7 IASB General Update

Project Type	Influencing
Project Scope	Various

		Discussion	Redeliberation	Exposure	Redeliberation	Final standard (n/a)	Post Implementation Review (n/a)
IASB	Research /	paper		Draft
	Pipeline
UKEB	Research /	Research /	Monitoring	Influencing	Monitoring	Endorsement	Influencing (n/a)
	Influencing	Influencing				(n/a)

| Example number and description | IASB feedback received | UKEB Comment Letter | | Example 1 | Illustrated the application of materiality to a scenario in which the fact pattern and | Example 2 | Illustrated a scenario in which no disclosure was required of climate transition risks. This was due to there being no effects on the entity beyond the existing use of renewable energy and carbon offsets. It was assumed that users of financial statements would not reasonably expect there to be any material financial impacts in this industry. | IASB staff preliminary |

UKEB Project page

UKEB Final Comment Letter (published 19 July 2024)

Background

B1The IASB's objective in this project is to explore whether entities can, at a reasonable cost, provide users with more useful information about business combinations, to assist them making better decisions by helping them understand and assess:

1. the strategic rationale behind an acquisition;
2. how the acquired business is performing; and
3. whether the acquirer's management has been effective and efficient in using the entity's economic resources to acquire the business.

B2The IASB published an Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment on 14 March 2024, which proposed amendments to two standards. Firstly, the Exposure Draft (ED) proposed adding disclosure requirements for business combinations to IFRS 3 Business Combinations; and secondly proposed updating IAS 36 Impairment of Assets, mostly to clarify or simplify existing requirements.

B3The proposed amendments to IFRS 3, to improve the information companies disclose about the performance of business combinations, included:

1. adding disclosure objectives;
2. adding disclosure requirements, including:
   1. performance information of a business combination – requiring an

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Footnotes

Agenda Paper 7: Appendix B

Appendix B: Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment

Project Stage

UKEB project page

UKEB Final Comment Letter (published 19 July 2024)

Background

B1The IASB's objective in this project is to explore whether entities can, at a reasonable cost, provide users with more useful information about business combinations, to assist them making better decisions by helping them understand and assess:

1. the strategic rationale behind an acquisition;
2. how the acquired business is performing; and
3. whether the acquirer's management has been effective and efficient in using the entity's economic resources to acquire the business.

B2The IASB published an Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment on 14 March 2024, which proposed amendments to two standards. Firstly, the Exposure Draft (ED) proposed adding disclosure requirements for business combinations to IFRS 3 Business Combinations; and secondly proposed updating IAS 36 Impairment of Assets, mostly to clarify or simplify existing requirements.

B3The proposed amendments to IFRS 3, to improve the information companies disclose about the performance of business combinations, included:

1. adding disclosure objectives;
2. adding disclosure requirements, including:
   
   1. performance information of a business combination – requiring an entity to disclose information about the entity's acquisition-date key objectives and the related targets for a subset of business combinations (proposed to be called strategic business combinations) and the extent to which those key objectives and targets are met in subsequent periods;
   2. requiring an entity to disclose quantitative information about synergies expected to arise from a business combination (expected synergies) including a description of expected synergies by category, and for each category of synergies (i) the estimated amounts, or range of amounts, of the expected synergies, (ii) the estimated cost, or range of costs, to achieve these synergies; and (iii) the time from which the benefits from the synergies are expected to start and how long they are expected to last; and
   3. exempting, in specific circumstances, an entity from disclosing some of the information in paragraphs (i) and (ii) (proposed exemption); and
3. amending some other disclosure requirements in IFRS 3.

B4The proposed amendments to the impairment test of cash-generating units containing goodwill in IAS 36, to help mitigate management over-optimism and shielding, and to reduce cost and complexity, included:

1. clarifying how an entity allocates goodwill to CGUs;
2. requiring an entity to disclose in which reportable segment a CGU or group of CGUs containing goodwill is included; and
3. changing how an entity calculates value in use (VIU) by removing the requirements:
   
   1. to exclude future restructurings and asset enhancement cash flows; and
   2. to use pre-tax cash flows and pre-tax discount rates.

B5The ED also included proposed amendments to IFRS 19 Subsidiaries without Public Accountability.

UKEB response to Exposure Draft

B6The IASB comment period for the ED closed on 15 July 2024. The IASB received 143 comment letters¹ in response to the ED.

B7The UKEB provided its response in a Final Comment Letter (FCL) on 19 July 2024².

B8The UKEB is broadly supportive of the package of proposed amendments to the disclosure requirements in IFRS 3 and to the impairment test in IAS 36. However, the UKEB's key recommendations included:

1. A principle-based approach to identifying the most important business combinations, including a rebuttable presumption approach. This approach would alleviate some of the concerns expressed by stakeholders that the exhaustive list of quantitative and qualitative thresholds (the closed threshold approach) proposed in the ED may not capture the most important acquisitions.
2. Adding a threshold of 10% of market capitalisation (should the threshold approach to identifying a subset of important acquisitions be retained).
3. Replacing the term 'strategic', which does not adequately reflect the nature of the acquisitions for which users are keen to obtain additional disclosures – preparers tell us that they only undertake acquisitions if they are strategic. Another term, such as 'major' or 'significant' may be more appropriate to describe this subset of the most important business combinations.
4. Clarifying that the proposed exemption would be used only in 'extremely rare cases'.
5. Introducing some disclosure requirements to address the risk that management use optimistic inputs when calculating value in use that could avoid or further delay the recognition of impairment losses.

Purpose of this paper

B9The Board was last provided an update on this project in February 2025³ following the IASB's review of feedback received on the ED at the IASB meetings in October 2024, December 2024 and January 2025.

B10The purpose of this paper is:

1. to provide the Board with a further update of the status of the project, now that the IASB has started to redeliberate the proposals in the ED in February, March and April 2025; and
2. to ask for Board members' feedback to inform the meeting of the IASB Accounting Standards Advisory Forum (ASAF) on 8 July 2025 on the current IASB redeliberations of the ED.

B11

IASB tentative decisions

B12The IASB began redeliberating the ED proposals in February 2025. A summary of the ED proposals, respondents' feedback and the IASB's discussions and tentative decisions during redeliberations can be found in Appendix A of March 2025 IASB staff paper 18.

