|IFRS Interpretations Committee (Committee) agenda decisions are those issues that the Committee decided not to take onto its agenda. Although not authoritative guidance, in practice they are regarded as being highly persuasive, and all entities reporting under IFRS should be aware of these decisions because they could impact the way particular transactions and balances are accounted for.|
At its January and March 2018 meetings, the IFRS Interpretations Committee issued agenda decisions on the following issues:
|IFRS 15 Revenue from Contracts with Customers||Revenue recognition in a real estate contract that Includes the transfer of land|
|IFRS 15 Revenue from Contracts with Customers||Right to payment for performance to date|
|IFRS 15 Revenue from Contracts with Customers||Revenue recognition in a real estate contract|
|IFRS 9 Financial Instruments|
IAS 1 Presentation of Financial Statements
|Presentation of interest revenue calculated using the effective interest method|
|IAS 28 Investments in Associates and Joint Ventures||Contributing property, plant and equipment to an associate|
The Committee issued agenda decisions on three revenue recognition issues relating to real estate contracts, specifically whether in three separate fact patterns, revenue should be recognised at a point in time, or over time as construction progresses.
In the first scenario, for a real estate construction contract that includes the transfer of land, the Committee concluded for this specific fact pattern, that transferring the land and performing the construction services were considered two separate performance obligations, and that revenue would be recognised for the:
The second and third IFRS 15 fact patterns considered by the Committee related to IFRS 15, paragraph 35(c). Revenue is recognised OVER TIME if:
An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
IFRS 15, paragraph 35
The three agenda decisions go into some detail regarding these criteria in paragraph 35(c).
IAS 1, paragraph 82(a) was amended with the introduction of IFRS 9. In addition to disclosing revenue on the face of the Statement of Profit or Loss, it also requires separate disclosure of ‘interest revenue calculated using the effective interest method’.
A question was raised whether this requirement specifically prohibits an entity presenting certain cash flows on derivatives that are not part of a designated hedging relationship (for example, the accrued realised cash flows on an interest rate swap) from being disclosed as ‘interest revenue’ rather than as part of movements in fair value of derivatives.
The Committee noted that amortised cost accounting only applies to financial assets that are subsequently measured at either amortised cost or fair value through other comprehensive income (FVTOCI). It is not applied to financial assets that are subsequently measured at fair value through profit or loss (FVTPL). Therefore, the requirement in IAS 1, paragraph 82(a) does not apply to derivatives or other financial assets that are subsequently measured at FVTPL.
Three questions were raised about how an investor accounts for a contribution of PPE to a newly-formed associate:
Please refer to our International Financial Reporting Bulletin IFRB 2018/01 for more detail about the Committee’s rationale on the agenda decisions for the above scenarios,