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IFRS proposes guidance on levies and put options

The IFRS Interpretations Committee has proposed guidance on the accounting for levies charged by public authorities on entities that operate in a specific market.

The committee has also proposed guidance on the accounting for a put option written by a parent entity on the shares of its subsidiary held by a non-controlling-interest shareholder.

In the first proposal, DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market, the committee said it considered how an entity would account for the payment of levies, other than income taxes, in its financial statements and when the liability to pay a levy should be recognised.

The proposal states that an obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation.

In the second proposal, DI/2012/2 Put Options Written on Non-controlling Interests, the committee considered how to measure the financial liability created when a parent entity is obliged to purchase the shares of its subsidiary for cash or for another financial asset and the parent must recognise a financial liability in its consolidated financial statements for the present value of the option exercise price.

The proposed guidance also specifies that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.

Deadline for comments on the levies and put option proposals is 5 September and 1 October, respectively.


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