On the Horizon for IFRS
June 25, 2013
IASB issues May 2013 joint IASB / FASB meeting highlights
Comprehensive review of the IFRS for SMEs
Conceptual Framework
Fair value measurement
Financial instruments: accounting for macro hedging
Financial instruments: classification and measurement
IFRS 3, Business Combinations ‒ mandatory purchases of noncontrolling interests in
business combinations
IFRS 3, Business Combinations ‒ contingent consideration
IAS 27, Separate Financial Statements ‒ equity method
IAS 39, Financial Instruments: Recognition and Measurement ‒ novation of
derivatives and continuation of hedge accounting
IAS 41, Agriculture and IFRS 13, Fair Value Measurement ‒ valuation of biological
assets
Revenue recognition
Work plan
IASB / FASB joint meeting May 2013
IASB issues May 2013 joint IASB / FASB meeting highlights
Key issues
At the May 2013 joint IASB / FASB meeting the following issues were discussed:
•
Comprehensive review of the IFRS for SMEs: The IASB continued its discussion on
whether the IFRS for SMEs should be updated for new and revised IFRS that have been
issued since the IFRS for SMEs was first issued. The IASB tentatively decided that changes
as a result of certain new and revised IFRS and annual improvements would be considered
for incorporation into IFRS for SMEs. The IASB also discussed other issues identified in
response to its request for information related to the guidance in the IFRS for SMEs.
•
Conceptual Framework: The IASB decided that the comment period for the Conceptual
Framework Discussion Paper would be 180 days. The IASB plans to issue the Discussion
Paper on the Conceptual Framework in July 2013.
© 2013 Grant Thornton LLP. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting issues and developments. It is not a
comprehensive analysis of the subject matter covered and is not intended to provide accounting or other conclusions with respect to the matters addressed in this issue. All relevant facts and
circumstances, including the pertinent authoritative literature, need to be considered to arrive at accounting that complies with matters addressed in this publication. For additional information on
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On the Horizon for IFRS June 25, 2013
•
Fair value measurement: The IASB tentatively decided to issue an exposure draft to amend
•
amend paragraph 10 of IAS 27 to allow an entity to account for investments in subsidiaries,
venture, or associate is the investment as a whole. The IASB will first discuss a related
associates, and joint ventures using the equity method in its separate financial statements.
IAS 34, Interim Financial Reporting ‒ disclosure of information “elsewhere in the interim
Financial instruments ‒ accounting for macro hedging: The IASB discussed certain
financial report”: The IASB tentatively agreed with the IFRS Interpretations Committee’s
recommendation to amend paragraph 16A of IAS 34 to clarify the meaning of disclosure of
hedge accounting and the scope of the guidance on accounting for macro hedge
information “elsewhere in the interim financial report” and to require the inclusion of a cross-
accounting activity, for inclusion in a Discussion Paper. No decisions were made by the
reference from the interim financial statements to the location of this information. The IASB
IASB at this meeting.
plans to issue the exposure draft of proposed amendments Annual Improvements to IFRSs
Financial instruments ‒ classification and measurement: The staff presented to the IASB
2012-2014 Cycle in the fourth quarter of 2013.
•
IAS 39, Financial Instruments: Recognition and Measurement ‒ novation of derivatives and
outreach activities on the IASB's Exposure Draft on certain proposed amendments to the
continuation of hedge accounting: The IASB analyzed responses to its exposure draft,
classification and measurement of financial instruments in IFRS 9, Financial Instruments.
which proposed relief from the discontinuation of hedge accounting when a derivative is
No decisions were made at this meeting.
novated to a central counterparty, under certain criteria. The IASB tentatively decided to
IFRS 3, Business Combinations ‒ mandatory purchases of non-controlling interests in
expand the scope of the proposed amendments to IAS 39, Financial Instruments:
business combinations: The IASB discussed the IFRS Interpretations Committee's views
Recognition and Measurement and IFRS 9, Financial Instruments so that the relief also
and recommendations on this issue and tentatively agreed that the initial acquisition of the
applies to the voluntary novation of a derivative to a central counterparty and a novation that
controlling stake and the subsequent mandatory tender offer would be treated as a single
provides the entity with indirect access to a central counterparty. The IASB directed the staff
acquisition. The IASB tentatively decided to discuss that issue, as well as the accounting for
to begin the balloting process.
the mandatory offer at the date that the acquirer obtains control of the acquiree, when it
•
•
alternatives related to the balance sheet and income statement presentation of macro
and the FASB a summary of the main points received in the comment letters and the
•
IAS 27, Separate Financial Statements ‒ equity method: The IASB tentatively decided to
certain IFRS to clarify that the unit of account for an investment in a subsidiary, joint
issue on the portfolio exception, which was referred by the IFRS Interpretations Committee.
