both
IFRIC 8 and IFRIC 11 have been withdrawn.
Transition
This amendment is applied retrospectively, in accordance with
IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors in respect of changes in accounting policy. Earlier
application is permitted and must be disclosed.
Impact
For group reporting and consolidated nancial statements, the
amendment claries that if an entity receives goods or services
that are cash settled by shareholders not within the group, they
are outside the scope of IFRS 2. Management will need to
consider any such past transactions.
The amendment may have a signicant affect on the cost
recognised in separate nancial statements of an entity that has
material share-based payment awards that have not previously
been accounted for in accordance with IFRS 2.
Other Ernst & Young publicationsFurther information about this amendment can be found in
Ernst & Young’s publication Supplement to IFRS outlook Issue 45
(June 2009).
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IFRS update for nancial years ending 31 December 2010 6
IFRS 3 Business Combinations (Revised)
Effective for periods beginning on or after 1 July 2009.
Key requirements
A change to the scope of IFRS 3 increases the number of
transactions to which it must be applied, by including
combinations of mutual entities and combinations without
consideration (e.g., dual listed shares).
The more signicant changes in accounting for business
combinations are as follows:
• Entities have a choice, for each business combination entered
into, to measure non-controlling interests (previously minority
interests) in the acquiree either at their fair value or at their
proportionate interest in the acquiree’s net assets.
• In step acquisitions, previously held interests are remeasured
to fair value at the date of the subsequent acquisition and this
value is included in calculating goodwill. Any gain or loss
arising from the re-measurement is recognised in prot or loss.
• Contingent consideration is formally dened as additionalconsideration by the acquirer to the former owners (or return
of consideration from the former owners). All contingent
consideration is measured at fair value at the date of
acquisition, and subsequent changes are recognised in prot
and loss rather than adjusting goodwill recognised on the
acquisition.
• Acquisition-related costs are expensed through prot or loss
at the time that such services are received.
• Contingent liabilities of the acquiree are recognised at their
fair value if there is a present obligation that arises from a
past event and its fair value can be measured reliably,
regardless of the probability of a cash ow arising.
• The acquirer will reassess all assets and liabilities acquired to
determine their classication or designation as required by
other standards. There are two exceptions, namely for leases
and insurance contracts, which are classied and designated
based on the contractual terms and conditions at the date of
inception of the contract.
• If the acquirer reacquires a right that it had previously
granted to an acquiree, the right will be recognised as an
identiable intangible asset, separately from goodwill.
• All consideration transferred needs to be analysed to
determine whether it is part of the exchange transaction
or for another transaction, such as remuneration for the
provision of future services or settlement of existing
relationships.
• Indemnication assets are recognised and measured based
on the same measurement principles and assumptions asthe related liability.
• The standard requires that deferred taxation assets
or liabilities arising from the net assets acquired in a
business combination be measured in accordance with
IAS 12 Income Taxes.
Transition
IFRS 3 applies prospectively to business combinations occurring
after 1 July 2009. If the standard is applied before this date, the
amendments to IAS 27 Consolidated and Separate Financial
Statements must also be applied at the same date. This standard
includes consequential amendments to 14 other standards and
interpretations.
Impact
The revised standard (including the revised IAS 27) will have a
signicant impact on prot and loss reported in the period of an
acquisition, the amount of goodwill recognised in a business
combination and prot and loss reported in future periods.
The negotiation of contracts now needs to take into account the
accounting consequences summarised above, especially as they
apply to any contingent considerations and amounts transferred
to employees. The greater time and effort that will be required
to identify and measure the elements in the transaction may well
increase the costs associated with such transactions. In addition,
the future intentions with respect to the acquiree should be
considered, as these may inuence the choice of method to
measure non-controlling interests.
Other Ernst & Young publications
More information about this revised standard can be found in
Ernst & Young’s publications IFRS Alert Issue 23 (January 2008)
and Business Combinations and Consolidated Financial
Statements — How the changes will impact your business.
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IFRS update for nancial years ending 31 December 20107
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IAS 27 Consolidated and Separate Financial
Statements (Amendment)
Effective for periods beginning on or after 1 July 2009.
Key requirements
The most signicant changes to IAS 27 are as follows:
• Changes in ownership interests of a subsidiary (that do notresult in loss of control) will be accounted for as an equity
transaction and will have no impact on goodwill nor will it give
rise to a gain or loss.
• Losses incurred by the subsidiary will be allocated between
the controlling and non-controlling interests (previously
referred to as ‘minority interests’); even if the losses exceed
the non-controlling equity investment in the subsidiary.
• On loss of control of a subsidiary, any retained interest will be
remeasured to fair value and this will impact the gain or loss
recognised on disposal.
Transition
IAS 27 is applied retrospectively, with the following exceptions:
• The allocation of comprehensive income to non-controlling
interests in periods before the standard is applied is not
restated.
• Changes in ownership interests (without loss of control)
occurring before the standard is applied are not restated.
• The carrying amount of an investment in a former subsidiary,
where control was lost in periods before the standard is
applied, is not restated. Accordingly, the gains or losses
arising from such transactions are not recalculated.
If the standard is applied before 1 July 2009, IFRS 3 Business
Combinations (Revised), together with all the consequentialamendments in these two standards, must also be applied at the
same date.
Impact
Subsequent to application of the standard, the impact of
transactions where control is lost/not lost and the allocation of
losses of a subsidiary will impact the reported prot and loss of
an entity, both in terms of timing and on an aggregate basis.
Other Ernst & Young publications
More information about these amendments can be found in
Ernst & Young’s publications IFRS Alert Issue 23 (January 2008)
and Business Combinations and Consolidated FinancialStatements — How the changes will impact your business.