Project objective and scope

B13On 19 February 2025, the IASB redeliberated the project's objective and its approach to achieving that objective⁴ and tentatively decided:

1. to retain the project's objective but to adjust its wording to reflect the stage of the project; and
2. to retain its approach to achieving the project objective (see paragraphs B1 – B5 above).

Concerns regarding proposed performance and synergy disclosures

B14On 19 March 2025, the IASB commenced redeliberation of the proposal to require entities to disclose information about performance of an acquisition and expected synergies. In particular, IASB members discussed conceptual concerns raised by respondents to the ED about requiring such information to be disclosed in the financial statements.

B15IASB staff analysis concluded that these conceptual concerns would not preclude the IASB from further analysing and redeliberating the proposals. Given the significant interaction between various aspects of the proposals, the IASB is not making any decisions on this matter at this stage and the IASB decided to continue to redeliberate these proposed requirements in future meetings.

Performance information – subset approach

B16On 8 April 2025, the IASB discussed:

1. whether to continue with an approach to require disclosure of information about the performance of a business combination for only a subset of business combinations (Agenda Paper 18A 8 April 2025 IASB meeting);
2. how to identify the subset i.e. thresholds and other matters (Agenda Paper 18B 8 April 2025 IASB meeting); and
3. evidence-based feedback on the proportion of business combinations that would be captured as part of that subset using the thresholds proposed in the ED (Agenda Paper 18C 8 April 2025 IASB meeting).

B17The IASB members were not asked to make any decisions at the April 2025 meeting, but Board members shared thoughts on how they might proceed.

B18The IASB's intention with this performance information subset approach was to require information for investors for the most important business combinations, while addressing stakeholder concerns about the volume and cost of this information.

B19Following the 8 April meeting, the IASB staff are reconsulting on whether to include a rebuttable presumption in identifying the subset of business combinations for which disclosures would be required – under a rebuttable presumption approach, companies would not have to disclose performance information even when they exceeded the proposed thresholds, if those business combinations were not important enough.

B20The IASB plans to consult on application aspects and the cost-benefit balance of a possible rebuttable presumption approach, including:

1. how to design the basis for rebuttal (paragraph B23(b) below)—for example, how to describe or define the population of strategic business combinations;
2. whether to require an entity to consider rebutting the presumption and disclosing performance information for a business combination that does not meet the specified thresholds (paragraph B23(c) below);
3. whether to require an entity to disclose the fact and reason for any rebuttal (paragraph B23(d) below); and
4. whether the benefits of applying a rebuttable presumption approach (avoiding inappropriately capturing non-strategic business combinations) would outweigh the costs of doing so – a rebuttable presumption approach might be more difficult to apply, audit and enforce than the thresholds approach.

B21The IASB also plans to consult on whether to retain, remove or amend a proposed approach to identify the subset of business combinations by using an operating profit-based threshold. Many respondents had concerns with this threshold, so IASB staff will consult on:

1. whether this threshold is necessary (i.e. whether a threshold based on operating profit would identify business combinations for which it would be important for a user to receive performance information, and which would not have been identified by another threshold); and
2. whether using an average operating profit over a period, like three or five years, would alleviate concerns about volatility, and what the period for that average should be (for example, 3 years, 5 years or a different number of years).

Rebuttable presumption approach

B22Many respondents suggested applying a rebuttable presumption approach. These respondents suggest identifying thresholds (for example, the thresholds proposed in the ED) with a rebuttable presumption that performance information would be disclosed for a business combination meeting those thresholds⁶. This approach would avoid thresholds inappropriately capturing non-strategic business combinations within the scope of the disclosure requirements.

B23Some of these respondents suggested requiring an entity that rebuts the presumption to disclose the fact that it has rebutted the presumption and the reason for the rebuttal. Adopting a rebuttable presumption approach would require the IASB:

1. To develop a list of thresholds (the IASB could leverage the work done / being done on the thresholds approach to develop this list).
2. To design a basis on which an entity could rebut the presumption that performance information should be disclosed for a business combination meeting the specified thresholds. The IASB could design the basis for rebuttal by, for example:
   
   1. describing or defining the subset of business combinations for which performance information should be disclosed; or
   2. requiring entities to determine whether disclosing performance information would require undue cost or effort.
3. To consider whether to require an entity to consider rebutting the presumption and disclosing performance information for a business combination that does not meet the specified thresholds. This requirement might:
   
   1. help with enforcement and prevent potential abuse by allowing auditors and regulators to step in if there is evidence that information should be disclosed about a business combination not meeting the thresholds;
   2. increase the cost for preparers as an entity would need to assess each business combination for evidence for rebuttal; and
   3. increase the level of judgement required in applying this approach and thereby create tension among preparers, auditors and regulators;
4. To consider whether to require an entity that rebuts the presumption to disclose that it has done so and the reasons why. Requiring the disclosure of the fact and reason for rebuttal might:
   
   1. provide users with additional information for their analysis;
   2. highlight business combinations that users might wish to pay close attention to;
   3. give rise to commercial sensitivity concerns; and
   4. result in boiler-plate information.

B24During the April meeting the IASB members were overall supportive of exploring and consulting further on a rebuttable presumption approach. Some suggested that, to keep costs to preparers at a minimum, the rebuttable presumption approach did not need to be symmetric, and that an asymmetric or one-way approach (i.e. providing a company the option to rebut the presumption that an acquisition is 'strategic', if it meets one of the thresholds) was sufficient, since an entity can always choose to disclose more information in cases when an acquisition does not meet the threshold. If a rebuttal was pursued, it would be important to set the thresholds low enough.

B25In its response to the ED, the UKEB proposed a principle-based approach to identifying the most important business combinations, including a rebuttable presumption approach, as set out in paragraph A6–A10 of Appendix A and in the flowchart in Appendix B the UKEB's FCL, including disclosing the reason for the rebuttal.

B26The design of the UKEB suggestion focuses on the description of the relevant acquisitions currently set out in the Basis for Conclusions paragraph BC54⁷.

