ASCG: Draft interpretation following an agenda decision on IAS 12

16 July 2018

ASCG has published ED of Interpretation (IFRS) No. 1 Accounting for Interest and Penalties Related to Income Taxes under IFRSs. The interpretation was developed following a negative agenda decision by the IFRS Interpretations Committee on a matter where diversity in practice is observed in Germany.

The ED prescribes the application of IAS 37 to the accounting for interest and penalties related to income taxes. IAS 12 cannot be applied because interest and penalties related to income taxes in the German legal context do not meet the definition of income taxes in IAS 12.2.

Under the ED, a change in the accounting treatment because of this pronouncement does not constitute the correction of an error, but rather a change in accounting policy in accordance with IAS 8. The justification for this is that existing IFRSs do not specifically address the accounting for interest and penalties related to income taxes.

Comments on the ED are requested by 31 August 2018.

Full ED

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