IAS 39 Financial Instruments: Recognition and
Measurement — Eligible hedged items (Amendment)
Effective for periods beginning on or after 1 July 2009.
Key requirements
The nal amendment addresses only the designation of a
one-sided risk in a hedged item, and the designation of inationas a hedged risk or portion in particular situations. The
amendment claries that an entity is permitted to designate a
portion of the fair value changes or cash ow variability of a
nancial instrument as a hedged item.
An entity can designate the changes in fair value or cash ows
related to a one-sided risk as the hedged item in an effective
hedge relationship. In most cases, the intrinsic value of a
purchased option hedging instrument, but not its time value,
reects a one-sided risk in a hedged item.
The designated risks and portions of cash ows or fair values in
an effective hedge relationship must be separately identiable
components of the nancial instrument. Additionally, the
changes in cash ows or fair value of the entire nancial
instrument arising from changes in the designated risks and
portions must be reliably measurable.
The amendment indicates that ination is not a separately
identiable risk and cannot be designated as the hedged risk
unless it represents a contractually specied cash ow.
Transitional provisions
If changes in accounting policies are required, they are applied
retrospectively in accordance with IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors. Retrospective
re-designation of hedge relationships is not permitted.
Impact
Entities that have designated options as hedging instruments of
one-sided risks, including the imputed time value, and/or have
designated the effects of ination on xed rate nancial assets as
the hedged risks, will be signicantly impacted by this amendment.
Such arrangements may no longer be accounted for as effective
hedge relationships and management will need to re-consider its
hedging strategy for the future.
Other Ernst & Young publications
More information about this amendment can be found in
Ernst & Young publication Supplement to IFRS outlook Issue 11(August 2008).
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IFRS update for nancial years ending 31 December 2010 8
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IFRIC 17 Distributions of Non-cash Assets to Owners
Effective for annual periods beginning on or after 1 July 2009.
Key requirements
This interpretation provides guidance on accounting for
arrangements whereby an entity distributes non-cash assets to
shareholders either as a distribution of reserves or as dividends.
The interpretation applies to all non-reciprocal distributions of
non-cash assets, including those giving the shareholders a choice
of cash or other assets, provided that:
• All owners of the same class of equity instruments are treated
equally
And
• The non-cash assets distributed are not ultimately controlled
by the same party before and after the distribution (i.e.,
excluding transactions under common control)
An entity must recognise a liability for the distribution when it is
no longer at the discretion of the entity (i.e., when shareholderapproval is obtained, if required). The liability is initially
recognised at the fair value of the assets to be distributed and is
remeasured at the end of each reporting period and immediately
before settlement.
At settlement date, the difference between the carrying amount
of the assets to be distributed and the liability is recognised in
prot or loss as a separate line item.
IFRS 5 has also been amended to require that assets are
classied as held for distribution only when they are available
for distribution in their present condition and the distribution is
highly probable.
Transition
This interpretation is to be applied prospectively. Earlier
application is permitted, however, IFRS 3 (revised 2008), IAS 27
(amended May 2008) and IFRS 5 (amended by this interpretation)
must also be applied from the same date.
Impact
The changes are likely to require a change in accounting policy
for many entities, which may result in a signicant prot being
recognised at the date of settlement that may not have been
previously recognised. As any gain will only be recognised after
the declaration of a dividend, management will need to consider
if there are any implications on the entity’s ability, such as
statutory requirements, to declare dividends.
Other Ernst & Young publications
More information about this interpretation can be found in
Ernst & Young’s Supplement to IFRS outlook Issue 21
(November 2008).
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IFRS update for nancial years ending 31 December 20109
Improvements to International Financial Reporting
Standards (issued 2008)
Generally, these amendments are effective for periods
beginning on or after 1 January 2009.
Key requirements
The Improvements to IFRS project is an annual process that theIASB has adopted to deal with non-urgent but necessary
amendments to IFRS (the ‘annual improvements process’).
In the rst omnibus edition, 34 amendments are dealt with by
the Board. The Board has separated the amendments into two
parts: Part I deals with changes the Board identied resulting in
accounting changes; and Part II deals with either terminology or
editorial amendments that the Board believes will have minimal
impact. The following summarises the amendments included in
Parts I that will only be effective for December 2010 year ends.
Other Ernst & Young publications
More information about amendments can be found in
Ernst & Young’s publication Supplement to IFRS outlook Issue 6
(June 2008).
Part I
IFRS 5 Non-current AssetsHeld for Sale and
Discontinued Operations
Plan to sell the controlling interest in a subsidiary• When a subsidiary is held for sale, all of its assets and liabilities will be classied as held for sale under IFRS 5, even
when the entity retains a non-controlling interest in the subsidiary after the sale. This amendment is effective forperiods commencing 1 July 2009.
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IFRS update for nancial years ending 31 December 2010 10
IFRS 2 Share-based
Payment
Scope of IFRS 2 and revised IFRS 3
• Claries that the contribution of a business on formation of a joint venture and combinations under commoncontrol are not within the scope of IFRS 2. Effective for periods beginning on or after 1 July 2009.
IFRS 5 Non-current
Assets Held for Sale and
Discontinued Operations
Disclosures
• Claries that the disclosures required in respect of non-current assets (or disposal groups) classied as held for saleor discontinued operations are only those set out in IFRS 5. Effective prospectively for annual periods beginning onor after 1 January 2010.
IFRS 8 Operating
Segments
Disclosure of information about segment assets
• Segment assets and liabilities need only be reported when those assets and liabilities are included in measures usedby the chief operating decision maker. Effective for annual periods beginning on or after 1 January 2010.
