8 IASB General Update

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22 January 2026
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Executive Summary

| Project Type | Influencing IASB General Update IASB General Update Executive Summary

Project Type Influencing
Project Scope Various
Purpose of the paper This paper provides the Board with an update on projects the Secretariat is currently monitoring. As agreed with the Board, the Secretariat monitors projects being undertaken by the IASB. This is undertaken to inform the Board about the progress and decisions being made by the IASB on active projects. Discussion by the Board may also help inform interactions with international standard setter meetings, including the IASB's Accounting Standards Advisory Forum (ASAF).
Summary of the Issue Topics addressed in this paper include topics discussed by the IASB at its November and December 2025 meetings.
Topics for discussion IASB General Update
* Provisions - Targeted Improvements

Topics of noting

  • Statement of Cash Flows and Related Matters
  • Business Combinations—Disclosures, Goodwill and Impairment
  • Equity Method
  • Disclosures about Uncertainties in the Financial Statements
  • IASB's draft Prioritisation Framework
  • List of IASB projects

Decisions for the Board

Topics for discussion

Provisions – Targeted Improvements

Question
1Do Board Members agree with the Secretariat's preliminary view that the IASB tentative decision to revise the criteria in paragraph 14F(a) is an improvement compared to the wording in the ED as it should address the concern raised in the UKEB FCL?
2Do Board Members have any additional views regarding the IASB tentative decisions on aspects of the obligation condition relating to legal obligations?
3Do Board Members have any views regarding the IASB tentative decisions on aspects of the obligation condition relating to constructive obligations?
4Do Board Members have any views regarding the IASB tentative decisions made in relation to the costs to include in estimating the future expenditure required to settle an obligation?

Topics for noting

Do Board members have any comments or questions on the comments for noting?

Recommendation
N/A

Appendices

  • Appendix A: Provisions – Targeted Improvements
  • Appendix B: Statement of Cash Flows and Related Matters
  • Appendix C: Business Combinations—Disclosures, Goodwill and Impairment
  • Appendix D: Equity Method
  • Appendix E: Disclosures about Uncertainties in the Financial Statements
  • Appendix F: IASB's draft Prioritisation Framework
  • Appendix G: List of IASB projects

Appendix A: Provisions – Targeted Improvements

Project Stage
IASB Research / Pipeline Discussion Paper
Redeliberation Exposure Draft
Redeliberation Final Standard
Post Implementation Review
UKEB Research / Influencing Research / Influencing
Monitoring Influencing
Monitoring Endorsement
Influencing
UKEB project page
UKEB Final Comment Letter (published 12 March 2025)
IASB Next Milestone: Decide Project Direction (March 2026)

Purpose of this paper

A1The purpose of this paper is to seek Board Member views on the most recent IASB tentative decisions made on the Provisions – Targeted Improvements project. According to the IASB's published workplan, the IASB is expected to decide on the project direction in March 2026.

A2This project is expected to be on the agenda of the IASB's Accounting Standards Advisory Forum (ASAF) in the future. Board member comments will inform UKEB feedback at that meeting.

Background

A3In November 2024, the IASB published its Exposure Draft (ED) Provisions – Targeted Improvements proposing amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which aimed to clarify:

  1. when an entity recognises a provision (specifically, the present obligation recognition criterion); and
  2. two aspects of the requirements for measuring a provision:
    1. the costs an entity includes in measuring a provision; and
    2. the rate an entity uses to discount a provision to its present value.

A4The UKEB submitted its Final Comment Letter in March 2025.

A5In June 2025, the IASB discussed stakeholder feedback received on its ED. In September 2025, the IASB commenced redeliberation of the proposals in the ED. The Board received updates about these IASB meetings at its June, October and November 2025 meetings1.

IASB redeliberation – December 2025

A6At its December 2025 meeting, the IASB continued the redeliberation of the proposals in its ED. The focus at the meeting was:

  1. Feedback on one of the proposed three conditions for the present obligation criterion, the ‘obligation’ condition. As part of these discussions, the IASB redeliberated aspects relating to:
    1. legal obligations2; and
    2. constructive obligations.3
  2. The proposed clarification of the costs an entity includes in estimating the future expenditure required to settle an obligation4.

A7The following paragraphs present further details on the IASB redeliberations, including some background information.

Recognition criteria - Obligation condition

A8Paragraph 14 in IAS 37 currently requires a provision to be recognised when the following three criteria (‘recognition criteria’) are met:

  1. Present obligation recognition criterion.
  2. Probable outflow of resources criterion.
  3. Reliable estimate criterion.

A9The IASB proposed amendments to the 'present obligation recognition criterion'. As per the IASB's ED paragraph 14A, this criterion comprises the following three conditions:

  1. an obligation condition;
  2. a transfer condition; and
  3. a past-event condition.

A10The IASB's ED paragraph 14B proposes that an entity has an obligation if:

  1. a mechanism is in place that imposes a responsibility on the entity if it obtains specific economic benefits or takes a specific action;
  2. the entity owes that responsibility to another party; and
  3. the entity has no practical ability to avoid discharging the responsibility if it obtains the specific economic benefits or takes the specific action.

A11The proposed guidance for assessing when an entity has no practical ability to avoid discharging a responsibility differs depending on whether the entity has a legal obligation or a constructive obligation.

A12A summary of the IASB's tentative decisions and background information, is presented in the table below. However, this is a complex issue and worth more detailed analysis. This is presented in the paragraphs that follow the table and include further preliminary Secretariat views for the Board to consider.

Obligation condition - Legal obligations
Current requirements
One of the key considerations as part of the present obligation recognition criterion is identifying the 'past event'. Paragraph 17 of IAS 37 notes that a past event that leads to a present obligation is called an obligating event. That same paragraph also requires that “settlement of the obligation can be enforced by law.” An obligating event is defined in paragraph 10 of IAS 37 as 'an event that creates a legal or constructive obligation that results in an entity having no realistic alternative to settling that obligation.'
Exposure Draft proposals

In relation to the 'obligation' condition, paragraph 14F(a) of the ED proposes that an entity has no practical ability to avoid discharging a responsibility “in the case of a legal obligation, if:

  1. the other party has a legal right to act against the entity if the entity fails to discharge the responsibility—for example, to ask a court to enforce settlement, charge the entity a financial penalty or restrict the entity's access to economic benefits; and
  2. as a result of that right, the economic consequences for the entity of not discharging the responsibility are expected to be significantly worse than the costs of discharging it..."

In addition, paragraph 14G of the ED proposes to retain the requirements currently in paragraph 22 of IAS 37, which state that if details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is virtually certain to be enacted as drafted (that is, such an obligation is treated as a legal obligation).

UKEB Comment Letter

The UKEB comment letter to the IASB in response to the ED, made the following observations:

  • The UKEB noted that ED paragraph 14F introduces a form of economic compulsion in the 'no practical ability to avoid test' for legal obligations. The test requires an assessment of whether the economic consequences for the entity of not discharging the legal responsibility are expected to be significantly worse than the costs of discharging it. The UKEB recommended the IASB clarifies the proposed requirement. For example, if the economic consequences for the entity of not discharging a legal responsibility were not expected to be significantly worse but perhaps were expected to be similar to or lower than the costs of discharging the UKEB believes that the entity would still have an obligation. In the UKEB view, the impact of the proposed assessment in paragraph 14F(a)(ii) should perhaps be reflected instead in the measurement of the provision (assuming all the recognition criteria were met). (UKEB FCL paragraphs A6–A7)
  • The use of the word 'obligation' in the first condition in paragraphs 14A and 14B of the ED seems inconsistent with the normal usage of that term in the English language and there is a risk of confusion, in particular to the distinction between the obligation condition and the past-event condition. The UKEB recommended the IASB reconsiders the terminology used. (UKEB FCL paragraphs A4–A5)
  • Although the proposed requirement is based on concepts in paragraph 4.34 of the Conceptual Framework, we observe that the terminology is not consistent. CF 4.34 uses the term 'significantly more adverse' and the ED 14F(a)(ii) 'significantly worse'. If the IASB decides to proceed with this proposal, we recommend aligning the terminology used and providing further guidance as to the intended application of this amendment. (UKEB FCL paragraph A8)
IASB tentative decisions

The IASB tentatively decided to revise the criteria proposed in paragraph 14F(a) the ED for concluding that an entity has no practical ability to avoid discharging a legal responsibility. The revised criteria would require that either:

  1. the counterparty has a right to ask a judicial body to force the entity to discharge the responsibility or to pay a penalty or compensation for failing to do so; or
  2. the counterparty has a right to take another form of action against the entity for failing to discharge the responsibility and, as a result, the economic consequences for the entity of not discharging the responsibility are expected to be significantly worse than the costs of discharging it.

