CA Sri Lanka calls for feedback on proposed amendments to IFRS 11 and IFRS 1

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), in its capacity as the sole authority to promulgate accounting standards in the country, has called for comments on the proposed amendments to the IFRS 11 and IFRS 1 with reference to the recent exposure draft published by the International Accounting Standards Board (IASB).  

IASB recently published an Exposure Draft ED/2012/7 on Acquisition of an Interest in a Joint Operation: proposed amendment to IFRS 11, proposing specific guidance on accounting for the acquisition of an interest in a joint operation that is a business as defined by IFRS 3 Business Combinations.

Currently different approaches have developed in practice result in different accounting for:

nThe premium paid for the acquisition

nDeferred tax assets and liabilities

nAcquisition-related costs

Several key amendments will be made which would clarify that IFRS 3 and other relevant standards would be applied to acquisitions of interests in joint operations that are businesses. Accordingly, such acquisitions would be accounted for using the acquisition method under IFRS 3, to the extent of the joint operator’s interest in the joint operation, resulting in:

nMeasuring most identifiable assets and liabilities at fair value

nExpensing acquisition-related costs (other than debt or equity issuance costs)

nRecognising deferred taxes

nRecognising any goodwill or bargain purchase gain

The Exposure Draft also proposes a consequential amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards to extend and clarify the operation of the business combination exemptions, so that they include past acquisitions of interests in joint operations in which the activity of the joint operation constitutes a business.

The effective date is yet to be confirmed; however, the Exposure Draft does indicate that application would be on a prospective basis. The comment period for the proposed amendments will end on 23 April 2013.

CA Sri Lanka therefore invites accounting professionals and members of the public to submit their comments on the proposed amendments to the Institute’s technical division at [email protected] before 15 April 2013. Subsequently, the Institute will compile all the comments and forward it to IASB for their consideration.