IAS 1 Presentation of
Financial Statements
Current/non-current classication of convertible instruments
• The terms of a liability that could at anytime result in its settlement by the issuance of equity instruments at theoption of the counterparty do not affect its classication. Effective for annual periods beginning on or after 1January 2010.
IAS 7 Statement of Cash Flows
Classication of expenditures on unrecognised assets• Only expenditure that results in a recognised asset can be classied as a cash ow from investing activities.
Effective for annual periods beginning on or after 1 January 2010.
IAS 17 Leases Classication of land and buildings
• The specic guidance on classifying land as a lease has been removed so that only the general guidance remains.Effective for annual periods beginning on or after 1 January 2010.
IAS 18 Revenue Effective in December 2009 year-ends.
IAS 36 Impairment of
Assets
Unit of accounting for goodwill impairment testing
• The largest unit permitted for allocating goodwill acquired in a business combination is the operating segmentdened in IFRS 8 before aggregation for reporting purposes. See Section 2. Effective prospectively for annualperiods beginning on or after 1 January 2010.
IAS 38 Intangible Assets Consequential amendments arising from IFRS 3
• If an intangible acquired in a business combination is identiable only with another intangible asset, the acquirer
may recognise the group of intangibles as a single asset provided the individual assets have similar useful lives.
Measuring fair value
• The valuation techniques presented for determining the fair value of intangible assets acquired in a businesscombination are only examples and are not restrictive on the methods that can be used.
• The amendments are effective for annual periods beginning on or after 1 July 2009.
Improvements to International Financial Reporting
Standards (issued 2009)
Generally, these amendments are effective for periods beginning
on or after 1 January 2010.
Key requirements
In the second omnibus edition, 15 amendments to 12 standards
are dealt with by the IASB. These amendments are summarised
in the table below.
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IFRS update for nancial years ending 31 December 201011
IAS 39 Financial
Instruments: Recognition
and Measurement
Assessment of loan prepayment penalties as embedded derivatives
• A prepayment option is considered closely related to the host contract when the exercise price reimburses thelender up to the approximate present value of lost interest for the remaining term of the host contract. Effective forannual periods beginning on or after 1 January 2010.
Scope exemption for business combination contract
• The scope exemption for contracts between an acquirer and a vendor in a business combination to buy or sell anacquiree at a future date applies only to binding forward contracts, not derivative contracts where further actions are
still to be taken. Effective prospectively to all unexpired contracts for annual periods beginning on or after 1 January2010.
Cash ow hedge accounting
• Gains or losses on cash ow hedges of a forecast transaction that subsequently results in the recognition of anancial instrument or on cash ow hedges or recognised nancial instruments should be reclassied in the periodthat the hedged forecast cash ows affect prot or loss. Effective prospectively to all unexpired contracts forannual periods beginning on or after 1 January 2010.
IFRIC 9 Reassessment of
Embedded Derivatives
Scope of IFRIC 9 and IFRS 3
• IFRIC 9 does not apply to possible reassessment at the date of acquisition to embedded derivatives in contractsacquired in a combination between entities or businesses under common control or the formation or a jointventure. The amendment is effective prospectively for annual periods beginning on or after 1 July 2009.
IFRIC 16 Hedges of a Net
Investment in a Foreign
Operation
Amendment of the restriction on the entity that can hold hedging instruments
• Qualifying hedging instruments may be held by any entity within the group, provided the designation,documentation and effectiveness requirements of IAS 39 are met. See Section 1 for further details. The
amendment is effective for annual periods beginning on or after 1 July 2009.
Other Ernst & Young publications
More information about the annual improvements can be
found in Ernst & Young’s Supplement to IFRS outlook Issue 40
(April 2009).
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IFRS update for nancial years ending 31 December 2010 12
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 requirementsIFRS 1 has been amended to allow rst-time adopters to utilise
the transitional provisions in IFRS 7 Financial Instruments:
Disclosures as they relate to the March 2009 amendments to
the standard. These provisions give relief from providing
comparative information in the disclosures required by the
amendments in the rst year of application.
To achieve this, the transitional provisions in IFRS 7 were
amended to clarify that the disclosures need not be provided for:
• Annual or interim periods, including any statement of
nancial position, presented with an annual comparative
period ending before 31 December 2009, and
• Any statement of nancial position as at the beginning of the
earliest comparative period as at a date before 31 December
2009.
Transition
The amendments may be applied earlier than the effective date
and this fact must be disclosed.
Impact
The amendments can provide relief to rst-time adopters, by
reducing the cost and resources required to provide certain
comparative disclosures.
Other Ernst & Young publications
Further information about this amendment can be found in
Ernst & Young’s publication Supplement to IFRS outlook Issue 66
(February 2010).
IAS 24 Related Party Disclosures (Revised)
Effective for annual periods beginning on or after 1 January 2011.
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. For these entities, 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 withIAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors. Earlier application is permitted for either the partial
exemption for government-related entities or the entire revised
standard, with disclosure of such fact.
Impact
Entities will need to consider the revised denition of related
parties to ensure all the relevant information is still being
captured. The reduced disclosures for government-related
entities may provide some relief. However, a substantial amount
of work may be required to identify these relationships and
ensure information is captured for those disclosures that are
now required.
Other Ernst & Young publications
Further information about this amendment can be found in
Ernst & Young’s publication Supplement to IFRS outlook Issue 59
(November 2009).
Section 2: New and amended standards
and interpretations applicable to
December 2011 year-ends
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IFRS update for nancial years ending 31 December 201013
IAS 32 Financial Instruments: Presentation —
Classication of Rights Issues (Amendment)
Effective for annual periods beginning on or after 1 February 2010.
