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IAS 37 and IAS 19 Amendments - Business Combinations Phase II


The amendments to IAS 37 would require entities to recognise in their financial statements obligations that satisfy the definition of a liability in the IASB's Framework, unless they cannot be measured reliably.

Uncertainty about the amount or timing of the economic benefits that will be required to settle a liability would be reflected in the measurement of that liability, instead of affecting whether it is recognised.

These proposed amendments to IAS 37 complement the Exposure Draft of Proposed Amendments to IFRS 3 Business Combinations (Phase 2), and would result in items previously described as 'contingent liabilities' being treated more consistently in and outside a business combination.

Specifically, the proposals would align the accounting in IASs 37 and 19 for costs typically associated with restructuring an entity with the requirements of FASB Standard SFAS 146 Accounting for Costs Associated with Exit or Disposal Activities. The proposals would require liabilities for costs associated with a restructuring - for example, termination benefits - to be recognised only when the IASB's Framework definition of a liability is met.

More generally, the amendments would align the recognition principles in IAS 37 with those in more recent FASB standards on liabilities.

The IASB decided in 2010 to suspend the project indefinitely. In 2013, the IASB added a project on provisions to its Reasarch programme.

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