In reaching this decision, the IASB:

  1. tentatively decided that an entity's practical ability to avoid discharging a responsibility represents a high hurdle.
  2. tentatively decided to retain the word 'significantly' in the proposal in paragraph 14F of the ED.

The IASB also tentatively decided:

  1. to add no application guidance on how to assess the economic consequences of failing to discharge a responsibility.
  2. to make no changes to the requirements in IAS 37 that apply to proposed new laws that have yet to be finalised.
Proposed assessment of economic consequences - ED paragraph 14F(a)(ii)

A13As noted in the table above, the ED paragraph 14F(a) proposed requiring both an assessment of legal enforceability as well as an assessment of the economic consequences for the entity not discharging the responsibility. The latter is an assessment of whether the economic consequences for the entity of not discharging the legal responsibility are expected to be 'significantly worse' than the cost of discharging it.

A14The UKEB Final Comment Letter (FCL) questioned whether the assessment of the economic consequences should impact the recognition or only the measurement of a provision. The FCL expressed concerns that the proposed wording could be interpreted as to conclude that an entity has no obligation in the circumstance where the economic consequences for it not discharging a legal responsibility were expected to be similar to or lower than the costs of discharging it. The UKEB believed that an entity would still have an obligation and the impact of the proposed assessment should then be reflected in the measurement of the provision (assuming all the recognition criteria were met). The UKEB recommended the IASB clarified the proposed requirement.

A15Stakeholder feedback indicated that the effect of the requirement (as drafted in the ED) could be the opposite of what the IASB intended; it could be interpreted as narrowing the existing definition of a legal obligation to exclude some legal responsibilities that are enforceable through the courts. As a result of such feedback, the IASB staff proposed revising paragraph 14F(a) so that the obligation being legally enforceable is sufficient. The need to consider the economic consequences of non-compliance would then apply only in the absence of legal enforceability. The IASB tentatively agreed with the staff recommendation.

A16The UKEB Secretariat considers that the recent amendment tentatively agreed by the IASB (see paragraph above) is an improvement compared to the wording in the ED, as it should address the concern raised in the UKEB FCL.

Requirements related to proposed new laws that have yet to be finalised

A17The IASB tentatively decided to make no changes to the existing requirements in paragraph 22 of IAS 37 relating to proposed new laws that have yet to be finalised. The UKEB FCL did not specifically comment on this aspect of the proposals.

Terminology used in the ED

A18As noted in the table above, the UKEB FCL also made recommendations in relation to the terminology used in the ED (i.e. the terms 'obligation' and 'significantly worse').

A19In December 2025 IASB members discussed the merit of retaining the words 'significantly worse' in paragraph 14F(a)(ii) of the ED. One IASB member expressed a preference for removing the term 'significantly', due to concerns that it may require a definition and could increase complexity in application. Other IASB members disagreed with the suggested deletion highlighting that the proposed requirement is intended to be a high hurdle, which aligns with the IASB's rationale applied when developing the Conceptual Framework paragraphs 4.34 and BC4.55.

A20The Secretariat considers that a holistic assessment of the overall proposals (considering the amendments made during the IASB redeliberations process) will be key to identify any potential application challenges to report to the IASB. The Secretariat will continue monitoring project developments and present updates to the Board at future meetings.5

Question
1Do Board Members agree with the Secretariat's preliminary view that the IASB tentative decision to revise the criteria in paragraph 14F(a) is an improvement compared to the wording in the ED as it should address the concern raised in the UKEB FCL?
2Do Board Members have any additional views regarding the IASB tentative decisions on aspects of the obligation condition relating to legal obligations?

Constructive obligations

A21A summary of the IASB's tentative decisions and background information, is presented in the table below. Further analysis and preliminary Secretariat views are presented in the paragraphs that follow the table.

Obligation condition – Constructive obligations
Current requirements
Paragraph 10 of IAS 37 states that a constructive obligation is an obligation that derives from an entity's actions where:
  1. by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities; and
  2. as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
Paragraph 17 of IAS 37 states that, in the case of a constructive obligation, an obligating event is an event that 'creates valid expectations in other parties that the entity will discharge the obligation'.
Exposure Draft proposals
Paragraph 14F(b) of the ED states that an entity has no practical ability to avoid discharging a responsibility, in the case of a constructive obligation, if the entity's pattern of past practice, published policy or sufficiently specific current statement creates valid expectations in other parties that the entity will discharge the responsibility.
UKEB Comment Letter
The UKEB did not make specific recommendations in relation to the proposed requirements for 'constructive obligations'.
IASB tentative decisions
The IASB tentatively decided:
  1. to retain the criterion proposed in the ED for concluding that an entity has no practical ability to avoid discharging a constructive responsibility—not to add a reference to the economic consequences of failing to discharge the responsibility.
  2. to add no further guidance on the factors to consider in determining whether an entity's public statement of its climate-related commitments creates a constructive obligation to fulfil these commitments.

A22The 'no practical ability' assessment proposed in the ED for constructive obligations is broadly consistent with the existing requirements in IAS 37. The ED paragraph 14F(b) states that an entity has no practical ability to avoid discharging a responsibility in the case of a constructive obligation, “if the entity's pattern of past practice, published policy or sufficiently specific current statement creates valid expectations in other parties that the entity will discharge the responsibility”. Unlike the proposed requirement for legal obligations, there is not an explicit requirement to assess the economic consequences for the entity not discharging the responsibility.

A23Some respondents to the ED questioned the rationale for a constructive obligation assessment not requiring consideration of the economic consequences of failing to discharge an obligation. The UKEB FCL did not specifically comment on this topic.

A24The IASB considered stakeholder feedback received on this aspect of the proposals and overall, it decided that proposing further amendments would go beyond the project scope (which does not include revisiting the criterion for identifying a constructive obligation). The IASB therefore tentatively decided to retain the proposals in the ED relating to constructive obligations.

A25The Secretariat understands the IASB's tentative decision to retain the proposals in the ED - in relation to constructive obligations - as the IASB's project scope did not consider revisiting the criterion for constructive obligations.

Question
3Do Board Members have any views regarding the IASB tentative decisions on aspects of the obligation condition relating to constructive obligations?

Measurement – Costs to include

A26A summary of the IASB's tentative decisions and background information, is presented in the table below. Further analysis and preliminary Secretariat views are presented in the paragraphs that follow the table.

Measurement – Costs to include
Current requirements
Paragraph 36 of IAS 37 states that the amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. In relation to 'onerous contracts' paragraph 68A of IAS 37 states that the cost of fulfilling a contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract consist of both:
  1. the incremental costs of fulfilling that contract—for example, direct labour and materials; and
  2. an allocation of other costs that relate directly to fulfilling contracts—for example, an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling that contract among others.
Exposure Draft proposals
The ED explicitly clarifies that, in measuring onerous contracts and other provisions, an entity includes the same costs as it includes in assessing whether a contract is onerous. That is, the ED paragraph 40A proposes that: The expenditure required to settle an obligation comprises the costs that relate directly to the obligation. Costs that relate directly to an obligation consist of both:
  1. the incremental costs of settling that obligation; and
  2. an allocation of other costs that relate directly to settling obligations of that type.
UKEB Comment Letter
The UKEB, in their comment letter to the IASB (UKEB FCL A48–A50): * Supported the proposed clarification of the costs an entity includes in estimating the future expenditure required to settle an obligation. * Recommended the IASB clarifies the scope of the proposed amendment (i.e. whether applicable to all provisions or only those to be settled by providing goods or services). * If applicable to all provisions, it recommended providing additional guidance on how the requirements would apply to obligations not settled by the provision of goods or services, such as legal claims. More clarity is also needed on the intended application of the amendments including, for example, whether a distinction should be made between internal/external costs. * Recommended that further application guidance and examples should be provided to facilitate consistent application.
IASB tentative decisions
The IASB tentatively decided:
  1. to retain the proposed requirement that the expenditure required to settle an obligation comprise the costs that relate directly to the obligation, which consist of both:
    1. the incremental costs of settling that obligation; and
    2. an allocation of other costs that relate directly to settling obligations of that type.
  2. to restrict the scope of the requirement described in (a) to obligations to transfer goods or services, and to clarify that the requirement applies to the measurement of those goods or services.
  3. not to add a requirement for an entity to disclose whether and how it includes ancillary costs in measuring a provision.
  4. to add no application guidance or illustrative examples on the types of costs to include in measuring a provision.

