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Monday 14 October 2019

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The Board tentatively decided to finalise the amendment to IAS 40

 18 July 2016


The Board met on 18 July 2016 to discuss IFRS Standards implementation projects.

Narrow-scope amendment—IAS 40 Investment PropertyTransfers of Investment Property (Agenda Papers 12A and 12B)

Agenda Paper 12A: Comment letter analysis

The Board considered an analysis of comments on the Exposure Draft Transfers of Investment Property (proposed amendments to IAS 40 Investment Property). The Board tentatively decided to proceed with finalising the proposed amendments to IAS 40, subject to the following revisions:

  1. clarifying that a change in management’s intentions, in isolation, provides no evidence of a change in use;
  2. amending two of the examples in paragraph 57 of IAS 40 so they could refer to property under construction or development as well as to completed property;
  3. emphasising in the Basis of Conclusions that an entity should use judgement in assessing whether a property meets, or has ceased to meet, the definition of investment property;
  4. allowing an entity to apply either of the following transition approaches:
    1. a retrospective approach applying IAS 8, including the requirements in paragraph 53 of IAS 8 on the use of hindsight; or
    2. an approach in which the entity:
      • reassesses the classification of property at the date of initial application of the amendments to IAS 40 and, if applicable, reclassifies property to reflect its use at that date; and
      • applies the amendments to changes in use that occur after the date of initial application of the amendments to IAS 40; and
  5. requiring entities to disclose information about any reclassification of property as a result of applying the transition approach in d.ii above.

All 11 Board members present agreed with these decisions.

Agenda Paper 12B: Due Process

All 12 Board members confirmed they are satisfied that the Board has completed the necessary due process for the project. Therefore, the Board instructed the staff to begin the balloting process for issuing these amendments to IAS 40. No Board members indicated they would dissent from the decision to issue these narrow-scope amendments.

The Board also tentatively decided that the effective date of the amendments to IAS 40 should be 1 January 2018, with earlier application permitted.

Next steps

The Board expects to issue the proposed amendments to IAS 40 in the fourth quarter of 2016.