Summaries of Final IFRIC Interpretations The full official text of all Interpretations is included in the Bound Volume of IASB Standards and IAS on CD-ROM. The following unofficial summaries are, by their nature, incomplete.

SIC 1: Consistency - Different Cost Formulas for Inventories SIC 2: Consistency - Capitalisation of Borrowing Costs SIC 3: Elimination of Unrealised Profits and Losses on Transactions with Associates SIC 5: Classification of Financial Instruments - Contingent Settlement Provisions SIC 6: Costs of Modifying Existing Software SIC 7: Introduction of the Euro SIC 8: First-Time Application of IASs as the Primary Basis of Accounting SIC 9: Business Combinations - Classification either as Acquisitions or Unitings of Interests SIC 10: Government Assistance - No Specific Relation to Operating Activities SIC 11: Foreign Exchange - Capitalisation of Losses Resulting from Severe Currency Devaluations SIC 12: Consolidation - Special Purpose Entities SIC 13: Jointly Controlled Entities - Non-Monetary Contributions by Venturers SIC 14: Property, Plant and Equipment - Compensation for the Impairment or Loss of Items SIC 15: Operating Leases - Incentives SIC 16: Share Capital - Reacquired Own Equity Instruments (Treasury Shares) SIC 17: Equity - Costs of an Equity Transaction SIC 18: Consistency - Alternative Methods SIC 19: Reporting Currency - Measurement and Presentation of Financial Statements Under IAS 21 and IAS 29 SIC 20: Equity Accounting Method - Recognition of Losses SIC 21: Income Taxes - Recovery of Revalued Non-Depreciable Assets SIC 22: Business Combinations - Subsequent Adjustment of Fair Values and Goodwill Initially Reported SIC 23: Property, Plant and Equipment - Major Inspection or Overhaul Costs SIC 24: Earnings Per Share - Financial Instruments and Other Contracts that May Be Settled in Shares SIC 25: Income Taxes - Changes in the Tax Status of an Enterprise or its Shareholders SIC-27: Evaluating the Substance of Transactions in the Legal Form of a Lease SIC-28: Business Combinations – “Date of Exchange” and Fair Value of Equity Instruments SIC-29: Disclosure – Service Concession Arrangements SIC-30: Reporting Currency – Translation from Measurement Currency to Presentation Currency SIC-31: Revenue – Barter Transactions Involving Advertising Services SIC-32 Intangible Assets – Web Site Costs New - 25/03/2002 SIC-33: Consolidation and Equity Method – Potential Voting Rights and Allocation of Ownership Interests

SIC 1: Consistency - Different Cost Formulas for Inventories Summary of SIC-1

SIC-1 Requires that under IAS 2, Inventories, paragraph 21 and IAS 2 paragraph 23 the same cost formula be used for inventories having the same characteristics. Where the nature or use of (groups of) items differs from others, the application of different methods is allowed.

Effective date: Periods beginning on or after 1 January 1999.

SIC 2: Consistency - Capitalisation of Borrowing Costs Summary of SIC-2

If an enterprise once has decided to apply the accounting policy permitted as Allowed Alternative in IAS 23: Borrowing Costs -- capitalising all borrowing costs described in IAS 23 paragraph 11 -- that policy should be applied consistently for all qualifying assets and periods.

Effective date: Periods beginning on or after 1 January 1998.

SIC 3: Elimination of Unrealised Profits and Losses on Transactions with Associates Summary of SIC-3

Under IAS 28: Investments in Associates, paragraph 16, unrealised gains and losses resulting from transactions with associates should be eliminated proportionately. This is consistent with the application of the equity method for joint ventures as required by IAS 31: Financial Reporting of Interests in Joint Ventures, paragraphs 39 and 40.

Effective date: Periods beginning on or after 1 January 1998.