A27The UKEB FCL expressed support for the IASB's proposals relating to the costs an entity includes in estimating the future expenditure required to settle an obligation. The UKEB FCL also included recommendations, such as clarifying the scope of the proposed amendment.

A28The IASB tentatively decided to retain the requirements in the ED and to restrict the scope of the requirement to obligations to transfer goods or services.

A29Although additional application guidance or illustrative examples would have been welcome, the Secretariat welcomes the IASB's tentative decision to clarify the scope of the proposals.

Question
4Do Board Members have any views regarding the IASB tentative decisions made in relation to the costs to include in estimating the future expenditure required to settle an obligation?

Next steps

A30At upcoming IASB meetings, the IASB will be asked to reconsider the remaining aspects of the ED proposals. This will include the transfer and past-event conditions (including the requirements for levies) in the proposed present obligation recognition criterion.

A31The IASB staff noted that a decision on the overall project direction is expected once the IASB has reached tentative decisions on the requirements for levies. The IASB's published work plan shows that a decision on project direction is expected in March 2026.

A32The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will provide the Board with updates in due course.

| Project Stage | IASB Research / Workplan | Discussion paper | Redeliberation | Exposure Draft | Redeliberation | Final standard | Post Implementation Review | | UKEB Research / Influencing | Research / Influencing | Monitoring | Influencing | Monitoring | Endorsement | Influencing | | IASB Next Milestone: Decide Project Direction (expected January 2026) | UKEB project page |

| IASB Research / Workplan | Discussion paper | Redeliberation | Exposure Draft | Redeliberation | Final standard | Post Implementation Review | | UKEB Research / Influencing | Research / Influencing | Monitoring | Influencing | Monitoring | Endorsement | Influencing | | IASB Next Milestone: Decide Project Direction (expected January 2026) | UKEB project page | | UKEB project page | UKEB project page | | |

Purpose

B1This paper provides the Board with an update6 on the status of the Statement of Cash Flows and Related Matters project, following the IASB's meeting in December 2025.

Background

B2At its May 2025 meeting, the IASB decided that this project would address five topics:

  1. The transparency of information communicated about cash flow measures not specified in IFRS Accounting Standards.
  2. The consistent application of requirements for classification of cash flows i.e. operating, investing or financing.
  3. The disaggregation of cash flow information in the financial statements.
  4. The reporting of information about non-cash transactions in the financial statements.
  5. The consistent application of the definition of ‘cash equivalents'.

B3The IASB decided to consider any additional changes to cash flow statement requirements for financial institutions only after concluding discussions on the above topics.

IASB December 2025 meeting

B4At its December 2025 meeting, the IASB addressed the following topics:

  1. Improving the transparency of information about cash flow measures by extending the requirements for MPMs (Agenda Paper 20A). The IASB will further research the benefits and costs of applying this disclosure requirement to reconciling items that relate to operating activities in the statement of cash flows when reported using the indirect method.
  2. Classification and presentation of cash flows. Based on the feedback received from the stakeholders, the IASB members discussed possible ways to improve consistent application in the classification and presentation of cash flows (Agenda Paper 20B).
  3. Presentation of cash flows from continuing and discontinued operations. The IASB members discussed the staff recommendation to require an entity to present cash from discontinued operations in a separate category (Agenda Paper 20C).

B5A summary of the IASB's tentative decisions on these topics is presented in Annex 1 of this paper.

Next steps

B6The IASB will continue to assess possible approaches to improve financial reporting in relation to each of the topics in the project plan through the first half of 2026.

B7The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will provide the Board with updates accordingly.

Annex 1: IASB's tentative decisions – December 2025

1) Improving the transparency of information about cash flow measures

Current requirements

IAS 7 Statement of Cash Flows does not explicitly require entities to present subtotals for each category in the statement of cash flows. The requirements for MPMs introduced in IFRS 18 Presentation and Disclosure in Financial Statements paragraphs 117–125 only cover subtotals of income and expenses (not cash inflows and cash outflows).

UK Stakeholder views

UKEB research suggests that MPMs should be extended to cash flow measures not specified in IFRS Accounting Standards, including the most widely used measure of free cash flow.

IASB tentative decisions

The IASB tentatively agreed with the staff recommendations and decided to propose:

  1. Including requirements for MPMs for cash flow measures in IFRS 18 and not in IAS 7.
  2. Extending the definition of MPMs in paragraph 117 of IFRS 18 from 'a subtotal of income and expenses' to 'a subtotal of income and expenses or a subtotal of cash inflows and outflows'.
  3. Including application guidance in IFRS 18 to clarify that subtotals combining income and expenses and cash flows are MPMs.
  4. Including application guidance in IFRS 18 to require an entity to disclose the effects of income tax and non-controlling interest for reconciling items if reconciling an MPM that is a subtotal of income and expenses and cash flows to a subtotal in the statement of profit or loss.
  5. Specifying that some subtotals of cash inflows and outflows are not MPMs, namely:
    1. the subtotal of the operating activities category;
    2. the subtotal of the investing activities category; and
    3. the subtotal of the financing activities category.
  6. Extending the disclosure requirement in IFRS 18 Appendix B Application guidance paragraph B137(a) so that, for each reconciling item, an entity be required to disclose the amount(s) related to each line item in the statement to which the MPM is reconciled—that is:
    1. to disclose amounts related to line items in the statement of profit or loss if the MPM is reconciled to that statement; and
    2. to disclose amounts related to line items in the statement of cash flows if the MPM is reconciled to that statement.
UKEB Secretariat preliminary view

The UKEB Secretariat considers that the IASB's general approach to improving the transparency of information about cash flow measures is consistent with the principles of IFRS 18, which specifies that MPMs are related to performance. Entity specific 'net debt' measures will not be in the scope of the cash flow MPMs, because it is a balance sheet performance measure. However, given the stakeholder feedback and UKEB research, it is important to reiterate to the IASB that there is a need for improved transparency and consistent reporting of this measure.

2) Classification and presentation of cash flows

Current requirements

Paragraph 10 of IAS 7 requires entities to report cash flows during the period, classified by operating, investing and financing activities.

According to paragraph 6 of IAS 7:

  1. Operating activities are the principal revenue-producing activities of the entity and other activities that are not investing or financing activities.
  2. Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents (and the receipt of interest and dividends as described in IAS 7 paragraphs 34A–34D, introduced by IFRS 18 and effective from 1 January 2027).
  3. Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.

Paragraph 11 of IAS 7 states that an entity presents its cash flows from operating, investing and financing activities in a manner which is most appropriate to its business.

Paragraph 16 of IAS 7 states that, when a contract is accounted for as a hedge of an identifiable position, the cash flows of the contract are classified in the same manner as the cash flows of the position being hedged.

Paragraph 22 of IAS 7 explains when an entity may report cash flows on a net basis but makes no reference to government grants.

Paragraph 39 of IAS 7 states that the aggregate cash flows arising from obtaining or losing control of subsidiaries or other businesses shall be presented separately and classified as investing activities.

