First Quarter Edition of IFRS News

Financial Reporting Standards

January 26, 2016

This Accounting Alert is issued to provide quarterly update on all things relating to International Financial Reporting Standards (IFRS). We begin this first edition of 2016 by looking at IFRS 16, the new Standard on lease accounting which was published by the IASB on January 13, 2016. We then move on to items currently in the International Accounting Standards Board (IASB)’s pipeline before taking a look at issues that regulators are likely to focus on in the coming months. Further on in the newsletter, you will find IFRS-related news at Grant Thornton and a general round-up of financial reporting developments. We finish with a summary of the implementation dates of newer Standards that are not yet mandatory, and a list of IASB publications that are out for comment.

New standard on leases

The IASB has published IFRS 16, Leases, completing its long-running project on lease accounting. The new Standard, which is effective for accounting periods beginning on or after January 1, 2019, requires lessees to account for leases 'on-balance sheet' by recognizing a 'right of use' asset and a lease liability.

IASB postpones changes to IFRS 10 and IAS 28

Amendments to IFRS 10 and IAS 28 -- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture was issued in 2014 and addressed an acknowledged inconsistency between IFRS 10 and IAS 28 relating to how to account for transactions in which a parent entity loses control of a subsidiary by contributing it to an associate or joint venture. These 2014 amendments are due to become effective for accounting periods on or after January 1, 2016. A number of questions were raised over the application of the amendments. The IASB decided that it would be better to address them as part of the research project on the equity method rather than make changes now.

Effective Date of Amendments to IFRS 10 and IAS 28' therefore defers indefinitely the mandatory effective date. Entities will still be permitted to apply the 2014 amendments if they wish to. Any proposal to insert a new effective date will be exposed for public comment.

Annual improvements proposals published

The IASB has published an Exposure Draft 'Annual Improvements to IFRSs 2014-2016 Cycle' which proposes minor amendments to three Standards -- IFRS 1, First-time Adoption of International Financial Reporting Standards; IFRS 12, Disclosure of Interests in Other Entities; and IAS 28, Investments in Associates and Joint Venture.

IASB proposes changes to insurance contracts standard to provide relief from IFRS 9

The IASB has issued an Exposure Draft 'Applying IFRS 9, Financial Instruments, with IFRS 4, Insurance Contracts' to address the temporary accounting consequences of the different effective dates of IFRS 9 and the anticipated new insurance contracts Standard. The new insurance contracts Standard is yet to be finalized but, when it is, its effective date is expected to be at least three years later. This means the mandatory effective date of the new insurance Standard will be after the 2018 effective date of IFRS 9.

See attached document for other IFRS-related news and developments in financial reporting standards.

Questions about this communication should be referred to Mabel Comedia or Jerald Sanchez.