ASCG comments on ED/2019/3

The ASCG today sent it’s comment letter on the IASB draft ED/2019/3 Reference to the Conceptual Framework (Proposed amendments to IFRS 3) to the IASB.

In this letter, the ASCG supports the amendments proposed by the IASB:

• update IFRS 3 so it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
• add to IFRS 3 an exception to its recognition principle for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 if incurred separately;
• add to IFRS 3 an explicit statement that an acquirer should not recognise contingent assets acquired in a business combination.

The ASCG regards this pragmatic approach chosen by the IASB to be an appropriate temporary solution. In the longer term the ASCG considers it necessary to align the liability definition in IAS 37 (including IFRIC 21) with that in the 2018 Conceptual Framework. Hence, the ASCG welcomes that the IASB has taken a project on provisions to its work plan.