IASB Update
From the International Accounting Standards Board
5 January 2010
 
Welcome to IASB Update

In this issue:

This IASB Updateis a staff summary of the tentative decisions reached by the Board at a public meeting. As a project progresses, the Board can, and sometimes does, modify its earlier tentative decisions. Tentative decisions do not change existing requirements until those decisions are incorporated in a new or amended standard.

The International Accounting Standards Board met in London on 5 January 2010 for an additional Board meeting, when they discussed Leases and Insurance contracts. The US Financial Accounting Standards Board (FASB) participated via video.

Other information


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International Accounting
Standards Board

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Tel: +44 (0)20 7246 6410
Fax: +44 (0)20 7246 6411
E-mail: iasb@iasb.org
Website: www.iasb.org
Future board meetings

The IASB meets at least once a month for up to five days.
The next Board meetings in 2010 are:

15 - 19 March
22 - 24 March
19 - 23 April
17 - 21 May

To see all Board meetings for 2010, click here.

Leases

At their October 2009 joint meeting, the boards tentatively decided to exclude from the scope of the proposed new leases requirements contracts that represent the purchase or sale of the underlying asset. At this meeting, the boards discussed the situation when a contract is the purchase or sale of the underlying asset. The boards decided tentatively that:

  1. Contracts that transfer control of the underlying asset should be excluded from the scope of the proposed new leases requirements
  2. The proposed new leases requirements should provide indicators to help a reporting entity determine whether control has been transferred
  3. Management of the reporting entity should exercise judgement and consider all relevant facts and circumstances when determining whether control of the underlying asset has been transferred
  4. Situations in which control of the underlying asset has normally been transferred include
  • Contracts where the title to the underlying asset automatically transfers
  • Contracts that include a bargain purchase option

The boards instructed the staff to provide additional analysis on the definition of control, how control would be assessed, and other possible indicators of control in the context of a lease contract

Go to the project page on the IASB website

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Insurance contracts

The boards discussed:

  • whether to account for insurance, investment and service components included in an insurance contract as if those components were separate contracts (unbundling)
  • presentation of the performance statement
  • derivatives embedded within a host insurance contract

Unbundling

The boards discussed whether to account for components of an insurance contract as if those components were separate contracts (ie unbundle those components). The IASB decided tentatively that, for recognition and measurement, an insurer should:

  • unbundle a component of an insurance contract if it is not interdependent with other components of that contract.
  • not unbundle a component that is interdependent

The FASB decided tentatively that if unbundling is not required for recognition and measurement, it should not be a permitted option. The FASB asked staff to clarify further how unbundling for recognition and measurement relates to (a) the definition of an insurance contract and the scope of the proposed standard, (b) the presentation models for the performance statement, and (c) bifurcation of embedded derivatives.

Presentation of the statement of comprehensive income

The boards discussed five models for the presentation of the statement of comprehensive income for insurance contracts and:

  • tentatively rejected a model that recognises revenue on the basis of written premiums (rather than recognising revenue as the insurer performs under the contract
  • asked the staff to clarify further the remaining models

Embedded derivatives

The boards discussed two approaches to measuring derivatives embedded in insurance contracts:

  • Measure at fair value (using existing guidance on when to bifurcate)
  • Measure consistently with the measurement used for the host insurance contract

Views diverged and no clear consensus emerged. The boards will return to the topic of embedded derivatives at a future meeting.


Next steps


The boards will continue their discussion of this project at their joint meeting in January.

Go to the project page on the IASB website

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Future Board Meetings

Future Board meetings The Board will meet in public session on the following dates in 2010. Meetings take place in London, UK, unless otherwise noted.

  • 18 - 22 January
  • 15 - 19 February
  • 2 February (PM)
  • 10 February (PM)
  • 15 - 19 March
  • 22 - 24 March
  • 19 - 23 April
  • 17 - 21 May
  • 14 - 18 June
  • 19 - 23 July
  • 13 - 17 September
  • 18 - 22 October
  • 25-27 October (Norwalk)
  • 15 - 19 November
  • 13 - 17 December

Please note that we are likely to add some meeting dates. We will include any such additional dates in future issues of IASB Update.

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Go to the meeting area of the IASB website


Past issues of IASB Update

Click here for archived copies of past issues of IASB Update on the IASB website.

For publications and subscriptions go to the IASCF online shop or email publications@iasb.org



Forthcoming comment deadline

There are no comment deadlines to be met before the January 2010 Board meeting. For a full list of comment deadlines, visit the Open to Comment section of the IASB website. For publications and subscriptions go to the IASCF online shop or email publications@iasb.org Go to the top of this page

Note that the information published in this newsletter originates from various sources and is accurate to the best of our knowledge. However, the International Accounting Standards Board and the International Accounting Standards Committee Foundation does not accept responsibility for loss caused to any person who acts or refrains from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise.
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