EFRAG has completed its due process regarding the IASB’s Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 and has submitted its Endorsement Advice Letter and Effects Study Report to the European Commission.
In May 2014, the IASB issued Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 (the Amendments).
The Amendments aim to clarify that the use of revenue-based methods to calculate the depreciation of an asset is not to be assumed appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset.
The Amendments also clarify that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. However, this presumption can be rebutted in certain limited circumstances.
The Amendments are effective for annual periods beginning on or after 1 January 2016, although entities are permitted to apply them earlier.
EFRAG has issued its Endorsement Advice and Effects Study Report relating to the Amendments for use in the EU and EEA. EFRAG supports the adoption of the Amendments and recommends their endorsement.
Press release
Endorsement Advice to the EC
© EFRAG - European Financial Reporting Advisory Group
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