Threshold approach – operating profit

B27The IASB proposed three quantitative thresholds⁸ for identifying strategic business combinations. A business combination would be a strategic business combination if:

1. in the most recent annual reporting period before the acquisition date:
   
   1. the absolute amount of the acquiree's operating profit or loss is 10 per cent or more of the absolute amount of the acquirer's consolidated operating profit or loss; or
   2. the acquiree's revenue is 10 per cent or more of the acquirer's consolidated revenue; or
2. the amount recognised as of the acquisition date for all assets acquired (including goodwill) is 10 per cent or more of the carrying amount of the total assets recognised in the acquirer's consolidated statement of financial position as at the acquirer's most recent reporting period date before the acquisition date.

B28The IASB proposed two qualitative thresholds⁹ for identifying strategic business combinations. A business combination would be a strategic business combination if the business combination resulted in the acquirer entering a new major line of business or geographical area of operations.

B29With regard to the quantitative thresholds, IASB staff suggest the IASB retain both the revenue and asset measures because:

1. only a few respondents expressed concerns about using these two measures;
2. as noted in paragraph BC64, these measures are defined in IFRS Accounting Standards and are commonly used in regulations;
3. although revenue can sometimes be volatile (for example, when there is significant fluctuation in commodity prices), revenue is generally less volatile than operating profit;
4. for the asset measure, while the acquired assets might be measured differently from the acquirer's existing assets, these measures are readily available to the acquirer whereas alternatives (for example, the fair value of the acquirer's existing assets) may be costly to determine; and
5. it would be important to have thresholds to capture business combinations that comprise a significant portion of the entity's total assets or total revenues.

B30IASB will discuss the percentage at which to set the thresholds at a future IASB meeting.

B31However, many respondents said an entity's operating profit may be volatile¹⁰. Using operating profit as a measure could result in an immaterial business combination being classified as strategic because the operating profit of the acquirer in the base period is unusually low.

B32Many respondents suggested changes, including:

1. using the average operating profit over the past few annual reporting periods instead of only the most recent annual reporting period;
2. removing the quantitative threshold for operating profit;
3. allowing an entity to adjust operating profit or revenue for unusual items; and
4. excluding amounts attributable to non-controlling interests.

B33IASB staff do not agree with suggestions c) and d) as:

1. it would be difficult to define what constitutes an 'unusual' item. As paragraphs BC407–BC413 of the Basis for Conclusions to IFRS 18 Presentation and Disclosure in Financial Statements explain, the IASB considered requiring entities to disclose unusual items when developing IFRS 18 but decided not to do so because there is no single accepted definition of 'unusual income and expenses' and it would be difficult to develop such a definition on a timely basis; and
2. users of an entity's financial statements include stakeholders other than owners of the entity (such as an entity's potential investors, lenders and other creditors) and a measure representing ‘operating profit attributable to owners of the entity' may not be useful to them.

B34At the 8 April IASB meeting, most members disagreed with using an average operating profit threshold and some supported the removal of the operating profit threshold.

B35The UKEB in its response to the ED (see paragraph A18–A20 of the UKEB FCL), noted the volatility of the operating profit threshold, and considers that a principle-based approach would alleviate some of those concerns.

Other considerations

B36IASB staff believe additional threshold measures¹¹, including market capitalisation as suggested by the UKEB, should not be considered. With respect to market capitalisation, consistent with paragraph BC64 and BC66 of the Basis for Conclusions, the IASB staff consider that:

1. the measure may not be relevant for all entities; and
2. the threshold based on total assets has been designed to function in a similar way to one based on the value of the entity. The total asset threshold requires an entity to use the value of all assets recognised by the acquirer as part of the business combination (including goodwill), instead of using total assets recognised by the acquiree before the acquisition.

B37The need for qualitative thresholds may depend on the approach agreed by the IASB to identify the subset of business combinations for which performance information would be required. For example, if the IASB decides to pursue a rebuttable presumption approach, the basis for the rebuttal could influence the need for any qualitative thresholds.

B38IASB staff acknowledged users' requests for receiving performance information about a series of business combinations¹² entered into to achieve the same strategic objective(s) but think developing and applying requirements to identify such a series of business combinations may be difficult. At the April meeting, IASB members expressed mixed views on this proposal but agreed to consult on this matter. It was noted that clarification was needed that a series means a number of different acquisitions, as opposed to step acquisitions of the same acquiree).

B39Regarding concern with the use of the term “strategic" for the subset of the most important business combinations, depending on the approach the IASB takes to identify the subset (that is, a threshold approach, rebuttable presumption approach, etc), it may not be necessary to use a term to describe that subset. For example, in a threshold approach, the IASB could simply list the thresholds and require an entity to disclose performance information for a business combination that meets those thresholds without using a term to describe such business combinations. The IASB will assess whether to label the subset and, if so, what that label should be, after developing the approach to use in identifying the subset of business combinations.

Academic evidence

B40While findings¹³ from the different evidence-based sources show some variation:

1. the proposed thresholds would result in capturing only a 'subset' of all business combinations—that is, the proposed thresholds would not result in entities being required to disclose performance information for all or almost all of their business combinations; and
2. despite the limitations of the academic study¹⁴, the results of the study are within the range the IASB previously considered.

B41Overall, it was considered that the key thing was to capture the appropriate group of most important acquisitions in the subset, and that the percentage of coverage was not an important statistic, especially given the volatility of M&A activity year on year.

Next steps

B42Going forward, the IASB will use feedback from the planned consultations, as well as feedback from the April 2025 IASB meeting, to make tentative decisions in future IASB meetings.

B43The IASB will continue to redeliberate the proposals, including other aspects of the requirements for an entity to disclose performance and expected synergy information (expected from June 2025). The IASB will redeliberate other proposals as and when time permits. This is a complex project with several interdependencies, so redeliberations are expected to continue into 2026. The Board plans to make tentative decisions before voting on the entire package of proposals.

B44The UKEB Secretariat will continue to monitor the IASB's redeliberations and tentative decisions and will provide the Board with updates in due course.

