Posted by & filed under Financial Reporting.

11 February 2013

 

Mr Hans Hoogervorst
Chairman
International Accounting Standards Board
30 Cannon Street
London EC 4M 6XH
UNITED KINGDOM

Dear Mr Hoogervorst

ED/2012/5 Clarification of acceptable methods of Depreciation and amortisation

The Group of 100 (G100) is an organization of chief financial officers from Australia’s largest business enterprises with the purpose of advancing Australia’s financial competitiveness. We are pleased to comment on the Exposure Draft.
Q1 The IASB proposes to amend IAS 16 ‘Property, Plant and Equipment’ and IAS 38 ‘Intangible Assets’ to prohibit a depreciation or amortisation method that uses revenue generated from an activity that includes the use of an asset. This is because it reflects a pattern of future economic benefits being generated from the asset, rather than reflecting the expected pattern of consumption of the future economic benefits embodied in the asset. Do you agree? Why or why not?

The G100 supports the principle that the depreciation/amortisation method applied should be that which best reflects the pattern of consumption of the economic benefits embodied in an asset. As such, this does not preclude the use of a revenue-based method as acknowledged in the Basis for Conclusions (BC3-BC5).

The G100 supports the removal of the last sentence of IAS 38, para 98, which could be interpreted to give prominence to the straight-line method in all circumstances and create an inconsistency with IAS 38, para 38.

As with other annual improvements topics the G100 supports the retrospective application of the clarifying amendments.

Q2 Do you have any other comments on the proposals?

No.

 

Yours sincerely
Group of 100 Inc

 

Terry Bowen
President


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