SIC 5: Classification of Financial Instruments - Contingent Settlement Provisions Summary of SIC-5

The issue is how to classify a financial instrument when the manner of settlement (in cash or in equity instruments of the issuer) depends on the outcome of uncertain future events that are beyond the control of both the issuer and the holder. The SIC agreed that such instruments should be classified in accordance with IAS 32: Financial Instruments: Disclosure and Presentation, paragraphs 5 and 18 as liabilities, regardless of their legal form unless the possibility of settlement in cash appears to be remote, in which case the instruments should be classified as equity.

Effective for instruments issued in periods beginning on or after 1 June 1998.

SIC 6: Costs of Modifying Existing Software Summary of SIC-6

The issue is how expenditure such as those for modifications necessary to prepare existing software systems for the turn of the millennium (often referred to as "Year 2000 Costs") or the introduction of the euro should be accounted for. The SIC agreed that in accordance with the Framework, paragraphs 89 and 90, (and applying IAS 16: Property, Plant and Equipment, paragraph 24, by analogy) expenditure incurred in order to restore or maintain the future economic benefits that an enterprise expected from the original standard of performance of existing software systems should not be capitalised. This solution is also in compliance with IAS 38: Intangible Assets. In addition, the SIC agreed that expenditure should be recognised as incurred in accordance with paras. 94 - 98 of the Framework, i.e. for work undertaken "in house", as materials are used or labour time is consumed. For work undertaken by external contractors, expenditure should be recognised only as the work is carried out.

Effective date: 1 June 1998.

SIC 7: Introduction of the Euro Summary of SIC-7

The issue is how the introduction of the Euro, resulting from the European Economic and Monetary Union (EMU) will affect the application of IAS 21: The Effects of Changes in Foreign Exchange Rates. The SIC agreed that the requirements of IAS 21 should be strictly applied. This means that monetary assets and liabilities should continue to be translated at the spot rate. Where an enterprise has an existing accounting policy of deferring exchange gains and losses related to anticipatory hedges, an enterprise should continue to account for such deferred exchange gains and losses notwithstanding the changeover to the euro. Cumulative differences classified as equity relating to foreign entities should continue to be recognised as income or expenses only on the disposal of the foreign entity. The Allowed Alternative Treatment of IAS 21.21 regarding exchange differences resulting from severe devaluations does not apply to currencies participating in EMU.

Effective date: 1 June 1998.

SIC 8: First-Time Application of IASs as the Primary Basis of Accounting Summary of SIC-8

SIC-8 is an Interpretation of IAS 8: Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies The issues dealt with in this Interpretation are:

• how the financial statements of an enterprise should be prepared and presented in the period of first-time application of the full set of IAS; and

• how the specific transitional provisions set out in certain Standards and Interpretations are to be applied in the period of first-time application of IASs to balances of items that existed already at the Effective Date of those Standards and Interpretations.

The SIC agreed that in the period of first-time application of IAS as the primary accounting basis, the financial statements of an enterprise, including comparative information, should be prepared and presented as if the financial statements had always been prepared in accordance with the IAS effective for the period of first-time application. Therefore, the Standards and Interpretations should be applied retrospectively except when Standards or Interpretations require or permit a different transitional treatment or when the amount of the adjustment relating to prior periods cannot be reasonably determined. Adjustment amounts should be treated as an adjustment to the opening balance of retained earnings of the earliest period presented in accordance with IAS. If adjustments relating to prior periods or comparative information cannot be determined, the fact should be disclosed.

On the first-time application of IAS, an enterprise may apply the transitional provisions only for periods ending at the date prescribed in the respective Standards and Interpretations. The transitional treatment adopted should be disclosed. For example, goodwill may only be written off directly against equity when it was acquired in periods beginning prior to January 1995.

Effective date: 1 August 1998.

SIC 9: Business Combinations - Classification either as Acquisitions or Unitings of Interests Summary of SIC-9

The issue resolved by this Interpretation is how the definitions in IAS 22: Business Combinations, paragraph 9, and the additional guidance in IAS 22, paragraphs 11 to 13, and in IAS 22, paragraphs 14 to 17, are to be interpreted and applied in classifying a business combination and whether a business combination under IAS 22 might be classified as neither an acquisition nor a uniting of interests.

