The recording and PPT can be accessed here.

EFRAG and the European Accounting Association (EAA) will hold a virtual research workshop on 5 May 2023 at 12.00-14.00 (CEST). The seminar will provide highlights of EFRAG’s Discussion Paper Accounting for Variable Consideration – From a purchaser’s perspective (the ‘DP’).

Divergence in practice currently exists on when a purchaser should recognise a liability within the scope of IAS 32 Financial Instruments: Presentation and IFRS 9 Financial Instruments for variable consideration that depends on the purchaser’s future actions. Also, divergence exists on whether/when the cost of an acquired asset should be updated to reflect changes in a liability for variable consideration. The divergence in practice has been evident from the discussions of the IFRS Interpretations Committee (the ‘IFRS IC’) held from 2011 to 2016. In these discussions, the IFRS IC concluded that the matters raised were too broad to be addressed within the confines of existing IFRS Standards, and as a result, signalled the need for broader standard setting. The IASB added the topic to its research pipeline after its 2015 Agenda Consultation. However, due to other priorities, the IASB did not include this project on its active research agenda and, following its 2021 Third Agenda Consultation, the project was excluded from the IASB’s 2022–2026 workplan. Nevertheless, the accounting challenges related to variable consideration that are addressed in the DP still exist and the IASB may have to include a project on variable consideration in its workplan in the future and/or address issues related to variable consideration within other projects.

Based on the DP, the main purpose of the workshop is to discuss alternative requirements on 1) when a purchaser should recognise a liability for variable consideration that depends on the purchaser’s future actions 2) whether/when the cost of an acquired asset should be updated to reflect changes in a liability for variable consideration. The session will be moderated by Erlend Kvaal. The DP will be presented by Vincent Papa and Rasmus Sommer from the EFRAG Secretariat. Academic reflections will be provided by Andrew Lennard and Luca Giovanni Viarengo. The presentations will include polling questions and will be followed by questions and comments from the audience to be addressed by the presenters.  The DP can be accessed here (website link).