Paragraph 43 of IAS 7 specifies that investing and financing transactions that do not require the use of cash or cash equivalents shall be excluded from a statement of cash flows and that such transactions shall be disclosed elsewhere in the financial statements.

For supplier finance arrangements, paragraphs 44F–44H of IAS 7 require an entity to disclose information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the entity's cash flows.

UK Stakeholder views

The UKEB recommended in paragraphs 2 and A6(c) of the UKEB Comment Letter in response to Exposure Draft ED/2021/10 Supplier Finance Arrangements: Proposed amendments to IAS 7 and IFRS 7, adding a specific requirement to disclose:

  1. an entity's accounting policy for the presentation of cash flows that are part of supplier finance arrangements;
  2. the amounts of those cash flows; and
  3. the line item(s) in the statement of cash flows where they are presented.

During the UKEB research on the Statement of Cash Flows and Related Matters, UK stakeholders suggested the IASB introduce new requirements for companies to disclose cash flows relating to tax as a separate classification, rather than classifying as 'operating' by default. The research also identified other areas where IFRS Accounting Standards are silent on how certain items should be classified, such as multiple component transactions.

In addition, UK stakeholders suggested new disclosures, such as the disaggregation of exceptional items and derivatives, including details of the extent of such cash flows included in each category i.e. operating, investing and financing7.

IASB tentative decisions

The IASB tentatively decided:

  1. To explore:
    1. developing requirements for the classification of acquisition-related payments in a business combination;
    2. developing requirements for the classification and presentation of cash flows from derivatives;
    3. developing requirements for the classification and presentation of receipts of government grants; and
    4. amending the principle for classifying cash flows in paragraph 11 of IAS 7 to help entities apply the principle more consistently.
  2. To revisit two issues after the IASB has concluded its discussions on strengthening the disclosure requirements on non-cash transactions and other non-cash changes:
    1. classification of deferred payments; and
    2. classification and presentation of cash flows involving third-party finance providers.
UKEB Secretariat preliminary view

The UKEB Secretariat considers that the IASB's approach to improving the consistency of classification and presentation of cash flows should be principle-based, as opposed to introducing specific classification requirements, where feasible. UKEB research identified the need for improved disclosures for specific items, such as factoring, supplier financing arrangements (reverse factoring), and derivatives. However, improvements for these items may be addressed through improved disclosures around non-cash information.

3) Presentation of cash flows from continuing and discontinued operations

Current requirements

IAS 7 does not contain any requirements relating to the presentation of cash flows from discontinued operations.

Paragraph 33(c) of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations requires an entity to either present in the statement of cash flows or disclose in the notes, the net cash flows attributable to the operating, investing and financing activities of discontinued operations.

UK Stakeholder views

During the user interviews for the UKEB Research, stakeholders asked for better disclosure of cash flows from discontinuing operations. Some suggested that this would be best presented in a note in segmental format for each line of the statement of cash flows.

IASB tentative decisions

The IASB tentatively decided to propose requiring an entity to present cash flows from discontinued operations in a separate category of the statement of cash flows.

UKEB Secretariat preliminary view

The UKEB Secretariat considers that the IASB's general approach to improving the presentation of cash flows from discontinued operations, in a separate category in the statement of cash flows, is consistent with users' needs identified through UKEB research. However, feedback received suggested that such information would be best presented in a segmental format, as opposed to single line items in each classification section of the statement of cash flows.

Appendix C: Business Combinations—Disclosures, Goodwill and Impairment

| Project Stage | IASB Research / Pipeline | Discussion paper | Redeliberation | Exposure Draft | Redeliberation | Final Standard | Post Implementation Review | | UKEB Research / Influencing | Research / Influencing | Monitoring | Influencing | Monitoring | Endorsement | Influencing | | IASB Next Milestone: Decide Project Direction H2 2026 | UKEB project page www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/ | | | UKEB Project Initiation Plan (Published March 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/project-initiation-plan/ | | | UKEB Draft Comment Letter (Published May 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/draft-comment-letter/ | | | UKEB Final Comment Letter (Published July 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/final-comment-letter/ | | | UKEB Feedback Statement (Published July 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/feedback-statement/ | | | UKEB Due Process Compliance Statement (Published September 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/due-process-compliance-statement/ | | | UKEB project page (Discussion Paper) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/discussion-paper/ | | | UKEB Final comment Letter on the Discussion Paper (Published January 2021) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/final-comment-letter-on-discussion-paper/ | | | UKEB Feedback Statement (Published March 2021) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/feedback-statement-march-2021/ | | | UKEB Report: Subsequent Measurement of Goodwill - A Hybrid Model (Published September 2022) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/report-subsequent-measurement-of-goodwill-a-hybrid-model/ |

Purpose of this paper

C1This paper provides the Board with an update on the International Accounting Standards Board (IASB)'s redeliberation, at the 10 December 2025 IASB meeting, of the proposals in the Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment (the ED).

Background

C2The IASB's objective for this project is to explore whether entities can, at a reasonable cost:

  1. provide users with more useful information about business combinations (by amending the requirements in IFRS 3 Business Combinations); and
  2. improve the effectiveness, and reduce cost and complexity, of the impairment test in IAS 36 Impairment of Assets.

C3The proposed information should assist users to make better decisions, by helping them to 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.

C4A summary of the ED proposals, the IASB's redeliberations and tentative decisions to date can be found in Appendix A of the IASB Staff Agenda paper 18 for the December 2025 meeting.

IASB meeting 10 December 2025

C5At the IASB meeting on 10 December 2025, the IASB members discussed:

  1. The ED proposal to make targeted changes to IAS 36 to improve how entities allocate goodwill to cash-generating units (CGUs) for impairment-testing purposes8. The IASB members tentatively decided to retain the proposed amendments in the ED to IAS 36 paragraphs 80, 80A, 80B and 81, subject to agreed wording changes (see Annex 1 of this paper).
  2. The items of information to which the proposed exemption from some proposed disclosure requirements in IFRS 3 should apply, and related clarification requests9. The IASB members were not asked to make any decisions on this topic.

Proposed Exemption from some proposed disclosure requirements

C6The ED included a proposed exemption from disclosing some of the information, if disclosure of that information could be expected to prejudice seriously the achievement of any of the entity's acquisition-date key objectives for a business combination. The proposed exemption related to the disclosure of:

  1. the acquisition-date key objectives and the related targets for a business combination (KOTs);
  2. the qualitative statement of whether actual performance is meeting, or has met, the KOTs; and
  3. quantitative information about expected synergies.

C7IASB members raised concerns about:

  1. How actual performance disclosures interact with exempted KOTs i.e. the risk of revealing sensitive information about acquisition-date KOTs indirectly through disclosing actual performance.
  2. Auditability challenges and practical implications for preparers.
  3. Non-financial objectives (e.g. Greenhouse Gas emission targets) and their treatment under the exemption.

C8The IASB staff will further analyse and consult on these matters.

C9The IASB did not make any decisions on this topic.

Next steps

C10In line with the redeliberation plan outlined in Agenda Paper 18G for the IASB’s January 2025 meeting, once the IASB completes all discussions, it will then consider the package of amendments overall, for example, the overall cost-benefit trade-off.

C11The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will provide the Board with updates accordingly.

Annex 1: IASB's tentative decisions – December 2025

Allocating goodwill to CGUs

Current requirements

Recognising and measuring impairment losses for CGUs and goodwill are dealt with in paragraphs 65-108 of IAS 36 Impairment of Assets. Paragraphs 80-87 of IAS 36 specifically set out the requirements for “Allocating goodwill to cash-generating units" for the purpose of impairment testing.

ED proposals

The ED proposed changes to the impairment test to reduce shielding by clarifying how to allocate goodwill to CGUs. This included clarifying that the operating segment level is a ceiling for goodwill allocation, not a default. The ED also proposed to refine the language around “business associated with the goodwill is monitored” to better reflect internal management practices.

UKEB Comment Letter

The UKEB supported the IASB's proposed amendments to IAS 36.