The SIC concluded that the overriding criterion to distinguish an acquisition from a uniting of interests is whether an acquirer can be identified, i.e. whether the shareholders of one of the combining enterprises obtain control over the combined enterprise. The classification of a business combination and the determination of whether control exists should be based on an overall evaluation of all relevant facts and circumstances of the transaction; the guidance given in IAS 22 provides examples of important factors to be considered, not a comprehensive set of conditions to be met.

In addition, the Interpretation clarifies that a business combination is to be classified as an acquisition, unless the criteria of IAS 22, paragrpah 16, are met (exchange or pooling of the substantial majority of the voting common shares of the combining enterprises, relative equality in fair values of the combining enterprises and continuance of substantially the same percentage in voting rights and interests of the shareholders of each of the combining enterprises in the combined enterprise). Even if all three criteria are met, a business combination is only to be classified as a uniting of interests if no acquirer can be identified.

Effective date: Business combinations given initial accounting recognition in periods beginning on or after 1 August 1998.

SIC 10: Government Assistance - No Specific Relation to Operating Activities Summary of SIC-10

In some countries government assistance to enterprises can be aimed at encouragement or long-term support of business activities either in certain regions or industry sectors. Conditions to receive such assistance may not be specifically related to the operating activities of the enterprise. The issue is whether such government assistance is "a government grant" within the scope of IAS 20: Accounting for Government Grants and Disclosure of Government Assistance and should therefore be accounted for in accordance with this Standard. The SIC agreed that government assistance to enterprises that is aimed at encouragement or long-term support of business activities either in certain regions or industry sectors meets the definition of government grants in IAS 20. Such grants should therefore not be credited directly to shareholders' interests.

Effective date: 1 August 1998.

SIC 11: Foreign Exchange - Capitalisation of Losses Resulting from Severe Currency Devaluations Summary of SIC-11

The Allowed Alternative Treatment in IAS 21: The Effects of Changes in Foreign Exchange Rates, paragraph 21, requires several conditions to be met cumulatively before an enterprise can include exchange losses on foreign currency liabilities in the carrying amount of related assets. The issue is how the conditions of IAS 21, paragraph 21, should be interpreted that the liability "cannot be settled" and that there is "no practical means of hedging" against the foreign currency exchange risk and that the liability should arise on the "recent acquisition" of an asset. The SIC agreed that foreign exchange losses on liabilities that result from the recent acquisition of assets should only be included in the carrying amount of the assets if those liabilities could not have been settled or if it was not practically feasible to hedge the foreign currency exposure before the severe devaluation or depreciation occurred. Only in these cases foreign exchange losses are unavoidable and therefore part of the asset's acquisition costs. "Recent" acquisitions of assets are acquisitions within twelve months prior to the severe devaluation or depreciation of the reporting currency.

Effective date: 1 August 1998.

SIC 12: Consolidation - Special Purpose Entities Summary of SIC-12

This interpretation addresses the question of when a special purpose entity would be consolidated by a reporting enterprise. The SIC agreed that an enterprise should consolidate a special purpose entity ("SPE") when, in substance, the enterprise controls the SPE.

Examples of SPEs include entities set up to effect a lease, a securitisation of financial assets or R&D activities. The concept of control used in IAS 27: Consolidated Financial Statements requires having the ability to direct or dominate decision making accompanied by the objective of obtaining benefits from the SPE's activities. The Interpretation provides example indications of when control may exist in the context of an SPE. The examples involve activities of the SPE on behalf of the reporting enterprise, the reporting enterprise having decision-making powers over the SPE, and the reporting enterprise having rights to the majority of benefits and exposure to significant risks of the SPE. Some enterprises may also need to evaluate separately the topic of derecognition of assets, for example, related to assets transferred to an SPE. In some circumstances, such a transfer of assets may result in those assets being derecognized and accounted for as a sale. Even if the transfer qualifies as a sale, the provisions of IAS 27 and SIC-12 may mean that the enterprise should consolidate the SPE. SIC-12 does not address the circumstances in which sale treatment should apply for the reporting enterprise or the elimination of the consequences of such a sale upon consolidation.

