UITF Draft Abstract 'Hedges of a Net Investment in a Foreign Operation'

The comment period for Information Sheet 84, which set out a draft UITF Abstract 'Hedges of a Net Investment in a Foreign Operation', that is based on draft Interpretation D22 issued by the IFRIC ended, on 9 November 2007. The draft Abstract provides a consensus on what constitutes a hedged risk when hedging the exposure from a net investment in a foreign operation and the location of the hedging instrument within the group. The Information Sheet can be accessed at: http://www.frc.org.uk/asb/uitf/pub1409.html. The IFRIC commenced redeliberation of D22 at its meeting in January 2008.

IFRIC Draft Interpretations IFRIC D21 Real Estate Sales

D21 aims to standardise accounting practice among real estate developers for sales of units, such as apartments or houses, 'off plan', ie before construction is complete. The UITF responded to the draft Interpretation in October 2007 a copy of its response can be downloaded from the ASB website.

In summary, while the UITF supports the consensus reached by the IFRIC for the sale of real estate it has two particular concerns. The first relates to the wider implication of the consensus for areas other than real estate sales. The second relates to how the draft Interpretation attempts to identify when a sales agreement meets the definition of a construction contract by setting requirements.

IFRIC D24 – Customer Contributions

This draft Interpretation addresses situations in which an entity receives either an item of property, plant or equipment or cash which must be used to supply services. It would require the entity receiving the contribution to determine whether it has received an asset. Where an asset is to be recognised then an obligation would also be recognised. The obligation would be reduced and revenue recognised as access to the supply of goods or services is provided.

IFRIC D23 – Distributions of Non-cash Assets to Owners

This draft Interpretation addresses unconditional non-reciprocal distributions of assets to shareholders. It proposes guidance on how an entity should measure the dividend payable and how the entity should account, on settlement, for the difference between the carrying amount of the assets and the carrying amount of the dividend payable.