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HKFRSs news
The first annual
improvements project
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In May 2008, the IASB has completed its first round of annual improvements by publishing "Improvements to IFRSs" (the 2008 Improvements). These make minor amendments to a number of International Financial Reporting Standards. Pursuant to the HKICPA's convergence policy with IFRSs, the Institute is expected to adopt the same amendments to HKFRSs shortly.
The annual improvement project is intended to deal with non-urgent (but necessary) minor amendments. These could be matters referred to the International Financial Reporting Interpretations Committee (IFRIC) or suggestions from practitioners. Rather than making piecemeal changes during the year, the process streamlines the improvement activity through publication of changes in a single, annual document.
The 2008 Improvements are divided into two parts, with the first part including amendments that result in changes for presentation, recognition or measurement purposes while the second deals with amendments that are terminology or editorial changes only, which the IASB expects to have no or minimal effect on accounting.
In most cases the amendments apply for annual periods beginning on or after 1 January 2009, with early adoption permitted.
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Comment
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The IASB has removed most of the more controversial changes contained in the Exposure Draft from the 2008 Improvements. An example was the proposed broadening of the definition of a derivative (including embedded derivatives) which we felt was likely to capture many contracts currently outside the scope of IAS 39 "Financial Instruments: Recognition and Measurement". This proposal did not seem to fall into the "minor but necessary" category. Nonetheless, one controversial issue that the Board did include concerns accounting for advertising and promotional activities. An entity incurring costs on promotional goods such as catalogues will need to expense these costs when it has a "right to access" the goods. Entities that previously recognised catalogues and brochures as assets will therefore need to review their accounting policies in the light of the 2008 Improvements.
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