10 IASB General Update

Project Type: Various Project Scope: Various

Executive Summary

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 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), of which the UKEB is a member.

Summary of the Issue

Topics addressed in this paper include topics discussed by the IASB at its June 2026 meeting. All topics included in this update are for noting.

Topics for noting

• Amortised Cost Measurement
• Equity Method
• List of IASB projects

Decisions for the Board

Topics for discussion

N/A

Topics for noting

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

Recommendation

N/A

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Appendices

• Appendix A: Amortised Cost Measurement
• Appendix B: Equity Method
• Appendix C: List of IASB projects

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Appendix A: Amortised Cost Measurement

IASB Next Milestone: Exposure Draft 2027

Purpose

A1The purpose of this paper is to provide the Board with an update on the IASB’s tentative decisions relating to determining whether a modification of a financial asset or financial liability is substantial, and therefore results in derecognition.

Background

A2The IASB commenced its Amortised Cost Measurement project in response to stakeholder feedback. The IASB aims to make targeted improvements to the amortised cost measurement requirements in IFRS 9, addressing application issues that are widespread and have a material effect on entities’ financial statements.

A3Information about the project was previously presented to the Board, including:

1. Project objectives, approach, criteria and scope. Refer to the UKEB March 2025 Agenda Paper 10 IASB General Update (Appendix B).
2. An indicative project timeline. Refer to the UKEB July 2025 Agenda Paper 9 IASB General Update (Appendix A).
3. A project update, and request for Board views ahead of the Accounting Standards Advisory Forum (ASAF) meeting in December 2025. Refer to the UKEB November 2025 Agenda Paper 7 IASB General Update (Appendix B).
4. A project update on tentative decisions taken by the IASB relating to changes in the effective interest rate and modifications of financial instruments. Refer to the UKEB May 2026 Agenda Paper 8 IASB General Update (Appendix F).

A4The IASB received feedback on modifications of financial instruments at the IASB Financial Instruments Consultative Group in May 2026.

Recent IASB discussions

A5At its June 2026 meeting, the IASB discussed possible standard-setting in relation to determining whether the modification of financial instruments is substantial. Substantial modifications result in derecognition of the original financial instrument, and recognition of a new financial instrument at fair value.

Modification of financial instruments

Current requirements

For financial liabilities, paragraph B3.3.6 of IFRS 9 sets out application guidance for the quantitative assessment to determine whether a modification is substantial. It does not include application guidance relating to the assessment of qualitative factors.

IFRS 9 does not include guidance relating to assessing whether a modification of a financial asset is substantial.

Tentative decisions

At the June 2026 IASB meeting, the IASB considered a staff paper¹ and tentatively decided that:

1. An entity would determine whether a modification of a financial instrument is substantial based on a holistic analysis of the changes in the contractual cash flows. The entity would consider qualitative and quantitative factors as part of this analysis. The ‘10 per cent test’ as described in paragraph B3.3.6 of IFRS 9 could supplement the analysis but would not be the decisive factor in isolation.
2. The factors an entity would consider in determining whether a modification is substantial include, but are not limited to:
   1. A change in the currency in which principal or interest is denominated, which would suggest the modification is substantial.
   2. A change in cash flow characteristics that alters the assessment of whether the cash flows are solely payments of principal and interest for a financial asset; or whether an embedded derivative is separated from the host contract for a financial liability. Such a change would suggest the modification is substantial.
   3. A change in borrower counterparty, which would suggest the modification is substantial, unless the change is between entities under common control.
   4. The reason for the modification. A commercial renegotiation to reset the financial instrument to current market terms would suggest the modification is substantial. Conversely, a modification attributable to the borrower’s financial difficulty would suggest the modification is not substantial.
3. The relevance of a specific factor, and its weight compared to other factors, would depend on the type of financial instrument, the characteristics of the financial instrument and general economic conditions. An entity would be required to consider reasonable and supportable information that is available without undue cost or effort and that is relevant for the particular financial instrument being assessed.

