IAS 2

Topics: Balance sheet, Asset, International Financial Reporting Standards Pages: 116 (31599 words) Published: October 20, 2013
CONFIDENTIAL—NOT TO BE
DISTRIBUTED TO UNAPPROVED
PARTIES, THE PUBLIC OR PRESS

IASB MEETING
LONDON, SEPTEMBER 2004
AGENDA PAPER 15B

First Pre-ballot Draft of “Proposed Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IAS 19 Employee Benefits”

Staff contact: Henry Rees, +44 20 7246 6466, hrees@iasb.org.uk

page 1

Exposure Draft of Proposed
AMENDMENTS TO
IAS 37
PROVISIONS, CONTINGENT LIABILITIES AND
CONTINGENT ASSETS
IAS 19
EMPLOYEE BENEFITS
Comment to be received by X MONTH 2004

page 2

Contents
Introduction
Proposed Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
Invitation to Comment
Summary of Main Changes
Contents
Standard
Appendix: Amendments to Other Pronouncements
Basis for Conclusions
Illustrative Examples
Proposed Amendments to IAS 19 Employee Benefits
Invitation to Comment
Summary of Main Changes
Contents
Amended Paragraphs of Standard
Basis for Conclusions

page 3

Introduction
1.

This Exposure Draft has been issued by the International Accounting Standards Board as a result of two of the Board’s projects: the Short-term Convergence project and the second phase of the Business Combinations project.

2.

The Short-term Convergence project being undertaken jointly with the Financial Accounting Standards Board (FASB) in the United States has the objective of reducing differences between International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (US GAAP) that are capable of resolution in a relatively short time and can be addressed outside current and planned major projects. It is one strand of the Board’s broader objective of convergence of accounting standards around the world that underlies much of the Board’s work.

3.

One aspect of the joint short-term convergence project involves the two boards considering each other’s recent standards with a view to adopting high quality accounting solutions. The proposed amendments to the requirements in IAS 19 Employee Benefits for termination benefits and those proposed to the requirements in IAS 37 Provisions, Contingent Liabilities and Contingent Assets for constructive obligations, onerous contracts and restructuring provisions arise from the IASB’s consideration of FASB Statement No. 146 Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146), issued in 2002. The Board believes that the proposed amendments would achieve substantial convergence with the recognition requirements of SFAS 146.

4.

Most of the remaining proposed amendments to IAS 37 are to the definitions of contingent assets and contingent liabilities. These amendments reflect decisions in the second phase of the Business Combinations project relating to the treatment in a business combination of contingencies of an acquiree. The amendments have required some re-ordering of the existing recognition requirements of IAS 37 as well as a reconsideration of the Standard’s probability recognition criterion. Given that these amendments have been prompted by the second phase of the Business Combinations project, this Exposure Draft is published simultaneously with the Exposure Draft of Proposed Amendments to IFRS 3 Business Combinations. If confirmed in a Standard, the proposals in this Exposure Draft would have an effective date of X Month 200X, the same as the amended IFRS 3 Business Combinations.

5.

The Board emphasises that although these amendments reflect a new analysis of contingent assets and liabilities, and have required changes to the structure of the Standard, they should not significantly alter either the recognition or disclosure of many items from the present version of IAS 37. However, in some instances, present obligations that previously were only disclosed in the financial statements will now be recognised.

6.

The Board’s intention while developing this Exposure Draft was to reflect only those...
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