Effective date: Annual financial periods beginning on or after 1 July 1999.

SIC 13: Jointly Controlled Entities - Non-Monetary Contributions by Venturers Summary of SIC-13

This Interpretation clarifies the circumstances in which the appropriate portion of gains or losses resulting from a contribution of a non-monetary asset to a jointly controlled entity (JCE) in exchange for an equity interest in the JCE should be recognised by the venturer in the income statement. The Interpretation indicates that under IAS 31: Financial Reporting of Interests in Joint Ventures, paragraph 39, recognition of gains or losses on contributions of non-monetary assets is appropriate unless:

• the significant risks and rewards related to the non-monetary asset are not transferred to the jointly controlled entity;

• the gain or loss cannot be measured reliably; or

• similar assets are contributed by the other venturers.

Non-monetary assets contributed by venturers are similar when they have a similar nature, a similar use in the same line of business and a similar fair value. A contribution meets the similarity test only if all significant component assets included in the contribution are similar to each of the significant component assets contributed by the other venturers. A gain should also be recognised if, in addition to the equity interest in the jointly controlled entity, the venturer receives consideration in the form of either cash or other assets which are dissimilar to the non-monetary assets contributed.

Effective date: Annual financial periods beginning on or after 1 January 1999.

SIC 14: Property, Plant and Equipment - Compensation for the Impairment or Loss of Items Summary of SIC-14

This SIC Interpretation is an interpretation of IAS 16: Property, Plant and Equipment. This Interpretation addresses how an enterprise should account for impairments or losses of items of property, plant and equipment, the related compensation from third parties, and the subsequent restoration, purchase or construction of assets.

The Interpretation confirms that three separate economic events are involved and that each event should be accounted for separately. The three separate events are:

1. the impairment or loss;

2. the related compensation from third parties; and

3. the subsequent restoration, purchase or construction of assets.

Compensation is to be included in the income statement when recognised. Recognising the compensation as deferred income or deducting it from the impairment or loss or from the cost of a new asset is not appropriate.

Effective date: Annual financial periods beginning on or after 1 July 1999.

SIC 15: Operating Leases - Incentives Summary of SIC-15

SIC-15 clarifies the recognition of incentives related to operating leases by both the lessee and lessor.

The Interpretation indicates that lease incentives (such as rent-free periods or contributions by the lessor to the lessee's relocation costs) should be considered an integral part of the consideration for the use of the leased asset. IAS 17: Leases, paragraphs 24 and 42 require an enterprise to treat incentives as a reduction of lease income or lease expense. As they are an integral part of the net consideration agreed for the use of the leased asset, incentives should be recognised by both the lessor and the lessee over the lease term, with each party using a single amortisation method applied to the net consideration.

Effective date: Lease terms beginning on or after 1 January 1999.

SIC 16: Share Capital - Reacquired Own Equity Instruments (Treasury Shares) Summary of SIC-16

This SIC Interpretation is an interpretation of IAS 32: Financial Instruments: Disclosure and Presentation This Interpretation indicates that treasury shares should be presented in the balance sheet as a deduction from equity, and the acquisition of treasury shares should be presented in the financial statements as a change in equity. Additionally, no gain or loss should be recognised in the income statement on the sale, issuance, or cancellation of treasury shares, and consideration received should be presented in the financial statements as a change in equity.

Effective date: Annual financial periods beginning on or after 1 July 1999.

SIC 17: Equity - Costs of an Equity Transaction Summary of SIC-17

This SIC Interpretation is an interpretation of IAS 32: Financial Instruments: Disclosure and Presentation. This Interpretation addresses the costs of issuing or acquiring an enterprise's own instruments classified as equity when the transaction results in a net increase or decrease to equity.