Key requirements
The denition of a nancial liability has been amended to
classify rights issues (and certain options or warrants) as equityinstruments if:
• The rights are given pro rata to all of the existing owners of the
same class of an entity’s non-derivative equity instruments
• In order to acquire a xed number of the entity’s own equity
instruments for a xed amount in any currency.
Transition
This amendment is applied retrospectively, in accordance with
IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors in respect of changes in accounting policy. Earlier
application is permitted and must be disclosed.
ImpactThe amendment will provide relief to entities that issue rights
(xed in a currency other than their functional currency), from
treating the rights as derivatives with fair value changes
recorded in prot or loss.
Rights issued in foreign currencies that were previously
accounted for as derivatives will now be classied as equity
instruments. Application of the change will result in the reversal
of prots or losses previously recognised, as application of the
change will be retrospective. In addition, the impact on
previously reported results would be a reclassication in equity.
Other Ernst & Young publications
Further information about this amendment can be found inErnst & Young’s publication Supplement to IFRS outlook Issue 58
(October 2009).
IFRIC 14 Prepayments of a Minimum Funding
Requirement (Amendment)
Effective for annual periods beginning on or after 1 January 2011.
Key requirements
IFRIC 14 provides guidance on assessing the recoverable
amount of a net pension asset. The amendment permits anentity to treat the prepayment of a minimum funding
requirement as an asset.
Transition
The amendment is applied retrospectively to the beginning of
the earliest period presented in the rst nancial statements in
which the entity applied the original interpretation.
Impact
Entities will need to assess whether prepayments made will now
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.
Other Ernst & Young publications
Further information about this amendment can be found in
Ernst & Young’s publication Supplement to IFRS outlook Issue 64
(November 2009).
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IFRS update for nancial years ending 31 December 2010 14
IFRIC 19 Extinguishing Financial Liabilities with
Equity Instruments
Effective for annual periods beginning on or after 1 July 2010.
Key requirements
IFRIC 19 claries that equity instruments issued to a creditor to
extinguish a nancial liability are consideration paid inaccordance with paragraph 41 of IAS 39 Financial Instruments;
Recognition and Measurement. The equity instruments issued at
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 the two parts.
The interpretation does not apply where the creditor is acting in
the capacity of a shareholder, common control transactions, and
where the issue of equity shares was part of the original terms
of the liability.
Transition
If the amendment results in a change in accounting policy, this is
applied retrospectively, in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors from the
beginning of the earliest comparative period presented. Earlier
application is permitted and must be disclosed.
Impact
In many cases, the modications 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.
Where these transactions occur within the same group, entities
will need to develop an appropriate accounting policy as they are
scoped out of the interpretation.
Other Ernst & Young publications
Further information about this Interpretation can be found in
Ernst & Young’s publication Supplement to IFRS outlook Issue 62
(November 2009).
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IFRS update for nancial years ending 31 December 201015
Improvements to International Financial Reporting
Standards (issued 2010)
Generally, these amendments are effective for periods beginning
on or after 1 January 2011 unless otherwise stated. Earlier
application is permitted in all cases.
Key requirements
In this omnibus edition, the IASB issued eleven amendments to
six standards and one interpretation. The following summarises
these amendments.
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 of the exemptions in
IFRS 1 after it has published an interim nancial report in accordance with IAS 34 Interim Financial Reporting, itneeds to explain those changes and update the reconciliations between previous GAAP and IFRS. The amendmentis applied prospectively.
IFRS 1 First-time
Adoption of International
Financial Reporting
Standards
Revaluation basis as deemed cost
• The amendment allows rst-time adopters to use an event-driven fair value as deemed cost, even if the eventoccurs after the date of transition, but before the rst IFRS nancial statements are issued. When suchremeasurement occurs after the date of transition to IFRS, but during the period covered by its rst IFRS nancialstatements the adjustment is recognised directly in retained earnings (or if appropriate, another category ofequity). Entities that adopted IFRS in previous periods are permitted to apply the amendment retrospectively in therst annual period after the amendment is effective.
IFRS 1 First-time
Adoption of International
Financial 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 intangible assets to
include items used subject to rate regulated activities. The exemption will be applied on an item-by-item basis. Allsuch assets will also need to be tested for impairment at the date of transition. The amendment allows entities withrate-regulated activities to use the carrying amount of their property, plant and equipment and intangible balancesfrom their previous GAAP as its deemed cost upon transition to IFRS. These balances may include amounts thatwould not be permitted for capitalisation under IAS 16 Property, Plant and Equipment, IAS 23 Borrowing Costs andIAS 38 Intangible Assets. The amendment is applied prospectively.
IFRS 3 Business
Combinations
Transition requirements for contingent consideration from a business combination that occurred before theeffective date of the revised IFRS
• The amendment claries that the amendments to IFRS 7 Financial Instruments: Disclosures, IAS 32 Financial
Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement, that eliminate theexemption for contingent consideration, do not apply to contingent consideration that arose from businesscombinations 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 is appliedretrospectively.
