The ASB is represented in the G4+1, a group of representatives of the national standard-setting bodies of Australia, Canada, New Zealand, the UK and the USA, and of IASC. The G4+1 met in Boston, Massachusetts, USA on 25-27 July. The main aspects of the meeting are set out below. The views noted are those of the representatives of the member standard-setting bodies and not necessarily of the bodies themselves.

New basis measurement

The Group continued its discussion of issues related to new basis measurement in the individual financial statements of members of a consolidated group. The Group considered alternative approaches to accounting for the assets and liabilities of entities under common control (for example, subsidiaries of the same parent company) when assets and liabilities of those controlled entities are combined or redistributed among them (reorganisation transactions). The Group agreed to explore further an approach under which the reorganisation transaction would require the carrying amounts of assets and liabilities of the controlled entities to be adjusted to reflect the controlling entity’s (parent’s) carrying amounts for those assets and liabilities. Use of the controlling entity’s basis would be limited to those circumstances in which the assets and liabilities of one controlled entity are acquired by, or combined with, another commonly controlled entity and would be applied to only those entities that were affected by the transaction. The Group agreed to explore that approach further at its next meeting.

Measurement alternatives for non-financial items

The Group continued its discussion of measurement alternatives for non-financial items, focusing on differences between net realisable value and replacement cost (the amount it would currently cost to replace an asset). The Group discussed cases in which an asset is highly specialised and replacement cost may be greater than net realisable value, generally owing to transaction costs. The Group agreed to continue its discussion of that topic at the next meeting, exploring the similarities and differences in current requirements in each Group member’s jurisdiction with regard to remeasuring assets pursuant to a revaluation or the recognition of an impairment loss.

Liability recognition

The Group continued its discussion of liability recognition, focusing on a number of cases in which an entity is required to transfer assets in a future exchange transaction in order to be released from an obligation. The Group agreed to explore the implications of alternative accounting methods for circumstances in which the settlement of an obligation would result in the maintenance or enhancement of the service potential of an existing asset. Those types of obligations might be recognised as liabilities or as adjustments to the value of the asset, depending on the circumstances. Further discussion of that topic was planned for the next meeting.

Financial instruments

The Chair of the Financial Instruments Joint Working Group (JWG) told the Group that the JWG would be meeting in late August with the intention of approving the text of the proposed comprehensive accounting standard on the recognition and measurement of financial instruments using fair value as the basis of measurement. The JWG expected to have a draft standard, application supplement, and basis for conclusions ready for the individual members of the JWG to publish on or about 31 October. Group members reconfirmed their intention to issue the JWG document for comment in each of their jurisdictions, together with accompanying material explaining the context of the document within their own standard-setting processes. G4+1 members also agreed to coordinate comment deadlines on the document (expected to be six months after publication) and to coordinate follow-up activities.

Revenue recognition issues

The Group discussed revenue recognition issues that arise in circumstances in which there is uncertainty about the timing of revenue recognition, such as multiple-element arrangements, bill and hold situations, and upfront fees associated with an ongoing service relationship between the customer and seller. The Group also discussed with the Chief Accountant of the SEC the status of the recently issued SEC Staff Accounting Bulletin No 101 ‘Revenue Recognition’. The Group agreed to discuss that topic further at the next meeting.

Prospects for convergence of accounting standards

The Group discussed prospects for convergence of individual Group members’ accounting standards in key areas. The Group agreed to develop a list of potential accounting topics that (1) would identify topics on which members of the Group could concentrate their domestic efforts to reduce differences between each others’ standards and (2) might provide useful input into the IASC process by identifying topics that IASC could consider as it made its initial agenda decisions. The Group also discussed progress on its project to compare the conceptual frameworks of the Group, including that of IASC. Group members reaffirmed their commitment to the convergence of national standards towards high quality international solutions and their support for the restructured IASC as the focal point for convergence efforts.

Project updates

The Group discussed comments received by the UK on the Discussion Paper developed by the G4+1 ‘Leases: Implementation of a New Approach’. Further updates on the status of the UK’s project on leasing were expected at future meetings.

The Group also discussed the status of the Financial Accounting Standards Board’s (FASB’s) project on accounting for liabilities and equity. A FASB Exposure Draft on that topic was expected to be issued in September.

The Group discussed responses to a New Zealand Exposure Draft based on the IASC standard, IAS 38 ‘Intangible Assets’. The Group agreed to continue discussion of methods of accounting for intangible assets at its next meeting.

Forthcoming publications

A paper developed by the Group on the equity method of accounting was expected to be published in each Group member’s jurisdiction in the near future.

Next meeting

The Group agreed to meet next in Sydney, Australia on 11-13 October. The following topics were due to be discussed:

• New basis measurement
• Convergence of accounting standards
• Liability recognition
• Measurement alternatives for non-financial items
• G4+1 conceptual framework comparison
• Intangible assets
• Revenue recognition issues
• Financial instruments—Joint Working Group
• Project updates on leases, business combinations, share-based payment, and the IAS 39 Implementation Guidance Committee efforts.