This comment letter, which reflects the views of the international BDO network of independent member firms, was sent by BDO IFR Advisory Limited to the IFRS Interpretations Committee on 14 October 2011.
A copy of the IFRIC Update - September 2011 is attached at the foot of this page.
Mr Wayne Upton
Chairman
IFRS Interpretations Committee
30 Cannon Street
London
EC4M 6XH
|
14 October 2011
Dear Mr Upton
Tentative agenda decision: IAS 12 Income Taxes – rebuttable presumption to determine the manner of recovery
We are pleased to respond to the IFRS Interpretations Committee’s (the Committee) publication of the above tentative agenda decision.
While the circumstances described in IAS 12.51C may cover substantially all of the cases in which the presumption that the carrying amount of an investment property will be recovered through sale, we agree with the Committee’s tentative decision that IAS 12.51C does not provide an exhaustive list of cases.
However, we do not agree with the tentative decision that:
‘...the scope of the rebuttable presumption is that there is no possibility of bifurcating asset recovery between recovery through use and recovery through sale.’
While we note from the reference in the IFRIC Update that this may have been the intention of the IASB, this does not reflect the wording of the actual amendment made to IAS 12 which does not prohibit bifurcation. Consequently, we consider that it would be inappropriate for the Committee to issue an agenda decision which suggested a more restrictive approach; instead, it should simply refer to application of the requirements of IAS 12.
While circumstances in which bifurcation of asset recovery may not arise frequently, if an entity had a clear expectation of disposing of an investment property within a specified window of time in the future it would seem appropriate for this approach to be followed.
We hope that you will find our comments and observations helpful. If you would like to discuss any of them, please contact Andrew Buchanan at +44 (0)20 7893 3300.
Yours sincerely
BDO IFR Advisory Limited