Monday, 6 March 2017
Comments to Annual Improvements to IFRS Standards
https://www.linkedin.com/pulse/comments-annual-improvements-ifrs-standards-2015-iasb-dash?trk=mp-reader-card
Sunday, 5 March 2017
Comments to Annual Improvements to IFRS Standards 2015 TO THE IASB AND THE ACSB – 2017 Cycle
Recently IASB have suggested opinion about 3 International accounting stdandards. Technically in January 2017, the IASB published Annual Improvements to IFRS Standards 2015–2017 Cycle, containing the following proposed amendments to three IFRSs. Basically this exposure draft for
Annual Improvements is normally published for comment for 90 days; this is shorter than the normal comment period for an exposure draft (120 days), reflecting the nature of Annual Improvements, i.e. they are clarifying or correcting in nature, and do not propose new principles or changes to existing ones. Rather than separately publishing a series of piecemeal changes, the publication of the proposals in a single exposure draft is intended to streamline the standard-setting process, with benefits both for interested parties and for the IASB.
At present there are #IAS-12 #IAS-23 #IAS-28. In fact about IAS 12 Income Taxes it needed to Clarify that the requirements in the existing paragraph 52B (to recognise the income tax consequences of dividends where the transactions or events that generated distributable profits are
recognised). This in turn shall apply to all income tax consequences of dividends by moving the paragraph away from existing paragraph 52A that only deals with situations where there are different tax rates for distributed and undistributed profits.
Secondly the issue relating to IAS 23 which embodies the Borrowing Costs the issue is more critical. It is again intended to clarify that when an asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that asset as part of the funds that it has borrowed generally.
Further the IAS 28 is about Investments in Associates and Joint Ventures. In so far as the Investments in Associates and Joint Ventures it is to be getting Clarification so that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
But the issue of these 3 IAS like IAS 12, IAS 23 & IAS 28 is very limited and rather the entire ambit of IFRS need to be reviewed. Some of are as stated below.
IAS 1 — Classification of liabilities
IAS 12 — Accounting for uncertainties in income taxes
IAS 19/IFRIC 14 — Remeasurement at a plan amendment, curtailment or settlement / Availability of a refund of a surplus from a defined benefit plan
IFRS 3 — Definition of a business
IFRS 3/IFRS 11 — Remeasurement of previously held interests
IFRS 9 — Symmetric prepayment options
IAS 16 — Proceeds before intended use
The key issue that need to be addressed about the recent International Accounting Standards Board (IASB) proposal of amendments
IAS 12 Income Taxes;
IAS 23 Borrowing Costs; and
IAS 28 Investments in Associates and Joint Ventures.
This can be seen in the following analysis. But in this case it is a last minute fine tuning. Particularly IAS-28 the benefits from aligning the effective date of the amendment to IAS 28 with the effective date of IFRS 9, we are concerned about the short time period between the expected date of issuing the amendment and the proposed effective date of 1 January 2018.
About the IAS 12 which deals with Income Taxes: The IASB is proposing to clarify that the requirements in paragraph 52B of IAS 12 apply not just. in the circumstances described in paragraph 52A of IAS 12, but to all income tax consequences of dividends. How it can be ignored amending IAS 12 without providing guidance on how to determine whether the payments are distributions of profits may not lead to a significant improvement in consistent application compared to the current situation particularly when different countries have different modules. Thus IASB should include
an example or other guidance illustrating the application of the proposed amendment.
For the IAS 23 Borrowing Costs: The IASB is proposing to amend paragraph 14 of IAS 23 to clarify that, when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset, as part of the funds that it has borrowed generally.
ABout the IAS 28 Investments in Associates and Joint Ventures: The IASB is proposing to clarify that an entity is required to apply IFRS 9> Financial Instruments, including its impairment requirements, to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied.
