Measurement of Liabilities in IAS 37
- Filippo Poli
In June 2005 the IASB published an Exposure Draft on Amendments to IAS 37 - Provisions, and IAS 19 - Employee Benefits. The project started following the decisions taken in IFRS 3 - Business Combinations about recognition of the contingencies of the acquiree. The 2005 ED substantially proposed to recognise all liabilities in scope of IAS 37 regardless of whether an outflow of resources woudl be more likely than not. In other words, the recognition of provisions would be aligned to the criteria to recognise liabilities in IFRS 3.
In January 2010 the IASB issued a limited re-exposure of proposed amendments to IAS 37. The ED is meant to clarify the measurement objective for liabilities in scope of IAS 37 and add detailed guidance on measurement. The IASB proposes that liabilities in scope of IAS 37 are measured at the amount that an entity would rationally pay at the end of the reporting period to be relived of the obligation.
EFRAG published its final comment letter in May 2010 and dissented on a number of the IASB proposals.
In November 2010 the IASB decided to postpone the completion of the project. In 2013, the IASB decided to add non-financial liabilities in scope of IAS 37 as a research project on their agenda.