Accounting for Acquisitions of Interests in Joint Operations (Amendments to TFRS 11)
TFRS 11 Joint Arrangements addresses the accounting for interests in joint ventures and joint operations. The amendments add new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions. The amendments are required to be applied to acquisitions occurring from the start of the first annual period beginning on or after 1 January 2017. Earlier application is permitted.
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to TAS 16 and TAS38)
TAS 16 Property, Plant and Equipment and TAS 38 Intangible Assets both establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset. This amendment clarifies that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. It also clarifies that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The amendments are required to be applied for annual periods beginning on or after 1 January 2017. Earlier application is permitted.
Agriculture: Bearer Plants (Amendments to TAS 16 and TAS 41)
Before these amendments TAS 41 Agriculture required all biological assets related to agricultural activity to be measured at fair value less costs to sell based on the principle that their biological transformation is best reflected by fair value measurement. However, there is a subset of biological assets, known as bearer plants, which are used solely to grow produce over several periods. At the end of their productive lives they are usually scrapped. Plants such as grape vines, rubber trees and oil palms will normally meet the definition of a bearer plant. Once a bearer plant is mature, apart from bearing produce, its biological transformation is no longer significant in generating future economic benefits. The only significant future economic benefits it generates come from the agricultural produce that it creates. The IASB decided that bearer plants should be accounted for in the same way as property, plant and equipment in TAS 16 Property, Plant and Equipment, because their operation is similar to that of manufacturing. Consequently, the amendments include them within the scope of TAS 16, instead of TAS 41. The produce growing on bearer plants remains within the scope of TAS 41. The amendments are required to be applied for annual periods beginning on or after 1 January 2017. Earlier application is permitted.
Equity Method in Separate Financial Statements (Amendments to TAS 27)
The amendments to TAS 27 Separate Financial Statements will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The amendments are required to be applied for annual periods beginning on or after 1 January 2017 retrospectively in accordance with TAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Earlier application is permitted.
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to TFRS 10 and TAS 28)
The amendments address the conflict between the requirements in TFRS 10 Consolidated Financial Statements and TAS 28 Investments in Associates and Joint Ventures, when accounting for the sale or contribution of a subsidiary to a joint venture or associate (resulting in the loss of control of the subsidiary). The amendments are required to be applied for annual periods beginning on or after 1 January 2017. Earlier application is permitted.
Investment Entities: Applying the Consolidation Exception (Amendments to TFRS 10, TFRS 12 and TAS 28)
The amendments clarify which subsidiaries of an investment entity should be consolidated instead of being measured at fair value through profit or loss. The amendments also clarify that the exemption from presenting consolidated financial statements continues to apply to subsidiaries of an investment entity that are themselves parent entities. This is so even if that subsidiary is measured at fair value through profit or loss by the higher level investment entity parent. In addition, the amendments provide relief whereby a non-investment entity investor can, when applying the equity method, choose to retain the fair value through profit or loss measurement that is applied by its investment entity associates and joint ventures to their subsidiaries. The amendments are required to be applied for annual periods beginning on or after 1 January 2017. Earlier application is permitted.
Disclosure Initiative (Amendments to TAS 1)
The amendments address concerns expressed about some of the existing presentation and disclosure requirements in TAS 1 Presentation of Financial Statements and ensure that entities are able to use judgement when applying those requirements. As a result, it introduces five, narrow-focus improvements to the disclosure requirements that relate to materiality, order of the notes, subtotals, accounting policies and disaggregation. The amendments also clarify the requirements in paragraph 82A of TAS 1 for presenting an entity’s share of items of other comprehensive income of associates and joint ventures accounted for using the equity method. These amendments are required to be applied for annual periods beginning on or after 1 January 2017. Earlier application is permitted.
Changes in methods of disposal (Amendments to TFRS 5)
Amend IFRS 5 by stating that in circumstances in which an entity determines that the asset (or disposal group) is no longer available for immediate distribution or that the distribution is no longer highly probable it should cease held-for-distribution accounting and apply the guidance in paragraphs 27–29 of TFRS 5.
Discount rate: regional market issue (Amendments to TAS 19)
The IASB proposes to clarify that the high quality corporate bonds used to estimate the discount rate for post-employment benefit obligations should be denominated in the same currency as the liability. Consequently, the IASB proposes to clarify that the depth of the market for high quality corporate bonds should be assessed at the currency level.
Disclosure of information ‘elsewhere in the interim financial report’ (Amendments to TAS 34)
The IASB proposes to amend TAS 34 to clarify the meaning of disclosure of information ‘elsewhere in the interim financial report’ and to require the inclusion of a cross-reference from the interim financial statements to the location of this information.