•
•
•
IAS 41, Agriculture and IFRS 13, Fair Value Measurement ‒ valuation of biological assets:
discusses the measurement of put options written on noncontrolling interests.
The IASB discussed an issue initially discussed by the IFRS Interpretations Committee
IFRS 3, Business Combinations ‒ contingent consideration: The IASB discussed the
related to the valuation of land used in combination with biological assets when the highest
proposed amendment to IFRS 3, Business Combinations, and consequential amendments
and best use differs from the current use. The IASB tentatively decided that the issue is not
to IFRS 9, Financial Instruments, regarding the accounting for contingent consideration in a
widespread but may consider the issue during the post-implementation review of IFRS 13,
business combination that was included in the May 2012 Exposure Draft, Annual
Fair Value Measurements, if conditions change.
Improvements to IFRSs 2010–2012 Cycle. The IASB tentatively decided to revise some of
•
Revenue recognition: The IASB reached tentative decisions on the following topics related
the proposed amendments and to approve the revised, proposed amendments to IFRS 3
to the revised Exposure Draft, Revenue from Contracts with Customers:
and the consequential amendments to IFRS 9 and IAS 39, Financial Instruments:
−
Exemptions for transition for first-time adopters
Recognition and Measurement, for inclusion in the final Annual Improvements to IFRSs,
−
Transition disclosures in IAS 8, Accounting Policies, Changes in Accounting Estimates
subject to review of the drafting. The IASB plans to issue the amendments in the third
and Errors
quarter of 2013.
The IASB concluded that it had met its due process requirements. Therefore, the IASB
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On the Horizon for IFRS June 25, 2013
•
IAS 1, Presentation of Items of Other Comprehensive Income (2011
amendment)
The IASB and the FASB also discussed the application of the revenue model to credit card
•
IAS 32, Classification of Rights Issues (2009 amendment)
reward programs and tentatively decided to amend the introductory paragraph to
•
IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
•
performance obligation.
Two amendments to IFRS 1, First-time Adoption of International
Financial Reporting Standards:
Work plan: The work plan as of June 21, 2013, reflecting decisions made at the May 2013
−
Severe Hyperinflation and Removal of Fixed Dates for First-time
Adopters (2010)
−
Government Loans (2012)
decided not to re-expose the revenue recognition standard and agreed that the staff could
begin the balloting process.
Example 24 in the Exposure Draft to clarify that the existence of a “customer loyalty
programme” and the promise to transfer award credits does not automatically give rise to a
•
meeting is available on the IASB website.
All decisions reached at IASB meetings are tentative and may be changed or modified at
future meetings. Board decisions become final only after completion of a formal ballot to issue a
Standard or Interpretation or to publish an Exposure Draft.
•
The International Accounting Standards Board has issued an IASB Update,
which summarizes the joint IASB / FASB meeting that was held on May 21-24,
2013. The IASB met alone for certain sessions.
Highlights of the meeting are discussed below.
•
Comprehensive review of the IFRS for SMEs
The IASB continued their discussion on issues from the IASB’s 2012 Request
for Information, Comprehensive Review of the IFRS for SMEs (“RFI”).
New and revised Standards
The IASB continued its discussion on whether the IFRS for SMEs should be
updated for new and revised IFRS that have been issued since the IFRS for
SMEs was first issued. At its April 2013 meeting the IASB considered the six
new or revised Standards that the staff believed had the potential to result in the
most significant changes for the guidance for SMEs. At this meeting the IASB
considered the other new and revised Standards.