IFRS 3 BusinessCombinations
Measurement of non-controlling interests (NCI)• The amendment limits the scope of the measurement choices that only the components of NCI that are present
ownership interests that entitle their holders to a proportionate share of the entity’s net assets, in the event ofliquidation, shall be measured either:
• At fair valueor
• At the present ownership instruments’ proportionate share of the acquiree’s identiable net assets. Othercomponents of NCI are measured at their acquisition date fair value, unless another measurement basis isrequired by another IFRS, e.g., IFRS 2
• Applicable to annual periods beginning on or after 1 July 2010. The amendment is applied prospectively from thedate the entity applies IFRS 3 (revised)
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IFRS update for nancial years ending 31 December 2010 16
IFRS 3 Business
Combinations
Un-replaced and voluntarily replaced share-based payment awards
• The amendment requires an entity (in a business combination) to account for the replacement of the acquiree’sshare-based payment transactions (whether obliged or voluntarily), i.e., split between consideration and postcombination expenses. However, if the entity replaces the acquiree’s awards that expire as a consequence of thebusiness combination, these are recognised as post-combination expenses. The amendment also species theaccounting for share-based payment transactions that the acquirer does 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 marketbased value as if granted at acquisition date, and allocated between NCI and post-combination expense.
• The amendment is applicable to annual periods beginning on or after 1 July 2010. The amendment is appliedprospectively.
IFRS 7 Financial
Instruments Disclosures
Clarication of disclosures
• The amendment emphasises the interaction between quantitative and qualitative disclosures and the nature andextent of risks associated with nancial instruments
• Amendments to quantitative and credit risk disclosures are, as follows:
• Clarify that only nancial assets whose carrying amount does not reect the maximum exposure to credit riskneed to provide further disclosure of the amount that represents the maximum exposure to such risk
• Require, for all nancial assets, disclosure of the nancial effect of collateral held as security and other creditenhancements regarding the amount that best represents the maximum exposure to credit risk (e.g., adescription of the extent to which collateral mitigates credit risk)
• Remove the disclosure requirement of the collateral held as security, other credit enhancements and anestimate of their fair value for nancial assets that are past due but not impaired, and nancial assets that are
individually determined to be impaired• Remove the requirement to specically disclose nancial assets renegotiated to avoid becoming past due or
impaired
• Clarify that the additional disclosure required for nancial assets obtained by taking possession of collateralor other credit enhancements are only applicable to assets still held at the reporting date
• The amendment is applied retrospectively.
IAS 1 Presentation of
Financial Statements
Clarication of statement of changes in equity
• The amendment claries that an entity will present an analysis of other comprehensive income for each componentof equity, either in the statement of changes in equity or in the notes to the nancial statements.
• The amendment is applied retrospectively.
IAS 27 Consolidated and
Separate Financial
Statements
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 of Changes in
Foreign Exchange Rates, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures applyprospectively for annual periods beginning on 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 is appliedretrospectively.
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IFRS update for nancial years ending 31 December 201017
Other Ernst & Young publications
More information about the annual improvements can be
found in Ernst & Young’s Supplement to IFRS outlook Issue 71
(May 2010).
IAS 34 Interim Financial
Reporting
Signicant events and transactions
• The amendment provides guidance to illustrate how to apply disclosure principles in IAS 34 and add disclosurerequirements around:
• 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 applied retrospectively
IFRIC 13 Customer
Loyalty Programmes
Fair value of award credit
• The amendment claries that when the fair value of award credits is measured based on the value of the awards forwhich they could be redeemed, the amount of discounts or incentives otherwise granted to customers notparticipating in the award credit scheme, is to be taken into account
• The amendment is applied retrospectively
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IFRS update for nancial years ending 31 December 2010 18
IFRS 9 Financial Instruments
Effective for annual periods beginning on or after 1 January 2013.
Key requirements
The rst phase of IFRS 9 Financial Instruments addresses the
classication and measurement of nancial assets. The Board’s
work on the other phases is ongoing and includes classication
and measurement of nancial liabilities, impairment of nancial
instruments, hedge accounting and derecognition of nancial
instruments, with a view to replacing IAS 39 Financial
Instruments: Recognition and Measurement in its entirety by
early 2011.
Phase 1 of IFRS 9 applies to all nancial assets within the scope
of IAS 39. The key requirements of IFRS 9 are as follows.
At initial recognition, all nancial assets are measured at fair
value.
Debt instruments
Debt instruments may (if the Fair Value Option is not invoked) besubsequently measured at amortised cost if:
• The asset is held within a business model whose objective is
to 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.
Equity investments
All equity investment nancial assets are measured at fair valueeither through other comprehensive income (OCI) or prot or
loss. Entities must make an irrevocable choice for each
instrument, unless they are held for trading, in which case they
must be measured at fair value through prot or loss.
Transition
Phase 1 of IFRS 9 can be early adopted for reporting periods
ending on or after 31 December 2009. For entities adopting the
standard in 2009 and 2010, the initial application date may be
any date within the reporting period from 12 November 2009.
The standard is applied retrospectively. However, early adopters
get some transitional relief from restating comparative gures.
Impact
Phase 1 of IFRS 9 will have a signicant impact on the
classication and measurement of nancial assets. For those
entities considering early adoption there are a number of
benets and challenges that should be considered.
Other Ernst & Young publications
Further information about the new standard can be found inErnst & Young’s publication Supplement to IFRS outlook Issue 60
(November 2009).
Improvements to International Financial Reporting
Standards (issued 2010)
All amendments in the 2010 omibus edition are listed in the
previous section of this publication. However, ammendments to
IFRS 3 and IAS 27 need only be applied to December 2011 year
ends (as noted in the table).
Section 3: New and amended standards
and interpretations issued that are effective subsequent
to December 2011 year-ends
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IFRS update for nancial years ending 31 December 201019
Since the publication of the 2009 IFRS Update for December
year-ends, the IFRS Interpretations Committee has deliberated
on a number of items. Certain items were published in the IASB’s
IFRIC Update as not having been added to the Interpretations
Committee agenda, together with the reason for not doing so.
When issuing their reasons, the Interpretations Committee
added some further reasons about how the standards should be
applied. This guidance does not constitute an interpretation, but
rather, provides additional information on the issues raised and
possibly how the standards and current interpretations are to be
applied.