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22 May 2025 Agenda Paper 7: Appendix C

Appendix C: Updating IFRS 19 Subsidiaries without Public Accountability: Disclosures

Project Stage

UKEB project page

UKEB Final Comment Letter (published 28 November 2024)

Purpose of this update

C1At its March 2025 meeting, the IASB made tentative decisions on:

1. Whether to develop reduced disclosure requirements for the forthcoming IFRS Accounting Standard Regulatory Assets and Regulatory Liabilities (RARL Standard)¹.
2. The effective date and transition requirements, the consequential amendments to other IFRS Accounting Standards and the due process for the prospective Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures².

C2The purpose of this paper is to provide the Board with an update on these matters.

Background

C3IFRS 19, issued in May 2024, included reduced disclosure requirements for IFRS Accounting Standards issued before 28 February 2021.

C4In July 2024, the IASB published the Exposure Draft Amendments to IFRS 19 (the catch-up ED) that proposed reductions to disclosure requirements for new or amended IFRS Accounting Standards issued between 28 February 2021 and May 2024.

C5In January 2025, the IASB discussed the feedback on the catch-up ED in comment letters and from outreach events³.

C6In February 2025, the IASB made tentative decisions⁴ on the catch-up ED proposals, except those related to rate regulated activities.

Forthcoming IFRS Accounting Standard Regulatory Assets and Regulatory Liabilities

Background

C7The IASB decided⁵ that when an ED for a new or amended IFRS Accounting Standard is published, it will propose amendments to IFRS 19 as part of the ED on the new or amended standard, to ensure that IFRS 19 remains up to date and consistent with the latest disclosure requirements in other IFRS Accounting Standards.

C8However, at the time the ED on the forthcoming RARL Standard was published i.e. January 2021, IFRS 19 was not yet issued. As a result, the IASB did not consult on reduced disclosures for inclusion in IFRS 19 in the ED on the forthcoming RARL Standard.⁶

C9At its March 2024 meeting, the IASB tentatively decided against⁷ developing reduced disclosures for subsidiaries without public accountability for the forthcoming RARL Standard. However, it consulted on this tentative decision through the catch-up ED.

C10Consequently, the catch-up ED sought views on the proposal to require an entity applying IFRS 19 to apply all the disclosure requirements in the forthcoming RARL Standard (i.e. no reduced disclosure requirements).

Feedback received by the IASB

C11The IASB received mixed views on its proposal in the catch-up ED not to provide reduced disclosures for the forthcoming RARL Standard.

C12Whilst most respondents agreed with the IASB's proposals, some stakeholders raised concerns about the IASB's rationale for not developing reduced disclosures. Their concern was that these proposals could set a precedent for future IFRS Accounting Standards or amendments that introduce a new accounting model, such that full disclosure requirements would apply to eligible subsidiaries.

C13Others commented that the requirement to apply full disclosures would reduce the potential cost savings from applying IFRS 19 and would be inconsistent with the IASB's decision for eligible subsidiaries to benefit from reduced disclosures for new IFRS Accounting Standards.

C14The IASB staff paper identified the following disclosure requirements in the forthcoming RARL Standard that a few respondents suggested could be simplified or eliminated in IFRS 19:

1. the requirement to disclose a detailed reconciliation of the opening and closing balances of regulatory assets and regulatory liabilities could be simplified so that only a summary reconciliation focusing on material changes would be required;
2. the requirement to provide an explanation of how risks and uncertainties affect the recovery of regulatory assets or the fulfilment of regulatory liabilities could be tailored to focus only on material risks that have the potential to significantly affect cash flows or financial performance; and
3. the disclosure of information about the nature of unrecognised regulatory assets and regulatory liabilities could be eliminated.

IASB staff recommendation

C15Based on their analysis of the feedback received in response to the catch-up ED question, the staff recommended the IASB confirm the decision to require an eligible subsidiary applying IFRS 19 and the forthcoming RARL Standard to apply all the disclosure requirements in the forthcoming RARL Standard.

IASB discussion

C16Most IASB members agreed with the staff recommendation not to develop reduced disclosures for the following reasons:

1. Most respondents to the catch-up ED agreed with the IASB's proposals, suggesting that there is broad support for not reducing disclosures.
2. Many IASB members considered whether this topic should be prioritised and concluded that the costs of standard-setting i.e. consulting in a separate ED would exceed the benefits, as only a small population of entities would be affected.
3. The general view among IASB members was that any reductions in disclosures would be limited and therefore would not result in significant cost savings for preparers.

C17A few IASB members disagreed with the staff recommendation not to develop reduced disclosures for the following reasons:

1. One IASB member noted that developing reduced disclosures would be consistent with the IASB's approach and principles, and maintaining the full disclosures should be an exception.
2. The staff suggestion to reconsider reduced disclosures in the Post-implementation Review (PIR) of the forthcoming RARL Standard would provide limited benefits because eligible subsidiaries would have been required to provide the full disclosures for several reporting periods before any possible future reduction came into effect.
3. One IASB member argued that, while many respondents agreed with not reducing disclosures, some of the feedback indicated that they wanted to review the final disclosures in the forthcoming RARL Standard once published, before considering specific reductions.
4. One IASB member said removing disclosure objectives and guidance would not require the IASB to re-expose the proposals as it had already consulted with stakeholders in the catch-up ED.

C1811 of 14 IASB members tentatively agreed with the staff recommendation.

IASB tentative decision

C19The IASB tentatively decided to require an entity applying IFRS 19 and the forthcoming RARL Standard to apply all the disclosure requirements in the forthcoming RARL Standard.

Implication of IASB tentative decision

C20The IASB is expected to issue the forthcoming RARL Standard in H2 2025, replacing IFRS 14. When the forthcoming RARL Standard is issued, it will make consequential amendments to IFRS 19 to delete the existing disclosure requirements under the sub-heading IFRS 14 and replace them with the full disclosure requirements in the forthcoming RARL Standard.

UKEB Secretariat view

C21The Secretariat notes that the IASB's tentative decision not to develop reduced disclosures is inconsistent with the recommendation in the UKEB FCL.

Other matters

Consequential amendments required by IFRS 18 Presentation and Disclosure in Financial Statements

C22Appendix C of IFRS 19 sets out consequential amendments to paragraphs in other IFRS Accounting Standards.

