Page 12 - ICAP NL-Sep-2014

NEWSLETTER The Institute of Chartered Accountants of Pakistan September 2014 joint ventures and associates in its separate financial IASB publishes proposed statements: (a) at cost; (b) in accordance with IFRS 9 Financial Instruments (or IAS 39 Financial Instruments: amendments to IAS 12 Income Recognition and Measurement for entities that have Taxes not yet adopted IFRS 9); or (c) using the equity method as described in IAS 28 Investments in Associates and The International Accounting Standards Board (IASB) Joint Ventures. The amendments also clarify that when has published an Exposure Draft ‘Recognition of Deferred a parent ceases to be an investment entity, or becomes Tax Assets for Unrealised Losses (Proposed amendments an investment entity, it shall account for the change to IAS 12) ‘considering that diversity in practice around from the date when the change in status occurred. the recognition of a deferred tax asset that is related The accounting option must be applied by category of to a debt instrument measured at fair value is mainly investments. attributable to uncertainty about the application of some of the principles in IAS 12. Comments are IASB publishes a Discussion requested by 18 December 2014. The amendments Paper on reporting the financial aimed at clarifying the following aspects: effects of rate regulation  Unrealised losses on debt instruments measured at The IASB published for comments the Discussion Paper fair value and measured at cost for tax purposes give ‘Reporting the Financial Effects of Rate Regulation’. The rise to a deductible temporary difference regardless Discussion Paper describes a type of rate regulation that of whether the debt instrument’s holder expects to contains elements of both cost recovery and incentive recover the carrying amount of the debt instrument approaches. The Discussion Paper seeks comments on by sale or by use. whether or not the distinguishing features of defined rate regulation sufficiently capture the type(s) of rate  The carrying amount of an asset does not limit the regulation that have the most significant financial estimation of probable future taxable profits. effects. Comments are due 15 January 2015.  Estimates for future taxable profits exclude tax IASB publishes proposals for deductions resulting from the reversal of deductible measuring quoted investments in temporary differences. subsidiaries, joint ventures and  An entity assesses a deferred tax asset in combination with other deferred tax assets. Where associates at fair value tax law restricts the utilisation of tax losses, an entity The IASB has published Exposure Draft of proposed would assess a deferred tax asset in combination amendments to IFRS 10, IFRS 12, IAS 27, IAS 28, IAS 36, with other deferred tax assets of the same type. and IFRS 13. The IASB has proposed amendments that would confirm that the unit of account for investments Ethics code proposals seek to in subsidiaries, joint ventures and associates is the investment as a whole, but that the fair value enhance auditor independence measurement of quoted investments in subsidiaries, joint ventures and associates should be the product The International Ethics Standards Board for of the quoted price multiplied by the quantity of Accountants (IESBA) has released an exposure draft of financial instruments held, without adjustments. The proposed changes to the Code of Ethics for Professional IASB also proposes to align the fair value measurement Accountants ‘Proposed Changes to Certain Provisions of of a quoted CGU to the fair value measurement of a the Code Addressing the Long Association of Personnel quoted investment. The proposed amendments also with an Audit or Assurance Client’. The changes are include an addition to the Illustrative Examples for IFRS 13 to illustrate the application of paragraph 48 of that designed to strengthen auditor independence through standard to a net risk exposure of Level 1 financial assets addressing threats created by the long association of and financial liabilities. Comments are requested by 16 audit firm personnel with an audit client. The proposals January 2015. are open for comment until November 12, 2014. 12