Wednesday, June 30, 2010

IASB proposes the ED of Measurement Uncertainty Analysis Disclosure for Fair Value Measurements

The International Accounting Standards Board (IASB) today (29 June 2010) published for public comment further enhancements to a disclosure proposal on Level 3 fair value measurements that formed part of the IASB’s exposure draft Fair Value Measurement published in May 2009.

In that exposure draft, the IASB proposed a three-level fair value hierarchy that categorises observable and non-observable market data used as inputs for fair value measurements. According to that hierarchy, Level 3 inputs are ‘unobservable inputs’ used for the fair value measurement of assets or liabilities for which market data are not available.

In response to comments received, the IASB proposes to enhance its original proposal by requiring the measurement uncertainty analysis disclosure to reflect the interdependencies between unobservable inputs used to measure fair value in Level 3. Users of financial statements commented that this information would allow them to assess the effect that the use of different unobservable inputs would have had on the fair value measurement.

The exposure draft Measurement Uncertainty Analysis Disclosure for Fair Value Measurements is open for comment until 7 September 2010.

T he FASB is publishing the proposals in the exposure draft Amendments for Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. Both boards will consider the comments received on the exposure drafts jointly as they continue their discussions about fair value measurement.

The IASB exposure draft can be accessed on from today. The FASB exposure draft can be accessed on

The IASB will publish in due course on its website a comprehensive summary on the progress of its fair value measurement project, of which these proposals form part.

Source :

Saturday, June 26, 2010

Identifying the Internally Generated Intangible Assets

With internally generated intangible assets, problems arise in identifying whether there is an identifiable asset that will generate future economic benefit and in reliably determining its cost.


IAS 38 proscribes the recognition of internally generated goodwill as an asset. The rationale behind this is that any expenditure incurred does not result in an asset that is an identifiable resource – it is not separable, nor does it arise from a contractual or other legal rights – or that is controlled  by the entity. In addition, any costs incurred are unlikely to be specifically identifiable as generating the goodwill. The position that the difference between a valuation of a business and the carrying amount of its individual assets and liabilities may be capitalized as goodwill falls down insofar as that difference cannot be categorized as the cost and therefore cannot be recognized as an asset.

Other Internally Generated Intangible Assets

IAS 38 sets out rules for the recognition of other internally generated intangible assets and broadly defines such expenditures as research and development. It proscribes the recognition of internally generated brands, mastheads, publishing titles, customer lists, and similar items, because expenditure thereon, like expenditure on internally generated goodwill, cannot be distinguished from the cost of developing the business as a whole and is therefore not separately identifiable.

In order to determine whether an internally generated intangible asset qualifies for recognition, its generation is divided into a research phase and a development phase. If the two phases cannot be distinguished, then the entire expenditure is classified as research.

Expenditure on research (or the research phase of an internal project) is to be written off as an expense as and when incurred, as it is not possible to demonstrate that an asset exists that will generate future economic benefit. Examples include :

  • Activities aimed at obtaining new knowledge
  • The search for, evaluation, and selection of applications of research findings or knowledge
  • The search for alternatives for materials, devices, products, systems, or processes
  • The formulation, design, evaluation, and selection of possible alternatives for new or improved materials, devices, products, systems, or processes

Development expenditure may be recognized as an intangible asset when, and only when, all of the following can be demonstrated :

  • The technical feasibility of completing the asset so that it will be available for use or sale
  • The intention to complete the asset and use or sell it
  • The ability to use or sell the asset
  • How the asset will generate probable future economic benefit, including demonstrating a market for the asset’s output, or for the asset itself, or the asset’s usefulness
  • The availability of sufficient technical, financial, and other resources to complete the development and to use or sell the asset
  • The ability to reliably measure the expenditure attributable to the asset during its development

Examples of activities that may fail to be recognized as intangible assets include :

  • The design, construction, and testing of pre-use prototypes or models
  • The design of tools and jigs involving new technology
  • The design, construction, and operation of a pilot plan that is not capable of commercial production
  • The design, construction, and testing of a chosen alternative for new or improved materials, devices, products, systems, or processes

Source : IFRS Practical Implementation Guide and Workbook (2nd Edition) – Abbas Ali Mirza, Magnus Orrell and Graham J. Holt

Friday, June 25, 2010

ED of Revenue from Contracts with Customers

The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) today (24 June 2010) published for public comment a draft standard to improve and align the financial reporting of revenue from contracts with customers and related costs.

If adopted, the proposal would create a single revenue recognition standard for International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP) that would be applied across various industries and capital markets. The publication of this joint proposal represents a significant step forward toward global convergence in one of the most important and pervasive areas in financial reporting. The proposed standard would replace IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. In US GAAP, it would supersede most of the guidance on revenue recognition in Topic 605 of the FASB Accounting Standards Codification.

The core principle of the draft standard is that an entity should recognise revenue from contracts with customers when it transfers goods or services to the customer in the amount of consideration the entity receives, or expects to receive, from the customer. The proposed standard would improve both IFRSs and US GAAP by:

  • removing inconsistencies in existing requirements;
  • providing a more robust framework for addressing revenue recognition issues;
  • improving comparability across companies, industries and capital markets;
  • requiring enhanced disclosure; and
  • clarifying the accounting for contract costs.

The exposure draft Revenue from Contracts with Customers is open for comment until 22 October 2010 and can be accessed via the ‘Comment on a Proposal’ section of or on A live webcast introducing the proposals is planned for early July - details will be available on the FASB and IASB websites soon. An IASB ‘Snapshot’ and an ‘FASB In Focus’, high level summaries of the proposals, will be available in due course to download free of charge from the IASB and FASB websites: and

Source :


Thursday, June 24, 2010

IASB IFRS latest update – June 2010

This IASB Update is 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 with the US Financial Accounting Standards Board (FASB) in London on 14 - 17 June 2010. The boards discussed:

Read further in here

Saturday, June 19, 2010

Japanese translation of the ED of Fair value Option for Financial Liabilities

The IASC Foundation is pleased to announce the publication of the following:

  • Japanese translation of the Exposure draft: Fair Value Option for Financial Liabilities (ED/2010/4) that was published in English by the IASB in May 2010. Comments to be received by 16 July 2010.

Access the documents online

The Japanese translation of the exposure draft can be accessed online via the "Get Involved/Comment on a proposal" section on or by going to the project page.