C23The IASB staff proposed editorial changes to Appendix C of IFRS 19 to align it with the amendments introduced by IFRS 18, ensuring consistency without altering existing requirements.

Effective date and transition

C24The IASB discussed the effective date of, and transition to, the forthcoming Amendments and tentatively decided:

1. The Amendments to IFRS 19 will have the same effective date as IFRS 19 i.e. 1 January 2027, allowing subsidiaries adopting the updated standard to benefit from reduced disclosure requirements immediately. The staff paper acknowledged that some jurisdictions may evaluate the Amendments alongside their endorsement of IFRS 19, treating them as a single

those material acquisitions with the same strategic rationale; and

whether or not an entity considers this series of acquisitions with the same strategic rationale to be 'strategic', and if so, disclose the key objectives for that series at the acquisition date of the first in the series.

This will ensure that:

1. users receive a full picture of 'strategic' acquisitions undertaken by the entity; and
2. the disclosures reflect how management will monitor the combined businesses with a similar objective e.g. increase in market share in a specific geographical area.

The UKEB also recommends that the IASB should consider and address how a company might disclose a series of 'strategic' acquisitions where they occur over different reporting periods.

Agenda Paper 7: Appendix C

IASB tentative decision

C19The IASB tentatively decided to require an entity applying IFRS 19 and the forthcoming RARL Standard to apply all the disclosure requirements in the forthcoming RARL Standard.

Implication of IASB tentative decision

C20The IASB is expected to issue the forthcoming RARL Standard in H2 2025, replacing IFRS 14. When the forthcoming RARL Standard is issued, it will make consequential amendments to IFRS 19 to delete the existing disclosure requirements under the sub-heading IFRS 14 and replace them with the full disclosure requirements in the forthcoming RARL Standard.

UKEB Secretariat view

C21The Secretariat notes that the IASB's tentative decision not to develop reduced disclosures is inconsistent with the recommendation in the UKEB FCL.

Question for the Board

Other matters

Consequential amendments required by IFRS 18 Presentation and Disclosure in Financial Statements

C22Appendix C of IFRS 19 sets out consequential amendments to paragraphs in other IFRS Accounting Standards.

C23The IASB staff proposed editorial changes to Appendix C of IFRS 19 to align it with the amendments introduced by IFRS 18, ensuring consistency without altering existing requirements.

Effective date and transition

C24The IASB discussed the effective date of, and transition to, the forthcoming Amendments and tentatively decided:

1. The Amendments to IFRS 19 will have the same effective date as IFRS 19 i.e. 1 January 2027, allowing subsidiaries adopting the updated standard to benefit from reduced disclosure requirements immediately. The staff paper acknowledged that some jurisdictions may evaluate the Amendments alongside their endorsement of IFRS 19, treating them as a single standard. This is the proposed approach for the UKEB's endorsement process.
2. Early application of the Amendments will be permitted for entities that apply IFRS 19 early, enabling them to take advantage of the reduced disclosure requirements sooner. The Amendments do not alter the existing comparative information requirements outlined in IFRS 19, eliminating the need for specific transition provisions.

Permission to begin the balloting process

C25All IASB members confirmed they were satisfied that the IASB has complied with the applicable due process requirements and has undertaken sufficient consultation and analysis to begin the process for balloting the Amendments.

Next steps

C26The IASB is expected to publish the final Amendments to IFRS 19 in Q3 2025.

C27The UKEB Secretariat has commenced planning activities for the UKEB's assessment of both IFRS 19 and the Amendments to IFRS 19 as a package for potential adoption and will present a Project Initiation Plan in due course.

Appendix D: Post-implementation Review of IFRS 16 Leases

Project Stage

IASB project page

Purpose of this update

D1At its March 2025 meeting the IASB:

1. discussed feedback and other information gathered in the first phase of the Post-implementation Review (PIR) of IFRS 16 Leases, including the findings from a review of academic literature⁹ relevant to the PIR; and
2. decided what questions should be included in a public consultation in the form of a Request for Information (RFI).

D2The following IASB staff papers were discussed:

1. A background paper¹⁰ that provided an overview of outreach activities and other research that IASB members and the staff have undertaken to decide the scope of the PIR.
2. Feedback analysis relating to:
   1. the overall assessment of IFRS 16¹¹;
   2. identifying a lease, lease terms and the lessee accounting model¹²;
   3. lessor accounting, sale and leaseback transactions and transition¹³;
   4. applying IFRS 16 with other IFRS Accounting Standards¹⁴.

D3At the March 2025 ASAF meeting, the IASB staff provided an update on the project, including a summary of the IASB's tentative decisions from its March 2025 meeting.

D4The purpose of this paper is to provide an overview of the IASB discussions and tentative decisions from its March 2025 meeting as well as to provide a summary of feedback received at the March 2025 ASAF meeting.

IASB tentative decisions – March 2025

Background paper

D5The IASB was not asked to make any decisions on the background paper.

D6IASB members noted that the feedback indicates higher-than-expected ongoing costs, greater concerns when compared to the PIR of IFRS 15 Revenue from Contracts with Customers, and that continued use of APMs may be industry specific.

Review of academic literature

D7The IASB was not asked to make any decisions on the academic literature review findings.

D8Comments made by the IASB staff and an academic who supported development of this paper included:

1. Most key messages from the literature review align with other feedback.
2. Academic studies show entities were significantly affected by IFRS 16.
3. IFRS 16 improves transparency and provides new relevant information but there is mixed feedback on comparability.

D9IASB members asked the staff to do further work on whether the more relevant information provided by IFRS 16 was due to presentation or disclosure. It was also noted that the lack of comparability may have been caused by the transition options and non-compliance with the Standard.

Feedback analysis – Overall assessment of IFRS 16

Feedback

D10Most users, standard-setters, regulators and IFRS Interpretations Committee members agree that IFRS 16 is effective, meeting its goals and enhancing financial reporting. However, nearly all preparers report high initial and ongoing costs with minimal perceived benefits.

IASB discussion

D11IASB members noted that the RFI needs to explore further the reasons for the ongoing costs. An IASB member noted that there should be a focus on whether users are getting sufficient information while another member expressed concern about over-engineering PIRs and setting too high expectations.

