IFRS® Standards

Clarification of Acceptable Methods of Depreciation and Amortization (Amend IAS 16 and IAS 38)

Summary

The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to amend IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets to ensure that preparers do not use revenue-based methods to calculate charges for the depreciation or amortization of items of property, plant and equipment or intangible assets.

Staff Contact(s)

Meeting & event summaries


News


May 15, 2014

News

Final Amendments – Clarification of Acceptable Methods of Depreciation and Amortisation

May 15, 2014. The IASB has issued narrow-scope amendments to IAS 16 Property Plant and Equipment and IAS 38 Intangible Assets to clarify that the use of a revenue-based depreciation and amortization method is not appropriate; however, that presumption is rebuttable for intangible assets. The amendments are effective for annual periods beginning on or after January 1, 2016.

March 22, 2013

News

AcSB Response – Clarification of Acceptable Methods of Depreciation and Amortisation (Proposed amendments to IAS 16 and IAS 38)

On March 22, 2013, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft issued in December 2012. The letter supports the proposed amendments and agrees that there is a limited circumstance in which the use of a revenue-based method that is based on units sold rather than total expected revenue may be appropriate. As well, guidance should not be provided in the Basis for Conclusions. The letter also expresses concern that a reason was not provided as to why an amendment regarding the relevance of information about technical or commercial obsolescence of the product or service output was added. In addition, it queries why this amendment is only applicable to the diminishing balance method. Read the AcSB letter posted by the IASB.

December 20, 2012

News

Exposure Draft – Clarification of Acceptable Methods of Depreciation and Amortization (Proposed amendments to IAS 16 and IAS 38)

December 20, 2012. The AcSB has issued an Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Canadian stakeholders are encouraged to submit their comments, on the form provided, by April 2, 2013.

December 6, 2012

News

December 6, 2012. The IASB has issued an Exposure Draft proposing amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets. Canadian stakeholders are encouraged to submit their comments to the IASB by April 2, 2013.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.