7. October 2016
The ASCG submitted its comment letter on the ED/2016/1 Definition of a Business and Accounting for Previously Held Interests to the IASB.
In general, the ASCG supports the IASB’s aim to provide clearer application guidance regarding the definition of a business. Nevertheless, the ASCG thinks that the proposed amendments do not sufficiently help in determining whether a business or a group of assets has been acquired. In particular, there seem to be difficulties regarding the application of the screening test and there still does not seem to be an uniform understanding of the terms ‘input’, ‘process’ and ‘output’. In addition, the majority of the illustrative examples included in the ED do not seem to conform to the amendments proposed or they illustrate that the application of the definition of a business still does not seem to be sufficiently clear.
In contrast, the ASCG fully supports the proposed amendments regarding the accounting of previously held interests and thinks that the proposals will result in uniform accounting.