IASB Proposes IFRS Improvements 2011-2012

Keywords: Mazars, Thailand, IFRS, IASB

28 January 2013

The minor amendments proposed by the IASB relate to:

• IFRS 1 First-time Adoption of International Financial Reporting Standard: Meaning of effective IFRSs

The IASB proposes to clarify that a first-time adopter has the choice between applying a currently effective IFRSs or a new IFRS that is not yet mandatory, provided that early application is permitted.

The IASB also proposed to clarify that a first time adopter is required to apply the same version of IFRS throughout the period covered by its first IFRS financial statements.

• IFRS 3 Business combinations: Exclusion of joint arrangements from the scope

The IASB proposes to exclude the formation of all types of joint arrangements as defined in IFRS 11 from the scope of IFRS 3 (i.e. joint ventures and joint operations). This exclusion only applies to the financial statements of the joint venture or the joint operation itself.

• IFRS 13 Fair value measurement: Scope of paragraph 52 (portfolio exception)

The IASB proposes to clarify that the portfolio exception (permitting an entity to measure the fair value of a group of financial assets and financial liabilities on a net basis if the entity manages that group of assets and liabilities on the basis of its net exposure to either market risk or credit risk) applies to all contracts within the scope of IAS 39 or IFRS 9, regardless of whether they meet the definitions of financial assets or financial liabilities in IAS 32.

• IAS 40 Investment Property: Interactions between IFRS 3 Business combinations and IAS 40 when property is classified as investment property.

The IASB proposes to clarify that judgement is required to determine whether the acquisition of investment property is the acquisition of an asset, a group of assets or a business combination within the scope of IFRS 3. The IASB does not regard IFRS 3 and IAS 40 as mutually exclusive. A separate analysis must be conducted to determine whether the transaction meets the definition of a business combination and whether the asset is an investment property as defined.

These amendments will be of mandatory application to current financial periods at 1 January 2014. Early application is permitted.

The exposure draft can be accessed on the IASB web site.