IASB tentative decisions

At the IASB's December 2025 meeting, the IASB members tentatively decided to:

  1. retain the proposal to improve how entities allocate goodwill to CGUs, in particular:
    1. retain the proposal to replace the phrase 'goodwill is monitored' in paragraph 80(a) of IAS 36 with 'business associated with the goodwill is monitored';
    2. retain the proposal to clarify that existing paragraph 80(b) of IAS 36 acts as a ceiling to the level that the entity determines applying paragraph 80(a) of IAS 36; and
    3. retain the proposal in proposed paragraph 80A(b) of IAS 36, subject to some wording changes regarding how financial information about synergies is considered when determining the level at which to allocate goodwill for impairment testing.
  2. make no changes to the proposal in respect of other feedback on allocating goodwill.
UKEB Secretariat preliminary view

The UKEB Secretariat considers that the IASB's tentative decision to retain the proposals in the ED in relation to allocating goodwill to CGU's, subject to the proposed wording changes, is consistent with the UKEB comment letter.

Appendix D: Equity Method

| Project Stage | |

| IASB Research / Workplan | Discussion paper Redeliberation Exposure Draft | Redeliberation | Final standard | Post Implementation Review | | UKEB Research / Influencing | Research / Influencing Monitoring Influencing | Monitoring | Endorsement | Influencing | | IASB Next Milestone: Decide Project Direction March 2026 | UKEB project page www.ukeb.org.uk/projects/equity-method/ | | | UKEB Project Initiation Plan (Published October 2024) www.ukeb.org.uk/projects/equity-method/project-initiation-plan/ | | | UKEB Draft Comment Letter (Published October 2024) www.ukeb.org.uk/projects/equity-method/draft-comment-letter/ | | | UKEB Final Comment Letter (Published December 2024) www.ukeb.org.uk/projects/equity-method/final-comment-letter/ | | | UKEB Feedback Statement (Published December 2024) www.ukeb.org.uk/projects/equity-method/feedback-statement/ | | | UKEB Due Process Compliance Statement (Published January 2025) www.ukeb.org.uk/projects/equity-method/due-process-compliance-statement/ |

Purpose of this paper

D1The paper provides an update on the IASB's redeliberation, at its November 2025 meeting, of the proposals in the Exposure Draft (ED) Equity Method of Accounting IAS 28 Investments in Associates and Joint Ventures (revised 202x) on:

  1. measurement of the cost of an associate;
  2. purchases of an additional ownership interest; and
  3. disposal of a portion of an investment in an associate.

Background

D2The IASB's objective is to reduce diversity in practice, by answering application questions on the equity method of accounting, and to improve the understandability of IAS 28 Investments in Associates and Joint Ventures. The ED published by the IASB, in September 2024, aimed to:

  1. clarify and add to the requirements in IAS 28 to answer application questions about how to apply the equity method of accounting;
  2. reorder the requirements in a more logical and consistent way to help companies with the application of the Standard i.e. improve the understandability; and
  3. improve the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements to complement the proposed amendments to IAS 28.

D3The UKEB undertook a ‘light touch' approach in responding to the ED and is not aware of pervasive or material concerns for the UK arising from the proposals. Therefore, the UKEB supports the proposals in the ED.

D4In May 2025, the IASB discussed feedback to the ED. The Board received an update at its September 2025 meeting10.

D5In September 2025, the IASB commenced redeliberation of the ED proposals. The Board received updates, on tentative decisions made at the IASB meetings in September and October 2025, at its November 2025 meeting11.

IASB November 2025 meeting

D6At its November 2025 meeting, the IASB continued its redeliberation of the proposals in the ED.

D7A summary of background information and tentative decisions on the topics discussed at the meeting is presented in Annex 1 of this paper.

Next steps

D8The IASB will continue redeliberating the proposals over the next few months, in line with the redeliberation plan outlined in paragraph 27 of Agenda Paper 13 for the IASB's June 2025 meeting.

D9The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will continue to provide the Board with updates.

Annex 1: IASB's tentative decisions – November 2025

1) Measurement of the cost of an associate

Current requirements

Paragraph 10 of IAS 28 states that, on initial recognition, the investment in an associate is recognised at 'cost'. However, IAS 28 does not include requirements for how an investor measures the cost of the investment on obtaining significant influence.

Exposure Draft proposals

The ED proposed that an investor or joint venturer would:

  1. measure the cost of the associate, on obtaining significant influence, at the fair value of the consideration transferred, including the fair value of any previously held interest in the associate; and
  2. recognise contingent consideration, on obtaining significant influence, as part of the consideration transferred and measure it at fair value. Thereafter:
    1. not to remeasure contingent consideration classified as an equity instrument; and
    2. to measure other contingent consideration at fair value at each reporting date and recognise changes in fair value in profit or loss.
  3. apply the requirement in (b) when purchasing an additional ownership interest in an associate or joint venture.
UKEB Comment Letter

The UKEB supported the ED proposal.

IASB tentative decisions

In considering the feedback, the IASB decided to proceed with its proposal.

In addition to the ED proposals, the IASB also tentatively decided to define contingent consideration based on the definition set out in IFRS 3 Business Combinations.

UKEB Secretariat preliminary view

The IASB's tentative decisions are consistent with the ED proposals. The UKEB final comment letter supported the ED proposals.

2) Purchases of an additional ownership interest

Current requirements

No current requirements in IAS 28.

Exposure Draft proposals

The ED proposed that an investor that purchases an additional ownership interest while retaining significant influence would:

  1. measure the cost of the additional ownership interest at the fair value of the consideration transferred;
  2. recognise contingent consideration as part of the consideration transferred and measure it at fair value;
  3. include in the carrying amount of the investment:
    1. the additional share of the associate's or joint venture's identifiable assets and liabilities at fair value at the date of purchase;
    2. the deferred tax effects related to the fair value of the additional share of the associate's identifiable assets and liabilities;
  4. account for any difference between the fair value of the consideration transferred and the fair value of the additional share of the associate's or joint venture's identifiable assets and liabilities as either goodwill (included in the carrying amount of the investment), or a gain from a bargain purchase in profit or loss; and
  5. not immediately recognise unrecognised losses on its previously held investment.
UKEB Comment Letter

The UKEB supported the ED proposal.

IASB tentative decisions

In considering the feedback, the IASB decided to proceed with its proposals.

In addition, the IASB decided to explore providing investors or joint venturers with a relief from measuring the additional share of the associate's or joint venture's identifiable assets and liabilities at fair value.

The IASB also tentatively decided to extend the measurement period described in paragraph 45 of IFRS 3 to when an investor obtains significant influence or joint control over an associate or joint venture or purchases an additional ownership interest in an associate or joint venture.

UKEB Secretariat preliminary view

The IASB's tentative decisions are consistent with the ED proposals. The UKEB final comment letter supported the ED proposals.

3) Disposal of a portion of an investment in an associate

Current requirements

No current requirements in IAS 2812.

Exposure Draft proposals

The ED proposed requiring an investor that disposes of a portion of its interest in an associate and retains significant influence would:

  1. measure the disposed portion of the investment as a percentage of the carrying amount of the investment; and
  2. recognise the difference between the consideration received and the disposed portion as a gain or loss in profit or loss13.
UKEB Comment Letter

The UKEB supported the IASB proposed amendment.

IASB tentative decisions

In considering the feedback on the ED proposal, the IASB decided to proceed with its proposals.

UKEB Secretariat preliminary view

The IASB's tentative decisions are consistent with the ED proposals. The UKEB final comment letter supported the ED proposals.

