Insurance contracts

The IASB deliberated the remainder of the technical decisions on the accounting for insurance contracts. It finalised the decisions related to the level of aggregation of insurance contracts for the measurement of onerous contracts and for the allocation of the contractual service margin proposing criteria and constraints for the aggregation. The IASB decided to provide no exception to the level of aggregation when regulation affects the pricing of contracts.

The IASB further decided to require an entity to specify at the inception of the contract how it viewed its discretion under the contracts, and to use that specification to distinguish between the effect of changes in market variables and changes in discretion.

The IASB plans to review the due process steps taken and decide upon balloting at its February meeting.

Revenue from contracts with customers

The IASB tentatively decided to amend IFRS 15 Revenue from contracts with customers to clarify the factors that indicate when two or more promises to transfer goods or services are not separately identifiable.

The IASB also decided to provide further practical expedients on transition and confirmed that it would not be making amendments to the requirements of IFRS 15 in a number of areas, including collectability, measuring non-cash consideration, presentation of sales taxes and the definition of a completed contract.

Principal/agent guidance

At a joint session with the FASB, the Boards confirmed the principle that an entity is principal in a transaction when it controls the specified good or service before that good or service is transferred to the customer. Several amendments will be made to the principal/agent guidance and related illustrative examples to clarify how this guidance should be applied will be added.

The IASB expects to issue the final amendments Clarifications to IFRS 15 in March 2016.

Measurement of interests in associates and joint ventures that in substance form part of the net investment

The IASB discussed the IC’s request for input on whether long-term interests that in substance form part of the net investment in an associate or joint venture should be tested for impairment by applying IAS 28, IFRS 9 or a combination of both.

The IASB supported the IC’s continued discussion of the issue and noted the possibility that the IC might develop an interpretation to clarify the type of interests that are included in the net investment.