September 2026

Hey everyone,

Last month, I heard back from many of you that you prefer to receive Reporting Period in the morning, so you can enjoy your favourite newsletter before all the work emails start flooding in 😉 So, I’ve set the delivery time to the morning hours, and if you’ve not received this edition in the morning, let me know and we’ll fix it.

Okay, back to IFRS updates from September.

Technical Publications

FRC’s corporate reporting review

The UK FRC published its annual review of corporate reporting. I read this publication carefully each year because FRC staff always highlight interesting practical issues in their annual summaries. True, it’s focused on the UK, but it includes lots of practical recommendations for IFRS reporting too. Interestingly, impairment of assets lost its (infamous) no. 1 spot as the financial reporting area where the FRC raises the most issues with companies. What’s the top troublemaker now, you ask? Well, you have to find out for yourself 😉

Deep dives into IFRS 20

Most of you are fortunate enough not to care about IFRS 20 at all (anyone remember the title?), but for those less fortunate, EY and KPMG have published detailed analyses of the new standard.

IFRS Interpretations Committee meeting

After a recent surge in application questions relating to IFRS 18, the Committee members were able to enjoy crunching the intricacies of the older standards (including IAS 16!) at the September meeting. BTW, two of these questions were submitted by ESMA.

As always, these agenda decisions are ‘tentative’ and are open for comment until 30 November 2026.

Estimating residual values of PP&E

ESMA asked the Committee to clarify how an entity should reflect future developments when estimating the residual values of PP&E. ESMA’s question focuses on a car manufacturer-lessor that leases out cars under operating leases, but the discussion applies to all PP&E, whether leased out or not.

The essence of the question is whether the car manufacturer should reflect expected future developments, other than the expected age and condition of the asset at the end of its useful life, in its estimate of the residual value of leased cars. Such other developments could include future trends in supply and demand, including those resulting from future macroeconomic conditions.

Under View 1, the residual value should not reflect such other expected future developments because the definition of residual value in IAS 16.6 refers to the estimated amount that an entity would currently obtain from disposal of the asset, after adjusting for the age and condition expected at the end of its useful life. Under View 2, however, the residual value estimate should generally reflect all expected future developments.

The Committee’s opinion is that the right answer lies somewhere between the two views outlined by ESMA. The tentative agenda decision states that the residual value should reflect other expected future developments to the extent that they affect current prices. For example, expected future technological changes do affect the current prices that a potential buyer would be willing to pay at the reporting date. At the same time, the residual value shouldn’t reflect other expected future developments to the extent that they would affect the amount the entity will obtain for the asset only in the future. For example, projected inflation should be ignored.

Learn more:

Sale of FVOCI equity instruments when price differs from fair value

You’ll recall that IFRS 9 allows an entity to irrevocably designate investments in equity instruments as measured at FVOCI. A key implication of this designation is that changes in the fair value of these investments are never recycled to P&L, even on disposal.

Now, ESMA asked the Committee to clarify what happens when an entity sells that investment for a price other than fair value at the disposal date. For instance, the parties can set the sale price with reference to the average quoted price from the last, say, 3 months. Another example is a difference resulting from premiums or discounts to the quoted price reflecting the size of the equity holding being sold. In these scenarios, does the difference between the sale price and fair value go to, and stay forever in, OCI, similarly to all the other fair value movements? Or should it be recognised as a gain or loss on disposal (i.e., derecognition) in P&L?

The Committee considered the matter too niche to develop a deeper technical analysis. Still, outreach to standard setters and accounting firms carried out by the IFRS staff indicated that the practice is to recognise the gain on disposal of FVOCI instruments in OCI.

Learn more:

Identifying assets generating independent returns

The Committee members obviously couldn’t forget about IFRS 18 completely. They discussed and clarified that an asset can generate a return ‘individually and largely independently’ of an entity’s other resources even when there is some interaction between the asset and the entity’s other resources. For example, an investment property will still be such an asset under IFRS 18.53(c) even if the entity uses some of its other assets to maintain that property.

Learn more:

Work in Progress at the IASB

MPMs with hypothetical income and expenses

You’ll recall from the June edition that the Interpretations Committee tentatively determined that performance measures that include “hypothetical” income or expenses meet the part of the MPM definition that says MPMs are subtotals of income and expenses. As part of the due process, that agenda decision will now be reviewed by the IASB.

John Hughes looked at the comment letters, and one common objection is that this agenda decision, if finalised, could encourage companies to devise “counterfactual” MPMs that exclude the effects of events that did, in fact, occur. The comment letter period closed in early September, so I’m guessing the IASB will look at this issue at the October meeting, and I’m hoping for an interesting debate.

Miscellany

Australia to consolidate its auditing and financial reporting regulatory bodies

If you’re tired of all these acronyms for different regulatory bodies, you’re not alone! Australia announced that it plans to establish External Reporting Australia, which will combine the functions and powers of the Australian Accounting Standards Board, the Auditing and Assurance Standards Board and the Financial Reporting Council. Bold move!

That’s all for this edition of Reporting Period. Thanks for reading, and see you in the next issue!

PS. Did I mention I love getting replies from you? Even a thumbs up, if your email client allows it? Well, I do, so hit that reply button and say hello! 🙂

Best regards,
Marek