UKEB Secretariat preliminary view

Feedback from the UKEB Financial Instruments Working Group (FIWG) has previously welcomed the IASB’s intention to provide clarification in this area. The UKEB Secretariat’s initial assessment is that these proposals should provide greater clarity, and strike a sensible balance between the relative assessment of qualitative and quantitative factors in assessing whether modifications to financial instruments are substantial, and thus lead to derecognition.

The Secretariat intends to seek feedback from the FIWG on these tentative decisions later in 2026.

Next steps

A6The IASB will continue to deliberate issues within the scope of the project. The project scope has been widened to include certain aspects of the Financial Instruments with Characteristics of Equity project related to the initial and subsequent measurement of contingent settlement provisions.

A7The IASB workplan has now been updated to reflect an Exposure Draft in 2027.

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Appendix B: Equity Method

UKEB project page
UKEB Final Comment Letter (published 16 December 2024)
IASB Next Milestone: Final Amendments (expected H1 2027)

Purpose

B1The purpose of this paper is to provide an update on the IASB’s deliberation at its June 2026 meeting, on the proposals in the Exposure Draft (ED) ‘Equity Method of Accounting IAS 28 Investments in Associates and Joint Ventures (revised 202x)’ relating to:

1. applying the equity method in an entity’s separate financial statements;
2. the proposed amendments to the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities; and
3. the proposed amendments to the disclosure requirements in IFRS 19 Subsidiaries without Public Accountability Disclosures.

Background

B2In September 2024, the IASB published its ED, which aimed to:

1. clarify and add to the requirements in IAS 28 Investments in Associates and Joint Ventures, to answer application questions about the equity method of accounting;
2. reorder the requirements in a more logical and consistent way to help companies apply 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.

B3The 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 supported the proposals in the ED, but did not comment on each specific proposal.

Status of IASB redeliberation

B4In May 2025, the IASB discussed feedback on the ED.

B5In September 2025, the IASB commenced its redeliberation of the ED proposals. The Board has received regular updates on IASB’s decisions/tentative decisions².

B6The IASB is expected to issue a revised Standard in H1 2027³.

IASB June 2026 meeting

B7At its June 2026 meeting, the IASB continued its redeliberation of the ED proposals and made tentative decisions on:

1. applying the equity method in an entity’s separate financial statements;
2. the proposed amendments to the disclosure requirements in IFRS 12; and
3. the proposed amendments to the disclosure requirements in IFRS 19.

Applying the equity method in an entity’s separate financial statements4

Current requirements

IAS 27 Separate Financial Statements permits an entity to choose whether to apply the equity method to its investments in subsidiaries, associates or joint ventures when presenting its separate financial statements.

Exposure Draft proposals

The ED proposed:

1. Requiring a parent to apply the proposals when using the equity method to account for its investments in subsidiaries in its separate financial statements. This would require a parent to recognise gains or losses from transactions with its subsidiaries in full, creating a new difference between the parent’s separate financial statements and the consolidated financial statements, where unrealised gains or losses are eliminated.
2. A parent that obtains control of an associate and continues to account for the investment (now in a subsidiary) using the equity method in its separate financial statements is not required to remeasure its previously held interest⁵.
3. A parent that loses control of a subsidiary, while retaining significant influence or joint control, and continues applying the equity method to the retained interest is not required to remeasure the retained interest⁶.

UKEB Comment Letter

The UKEB Final Comment Letter generally supported the ED proposals but did not comment on each specific proposal.

IASB tentative decisions

At its June 2026 meeting, in considering the feedback on the ED, the IASB tentatively decided to:

1. modify the ED proposal in (a) above to permit an entity to choose either full or restricted recognition of gains or losses on all transactions with associates, joint ventures or subsidiaries accounted for using the equity method in the separate financial statements (except for gains or losses on transfer of businesses, which would be recognised in full).
2. withdraw the ED proposals in (b) and (c) above⁷.

The IASB also decided not to add to the scope of the project application questions on measurement of cost, step acquisition and loss of control of an investment in a subsidiary accounted for at cost in separate financial statements.

