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IAS 16 Amendments - Proceeds before Intended Use


​On 20 June 2017, the IASB issued the Exposure Draft ED/2017/4 Property, Plant and Equipment - Proceeds before Intended Use (Proposed amendments to IAS 16) ('the ED') with a comment period ending on 19 October 2017.

The ED proposes a narrow-scope amendment to IAS 16 that would prohibit deducting from the cost of an item of property, plant and equipment (PPE) the proceeds from selling items produced while making that item of PPE available for use. Consequently, an entity should recognise the proceeds from selling any such items, and the cost of producing those items, in profit or loss in accordance with applicable Standards (generally IFRS 15 Revenue from Contracts with Customers and IAS 2 Inventories).

EFRAG published a draft comment letter on 05 July 2017, with comments due by 13 October 2017.

On 10 November 2017 EFRAG published its comment letter in response to the IASB's ED.

In its comment letter, EFRAG considered that the proposed amendments raise a number of substantive questions and was not convinced that these matters have been sufficiently explored in developing the ED. EFRAG also noted that the proposed amendments affect a wider range of transactions and circumstances than the issue submitted to the IFRS Interpretations Committee. EFRAG therefore suggested that the IASB should consider taking on a broader project that would address the underlying principles and issues, and assess the effects on current practices, more comprehensively. The IASB could also consider addressing the narrower issue submitted the IFRS Interpretations Committee in the shorter term.

On 14 May 2020 the IASB issued Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16.

On 25 June 2020 EFRAG published its Draft Endorsement Advice with a comment period until 7 September 2020.

On 20 October 2020 EFRAG has submitted its Endorsement Advice letter relating to the Amendments for use in the European Union and European Economic Area. EFRAG assesses that the Amendments meets the technical endorsement criteria of the IAS Regulation and is conducive to the European public good. EFRAG therefore recommends​ their endorsement. EFRAG's recommendation can be found in the letters to the European Commission and the accompanying appendices.

The Endorsement Advice letters to the European Commission can be found ​​here.

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