The table below summarises only those items where it is felt that
additional information is helpful to preparers of nancial
statements. The full list of items considered and the reasons for
not being taken onto the agenda can be found in the IFRIC
Update on the IASB’s website.
Section 4: Items not taken onto the Interpretations
Committee agenda where the Interpretations Committee
has provided guidance on the interpretation of IFRS
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IFRS update for nancial years ending 31 December 2010 20
Final date
considered
Issue Summary of reasons for not adding to the Interpretations
Committee agenda
November 2009 IFRS 3 Business Combinations — Measurementof NCI
IFRS 3 states that an acquirer measures any non-controlling interest in anacquiree, either at fair value or at the NCI’s proportionate share of theacquiree’s identiable net assets. NCI may include options or warrants,classied as equity. The Interpretations Committee noted that themeasurement choice should apply only to instruments currently entitled to
proportionate share of the acquiree’s net assets.
November 2009 IFRS 3 Business Combinations — Unreplacedand voluntarily replaced share-basedpayment awards
IFRS does not contain requirements for acquiree share-based paymentawards that are not replaced or are voluntarily replaced. TheInterpretations Committee noted that in this case, at least some portion ofthe amount recognised for those awards should be regarded as part of theconsideration transferred in the business combination. The InterpretationsCommittee recommended that the IASB amend IFRS 3 to address this.
January 2010 IFRS 4 Insurance Contracts and IAS 32
Financial Instruments: Presentation — Scopeissue for Real Estate Investment Trusts (REIT)
A REIT is an entity with a special tax designation, which is usually requiredto distribute 90% of its total distributable income (TDI) to investors with theremaining 10% distributed at the discretion of management. TheInterpretations Committee were asked whether the discretion to distributethe 10% met the denition of a Discretionary Participation Feature (DPF).
The IFRIC noted that the denition of DPF requires the instrument toprovide the holder with guaranteed benets and that the DPF benets are
in addition to this. Further, there must be guaranteed benets to theholder and such benets are typically those present in insurance activities.
January 2010 IAS 18 Revenue — Receipt of a dividend ofequity instruments
Current IFRS provides guidance on when revenue arising from dividends isrecognised. The Interpretations Committee noted that when all ordinaryshareholders receive a dividend of an investee’s own equity instruments ona pro-rata basis, there is no change in nancial position of any of theinvestors.
Therefore, the divided is not recognised as revenue as it is not probablethat there is an economic benet that will ow to the investor.
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IFRS update for nancial years ending 31 December 201021
Final date
considered
Issue Summary of reasons for not adding to the Interpretations
Committee agenda
January 2010 IAS 27 Consolidated and Separate Financial
Statements — Combined nancial statementsand redening the reporting entity
The Interpretations Committee received a request for guidance on whethera reporting entity can present nancial statements, in accordance withIFRS, that include a selection of entities under common control, not justparent/ subsidiary relationships. The Interpretations Committee noted thatthe ability to include entities within a set of IFRS nancial statements
depends on the interpretation of ‘reporting entity’ in the context ofcommon control.
January 2010 IAS 38 Intangible Assets — Amortisationmethod
The Interpretations Committee received a request for guidance on themeaning of “consumption of economic benets” in determining theamortisation method for a nite intangible asset. The methods consideredwere the straight line method and the unit of production method (includinga revenue-based unit of production method). The InterpretationsCommittee noted that the determination of the amortisation method is amatter of judgment.
March 2010 IAS 21 The Effects of Changes in Foreign
Exchange Rates — Determination of functionalcurrency of an investment holding company
The Interpretations Committee received a request for guidance on whetherthe underlying economic environment of subsidiaries should be consideredin determining, in its separate nancial statements, the functionalcurrency of an investment holding company. The InterpretationsCommittee noted that the determination is a matter of judgment, guidance
is already provided in IAS 21, and IAS 1 Presentation of FinancialStatements requires the disclosure of signicant judgments.
May 2010 IFRS 1 First-time Adoption of International
Financial Reporting Standards — Accountingfor costs included in self-constructed assetson transition
The Interpretations Committee received two requests concerning an entitythat, on transition to IFRSs, changes its accounting policy for actuarialgains and losses and determines that they should no longer be capitalised(under previous GAAP the entity capitalises certain costs, includingactuarial gains and losses, as part of self-constructed assets, inaccordance).
The Interpretations Committee noted that IFRS 1 requires an entity to use‘the same accounting policies in its opening IFRS statement of nancialposition and throughout all periods presented in its rst IFRS nancialstatements’.
May 2010 IAS 26 Accounting and Reporting by
Retirement Beneft Plans — Valuation of plan
assets
The Interpretations Committee received a request for guidance on theinteraction between IAS 26 and IAS 39 relating to the accounting for
retirement benet plan investments (plan assets), in the nancial statementsof retirement benet plans prepared in accordance with IAS 26. TheInterpretations Committee concluded that IFRSs are clear because:
• The guidance in IAS 26 is clear that plan assets shall be carried at fairvalue.
• IAS 26 is clear that changes in the fair value of plan assets should bepresented and disclosed in the statement of changes in net assetsavailable for benets.
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IFRS update for nancial years ending 31 December 2010 22
Final date
considered
Issue Summary of reasons for not adding to the Interpretations
Committee agenda
July 2010 IAS 1 Financial Statement Presentation —Going concern disclosure
The Interpretations Committee received a request for guidance on thedisclosure requirements in IAS 1 on uncertainties related to an entity’sability to continue as a going concern. How an entity applies the disclosurerequirements in IAS 1 about such uncertainties requires the exercise ofprofessional judgment. The Interpretations Committee noted that:
• IAS 1 requires that an entity shall disclose ‘material uncertaintiesrelated to events or conditions that may cast signicant doubt upon theentity’s ability to continue as a going concern’.
