The International Accounting Standards Board (IASB) has published consultation papers on rate regulation and accounting for investments, and updated standards on consolidated financial statements.

Rate regulation

The IASB discussion paper, Reporting the Financial Effects of Rate Regulation, considers how financial reporting should approach the impact of government regulation of supply and pricing across a number of essential industries, such as transport or utilities.

The paper seeks comments on whether or not the distinguishing features of defined rate regulation, as identified by the IASB, sufficiently capture the type(s) of rate regulation that have the most significant financial effects. It also seeks comments on whether the presentation and disclosure requirements of IFRS 14 Regulatory Deferral Accounts (issued in January 2014 as a temporary measure) should form the basis of future IASB proposals in this area.

Comments are invited by 15 January 2015 and a “Snapshot” summary of the discussion paper is available via the IFRS website.

Consolidated financial statements: The IASB has issued narrow-scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011). The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution of assets between an investor and its associate or joint venture.

The main consequence is that a full gain or loss is recognised when a transaction involves a business, whether it is housed in a subsidiary or not. A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. The amendments will be effective from annual periods commencing on or after 1 January 2016.

Accounting for investments

The IASB has published an exposure draft detailing proposals concerning the measurement of investments in subsidiaries, joint ventures and associates at fair value when those investments are quoted in an active market.

Amendments are proposed to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements, IAS 28 Investments in Associates and Joint Ventures and IAS 36 Impairment of Assets.

The proposed amendments clarify that an entity should measure the fair value of quoted investments and quoted cash-generating units (CGUs) as the product of the quoted price for the individual financial instruments that make up the investments held by the entity and the quantity of financial instruments.

The exposure draft also includes proposed amendments to the Illustrative Examples for IFRS 13 Fair Value Measurement.

Comments are invited by 16 January 2015. The exposure draft and related documents can be downloaded from the IFRS website.

Source: ICAS – IASB publishes consultation on controlled pricing and accounting for investments

 

 

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