Appendix E: Disclosures about Uncertainties in the Financial Statements

| Project Stage | IASB General Update | Research / Pipeline | Discussion paper | Redeliberation | Exposure Draft | Redeliberation | Final Standard | Post Implementation Review | | Research / Influencing | Research / Influencing | Monitoring | Influencing | Monitoring | Endorsement | Influencing | | IASB Next Milestone: Decide Project Direction H2 2026 | UKEB project page www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/ | | | UKEB Project Initiation Plan (Published March 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/project-initiation-plan/ | | | UKEB Draft Comment Letter (Published May 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/draft-comment-letter/ | | | UKEB Final Comment Letter (Published July 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/final-comment-letter/ | | | UKEB Feedback Statement (Published July 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/feedback-statement/ | | | UKEB Due Process Compliance Statement (Published September 2024) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/due-process-compliance-statement/ | | | UKEB project page (Discussion Paper) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/discussion-paper/ | | | UKEB Final comment Letter on the Discussion Paper (Published January 2021) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/final-comment-letter-on-discussion-paper/ | | | UKEB Feedback Statement (Published March 2021) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/feedback-statement-march-2021/ | | | UKEB Report: Subsequent Measurement of Goodwill - A Hybrid Model (Published September 2022) www.ukeb.org.uk/projects/business-combinations-disclosures-goodwill-and-impairment/report-subsequent-measurement-of-goodwill-a-hybrid-model/ |

C1This paper provides the Board with an update on the International Accounting Standards Board (IASB)'s redeliberation, at the 10 December 2025 IASB meeting, of the proposals in the Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment (the ED).

Background

C2The IASB's objective for this project is to explore whether entities can, at a reasonable cost:

  1. provide users with more useful information about business combinations (by amending the requirements in IFRS 3 Business Combinations); and
  2. improve the effectiveness, and reduce cost and complexity, of the impairment test in IAS 36 Impairment of Assets.

C3The proposed information should assist users to make better decisions, by helping them to 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.

C4A summary of the ED proposals, the IASB's redeliberations and tentative decisions to date can be found in Appendix A of the IASB Staff Agenda paper 18 for the December 2025 meeting.

IASB meeting 10 December 2025

C5At the IASB meeting on 10 December 2025, the IASB members discussed:

  1. The ED proposal to make targeted changes to IAS 36 to improve how entities allocate goodwill to cash-generating units (CGUs) for impairment-testing purposes8. The IASB members tentatively decided to retain the proposed amendments in the ED to IAS 36 paragraphs 80, 80A, 80B and 81, subject to agreed wording changes (see Annex 1 of this paper).
  2. The items of information to which the proposed exemption from some proposed disclosure requirements in IFRS 3 should apply, and related clarification requests9. The IASB members were not asked to make any decisions on this topic.

Proposed Exemption from some proposed disclosure requirements

C6The ED included a proposed exemption from disclosing some of the information, if disclosure of that information could be expected to prejudice seriously the achievement of any of the entity's acquisition-date key objectives for a business combination. The proposed exemption related to the disclosure of:

  1. the acquisition-date key objectives and the related targets for a business combination (KOTs);
  2. the qualitative statement of whether actual performance is meeting, or has met, the KOTs; and
  3. quantitative information about expected synergies.

C7IASB members raised concerns about:

  1. How actual performance disclosures interact with exempted KOTs i.e. the risk of revealing sensitive information about acquisition-date KOTs indirectly through disclosing actual performance.
  2. Auditability challenges and practical implications for preparers.
  3. Non-financial objectives (e.g. Greenhouse Gas emission targets) and their treatment under the exemption.

C8The IASB staff will further analyse and consult on these matters.

C9The IASB did not make any decisions on this topic.

Next steps

C10In line with the redeliberation plan outlined in Agenda Paper 18G for the IASB’s January 2025 meeting, once the IASB completes all discussions, it will then consider the package of amendments overall, for example, the overall cost-benefit trade-off.

C11The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will provide the Board with updates accordingly.

Annex 1: IASB's tentative decisions – December 2025

Allocating goodwill to CGUs

Current requirements

Recognising and measuring impairment losses for CGUs and goodwill are dealt with in paragraphs 65-108 of IAS 36 Impairment of Assets. Paragraphs 80-87 of IAS 36 specifically set out the requirements for “Allocating goodwill to cash-generating units" for the purpose of impairment testing.

ED proposals

The ED proposed changes to the impairment test to reduce shielding by clarifying how to allocate goodwill to CGUs. This included clarifying that the operating segment level is a ceiling for goodwill allocation, not a default. The ED also proposed to refine the language around “business associated with the goodwill is monitored” to better reflect internal management practices.

UKEB Comment Letter

The UKEB supported the IASB's proposed amendments to IAS 36.

IASB tentative decisions

At the IASB's December 2025 meeting, the IASB members tentatively decided to:

  1. retain the proposal to improve how entities allocate goodwill to CGUs, in particular:
    1. retain the proposal to replace the phrase 'goodwill is monitored' in paragraph 80(a) of IAS 36 with 'business associated with the goodwill is monitored';
    2. retain the proposal to clarify that existing paragraph 80(b) of IAS 36 acts as a ceiling to the level that the entity determines applying paragraph 80(a) of IAS 36; and
    3. retain the proposal in proposed paragraph 80A(b) of IAS 36, subject to some wording changes regarding how financial information about synergies is considered when determining the level at which to allocate goodwill for impairment testing.
  2. make no changes to the proposal in respect of other feedback on allocating goodwill.
UKEB Secretariat preliminary view

The UKEB Secretariat considers that the IASB's tentative decision to retain the proposals in the ED in relation to allocating goodwill to CGU's, subject to the proposed wording changes, is consistent with the UKEB comment letter.

Appendix D: Equity Method

| Project Stage | IASB Research / Workplan | Discussion paper | Redeliberation | Exposure Draft | Redeliberation | Final standard | Post Implementation Review | | UKEB Research / Influencing | Research / Influencing | Monitoring | Influencing | Monitoring | Endorsement | Influencing | | IASB Next Milestone: Decide Project Direction (expected March 2026) | UKEB project page www.ukeb.org.uk/projects/equity-method/ | | | UKEB Final Comment Letter (published 16 December 2024) www.ukeb.org.uk/projects/equity-method/final-comment-letter/ |

Purpose of this paper

D1The paper provides an update on the IASB's redeliberation, at its November 2025 meeting, of the proposals in the Exposure Draft (ED) Equity Method of Accounting IAS 28 Investments in Associates and Joint Ventures (revised 202x) on:

  1. measurement of the cost of an associate;
  2. purchases of an additional ownership interest; and
  3. disposal of a portion of an investment in an associate.

Background

D2The IASB's objective is to reduce diversity in practice, by answering application questions on the equity method of accounting, and to improve the understandability of IAS 28 Investments in Associates and Joint Ventures. The ED published by the IASB, in September 2024, aimed to:

  1. clarify and add to the requirements in IAS 28 to answer application questions about how to apply the equity method of accounting;
  2. reorder the requirements in a more logical and consistent way to help companies with the application of the Standard i.e. improve the understandability; and
  3. improve the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements to complement the proposed amendments to IAS 28.

D3The UKEB undertook a ‘light touch' approach in responding to the ED and is not aware of pervasive or material concerns for the UK arising from the proposals. Therefore, the UKEB supports the proposals in the ED.

D4In May 2025, the IASB discussed feedback to the ED. The Board received an update at its September 2025 meeting10.

D5In September 2025, the IASB commenced redeliberation of the ED proposals. The Board received updates, on tentative decisions made at the IASB meetings in September and October 2025, at its November 2025 meeting11.

IASB November 2025 meeting

D6At its November 2025 meeting, the IASB continued its redeliberation of the proposals in the ED.

D7A summary of background information and tentative decisions on the topics discussed at the meeting is presented in Annex 1 of this paper.

Next steps

D8The IASB will continue redeliberating the proposals over the next few months, in line with the redeliberation plan outlined in paragraph 27 of Agenda Paper 13 for the IASB's June 2025 meeting.

D9The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will continue to provide the Board with updates.

Annex 1: IASB's tentative decisions – November 2025

1) Measurement of the cost of an associate

Current requirements

Paragraph 10 of IAS 28 states that, on initial recognition, the investment in an associate is recognised at 'cost'. However, IAS 28 does not include requirements for how an investor measures the cost of the investment on obtaining significant influence.

Exposure Draft proposals

The ED proposed that an investor or joint venturer would:

  1. measure the cost of the associate, on obtaining significant influence, at the fair value of the consideration transferred, including the fair value of any previously held interest in the associate; and
  2. recognise contingent consideration, on obtaining significant influence, as part of the consideration transferred and measure it at fair value. Thereafter:
    1. not to remeasure contingent consideration classified as an equity instrument; and
    2. to measure other contingent consideration at fair value at each reporting date and recognise changes in fair value in profit or loss.
  3. apply the requirement in (b) when purchasing an additional ownership interest in an associate or joint venture.
UKEB Comment Letter

The UKEB supported the ED proposal.