• For this disclosure to be useful it must identify that the discloseduncertainties may cast signicant doubt upon the entity’s ability tocontinue as a going concern.
July 2010 IAS 39 Financial Instruments: Recognition
and Measurement — Impairment of nancialassets reclassied from available-for-sale toloans and receivables
The Interpretations Committee received a request for guidance on how anentity should account for the impairment of nancial assets with a xedmaturity after they have been reclassied from the available-for-salecategory to loans and receivables. The Interpretations Committee notedthat:
• IAS 39 requires that the fair value of a nancial asset on the date ofreclassication becomes its new cost or amortised cost.
• A new effective rate of interest is then calculated and applied to the
nancial asset. This is the rate that discounts the estimated future cashows to the new carrying amount of the nancial asset.
• When an impairment loss is recognised, applying the requirements of IAS39 would result in all gains or losses that have been recognised in othercomprehensive income being reclassied from equity to prot or loss.
September 2010 IAS 21 The Effects of Changes in Foreign
Exchange Rates — Repayments of investmentsand foreign currency translation reserve
The Interpretations Committee received a request for guidance on thereclassication of the foreign currency translation reserve (FCTR) when arepayment of a foreign investment occurs. Specically on whether FCTRshould be recycled for transactions in which there is a reduction in:
• The investor’s percentage equity ownership in the investee (a relativereduction)
Or
• The absolute investment in the investee, even if there is no reduction inthe proportionate equity ownership interest. A reduction in ownership
may be relative, absolute or both
The Interpretations Committee noted that IAS 21 requires that an entitymust treat ‘any reduction in an entity’s ownership interest in a foreignoperation’ as a partial disposal, apart from those certain reductions thatare accounted for as disposals. How an entity applies the requirements islargely dependent on whether it interprets ‘any reduction in an entity’sownership interest in a foreign operation’ to mean an absolute reduction, aproportionate reduction, or both. The Interpretations Committee considersthat different interpretations could lead to diversity in practice in theapplication of IAS 21 on the reclassication of the FCTR when repaymentof investment in a foreign operation occurs.
However, the Interpretations Committee decided neither to add this issueto its agenda nor to recommend the Board to address this issue through Annual Improvements because it did not think that it would be able toreach a consensus on the issue on a timely basis. The Committeerecommends that the IASB should consider this issue within a broadreview of IAS 21 as a potential item for its post-2011 agenda.
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IFRS update for nancial years ending 31 December 201023
Section 5: Exposure drafts of new and amended
standards and interpretations that are still to
be issued as standards and interpretations
The IASB is currently working on a number of other exposure
drafts of new and amended standards and interpretations, some
of which are expected to be issued before 31 December 2010.
The effective date of these new standards and amendments is
only expected to be in 2012 or 2013. However, they are likely to
permit early application and in some cases this may be benecial
to entities.
The table below indicates the scope of these exposure drafts and
the date that a standard or interpretation is expected to the
issued, together with a reference to relevant Ernst & Young
publications. The timing of the nal standard or interpretation is
based on the IASB’s project timetable on its website.
Exposure draft Expected IFRS/Interpretation1 Ernst & Young publications
Derecognition (ED/2009/3)
Proposes to improve and simplify the requirements as to whennancial assets and liabilities are derecognised. The ED’s proposeddisclosure requirements are to be issued as an IFRS to improvederecognition disclosures
IFRS 4th quarter of 2010
(Per the IASB the IFRS is to be issuedin the 3rd quarter of 2010. However,as of 1 October 2010, the IFRS hasnot been issued)
Supplement to IFRS outlook Issue 37(April 2009)
ED 10 Consolidated Financial Statements
Proposes a new denition of control of an entity, which will widenthe scope of the standard. It also proposes signicant newdisclosure requirements
IFRS 4th quarter of 2010 Supplement to IFRS outlook Issue 26(December 2008)
ED 9 Joint Arrangements
Proposes to require an entity to recognise its contractual rightsand obligations arising from its joint arrangements. The proposalsalso require a joint venture (previously called a jointly controlledentity) to be accounted for using the equity method
IFRS 4th quarter of 2010 IFRS Alert Issue 19 (September
2007)
Presentation of Items of Other Comprehensive Income
(amendments to IAS 1 Presentation of Financial Statements) (ED/2010/5)
Proposes two key changes to IAS 1:
• Present a single statement of comprehensive income containingtwo distinct sections for prot or loss and other comprehensiveincome (OCI)
• Group items presented in OCI based on whether those items aresubsequently reclassied to prot or loss
IFRS 4th quarter of 2010 Supplement to IFRS outlook Issue 74(May 2010)
Removal of Fixed Dates for First-time Adopters (ED/2010/10)Proposes to remove the xed dates relating to the derecognitionand day one gain or loss provisions in IFRS 1 First-time Adoption of
International Financial Reporting Standards and replace them witha relative date, the date of transition to IFRS
IFRS 4th quarter of 2010(Estimated, the IASB would like toissue the amendment on a timelybasis for those jurisdictions that arecurrently affected by the issue)
Supplement to IFRS outlook Issue 82(August 2010)
Severe Hyperination (ED/2010/12)
Proposes to clarify how an entity should resume presentingnancial statements in accordance with IFRS after a period whenthe entity was unable to comply with IFRS because it had afunctional currency that was subject to severe hyperination
IFRS 4th quarter of 2010
(Estimated, the IASB would like toissue the amendment on a timelybasis for those jurisdictions that arecurrently affected by the issue)
1
Per the IASB’s project timetable dated 2 July 2010 unless otherwise noted(www.ifrs.org/Current+Projects/IASB+Projects/IASB+Work+Plan.htm).This is updated on a regular basis by the IASB.