IAS 12 Income Taxes: The IASB is proposing to clarify that the requirements in paragraph 52B of IAS 12 apply not just in the circumstances described in paragraph 52A of IAS 12, but to all income tax consequences of dividends.
IAS 23 Borrowing Costs: The IASB is proposing to amend paragraph 14 of IAS 23 to clarify that, when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset, as part of the funds that it has borrowed generally. Interest expense in the part of borrowing cost as defined in IAS-23. No doubt, it's cost of using money. This cost of using money has two different aspects of recording as per IAS-23.
(A) if cost of using money (interest) is made for the qualifying asset, it should be capitalized and should not be expense out.
(B) If it is not taken for the qualifying asset, it should be expense out. Interest Payable denotes to the current liability at the balance sheet date to be outstanding/paid out.
IAS 28 Investments in Associates and Joint Ventures. In fact the world of accounting is indeed full of terms and concepts. This may also be the reason why a lot of business owners often do not like taking accounting into their own hands. IASB standardisation is welcome. Here IASB is proposing to clarify that an entity is required to apply IFRS 9 Financial Instruments, including its impairment requirements, to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied. In fact some description to equity method is needed. In fact in the equity hypotheses the investment in an associate is initially recognised at cost and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The investor’s share of the profit or loss of the investee is recognised in the investor’s profit or loss. Distributions received from an investee reduce the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the investor’s proportionate interest in the investee arising from changes in the investee’s other comprehensive income. Such changes include those arising from the revaluation of property, plant and equipment and from foreign exchange translation differences. The investor’s share of those changes is recognised in other comprehensive income of the investor.
In fact the Changes to standards, however small, are time-consuming for the Board and burdensome for others. The IASB has adopted unique policy for the Annual Improvements process to deal efficiently with a collection of narrow scope amendments to IFRSs even though the amendments are
unrelated. In this regard the IFRS Interpretations Committee reviews the proposed amendments within the annual improvements process and makes recommendations to the IASB before they are issued. Like previus years the IASB discusses and decides upon proposed improvements to IFRSs as they have arisen throughout the year. These Issues are dealt with in this process arise from matters raised by the IFRS Interpretations Committee and suggestions from staff or practitioners, and focus on areas of inconsistency in IFRSs or where clarification of wording is required. Annual Improvements follow the same due process as other amendments to IFRSs except that unrelated amendments can be exposed together, rather than separately.
Annual Improvements is normally published for comment for 90 days; this is shorter than the normal comment period for an exposure draft (120 days), reflecting the nature of Annual Improvements, i.e. they are clarifying or correcting in nature, and do not propose new principles or changes to existing ones. Rather than separately publishing a series of piecemeal changes, the publication of the proposals in a single exposure draft is intended to streamline the standard-setting process, with benefits both for interested parties and for the IASB.
At present there are #IAS-12 #IAS-23 #IAS-28. In fact about IAS 12 Income Taxes it needed to Clarify that the requirements in the existing paragraph 52B (to recognise the income tax consequences of dividends where the transactions or events that generated distributable profits are
recognised). This in turn shall apply to all income tax consequences of dividends by moving the paragraph away from existing paragraph 52A that only deals with situations where there are different tax rates for distributed and undistributed profits.
Further the IAS 28 is about Investments in Associates and Joint Ventures. In so far as the Investments in Associates and Joint Ventures it is to be getting Clarification so that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.
But the issue of these 3 IAS like IAS 12, IAS 23 & IAS 28 is very limited and rather the entire ambit of IFRS need to be reviewed. Some of are as stated below.
IAS 1 — Classification of liabilities
IAS 12 — Accounting for uncertainties in income taxes
IAS 19/IFRIC 14 — Remeasurement at a plan amendment, curtailment or settlement / Availability of a refund of a surplus from a defined benefit plan
IFRS 3 — Definition of a business
IFRS 3/IFRS 11 — Remeasurement of previously held interests
IFRS 9 — Symmetric prepayment options
IAS 16 — Proceeds before intended use
The key issue that need to be addressed about the recent International Accounting Standards Board (IASB) proposal of amendments
IAS 12 Income Taxes;
IAS 23 Borrowing Costs; and
IAS 28 Investments in Associates and Joint Ventures.