IASB tentative decisions

In considering the feedback, the IASB decided to proceed with its proposal.

In addition to the ED proposals, the IASB also tentatively decided to define contingent consideration based on the definition set out in IFRS 3 Business Combinations.

UKEB Secretariat preliminary view

The IASB's tentative decisions are consistent with the ED proposals. The UKEB final comment letter supported the ED proposals.

2) Purchases of an additional ownership interest

Current requirements

No current requirements in IAS 28.

Exposure Draft proposals

The ED proposed that an investor that purchases an additional ownership interest while retaining significant influence would:

  1. measure the cost of the additional ownership interest at the fair value of the consideration transferred;
  2. recognise contingent consideration as part of the consideration transferred and measure it at fair value;
  3. include in the carrying amount of the investment:
    1. the additional share of the associate's or joint venture's identifiable assets and liabilities at fair value at the date of purchase;
    2. the deferred tax effects related to the fair value of the additional share of the associate's identifiable assets and liabilities;
  4. account for any difference between the fair value of the consideration transferred and the fair value of the additional share of the associate's or joint venture's identifiable assets and liabilities as either goodwill (included in the carrying amount of the investment), or a gain from a bargain purchase in profit or loss; and
  5. not immediately recognise unrecognised losses on its previously held investment.
UKEB Comment Letter

The UKEB supported the ED proposal.

IASB tentative decisions

In considering the feedback, the IASB decided to proceed with its proposals.

In addition, the IASB decided to explore providing investors or joint venturers with a relief from measuring the additional share of the associate's or joint venture's identifiable assets and liabilities at fair value.

The IASB also tentatively decided to extend the measurement period described in paragraph 45 of IFRS 3 to when an investor obtains significant influence or joint control over an associate or joint venture or purchases an additional ownership interest in an associate or joint venture.

UKEB Secretariat preliminary view

The IASB's tentative decisions are consistent with the ED proposals. The UKEB final comment letter supported the ED proposals.

3) Disposal of a portion of an investment in an associate

Current requirements

No current requirements in IAS 2812.

Exposure Draft proposals

The ED proposed requiring an investor that disposes of a portion of its interest in an associate and retains significant influence would:

  1. measure the disposed portion of the investment as a percentage of the carrying amount of the investment; and
  2. recognise the difference between the consideration received and the disposed portion as a gain or loss in profit or loss13.
UKEB Comment Letter

The UKEB supported the IASB proposed amendment.

IASB tentative decisions

In considering the feedback on the ED proposal, the IASB decided to proceed with its proposals.

UKEB Secretariat preliminary view

The IASB's tentative decisions are consistent with the ED proposals. The UKEB final comment letter supported the ED proposals.

Appendix E: Disclosures about Uncertainties in the Financial Statements

| Project Stage | IASB Research / Pipeline | Discussion Paper | Redeliberation | Exposure Draft | Redeliberation | Final Examples | Post Implementation Review (n/a) | | UKEB Research / Influencing | Research / Influencing | Monitoring | Influencing | Monitoring | Endorsement | Influencing (n/a) | | UKEB project page www.ukeb.org.uk/projects/disclosures-about-uncertainties-in-financial-statements/ | | UKEB Final Comment Letter (published 3 December 2024) www.ukeb.org.uk/projects/disclosures-about-uncertainties-in-financial-statements/final-comment-letter/ |

Purpose of this paper

E1The purpose of this paper is to provide Board members with an overview of the final Illustrative Examples. These were published by the IASB in November 2025.

Background

E2The Climate-related and Other Uncertainties in the Financial Statements (CROUFS) Exposure Draft (ED)14 was published by the IASB in July 2024. The ED contained eight proposed Illustrative Examples, explaining how an entity could apply the requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements. The UKEB commented15 on the ED in the interest of ensuring high-quality financial reporting and connectivity with IFRS Sustainability Disclosure Standards.

E3As the Illustrative Examples do not form part of the mandatory sections of IFRS Accounting Standards, they are not to be endorsed in the UK. In addition, as they are a part of IFRS Accounting Standards non-mandatory guidance there is no effective date or any transition requirements. The IASB explains, in the Basis for Conclusions16 that it expects entities to be entitled to sufficient time to implement any changes to the information disclosed in their financial statements because of the Illustrative Examples. The IASB expects 'sufficient time' to be determined as a matter of judgement for each entity, but for entities to implement the examples on a timely basis.

Alignment with UKEB final comment letter

E4Annex A of this paper provides an overview of the final Illustrative Examples, the main changes from the ED and the Secretariat's view of the level of alignment with the UKEB Final Comment Letter.

Annex A: Overview of the Illustrative Examples

E5The table below provides an overview of the Illustrative Examples, and changes from the CROUFS ED versions. The IASB decided to withdraw the example regarding a deferred tax asset (CROUFS ED Example 5) in response to stakeholder feedback. The examples have been numbered in the table below for ease of reference, however the IASB chose not to number them in the final version.

| # | Example title IASB General Update | Research / Pipeline | Discussion Paper | Redeliberation | Exposure Draft | Redeliberation | Final Amendments H2 2026 | | UKEB Project Type: Monitoring | UKEB project page www.ukeb.org.uk/projects/financial-instruments-with-characteristics-of-equity/ | | IASB Next Milestone: Final Amendments H2 2026 | UKEB Project Initiation Plan (Published October 2023) www.ukeb.org.uk/projects/financial-instruments-with-characteristics-of-equity/project-initiation-plan/ | | | UKEB Draft Comment Letter (Published February 2024)) www.ukeb.org.uk/projects/financial-instruments-with-characteristics-of-equity/draft-comment-letter/ | | | UKEB Final Comment Letter (Published April 2024) www.ukeb.org.uk/projects/financial-instruments-with-characteristics-of-equity/final-comment-letter/ | | | UKEB Feedback Statement (Published April 2024) www.ukeb.org.uk/projects/financial-instruments-with-characteristics-of-equity/feedback-statement/ | | | UKEB Due Process Compliance Statement (Published April 2024) www.ukeb.org.uk/projects/financial-instruments-with-characteristics-of-equity/due-process-compliance-statement/ |

Intangible Assets

| UKEB Project Type: Monitoring | UKEB project page www.ukeb.org.uk/projects/intangible-assets/ | | IASB Next Milestone: Decide Project Direction H2 2026 | Accounting for Intangibles UK Stakeholders' Views' (Published March 2023) www.ukeb.org.uk/projects/intangible-assets/accounting-for-intangibles-uk-stakeholders-views/ | | | UKEB Project Initiation Plan Updated (Published June 2023) www.ukeb.org.uk/projects/intangible-assets/project-initiation-plan-updated/ | | | Accounting for Intangibles a Quantitative Analysis of UK Financial Reports (Published May 2024) www.ukeb.org.uk/projects/intangible-assets/accounting-for-intangibles-a-quantitative-analysis-of-uk-financial-reports/ | | | Accounting for Intangibles a Survey of Users' Views' (Published May 2024) www.ukeb.org.uk/projects/intangible-assets/accounting-for-intangibles-a-survey-of-users-views/ |

Post-implementation Review of IFRS 16–Leases

| UKEB Project Type: Monitoring | UKEB project page www.ukeb.org.uk/projects/post-implementation-review-of-ifrs-16-leases/ | | IASB Next Milestone: Request for Information Feedback January 2026 | UKEB Project Initiation Plan (Published June 2025) www.ukeb.org.uk/projects/post-implementation-review-of-ifrs-16-leases/project-initiation-plan/ | | | UKEB Draft Comment Letter (Published July 2025) www.ukeb.org.uk/projects/post-implementation-review-of-ifrs-16-leases/draft-comment-letter/ | | | UKEB Final Comment Letter (Published October 2025) www.ukeb.org.uk/projects/post-implementation-review-of-ifrs-16-leases/final-comment-letter/ |