The IASB tentatively decided that the main changes in the following new and
revised IFRS and annual improvements would be considered for incorporation
in the IFRS for SMEs:
Annual improvements issued in 2010:
−
Revaluation basis as deemed cost (IFRS 1)
−
Use of deemed cost for operations subject to rate regulation (IFRS
1)
−
Clarification of statement of changes in equity (IAS 1)
Annual improvements issued in 2012:
−
Repeated application of IFRS 1
−
Classification of servicing equipment (IAS 16)
−
Tax effect of distributions to holders of equity instruments (IAS
32)
Additional issues
As well as asking questions on known issues, the RFI also asked
respondents to raise their own issues on specific requirements in the IFRS
for SMEs and any other general issues relating to the IFRS for SMEs. At this
meeting the IASB considered additional issues raised by respondents and
made the following tentative decisions to amend the IFRS for SMEs to
address some of those issues:
•
To incorporate guidance to help SMEs apply the “undue cost or effort”
exemption based on Q&A 2012/01 Application of “undue cost or effort”
issued by the SME Implementation Group in 2012
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On the Horizon for IFRS June 25, 2013
•
To add an “undue cost or effort” exemption
See the IASB project summary for more information on this project.
−
Conceptual Framework
−
To the requirement to recognize intangible assets separately in a
business combination; and
From measurement of investments in equity instruments at fair value in
Section 11, Basic Financial Instruments and Section 12, Other Financial
Instruments Issues
•
To add additional guidance in paragraph 9.16 on the preparation of
consolidated financial statements if group entities have different reporting
dates, but continue to require uniform reporting dates to be used unless it is
impracticable to do so
•
To amend the criteria in paragraph 11.9 to clarify that loans payable in a
foreign currency and loans with standard loan covenants will usually be
basic financial instruments accounted for at amortized cost in accordance
with Section 11
•
To add specific guidance in paragraph 19.14 for the measurement of
employee benefit arrangements and deferred taxes when allocating the cost
of a business combination
•
To add an exemption in paragraph 22.8 for equity instruments issued as
part of a business combination of entities or businesses under common
control
•
To add an exemption in paragraph 22.17 for distributions of a non-cash
asset ultimately controlled by the same parties before and after distribution
•
To revise the definition of “related party” to be consistent with IAS 24,
Related Party Disclosures (2009) and add the definition “close members of the
family of a person”
•
To clarify the accounting requirements for entities involved in extractive
activities
Next steps
The IASB has now completed its discussions on the main issues from the RFI
and at the next meeting will discuss a few additional issues identified by the staff
and will then proceed to drafting the Exposure Draft of proposed amendments.
The IASB discussed the due process procedures for the Discussion Paper
on the Conceptual Framework. The IASB decided that the comment period
for the Conceptual Framework Discussion Paper would be 180 days. The
Board also stated that it is satisfied that it has completed all of the necessary
steps to ensure that the Conceptual Framework Discussion Paper is likely
to meet its purpose and asked the staff to prepare for ballot a draft of the
Discussion Paper.
The IASB plans to issue the Discussion Paper on the Conceptual
Framework in July 2013.
See the IASB project summary for more information on this project.
Fair value measurement
The IASB continued their discussion regarding questions raised about the
unit of account for financial assets that are investments in subsidiaries, joint
ventures, and associates, measured at fair value. The IASB had previously
tentatively decided:
•
The unit of account for investments in subsidiaries, joint ventures, and
associates is the investment as a whole
•
The fair value measurement of an investment in financial instruments
quoted in an active market is the product of the quoted price multiplied
by the quantity of investments held
At this meeting, the IASB discussed in addition to amending IFRS 13,
whether to also amend IFRS 10, Consolidated Financial Statements; IAS 27,
Separate Financial Statements; and IAS 28, Investments in Associates and Joint
Ventures, to address the previous tentative decisions noted above and
whether additional disclosure requirements are necessary. The IASB also
discussed the transition provisions and effective date of the proposed
amendments to IFRS.
4
On the Horizon for IFRS June 25, 2013
The IASB tentatively decided that the clarification about the fair value
measurement of quoted investments in subsidiaries, joint ventures, and
associates would be made to all of the IFRS noted. The IASB also tentatively
decided that the proposed clarification did not necessitate additional disclosure
requirements.
The IASB did not make a decision on the transition provisions. It will consider
this topic again after considering any further amendments to the Exposure
Draft that may arise from its consideration of a portfolio exception issue that
was raised by the IFRS Interpretations Committee.
Next steps
The IASB expects to discuss a related portfolio issue identified by the IFRS
Interpretations Committee at a future meeting. The staff will also draft an
exposure draft clarifying the fair value measurement of quoted investments in
subsidiaries, joint ventures, and associates (together with any other clarifications
arising from consideration of the related portfolio issue) during the third quarter
of 2013.
See the IASB project summary for more information on this project.
