IASB April 2008

The Board discussed one issue that had been referred to it by the IFRIC for inclusion in the 2008 annual improvements.

Paragraph 2(g) of IAS 39 Financial Instruments: Recognition and Measurement excludes from its scope ‘contracts between an acquirer and a vendor in a business combination to buy or sell an acquiree at a future date.’ The IFRIC asked the Board to clarify the wording of this paragraph because of uncertainty as to how to apply it, and to eliminate diversity in practice.

The Board tentatively decided to amend paragraph 2(g) to clarify that the scope exception applies only to forward contracts entered into before the acquisition date (i.e. before the date the acquirer obtains control of the acquiree) by an acquirer and a vendor in a business combination, to buy or sell an acquiree at a future date. The Board also tentatively decided that the exception in paragraph 2(g) should not be applied by analogy to investments in associates and other similar transactions.