Post-implementation Review of IFRS 9 – Hedge Accounting

| UKEB Project Type: Monitoring | | | IASB Next Milestone: Request for Information Feedback H2 2026 | UKEB project page www.ukeb.org.uk/projects/post-implementation-review-of-ifrs-9-hedge-accounting/ |

Provisions–Targeted Improvements

| UKEB Project Type: Monitoring | UKEB project page www.ukeb.org.uk/projects/provisions-targeted-improvements/ | | IASB Next Milestone: Decide Project Direction March 2026 | UKEB Project Initiation Plan (Published October 2024) www.ukeb.org.uk/projects/provisions-targeted-improvements/project-initiation-plan/ | | | UKEB Draft Comment Letter (Published December 2024) www.ukeb.org.uk/projects/provisions-targeted-improvements/draft-comment-letter/ | | | UKEB Final Comment Letter (Published March 2025) www.ukeb.org.uk/projects/provisions-targeted-improvements/final-comment-letter/ | | | UKEB Feedback Statement (Published March 2025) www.ukeb.org.uk/projects/provisions-targeted-improvements/feedback-statement/ | | | UKEB Due Process Compliance Statement (Published March 2025) www.ukeb.org.uk/projects/provisions-targeted-improvements/due-process-compliance-statement/ |

Rate-regulated Activities

| UKEB Project Type: Monitoring | UKEB project page (Pre-endorsement) www.ukeb.org.uk/projects/rate-regulated-activities/ | | IASB Next Milestone: IFRS Accounting Standard Q2 2026 | UKEB Preliminary Economic Assessment (Published April 2024) www.ukeb.org.uk/projects/rate-regulated-activities/preliminary-economic-assessment/ | | | UKEB letter to the IASB (Published July 2024) www.ukeb.org.uk/projects/rate-regulated-activities/letter-to-the-iasb/ | | | UKEB Secretariat's top-down approach (Published July 2024) www.ukeb.org.uk/projects/rate-regulated-activities/secretariats-top-down-approach/ | | | UKEB project page (Influencing) www.ukeb.org.uk/projects/rate-regulated-activities/influencing-project-page/ | | | UKEB Draft Comment Letter (Published July 2021) www.ukeb.org.uk/projects/rate-regulated-activities/draft-comment-letter-july-2021/ | | | UKEB Final Comment Letter (Published August 2021) www.ukeb.org.uk/projects/rate-regulated-activities/final-comment-letter-august-2021/ | | | UKEB Feedback Statement (Published April 2022) www.ukeb.org.uk/projects/rate-regulated-activities/feedback-statement-april-2022/ |

Risk Mitigation Accounting (formerly Dynamic Risk Management)

| UKEB Project Type: Influencing | UKEB project page www.ukeb.org.uk/projects/risk-mitigation-accounting/ | | IASB Next Milestone: Exposure Draft Feedback H2 2026 | | | IASB Next Milestone: Completed | | | IASB Next Milestone: Completed | |

| UKEB Project Type: UKEB Deferred Project | UKEB project page www.ukeb.org.uk/projects/translation-to-a-hyperinflationary-presentation-currency-ias-21/ | | IASB Next Milestone: Completed | UKEB Project Initiation Plan (Published December 2024) www.ukeb.org.uk/projects/translation-to-a-hyperinflationary-presentation-currency-ias-21/project-initiation-plan/ | | | UKEB updated Project Initiation Plan (Published June 2025) www.ukeb.org.uk/projects/translation-to-a-hyperinflationary-presentation-currency-ias-21/updated-project-initiation-plan/ | | | UKEB Research Paper 1 Statement of Cash Flows: Background and Key Issues (Published December 2024) www.ukeb.org.uk/projects/translation-to-a-hyperinflationary-presentation-currency-ias-21/research-paper-1-statement-of-cash-flows-background-and-key-issues/ | | | UKEB Research Paper 2 Statement of Cash Flows: Non-mandatory and Voluntary Cash Flow Disclosures Provided by UK Listed Companies (Published February 2025) www.ukeb.org.uk/projects/translation-to-a-hyperinflationary-presentation-currency-ias-21/research-paper-2-statement-of-cash-flows-non-mandatory-and-voluntary-cash-flow-disclosures-provided-by-uk-listed-companies/ | | | UKEB Research Paper 3 Statement of Cash Flows: UK User and Preparer Perspectives (Published March 2025) www.ukeb.org.uk/projects/translation-to-a-hyperinflationary-presentation-currency-ias-21/research-paper-3-statement-of-cash-flows-uk-user-and-preparer-perspectives/ | | | UKEB Research Paper 4 Statement of Cash Flows: UK Users' views on potential ways forward (Published July 2025) www.ukeb.org.uk/projects/translation-to-a-hyperinflationary-presentation-currency-ias-21/research-paper-4-statement-of-cash-flows-uk-users-views-on-potential-ways-forward/ |

  • UKEB meeting - 26 June 2025, Agenda Paper 9 IASB General Update (Appendix C);
  • UKEB meeting - 30 October 2025, Agenda Paper 8 IASB General Update (Appendix D); and
  • UKEB meeting - 20 November 2025, Agenda Paper 7 IASB General Update (Appendix C).

    • Footnotes

    1. Refer to:

         ↩

      1. IASB Dec 2025 staff paper AP22A: Recognition – Legal obligations. ↩

      2. IASB Dec 2025 staff paper AP22B: Recognition – Constructive obligations. ↩

      3. IASB Dec 2025 staff paper AP22C: Measurement – Costs to include. ↩

      4. As noted in paragraph 31 of IASB Dec 2025 staff paper AP22A: Recognition – Legal obligations. During the December 2025 meeting it was also agreed to use the term 'judicial body' instead of 'court' as originally proposed. ↩

      5. The Board was last provided an update on this research project in November 2025 – see UKEB meeting 20 November 2025 Agenda paper 7 Appendix E. ↩

      6. Agenda Paper 7: IASB General Update - Appendix B ↩

      7. See Staff Agenda Paper 18A for the 10 December 2025 IASB meeting, including Appendix A—Requests for clarifications, guidance or examples; and Appendix B includes excerpts of the proposed amendments in the ED to IAS 36 paragraphs 80, 80A, 80B and 81. ↩↩

      8. See Staff Agenda Paper 18B for the 10 December 2025 IASB meeting. ↩↩

      9. Refer to UKEB Public Board Meeting – 25 September 2025, Agenda Paper 7 IASB General Update (Appendix D). ↩↩

      10. Refer to UKEB Public Board Meeting – 20 November 2025, Agenda Paper 7 IASB General Update (Appendix J). ↩↩

      11. IAS 28 does not have requirements on how to measure the portion disposed when an investor disposes of a portion of an investment while it retains significant influence. Paragraph 25 of IAS 28 only requires the entity to reclassify to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to the reduction in ownership interest, if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities. ↩↩

      12. This requirement is carried forward from IAS 28. ↩↩

      13. Climate-related and Other Uncertainties in the Financial Statements: Proposed illustrative examples, July 2024 ↩

      14. UKEB CROUFS Final Comment Letter, December 2024 ↩

      15. Disclosure of Uncertainties in the Financial Statements Basis for Conclusions on IFRS 18, para 451 ↩

      16. The Final Illustrative Examples include another version of this example for entities preparing financial statements under IAS 1 Presentation of Financial Statements prior to the 1 January 2027 effective date of IFRS 18 and/or jurisdictional adoption of IFRS 18, where applicable. ↩

      17. IASB Work plan update—approach to adding new projects (November 2025) ↩

      18. ASAF 'IASB's Prioritisation Framework' (December 2025) ↩

      19. Appendix D: IASB's Project Prioritisation Framework (November 2025) ↩

      20. IASB Proposed IASB Prioritisation Framework (April 2024) ↩

      21. This list does not include projects related to the IFRS Interpretations Committee or IASB's project outside the UKEB's work remit (such as the Second Comprehensive Review of the IFRS for SMEs Accounting Standard and Management Commentary). ↩