Financial instruments: accounting for macro hedging
The IASB continued its previous discussions on the proposed revaluation
approach for accounting for macro hedging activity. The IASB discussed the
dynamic risk management of interest rate risk in the banking sector, because it
is a well-known example of where the application of accounting for macro
hedging activity is necessary.
Income statement and balance sheet presentation
At this meeting the IASB discussed the possible geography of the accounting
entries within both the income statement and the statement of financial
position, under the portfolio revaluation approach for accounting for macro
hedging activity.
The IASB discussed two alternatives for income statement presentation,
including the:
•
Stable net interest income approach; and
•
Actual net interest income approach
The IASB also discussed three presentation alternatives for the statement of
financial position:
•
Line-by-line gross-up
•
Separate lines for aggregate gross adjustments to assets and liabilities
•
Single net line item
The IASB discussed all the alternatives, in particular considering the
usefulness of the information provided by each presentation.
What the model should apply to
The IASB also discussed the scope of the guidance for accounting for
macro hedging, including what portfolios are to be revalued when an entity
applies this approach and whether the application of the accounting for
macro hedging should be mandatory or optional.
The IASB discussed a holistic view, which would result in applying the
macro hedge accounting guidance to the whole portfolio to which dynamic
risk management was undertaken, including both hedged and intentionally
unhedged positions within that portfolio. Another view discussed focused
more on hedging activity.
No decisions were made by the IASB at this meeting.
Next steps
The staff will continue drafting the Discussion Paper, which will
incorporate the alternatives discussed by the IASB at this meeting.
See the IASB project summary for more information on this project.
Financial instruments: classification and measurement
The staff presented to the IASB and the FASB a summary of the main
points received in the comment letters and the outreach activities on the
IASB’s Exposure Draft ED/2012/4, Classification and Measurement: Limited
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On the Horizon for IFRS June 25, 2013
Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010)). No decisions were
made at this meeting.
The IASB and the FASB expect to continue their discussions at future
meetings.
See the IASB project summary for more information on this project.
IFRS 3, Business Combinations ‒ mandatory purchases of noncontrolling
interests in business combinations
The IFRS Interpretations Committee (the Committee) was asked to address the
accounting for the mandatory purchases of noncontrolling interests in a
sequence of transactions that begins with the acquirer gaining control over
another entity. Shortly thereafter, the acquirer purchases an additional
ownership interest as a result of a regulatory requirement to offer to purchase
the additional interest. The submitter noted that IFRS 3, Business Combinations,
does not specifically address the accounting in this situation.
The Committee considered the following questions regarding this issue:
•
•
Should the initial acquisition of the controlling interest and the subsequent
mandatory tender offer be treated as separate transactions or as a single
acquisition (linked transactions)? In November 2012, the Committee
tentatively agreed that the initial acquisition of the controlling interest and
the subsequent mandatory tender offer would be treated as a single
acquisition. To make that assessment, the Committee tentatively agreed that
entities would apply the guidance in IFRS 10, Consolidated Financial
Statements, for determining whether the disposal of a subsidiary achieved in
stages should be accounted for as one or more transactions. The
Committee also tentatively decided to ask the IASB to amend IFRS 3
through Annual Improvements to reflect this issue.
Should a liability be recognized for the mandatory tender offer at the date
the acquirer obtains control of the acquiree? In November 2012, the
Committee noted that IAS 37, Provisions, Contingent Liabilities and Contingent
Assets, excludes contracts that are executory in nature from its scope.
Therefore, the Committee tentatively concluded that a liability would
not be recognized for the mandatory tender offer. The Committee
continued to discuss this issue in March 2013. At that meeting, some
members thought a liability would be recognized in a manner that is
consistent with IAS 32, Financial Instruments: Presentation. Other members
did not believe that the mandatory tender offer is within the scope of
IAS 32 and therefore a liability would not be recognized. The
Committee decided to ask the staff to report its views on whether a
liability should be recognized for the mandatory tender offer to the
Board. The Committee noted that the IASB could address this issue as
part of its post-implementation review of IFRS 3.
In May 2013, the IASB discussed the Committee's views and
recommendations on this issue. On the first question, the IASB tentatively
agreed with the Committee that the initial acquisition of the controlling
stake and the subsequent mandatory tender offer would be treated as a
single acquisition. In its discussion of the second question, the IASB noted
that in March 2013 it tentatively decided to reconsider the measurement
requirements in paragraph 23 of IAS 32, including whether all or particular
put options and forward contracts written on an entity's own equity should
be measured on a net basis at fair value. Since a mandatory tender offer is
economically similar to a put option written on a noncontrolling interest,
IASB members expressed the view that the accounting for those items
should be considered at the same time.
