PracticeConsultingConcerns eased by ASB’s Urgent Issues Task Force

Concerns eased by ASB's Urgent Issues Task Force

Clarification has been issued by the Accounting Standards Board in an information sheet to clear up concerns over capital instruments and liabilities on price reductions.

The ASB’s Urgent Issues Task Force states in the sheet that incidental financing costs that do not themselves fall to be accounted for under FRS 4 ‘Capital Instruments’ are not incremental costs incurred directly in making an acquisition.

Therefore they should not be included as part of the cost of acquisition, but should be written off immediately.

In another clarification, the Task Force confirms no liability should be recognised for a price reduction required by a regulator in a subsequent accounting period, as stated in FRS 12 ‘Provisions, Contingent Liabilities and Contingent Assets’.

www.asb.org.uk

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