Issues considered but not included in the Annual Improvements to IFRS project

At the November 2011 Committee meeting, the Committee noted that, for non-cumulative preference shares with participation features and that are classified as equity instruments, as described by the submitter, it is not relevant whether the dividends declared on the preference shares have been recognised in the financial statements for the purposes of calculating EPS, because the guidance in paragraph A14 of IAS 33 (as opposed to paragraph 14(a)) is the appropriate guidance. However, the Committee noted that there may be other fact patterns, for example when no participation feature exists, or when there is a loss recorded for the period but a preference dividend is nevertheless declared, that may result in diversity in practice if the wording in paragraph 14(a) is unclear. The Committee therefore directed the staff to:

1. perform outreach to determine whether any current fact patterns exist in which the guidance in paragraph 14(a) applies; and
2. to perform an analysis of whether the wording in IAS 33 may need to be clarified.

At its January 2012 meeting, the Committee noted that, on the basis of the outreach, there are very few situations in practice where the application of paragraph 14(a) of IAS 33 was expected to be unclear. Consequently, the Committee decided to recommend that that Board not amend IAS 33 paragraph 14(a) through Annual Improvements because the issue is not widespread or prevalent.