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IFRS update for nancial years ending 31 December 2010 24
Exposure draft Expected IFRS/Interpretation1 Ernst & Young publications
Stripping Costs in the Production Phase of a Mine (DI/2010/1)
Proposes that costs associated with a ‘stripping campaign’ shouldbe accounted for as an additional component of an existing asset,and that this component should be written down over the reservesthat directly benet from the campaign
Interpretation 4th quarter of 2010
(Estimated based on the commentdeadline of the draft interpretation)
Supplement to IFRS outlook Issue 81(August 2010)
Conceptual Framework for Financial Reporting — The ReportingEntity (ED/2010/2)
Proposes a denition of a reporting entity for the purposes ofnancial reporting
IFRS 4th quarter of 2010 Supplement to IFRS outlook Issue 68(March 2010)
Management Commentary (ED/2009/6)
Proposes a basis for the development of good managementcommentary. It offers a non-binding framework and limitedapplication guidance, which could be adapted to the legal andeconomic circumstances of individual jurisdictions
IFRS 4th quarter of 2010 Supplement to IFRS outlook Issue 48(July 2009)
Defned Beneft Plans (ED/2010/3)
Proposes changes in accounting for long-term employee benetssuch as pensions. The most signicant proposal is the removal ofthe ‘corridor mechanism’
IFRS 1st quarter of 2011 Supplement to IFRS outlook Issue 70(May 2010)
Fair value measurement (ED/2009/5)
Proposes to clarify the denition of fair value and enhance fairvalue disclosures
IFRS 1st quarter of 2011 Supplement to IFRS outlook Issue 43(June 2009)
Measurement Uncertainty Analysis Disclosure for Fair Value
Measurements (ED/2010/7)
Proposes disclosures related to measurement uncertainty onLevel 3 fair value measurements
IFRS 1st quarter of 2011 Supplement to IFRS outlook Issue 77(June 2010)
Fair Value Option for Financial Liabilities (ED/2010/4)
Proposes to retain the existing classication and measurementrequirements for nancial liabilities, with two exceptions:
• The effects of changes in the own credit risk will not affectprot or loss for nancial liabilities designated at fair value
through prot or loss using the fair value option
• Liabilities arising from derivatives on investments in unquotedequity instruments will no longer be measured at cost
IFRS 2nd quarter of 2011 Supplement to IFRS outlook Issue 72(May 2010)
Revenue from Contracts with Customers (ED/2010/6)
Proposes a revenue recognition model to determine the amount,timing and uncertainty of revenue recognition arising fromcontracts to provide goods and services to customers
IFRS 2nd quarter of 2011 Supplement to IFRS outlook Issue 75(June 2010)
Insurance contracts (ED/2010/8)
Proposes that an insurer should measure insurance liabilities usinga model based on the ’present value of the fullment cash ows’plus a residual margin when required
IFRS 2nd quarter of 2011 July 2010 Insurance AccountingAlert — Special edition
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http://slidepdf.com/reader/full/ifrs-year-end-update-dec-20101 26/28
IFRS update for nancial years ending 31 December 201025
Exposure draft Expected IFRS/Interpretation1 Ernst & Young publications
Leases (ED/2010/9)
Proposes a single model that would be applied to most leases thatwould effectively end off-balance sheet reporting for leases. Theproposed model would also require entities to make a number ofestimates and periodically reassess those estimates in accountingfor leases
IFRS 2nd quarter of 2011 Supplement to IFRS outlook Issue 79(August 2010)
Financial Instruments: Amortised Cost and Impairment (ED/2009/12)
Proposes improvements to amortised cost measurement, inparticular the transparency of provisions for losses on loans andfor the credit quality of nancial assets
IFRS 2nd quarter of 2011 Supplement to IFRS outlook Issue 61(November 2009)
Deferred Tax: Recovery of Underlying Assets (ED/2010/11)
Proposes to require that deferred tax assets or liabilities for certainspecied assets be measured based on the presumption that thecarrying amount of the underlying asset will be recovered entirelythrough sale
IFRS 1st half of 2011
(Estimated based on the commentdeadline of the ED)
Supplement to IFRS outlook Issue 83(September 2010)
Rate-regulated Activities (ED/2009/8)
Proposes to require certain regulated entities to recognise assets
or liabilities arising from the effects of price regulation and/ or torequire specic disclosures
IFRS 1st half of 2011 Supplement to IFRS outlook Issue 53(July 2009)
IAS 37 Provisions, Contingent Liabilities and Contingent Assets and
IAS 19 Employee Benefts (Amendments)
The 2005 ED proposes that entities should recognise allobligations that satisfy the denition of a liability in the IASB’sFramework, unless they cannot be measured reliably. The notionof probability is also removed from the determination of whethera liability should be recognised.
In September 2010 the IASB notedthat a new exposure draft will beissued in 2011
Summary of the IASB’s Proposals to
Amend IAS 37 and IAS 19
Measurement of Liabilities in IAS 37 (ED/2010/1)
Proposes to clarify how a non-nancial liability is measured —which will depend largely on whether or not the obligation canbe transferred or cancelled
In September 2010 the IASB notedthat a new exposure draft will beissued in 2011
Supplement to IFRS outlook Issues 65(January 2010) and 67 (February2010)
8/4/2019 IFRS Year End Update Dec 2010[1]
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IFRS update for nancial years ending 31 December 2010 26
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