The IASB tentatively decided to discuss this issue when it discusses the
measurement of put options written on noncontrolling interests.
IFRS 3, Business Combinations ‒ contingent consideration
The IASB discussed the proposed amendment to IFRS 3, Business
Combinations, and consequential amendments to IFRS 9, Financial Instruments,
regarding the accounting for contingent consideration in a business
combination that was included in the May 2012 Exposure Draft, Annual
Improvements to IFRSs 2010–2012 Cycle. The IASB considered the
6
On the Horizon for IFRS June 25, 2013
recommendations of the IFRS Interpretations Committee on the proposed
amendment and tentatively agreed with the following recommendations:
•
The wording of the requirement on the subsequent measurement of
nonequity contingent consideration in paragraph 58(b) of IFRS 3 would be
amended so that it does not imply that contingent consideration can give
rise only to a financial instrument.
•
The amendment proposed in paragraph 4.1.2 of IFRS 9 would not be
made.
•
All contingent consideration that is a liability would be subsequently
measured at fair value through profit or loss.
The IASB also tentatively decided that all nonequity contingent consideration in
a business combination would be subsequently measured at fair value through
profit or loss and that consequential amendments would also be made to IAS
39, Financial Instruments: Recognition and Measurement.
The IASB tentatively decided to approve the revised, proposed amendments to
IFRS 3 and the consequential amendments to IFRS 9 and IAS 39 for inclusion
in the final Annual Improvements to IFRSs, subject to review of the drafting. The
IASB plans to issue the amendments in the third quarter of 2013.
See the IASB project summary for more information on this project.
IAS 27, Separate Financial Statements ‒ equity method
In May 2012, the IASB tentatively decided to add a narrow-scope project to its
agenda to restore the option to use the equity method of accounting in separate
financial statements.
In May 2013, the IASB tentatively decided to amend paragraph 10 of IAS 27,
Separate Financial Statements, to permit an entity to account for investments in
subsidiaries, associates, and joint ventures using the equity method in its
separate financial statements.
See the IASB project summary for more information on this project.
IAS 39, Financial Instruments: Recognition and Measurement ‒
novation of derivatives and continuation of hedge accounting
The IASB analyzed comment letters received on the Exposure Draft
ED/2013/2, Novation of Derivatives and Continuation of Hedge
Accounting (Proposed Amendments to IAS 39 and IFRS 9), issued in
February 2013.
The IASB had received a request to clarify whether an entity is required to
discontinue hedge accounting for hedging relationships in which a
derivative that has been designated as a hedging instrument in accordance
with IAS 39, Financial Instruments: Recognition and Measurement is
novated. The derivative is transferred to a central counterparty (CCP)
following the introduction of a new law or regulation. The IASB concluded
that an entity is required to discontinue the hedge accounting for a
derivative that has been designated as a hedging instrument in the existing
hedging relationship if the derivative is novated to a CCP. The new
derivatives, with a counterparty being the CCP, would be recognized at the
time of the novation.
The IASB, however, was concerned with the financial reporting effects,
specifically the discontinuation of hedge accounting that would arise as a
result of the novation that occurs as a result of new laws or regulations.
Some jurisdictions have instituted new laws or regulations as a result of a
G20 commitment to improve transparency and regulatory oversight of
over-the-counter (OTC) derivatives in an internationally consistent and
non-discriminatory way. The amendments proposed in the Exposure Draft
provided relief from discontinuing hedge accounting when the novation to
a CCP meets three criteria:
(1) novation is required by laws or regulations; (2) novation results in a
central counterparty becoming the new counterparty to each of the parties
to the novated derivatives; and (3) only specified (limited) changes are made
to the terms of the novated derivative.
7
On the Horizon for IFRS June 25, 2013
A majority of respondents to the Exposure Draft requested that the IASB
expand the scope of the amendments to include voluntary novation to a CCP
and instances where an entity accesses a CCP indirectly, for example by
novating to a clearing member of a CCP.
The Committee believes that question also applies to circumstances when
the fair value of a non- biological asset (e.g. a building) is linked to the value
of the land on which it is located. The Committee decided not to take this
issue onto its agenda because it is too broad for the Committee to address.