This can be seen in the following analysis. But in this case it is a last minute fine tuning. Particularly IAS-28 the benefits from aligning the effective date of the amendment to IAS 28 with the effective date of IFRS 9, we are concerned about the short time period between the expected date of issuing the amendment and the proposed effective date of 1 January 2018.
About the IAS 12 which deals with Income Taxes: The IASB is proposing to clarify that the requirements in paragraph 52B of IAS 12 apply not just. in the circumstances described in paragraph 52A of IAS 12, but to all income tax consequences of dividends. How it can be ignored amending IAS 12 without providing guidance on how to determine whether the payments are distributions of profits may not lead to a significant improvement in consistent application compared to the current situation particularly when different countries have different modules. Thus IASB should include
an example or other guidance illustrating the application of the proposed amendment.
For the IAS 23 Borrowing Costs: The IASB is proposing to amend paragraph 14 of IAS 23 to clarify that, when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset, as part of the funds that it has borrowed generally.
ABout the IAS 28 Investments in Associates and Joint Ventures: The IASB is proposing to clarify that an entity is required to apply IFRS 9> Financial Instruments, including its impairment requirements, to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied.
IAS 12 Income Taxes: The IASB is proposing to clarify that the requirements in paragraph 52B of IAS 12 apply not just in the circumstances described in paragraph 52A of IAS 12, but to all income tax consequences of dividends.
IAS 23 Borrowing Costs: The IASB is proposing to amend paragraph 14 of IAS 23 to clarify that, when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset, as part of the funds that it has borrowed generally. Interest expense in the part of borrowing cost as defined in IAS-23. No doubt, it's cost of using money. This cost of using money has two different aspects of recording as per IAS-23.
(A) if cost of using money (interest) is made for the qualifying asset, it should be capitalized and should not be expense out.
(B) If it is not taken for the qualifying asset, it should be expense out. Interest Payable denotes to the current liability at the balance sheet date to be outstanding/paid out.
IAS 28 Investments in Associates and Joint Ventures. In fact the world of accounting is indeed full of terms and concepts. This may also be the reason why a lot of business owners often do not like taking accounting into their own hands. IASB standardisation is welcome. Here IASB is proposing to clarify that an entity is required to apply IFRS 9 Financial Instruments, including its impairment requirements, to long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint venture but to which the equity method is not applied. In fact some description to equity method is needed. In fact in the equity hypotheses the investment in an associate is initially recognised at cost and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The investor’s share of the profit or loss of the investee is recognised in the investor’s profit or loss. Distributions received from an investee reduce the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the investor’s proportionate interest in the investee arising from changes in the investee’s other comprehensive income. Such changes include those arising from the revaluation of property, plant and equipment and from foreign exchange translation differences. The investor’s share of those changes is recognised in other comprehensive income of the investor.
In fact the Changes to standards, however small, are time-consuming for the Board and burdensome for others. The IASB has adopted unique policy for the Annual Improvements process to deal efficiently with a collection of narrow scope amendments to IFRSs even though the amendments are
unrelated. In this regard the IFRS Interpretations Committee reviews the proposed amendments within the annual improvements process and makes recommendations to the IASB before they are issued. Like previus years the IASB discusses and decides upon proposed improvements to IFRSs as they have arisen throughout the year. These Issues are dealt with in this process arise from matters raised by the IFRS Interpretations Committee and suggestions from staff or practitioners, and focus on areas of inconsistency in IFRSs or where clarification of wording is required. Annual Improvements follow the same due process as other amendments to IFRSs except that unrelated amendments can be exposed together, rather than separately.
Subscribe to:
Posts (Atom)