IFRS Global office May 2012

IFRS in Focus IASB issues exposure draft on Improvements to IFRSs: 2010-2012 Cycle
Contents Introduction The proposed amendments The Bottom Line The exposure draft proposes amendments to the following standards: IFRS 2 Share-based Payment IFRS 3 Business Combinations IFRS 8 Operating Segments IFRS 13 Fair Value Measurement IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 12 Income Taxes IAS 16 Property, Plant and Equipment IAS 38 Intangible Assets IAS 24 Related Party Disclosures IAS 36 Impairment of Assets The proposed effective dates vary, with details outlined below. The comment period for the proposals ends on 5 September 2012.

Introduction On 3 May 2012, the International Accounting Standards Board (IASB) issued for public comment Exposure Draft ED/2012/1 Annual Improvements to IFRSs: 2010-2012 Cycle (the ED), which proposes amendments to 11 International Financial Reporting Standards (IFRSs) under its annual improvements project. The annual improvements process is designed to make necessary, but non-urgent, amendments to IFRSs. The proposed effective date for the amendments is for annual periods beginning on or after 1 January 2014, with the exception of the amendment to IFRS 3 Business Combinations and the corresponding consequential amendment to IFRS 9 Financial Instruments, which are effective for annual periods beginning on or after 1 January 2015. Early adoption is proposed to be permitted for all of the amendments. The comment period for the ED ends on 5 September 2012.

For more information please see the following websites: www.iasplus.com www.deloitte.com

The proposed amendments

IFRS IFRS 2 Share-based Payment IFRS 3 Business Combinations Topic Definition of vesting condition Accounting for contingent consideration in a business combination Proposed amendment Clarifies the definition of vesting conditions by separately defining a performance condition and a service condition in Appendix A of IFRS 2. Clarifies that: a) classification of contingent consideration in a business combination as either a liability or an equity instrument is based solely on the requirements of IAS 32 Financial Instruments: Presentation; and b) contingent consideration in a business combination that is not classified as an equity instrument is subsequently measured at fair value, with the corresponding gain or loss recognised either in profit or loss or other comprehensive income in accordance with IFRS 9 Financial Instruments. IFRS 8 Operating Segments Aggregation of operating segments Reconciliation of the total of the reportable segments assets to the entitys assets IFRS 13 Fair Value Measurement IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 12 Income Taxes Short-term receivables and payables Current/non-current classification of liabilities Interest paid that is capitalised Recognition of deferred tax assets for unrealised losses Requires entities to disclose the judgements made in identifying its reportable segments when operating segments have been aggregated, including a description of the operating segments that have been aggregated. Clarifies the requirement to provide a reconciliation between the total reportable segments assets and the entitys assets if segment assets are regularly provided to the chief operating decision maker. Clarifies that an entity is not required to discount short-term receivables and payables without a stated interest rate below their invoice amount when the effect of discounting is immaterial. Clarifies that a liability is classified as non-current if an entity expects, and has the discretion, to refinance or roll over the obligation for at least 12 months after the reporting period under an existing loan facility with the same lender and on the same or similar terms. Clarifies that capitalised interest payments should have a consistent classification in the statement of cash flows with other payments for the underlying asset into which those payments were capitalised. Clarifies that: a) the assessment of whether to recognise the tax effect of a deductible temporary difference as a deferred tax asset should be made as a combined assessment of all temporary differences that, when they reverse, will give rise to deductions against the same type of taxable income; b) taxable profit against which an entity assesses a deferred tax asset for recognition is the amount preceding any reversal of deductible temporary differences; and c) only actions that create or increase taxable profit are representative of tax planning opportunities. IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets Revaluation method proportionate restatement of accumulated depreciation Clarifies that accumulated depreciation should be computed as the difference between the gross and the net carrying amounts after restating the gross carrying amount in a manner consistent with the revaluation of the net carrying amount when an item of property, plant and equipment or an intangible asset is revalued. The computation of accumulated depreciation is independent of the selection of a valuation technique. Clarifies the identification and disclosure requirements for related party transactions that take place when key management personnel services are provided by a management entity that is not otherwise a related party of the reporting entity by extending the definition of a related party to include management entities, extending the disclosure requirements of IAS 24 to require the separate disclosure of transactions for the provisions of key management personnel services and excluding from the disclosure requirements of IAS 24 key management personnel compensation that is provided by a management entity to its own employees. Clarifies that the disclosure requirements in IAS 36 which are applicable to value in use are also applicable to fair value less costs of disposal when a present value technique is used to estimate the recoverable amount and there has been a material impairment loss or impairment reversal in the period.

IAS 24 Related Party Disclosures

Key management personnel

IAS 36 Impairment of Assets

Harmonisation of disclosures for value in use and fair value less costs of disposal

IFRS in focus

Key contacts

IFRS global office Global Managing Director, IFRS Clients and Markets Joel Osnoss ifrsglobalofficeuk@deloitte.co.uk Global Managing Director, IFRS Technical Veronica Poole ifrsglobalofficeuk@deloitte.co.uk Global IFRS Communications Randall Sogoloff ifrsglobalofficeuk@deloitte.co.uk

IFRS centres of excellence Americas Canada LATCO United States Asia-Pacific Australia China Japan Singapore Europe-Africa Belgium Denmark France Germany Luxembourg Netherlands Russia South Africa Spain United Kingdom

Karen Higgins Fermin del Valle Robert Uhl

iasplus@deloitte.ca iasplus-LATCO@deloitte.com iasplusamericas@deloitte.com

Anna Crawford Stephen Taylor Shinya Iwasaki Shariq Barmaky

iasplus@deloitte.com.au iasplus@deloitte.com.hk iasplus-tokyo@tohmatsu.co.jp iasplus-sg@deloitte.com

Laurent Boxus Jan Peter Larsen Laurence Rivat Andreas Barckow Eddy Termaten Ralph ter Hoeven Michael Raikhman Graeme Berry Cleber Custodio Elizabeth Chrispin

BEIFRSBelgium@deloitte.com dk_iasplus@deloitte.dk iasplus@deloitte.fr iasplus@deloitte.de luiasplus@deloitte.lu iasplus@deloitte.nl iasplus@deloitte.ru iasplus@deloitte.co.za iasplus@deloitte.es iasplus@deloitte.co.uk

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee. Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and each DTTL member firm are separate and distinct legal entities, which cannot obligate each other. DTTL and each DTTL member firm are liable only for their own acts or omissions and not those of each other. Each DTTL member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, affiliates, and/or other entities. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or its and their affiliates are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. None of Deloitte Touche Tohmatsu Limited, its member firms, or its and their respective affiliates shall be responsible for any loss whatsoever sustained by any person who relies on this publication. 2012 Deloitte Touche Tohmatsu Limited Designed and produced by The Creative Studio at Deloitte, London. 19001A