8. December 2016
The IASB has finalised and today published the IFRS Interpretation 22 regarding IAS 21, an amendment to IAS 40, and the collective amendments Annual Improvements to IFRSs (2014-2016 Cycle).
The IFRS Interpretation 22 relates to transactions involving advance payments or receipts of consideration. It clarifies that under those circumstances the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from advance considerations. This interpretation shall be applied for annual periods beginning on or after 1 January 2018; earlier application is permitted.
The Amendment to IAS 40 relates to the accounting of investment properties under construction or development. In IAS 40 requires properties to be transfered to, or from, investment property when there is evidence of a change in use. IAS 40.57 contains a list of circumstances that provide evidence of a change in use. As IAS 40.57 was drafted such that it was exhaustive, it appeared to be unclear whether it also holds for a transfer of an incomplete property. The amendment to IAS 40 now clarifies that this principle of IAS 40 also covers investment properties under construction or development, given evidence of a change in use. The list in IAS 40.57 is now re-presented as examples of evidence, rather than as an exhaustive list. This amendment shall be applied from 1 January 2018; earlier application is permitted.
The Annual Improvements to IFRSs (2014-2016 cycle) comprise the following amendments:
• In IFRS 1, the short-term exemptions in paragraphs E3-E7 were deleted, because they have served their intended purpose.
• The scope of IFRS 12 is clarified by specifying that the disclosures required by IFRS 12, except for those in paragraphs B10-B16, also apply to interests that are classified as held for sale, as held for distribution or as discontinued operations in accordance with IFRS 5.
• It is clarified in IAS 28.18, that the election to measure an investment in an associate or a joint venture at fair value through profit or loss is available for each investment on an investment-by-investment basis.
The amendment to IFRS 12 shall be applied from 1 January 2017, whereas the other amendments are to be applied from 1 January 2018. Earlier application is permitted.
This interpretation and all amendments are subject to a charge and available from the IASB only (www.ifrs.org). (For the IASB press release and further background information please follow this link)