UKEB Secretariat preliminary view

The IASB’s tentative decision to modify the ED proposal in (a) is consistent with the IASB’s tentative decision reached in May 2026 to introduce an accounting policy choice that permits an investor to choose either full or restricted recognition of gains or losses on all transactions with associates.

The proposed amendments to the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities8

The proposed amendments to the disclosure requirements in IFRS 12

Current requirements

IFRS 12 requires disclosures about equity-accounted investments including summarised information about assets, liabilities, and results.

IAS 24 Related Party Disclosures requires disclosure of information about an entity’s transactions with its associates and joint ventures.

Exposure Draft proposals

The proposed disclosure requirements in the ED aim to complement the proposed amendments to IAS 28. The ED proposed requirements for an entity to disclose:

1. gains or losses from changes in ownership interest;
2. information about contingent consideration arrangements; and
3. a reconciliation between the opening and closing carrying amount of its investments.

The ED also proposed to introduce a disclosure objective to disclose information that would enable users of financial statements to understand changes in the carrying amount of investment in associates.

UKEB Comment Letter

The UKEB Final Comment Letter generally supported the ED proposals but did not comment on each specific proposal.

IASB decisions

The IASB tentatively decided to confirm its proposals in the ED.

The IASB tentatively decided that, if an investor applies the relief from measuring at fair value the additional share of the associate’s or joint venturer’s identifiable assets and liabilities, when purchasing an additional ownership interest and retaining significant influence, the investor discloses the use of that relief⁹.

UKEB Secretariat preliminary view

The IASB’s tentative decisions are broadly consistent with the ED proposals.

The proposed amendments to the disclosure requirements in IFRS 19 Subsidiaries without Public Accountability Disclosures

The proposed amendments to the disclosure requirements in IFRS 12

Current requirements

There is no current requirement in IFRS 19 that requires an eligible subsidiary to disclose information about contingent consideration arrangements.

Exposure Draft proposals

The ED proposed amendments to IFRS 19 to require an eligible subsidiary:

1. to disclose information about contingent consideration arrangements; and
2. to disclose gains or losses resulting from ‘downstream’ transactions with its associates or joint ventures.

The IASB is also proposing an amendment to IFRS 19 to require a subsidiary that chooses to apply the equity method to account for its investments in subsidiaries in separate financial statements to disclose gains or losses resulting from ‘downstream’ transactions with those subsidiaries.

UKEB Comment Letter

The UKEB Final Comment Letter generally supported the ED proposals but did not comment on each specific proposal.

IASB decisions:

The IASB tentatively decided:

1. to confirm its proposal in the ED to amend IFRS 19 to require an eligible subsidiary to disclose information about contingent consideration arrangements; and
2. not to require an eligible subsidiary to disclose a reconciliation between the opening and closing carrying amount of its associates.

UKEB Secretariat preliminary view

The IASB’s tentative decisions are broadly consistent with the ED proposals.

Next steps

B8The IASB will continue redeliberating the remaining ED proposals.

B9The UKEB Secretariat will continue to monitor the IASB’s redeliberation and tentative decisions and update the Board.

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Appendix C: List of IASB projects

This Appendix provides a list of all active IASB projects¹⁰, including links to the IASB project page and where relevant, to the UKEB project page and any UKEB projects or comment letters. Items highlighted in grey are changed from the last report.

Amendments to the Fair Value Option (IAS 28)

Amortised Cost Measurement

Business Combinations—Disclosures, Goodwill and Impairment

Equity Method

Financial Instruments with Characteristics of Equity

Intangible Assets

Post-implementation Review of IFRS 16 Leases

Post-implementation Review of IFRS 9—Hedge Accounting

Presentation of Taxes or Other Charges that Are Not Tax Expense or Tax Income Applying IAS 12 Income Taxes (IFRS 18)

Provisions—Targeted Improvements

Risk Mitigation Accounting (formerly Dynamic Risk Management)

Statement of Cash Flows and Related Matters

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