IASB tentative decisions

D12The IASB tentatively decided:

1. To include questions in the RFI to assess whether: IFRS 16 is meeting its objective, and its core principles are clear; and the benefits to users of the information reported in accordance with IFRS 16 and the costs of applying the requirements, auditing and enforcing their application, are significantly different from the IASB's initial expectations. All 14 IASB members agreed with these decisions.
2. Not to include a question in the RFI to assess whether the IASB could make any improvements to the requirements in IFRS 16 that would help users to compare entities that apply IFRS 16 with those that apply FASB ASC Topic 842, Leases. Ten of 14 IASB members agreed with this decision.

Feedback analysis - Identifying a lease, lease terms and the lessee accounting model

Feedback

Identifying a lease

D13Feedback suggests that the primary difficulty in identifying leases stems from applying requirements to unique or complex contracts. Stakeholder comments indicate these challenges are specific to the contract's context and are not widespread. There have been no significant concerns regarding the clarity or appropriateness of the lease definition, application guidance, or examples.

Lease term

D14Some users find that the significant judgment required to determine lease terms potentially hinders comparability of reported financial information (i.e. in some cases the lease terms that entities determine are inconsistent with users' expectations). While some users believe IFRS 16 provides more accurate information compared with the previous lessee accounting model, others note inconsistencies with expectations. Short-term leases have become more common, possibly to leverage recognition exemptions. Despite these complexities, significant judgments on lease terms generally do not impact investment decisions, as analysts focus on income and cash flow statements. Stakeholders acknowledge that determining lease terms involves complex judgments, leading to diversity in practice.

Lessee accounting

Recognition

D15Most users support recognising leases on the balance sheet, viewing them as debt-like transactions. However, some users prefer the operating lease commitment note under IAS 17, which in their view provided sufficient information for analysis and comparability. Concerns expressed by stakeholders include the exclusion of variable lease payments from the lease liability.

D16Some stakeholders, mainly preparers, commented on the recognition exemption for leases of low-value assets:

1. The threshold of $5,000 is not helpful. In their view, it leads to diversity in practice and, in some cases, complicates discussions about materiality.
2. The threshold of $5,000 is outdated; it has not been updated for inflation since the Standard was issued almost 10 years ago.

Measurement

Variable lease payments

D17Stakeholders raised concerns about the differing accounting requirements for fixed and variable lease payments, impacting comparability, faithful representation, and creating structuring opportunities. Some noted that the accounting treatment of variable lease payments can lead to volatility in financial statements and is often more costly. Determining whether payments are variable or in-substance fixed remains challenging.

Discount rates

D18Stakeholders find determining discount rates under IFRS 16 costly and complex, involving significant judgment. This can lead to inconsistencies and hinder comparability. Some suggest additional guidance or simplification to improve the cost-benefit balance. Despite challenges, some users find lessees' lease liability determinations more accurate than the users' estimates of the present value of future lease payments under IAS 17.

Non-cash consideration

D19Some stakeholders, mainly standard setters, noted that IFRS 16 lacks guidance on accounting for non-cash consideration, such as barter transactions, which could lead to diversity in practice.

Lease liability and lease modification

D20Stakeholders, particularly from the telecommunications industry, raised concerns about the cost-benefit balance of IFRS 16's requirements for subsequent lease liability measurement. Frequent reassessments due to lease modifications are time-consuming and complex, often requiring manual work. Determining revised discount rates is costly, and frequent remeasurements may not enhance transparency. Suggestions for reducing costs include simplifying requirements, reducing remeasurement frequency, and allowing certain lease modifications to be treated as separate leases.

Presentation and disclosure

Presentation requirements

D21Most stakeholders (except preparers) believe IFRS 16 has improved transparency and financial information quality. However, many preparers question its benefits, as they reverse its effects for management purposes. Some stakeholders raised concerns about lease presentation in financial statements, suggesting leases should be fully presented in operating categories. They also noted the lack of disaggregation in cash flow statements. Suggestions include additional disclosures and better comparability between leased and owned assets.

Disclosure requirements

D22Most users and a regulator noted improved usefulness of information disclosed under IFRS 16, though quality varies by industry. Some users suggested additional disclosures, such as disaggregating cash outflows, detailing discount rates and lease terms, and providing more interim financial data. Preparers mentioned the high cost of complying with disclosure requirements.

IASB discussion

D23Some IASB members noted the importance of the challenges in determining the lease term while also expressing concerns about the issues raised around variable lease payments and their inconsistent accounting treatment. An IASB member suggested broader questions on cash flow, presentation and disclosure.

D24Most IASB members supported packaging questions under themes to avoid overwhelming stakeholders with too many questions. It was also suggested that the IASB team should liaise with the Cash Flow Statements project team on relevant issues and to ensure transparency in the RFI about addressing issues in the Cash Flow Statements project.

IASB tentative decisions

D25The IASB tentatively decided to include in the RFI questions related to:

1. Lease term requirements: Clarity and consistency in determining lease terms.
2. User benefits, including those resulting from lease-related cash flow information: Whether benefits align with IASB expectations.
3. Variable lease payments: Clarity in determining which payments are included in the lease liability.
4. Discount rates: Clarity and consistency in determining discount rates and whether effects align with IASB expectations.
5. Ongoing costs: Whether remeasurement costs are as expected.

D26The IASB tentatively decided to exclude from the RFI questions related to:

1. Identifying a lease;
2. Recognition requirements; and
3. Non-cash considerations.

D27Twelve of 14 IASB members agreed with these decisions.

Lessor accounting, sale and leaseback transactions and transition

Feedback

Lessor accounting

D28Stakeholders generally find the lessor accounting model under IFRS 16 effective, though some raised concerns about asymmetric requirements for lessors and lessees, which complicate financial reporting. Additional guidance for finance leases and subleases is suggested to improve consistency.

Sale and leaseback transactions

D29Most comments on sale and leaseback transactions focus on the interaction between IFRS 16 and IFRS 15. Stakeholders raised concerns about inconsistent accounting for variable lease payments in these transactions compared to outright leases.