The IASB tentatively decided to expand the scope of the amendments to also
provide relief from discontinuing hedge accounting for (1) voluntary novation
to a CCP associated with a legislative or regulatory change and (2) novation that
provides the entity with indirect access to a CCP. The IASB also tentatively
decided to clarify some of the drafting in the final amendments and that the
amendment would be applied retrospectively. In addition, the IASB also
tentatively decided that amendments would also be made to IFRS 9, Financial
Instruments and that no additional disclosure requirements were necessary.
The IASB, in its discussions noted that IAS 41 does not require the use of
the residual method. It further noted that IFRS 13, Fair Value Measurement
encourages the use of multiple valuation techniques where appropriate.
The IASB tentatively decided that re-exposure is not necessary and that the
mandatory effective date of the amendments would be January 1, 2014. The
IASB directed the staff to begin the balloting process.
Revenue recognition
The IASB expects to issue the amendments to IAS 39 and IFRS 9 in June 2013.
See the IASB project summary for more information on this project.
The IASB noted that the result of outreach activities indicates that this issue
is not currently widespread and thus tentatively decided that, depending on
how practice develops in this area, this matter may be considered for review
in the post-implementation review of IFRS 13.
IASB-only
On May 23, 2013, the IASB discussed the following topics related to the
revised Exposure Draft, Revenue from Contracts with Customers (the 2011 ED):
•
Exemptions for transition for first-time adopters
•
Transition disclosures in IAS 8, Accounting Policies, Changes in Accounting
Estimates and Errors
•
Due process
IAS 41, Agriculture and IFRS 13, Fair Value Measurement ‒ valuation of
biological assets
The IFRS Interpretations Committee (Committee) received a request on
clarification of the guidance in paragraph 25 of IAS 41, Agriculture. The guidance
relates to the use of a residual method as an example of a possible valuation
technique to measure the fair value of biological assets that are physically
attached to land, if the biological assets have no separate market but an active
market does exist for the combined assets as a group.
The concern raised is how the valuation of the biological assets is linked to the
valuation of the land on which they are situated, when an entity has concluded
that the valuation premise of the biological assets is to use them in combination
with other assets (such as land) and any of those other assets has a highest and
best use that differs from its current use.
The IASB tentatively decided not to amend IFRS 1, First-time Adoption of
International Financial Reporting Standards, to permit first-time adopters of
IFRS to use the alternative cumulative catch-up transition method. Instead,
the IASB tentatively decided to amend IFRS 1 to provide an optional
exemption for first-time adopters for contracts completed before the
earliest period presented. Under this exemption, a first-time adopter would
not be required to restate all of its contracts for which it has recognized all
of its revenue in accordance with its legacy revenue requirements before the
earliest period presented.
8
On the Horizon for IFRS June 25, 2013
The Board also tentatively decided that when an entity applies the retrospective
transition method, the entity is not required to provide the amount of
adjustments in the current period as required by
paragraph 28(f) of IAS 8.
The IASB discussed a summary of the mandatory and nonmandatory due
process steps that have been completed in developing the revenue recognition
standard and concluded that it had met its due process requirements and that
sufficient consultation and analysis had been undertaken. Therefore, the IASB
decided not to re-expose the revenue recognition standard and agreed that the
staff could begin the balloting process. None of the IASB members present at
the meeting indicated that they would dissent from issuing the final standard on
revenue recognition.
IASB and FASB
On May 24, 2013, the IASB and the FASB met to discuss the application of the
revenue model to credit card reward programs. The specific issue is whether the
accounting illustrated in Example 24 in the 2011 ED would always apply to
award credits in a credit card reward program.
The Boards tentatively decided to amend the introductory paragraph to
Example 24 in the 2011 ED to clarify that the existence of a “customer
loyalty programme” and the promise to transfer award credits does not
automatically give rise to a performance obligation. The Boards noted that
in all arrangements, even those in which there are more than two parties to
the arrangement, the entities in the arrangement would consider all the facts
and circumstances in applying the revenue model to determine whether the
promise to transfer award credits gives rise to a performance obligation.
Next steps
The staff has started to draft the final standard and will bring any sweep
issues that arise to a future Board meeting.
See the IASB project summary for more information on this project.
Work plan
The work plan as of June 21, 2013, reflecting decisions made at the May
2013 meeting is available on the IASB website.
See the IASB work plan for additional information.
9