Issues Rejected—Agenda Decisions

At its September 2014 meeting, the Interpretations Committee had considered the next steps in addressing several (old) issues relating to IFRS 5 and had decided to discuss new issues involving the requirements for scope and presentation before deciding how to proceed.

The new issues discussed at its meetings in November 2014 and March 2015 are:

1. Issue 1A: do certain cases of ‘loss of control of a subsidiary’ meet the criteria for classifying the subsidiary as held for sale in accordance with IFRS 5?
2. Issue 1B: is IFRS 5 applicable to a disposal group consisting mainly or entirely of financial instruments?
3. Issue 2: how to apply the notion of a ‘major line of business’ in presenting discontinued operations.

With regard to Issue 1A, the Interpretations Committee whether the ‘loss of control’ is key to the inclusion of an event within the scope of IFRS 5 or whether there also needs to be a disposal in order for the event to be classified as held for sale.It noted that it is important for the Interpretations Committee to fundamentally understand the scope of IFRS 5 so that it can then decide whether the issue can be addressed through an Interpretation, or whether an amendment to IFRS 5 would be necessary.

With regard to Issue 1B, the Interpretations Committee noted that a disposal group mainly, or entirely, consisting of financial instruments would meet the classification requirements for held for sale that are set out in IFRS 5. However, the Interpretations Committee noted that the question about the measurement of such a disposal group is another example of the IFRS 5 measurement challenges that it had considered in the September 2014 meeting. Consequently, the Interpretations Committee noted that this issue could be considered as part of those issues that it had considered in the September 2014 meeting.

With regard to Issue 2, the Interpretations Committee noted that this issue is about how to interpret the definition of 'discontinued operation' in terms of the concept of 'operating segment' in IFRS 8 Operating Segments. The Interpretations Committee noted that the definition of discontinued operations is an area that the IASB had attempted to revise in the former Financial Statement Presentation Project, but had not resolved the issues related to this. Consequently, the Interpretations Committee noted that this issue could be considered as part of those issues that it had considered in the September 2014 meeting.

At its meeting in May 2015, the Interpretations Committee continued to discuss the scope issue of IFRS 5. In addition, the Interpretations Committee also discussed the following new issues:

1. Issue 1: how to present intragroup transactions between continuing and discontinued operation;
2. Issue 2: applicability of the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities to a subsidiary classified as held for sale;
3. Issue 3: to what extent an impairment loss can be allocated to non current assets within a disposal group; and
4. Issue 4: how to apply the presentation requirements, in the case of a change to a plan, to a disposal group that consists of both a subsidiary and other non-current assets when there has been a change to a plan.

As a result of its discussions, the Interpretations Committee decided that a summary of the IFRS 5 related issues that it had discussed should be included in a paper that would be referred to the IASB. The purpose of the paper would be to summarise, and categorise, the IFRS 5 issues to see if the IASB thought any matters should be addressed through the normal processes of the Interpretations Committee or whether the IASB thought it would be better to consider undertaking a broader project on IFRS 5.

In July 2015, the IASB was provided with a package of IFRS 5-related issues, and discussed what the next steps should be for the unresolved IFRS 5 issues. The IASB decided to divide the issues to those to be that could be considered in the short term (Issues 1–3 above) and those that could be considered in the medium to longer term. For the medium- to longer-term issues, the IASB tentatively decided to include a reference to the IFRS 5 concerns raised by the Interpretations Committee in the Request for Views for the forthcoming agenda consultation.

For the short-term issues, the IASB decided that Issues 1 and 3 above should be referred to the Interpretations Committee for possible agenda decisions. Issue 2 above was considered separately for a potential annual improvement item (please refer to the related project page of IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of the disclosure requirements in IFRS 12 ).

In January 2016, with respect to Issue 3 above, in the light of the existing IFRS requirements, the Interpretations Committee determined that neither an Interpretation no amendment to a Standard was necessary. Consequently, it decided not to take the issue to its agenda.

With respect to Issue 1, along with the medium- to longer-term issues, the Interpretations Committee thought that these issues would be better considered as part of a broader scope project, if applicable. Consequently, the Interpretations Committee decided not to take these issues to its agenda.