Transition

D30Feedback indicates that transitioning to IFRS 16 was challenging and costly for many entities, with the modified retrospective approach being preferred for cost-benefit reasons. Most users found the information provided sufficient to understand financial changes. Suggestions for future improvements include reinforcing disclosure requirements and simplifying transition methods. Research supports the helpfulness of transition reliefs and practical expedients and supports the inclusion of an early adoption option to provide entities with greater flexibility in managing the implementation process, based on the availability of resources.

IASB discussion

D31The majority of IASB members did not agree with including a question on lessor accounting (3 out of 13 voted in favour of including such a question) in the RFI due to the fact that IFRS 16 made minimal changes to lessor accounting.

IASB tentative decisions

D32The IASB tentatively decided to include in the RFI questions designed to:

1. Assess which transition requirements were helpful to entities and gather feedback to inform future standard-setting.
2. Determine if entities provided sufficient information for users to understand changes in financial performance, position, and cash flows due to implementing IFRS 16.

D33The IASB tentatively decided to exclude from the RFI questions on:

1. Potential unintended consequences of the lessee accounting model on the lessor accounting model. (10 of 13 members agreed; 1 absent)
2. The requirements for sale and leaseback transactions with variable lease payments not dependent on an index or rate. (All 13 members agreed; 1 absent)

Applying IFRS 16 with other IFRS Accounting Standards

Feedback

Applying IFRS 16 with IFRS 3 Business Combinations

D34Stakeholders, mainly preparers, are concerned about the ongoing costs of applying IFRS 16 due to its interaction with IFRS 3. They find it onerous to measure acquired leases as new leases at the acquisition date and may need to maintain dual accounting records if the acquiree must prepare individual financial statements.

Applying IFRS 16 with IFRS 9 Financial Instruments

D35Stakeholders find it unclear how to distinguish between partial extinguishment of a lease liability under IFRS 9 and a lease modification under IFRS 16 when lease payments are forgiven. This distinction affects whether the lessee recognises a gain or loss or adjusts the right-of-use asset.

Applying IFRS 16 with IFRS 10 Consolidated Financial Statements

D36Stakeholders emphasised the need for clarity on interactions between IFRS 16 and IFRS 10. Without further guidance, inconsistency could arise on how seller-lessees recognise gains on sales when losing control of subsidiaries. A review found that a regulator accepted full gain recognition but disagreed with the entity not disclosing the accounting policy.

Applying IFRS 16 with IFRS 15 Revenue from Contracts with Customers in sale and leaseback transactions

Determining whether a sale occurs

D37Stakeholders, mainly standard-setters and regulators, find it challenging to determine if a transfer in a sale and leaseback transaction qualifies as a sale under IFRS 15. Issues include renewal options, unit of account, right of first refusal, and finance lease classification. Additional guidance and examples are requested to clarify these situations.

Recognising a gain or loss in a sale and leaseback

D38Stakeholders, mainly standard-setters and regulators, raised concerns about partial gain or loss recognition in sale and leaseback transactions, citing inconsistencies with IFRS 15. Issues include differing measurement requirements of:

1. the right-of-use asset and lease liability in a sale and leaseback transaction compared with the initial measurement requirements for assets and liabilities arising from outright leases; and
2. accounting for variable lease payments in a sale and leaseback compared to accounting for such payments applying general requirements of IFRS 16, which might provide structuring opportunities.

D39Feedback also suggests that the partial gain or loss recognition model requires entities to make costly and complex calculations which are difficult for users of financial statements to use for forecasting future cash flows.

Applying IFRS 16 with IAS 36 Impairment of Assets

D40Stakeholders highlighted difficulties in applying IAS 36 for impairment testing of CGUs with right-of-use assets. They seek clarification on including lease assets and liabilities, reflecting lease payments in cash flows, and including lease costs in discount rates. Respondents also noted challenges in determining cash outflows and suggested guidance for cash flows beyond the forecast period.

IASB discussion

D41Some IASB members emphasised managing expectations regarding IFRS 3 as this is more pervasive and also interacts with other IFRS standards. An IASB member advised that they should be mindful of any cross-cutting issues with the Fourth Agenda Consultation.

IASB tentative decisions

D42The IASB tentatively decided to ask stakeholders about applying IFRS 16 alongside IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

D43Specifically, the IASB tentatively decided to include questions in the RFI to assess whether any action is needed in relation to:

1. how a lessee distinguishes between a lease modification as defined in IFRS 16 and an extinguishment (or a partial extinguishment) of a lease liability (to which IFRS 9 applies) when it accounts for a rent concession in which the only change to the lease contract is the lessor's forgiveness of lease payments due from the lessee under that contract;
2. the requirements in IFRS 15 which the seller-lessee applies when assessing whether the transfer of an asset in a sale and leaseback transaction is accounted for as a sale of that asset; and
3. the requirements in IFRS 16 about partial gain or loss recognition for sale and leaseback transactions, considering differences between these requirements and the revenue recognition model in IFRS 15.

D44The IASB tentatively decided not to include a question in the RFI about:

1. Relevant market developments since February 2021 when the IFRS Interpretations Committee deliberated the feedback on its tentative agenda decision relating to the application of IFRS 10 Consolidated Financial Statements alongside IFRS 16 to the sale and leaseback of an asset in a single-asset entity.
2. The application of IFRS 16 alongside other IFRS Accounting Standards.

D45All 13 IASB members present agreed with these decisions. One member was absent.

March 2025 ASAF meeting

D46At the March 2025 ASAF meeting the IASB discussed which matters to include in the RFI based on stakeholder feedback and other information gathered in the first phase of the project.

D47The following points were noted by ASAF members:

1. Representatives from several national standard setters generally agreed with the IASB's tentative decisions on the matters to include in the RFI. However, some ASAF members suggested additional topics for stakeholder feedback that the IASB had decided not to include:
   1. Distinguishing a Lease from an In-Substance Purchase[^16].
   2. Applying IFRS 16 with IAS 36 Impairment of Assets[^17].
   3. Identifying leases, accounting for leases with non-cash consideration, and eliminating intragroup leases[^18].
2. The FASB representative emphasised the importance of identifying improvements for future standard-setting, suggesting it would be helpful to understand what the IASB could have done differently when developing IFRS 16, especially regarding the initial and ongoing costs of applying the new requirements.

Next steps

D48At the May 2025 IASB meeting the IASB staff will ask the IASB to approve the RFI for publication (expected to be at the end of June 2025). A comment period of 120 days is proposed.

D49The UKEB Secretariat intends to bring a Project Initiation Plan to the June 2025 UKEB meeting.

Appendix E: Interpretations Committee Update

UKEB Project Status: Monitoring

IASB Next Milestone: N/A

Background

Ε1The UKEB's Due Process Handbook notes that the UKEB expects to respond to a limited number of tentative agenda decisions published by the IFRS Interpretations Committee (Interpretations Committee). Some factors to consider when deciding whether to respond may be:

1. the degree of impact of the tentative agenda decision on UK companies (for example, in cases where the tentative agenda decision is expected to affect a significant number of UK companies);
2. disagreement with the Interpretations Committee's analysis; or
3. usefulness of the explanations and clarifications included in the tentative agenda decision.

E2The Interpretations Committee met on 11 March 2025. The next Interpretations Committee meeting is on 25 to 26 June 2025.

Finalised agenda decisions

E3At its April 2025 meeting, the IASB was asked whether it objected to the prospective Agenda Decisions:

1. Recognition of Intangible Assets Resulting from Climate-related Expenditure (IAS 38),
2. Recognition of Revenue from Tuition Fees (IFRS 15); and
3. Guarantees Issued on Obligations of Other Entities.

No IASB member objected to the prospective Agenda Decisions and therefore they were finalised.

Agenda decisions referencing IAS 1

E4At its April 2025 meeting, the IASB staff noted that 31 agenda decisions referencing IAS 1 have been identified:

1. Two agenda decisions (Presentation requirements and Presentation of Liabilities or Assets Related to Uncertain Tax Treatments), which focus on questions about the requirements in IAS 1 for which the IASB has developed new requirements in IFRS 18, will be withdrawn once IFRS 18 becomes effective;
2. Three agenda decisions (Disclosure requirements relating to assessment of going concern, Going concern disclosure and Comparative information for prospectuses), which focus on questions about the requirements in IAS 1 that have been brought forward unchanged to IFRS 18 or other IFRS Accounting Standards, for which the references will be updated when IFRS 18 becomes effective; and
3. 26 agenda decisions, that include explanatory material referencing requirements in IAS 1 that have been brought forward unchanged to IFRS 18 or other IFRS Accounting Standards, but for which the references will be updated when IFRS 18 becomes effective.

E5The IASB also considered ten other agenda decisions[^19] published by the Interpretations Committee that include explanatory material about, but that do not exclusively focus on, requirements in IAS 1 that will be superseded by new or amended requirements in IFRS 18. For these ten agenda decisions only, the IASB decided to ask the Interpretations Committee:

1. to consider how an entity would apply the requirements in IFRS 18 to the fact pattern described in Agenda Decision Supply Chain Financing Arrangements – Reverse Factoring, and
2. to consider replacing only the references to IAS 1 in the nine other agenda decisions with references to the new or amended requirements in IFRS 18.

This approach would allow the Interpretations Committee to publish for stakeholder comment these ten updated agenda decisions as part of its normal consultation process for agenda decisions.

E6The Secretariat has performed its own analysis of the agenda decisions which include references to requirements in IAS 1 as part of the IFRS 18 Presentation and Disclosure in Financial Statements project. That analysis identified an additional Agenda Decision which requires further clarification from the IASB. For further information refer to Agenda Paper 4.

E7The Secretariat expects to provide further updates to the UKEB Board when the updates to the above agenda decisions have been made.

INTERPRETATIONS COMMITTEE AGENDA ITEMS

Question for the Board

1. Do Board members agree that the UKEB will NOT undertake further work at this time on the matters received but not yet presented to the Interpretations Committee?

TENTATIVE AGENDA DECISIONS CLOSED FOR COMMENT

Appendix F: List of active IASB projects

This Appendix provides a list of all active IASB projects¹, including links to the IASB project page and, where relevant, to the UKEB project page and any UKEB reports or comment letters. Items highlighted in grey are changed from the last report.

 ↩↩

IFRS 19 included reduced disclosure requirements for subsidiaries that apply IFRS 14 Regulatory Deferral Accounts. ↩↩

See Agenda paper 7: Appendix B (paragraph B30) of the April 2024 UKEB meeting%20of%20the%20April%202024%20UKEB%20meeting) for a summary of main reasons for not proposing reduced disclosures for IFRS 17 and how those are applicable to the forthcoming RARL Accounting Standard. ↩↩

This view was supported by members of the UKEB Rate-regulated Activities Technical Advisory Group (RRA-TAG)), who also acknowledged that although some subsidiaries with regulatory assets and liabilities could be eligible to apply IFRS 19, they were more likely to continue to report under the UK GAAP i.e. FRS 101 Reduced Disclosure Framework. See June 2024 RRA-TAG meeting summary. ↩↩

Paragraphs BC68–BC70 of the Basis for Conclusions explain the IASB's rationale for proposing these qualitative thresholds. ↩↩

See paragraph 10 of Agenda Paper 18B of the IASB April 2025 meeting. ↩↩

Reasons for not considering respondents' additional measures (such as enterprise value, total liabilities acquired, consideration paid, sum of consideration paid and net debt assumed, acquisition premium paid) are explained in paragraph 17 of Agenda paper 18B of the IASB April 2024 meeting. ↩↩

The UKEB in paragraph A14–A15 of its Final Comment Letter recommended that, since a company will be required to disclose the strategic rationale for each material business combination, the IASB could extend this requirement to disclose:

 ↩↩

1. Paragraph 30 of Agenda Paper 18C of the April 2025 IASB meeting. ↩↩

2. One key limitation of the study is that for most transactions, there is not enough data to assess the proportion of transactions capture by the thresholds. Per paragraphs 15 and 22 of the Agenda Paper 18C of the April 2025 IASB meeting, it is likely that the data that is not available relates to smaller business combinations, where the acquiree may be immaterial in relation to the acquirer, because for larger business combinations or material ones, they are usually subject to more stringent regulations or disclosure requirements. ↩↩