Costs of an equity transaction are only those incremental external costs directly attributable to the equity transaction that would otherwise have been avoided. The transaction costs of an equity transaction should be accounted for as a deduction from equity, net of any related income tax benefit. The costs of a transaction which fails to be completed should be expensed. Transaction costs that relate to the issuance of a compound instrument that contains both a liability and an equity element should be allocated to the component parts in proportion to the allocation of proceeds. Transaction costs that relate jointly to more than one transaction, for example, costs of a concurrent offering of some shares and stock exchange listing of other shares, should be allocated to those transactions using a basis of allocation which is rational and consistent with similar transactions.

Effective date: Annual financial periods beginning on or after 30 January 2000

SIC 18: Consistency - Alternative Methods Summary of SIC-18

This SIC Interpretation is an interpretation of IAS 1: Presentation of Financial Statements If more than one accounting policy is available under an International Accounting Standard or Interpretation, an enterprise should choose and apply consistently one of those policies, unless the Standard or Interpretation specifically requires or permits categorisation of items (transactions, events, balances, amounts, etc.) for which different policies may be appropriate. If a Standard requires or permits categorisation of items, the most appropriate accounting policy should be selected and applied consistently to each category. Once the appropriate initial policy has been selected, a change in accounting policy should only be made in accordance with IAS 8: Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies and applied to all items or categories of items.

Effective date: Annual financial periods beginning on or after 1 July 2000

SIC 19: Reporting Currency - Measurement and Presentation of Financial Statements Under IAS 21 and IAS 29 Summary of SIC-19

This SIC Interpretation is an interpretation of IAS 21, The Effects of Changes in Foreign Exchange Rates and IAS 29: Financial Reporting in Hyperinflationary Economies. The measurement currency used by an enterprise to present its financial statements should provide information about the enterprise that is useful and reflects the economic substance of the underlying events and circumstances relevant to that enterprise. If a particular currency is used to a significant extent in, or has a significant impact on, the enterprise, that currency may be an appropriate measurement currency. All transactions in currencies other than the measurement currency should be treated as transactions in foreign currencies when applying IAS 21, The Effects of Changes in Foreign Exchange Rates. Once an enterprise has selected a measurement currency, the SIC agreed that it should not be changed unless there is a change in the underlying events and circumstances relevant to that enterprise.

Although an enterprise normally presents its financial statements in the same currency as the measurement currency, the SIC also agreed that it may choose to present its financial statements in a different currency. The method of translating the financial statements of a reporting enterprise from the measurement currency to a different currency for presentation should not lead to reporting in a manner that is inconsistent with the measurement of items in the financial statements.

Effective date: Annual financial periods beginning on or after 1 January 20

SIC 20: Equity Accounting Method - Recognition of Losses Summary of SIC-20

The Interpretation requires that, for the purpose of applying IAS 28: Investments in Associates, paragraph 22, the carrying amount of the investment in an associate should include common shares and preferred shares that provide unlimited rights of participation in earnings or losses and a residual equity interest in the associate. If the investor's share of losses of an associate exceeds the carrying amount of the investment, recognition of further losses should be discontinued, unless the investor has incurred obligations to satisfy obligations of the associate that the investor has guaranteed or otherwise committed, whether the obligation is funded or not. Financial interests in an associate which are not included in the carrying amount of the investment are accounted for in accordance with other applicable International Accounting Standards, for example IAS 39: Financial Instruments: Recognition and Measurement. Additionally, continuing losses of an associate should be considered objective evidence that financial interests in that associate may be impaired. Impairment of the carrying amount of the investment in an associate is determined based on the carrying amount after adjustment for equity method losses.

Effective date: 15 July 2000

SIC 21: Income Taxes - Recovery of Revalued Non-Depreciable Assets Summary of SIC-21

This Interpretation confirms that the deferred tax liability or asset recognised under IAS 12: Income Taxes that arises from the revaluation of a non-depreciable asset under IAS 16: Property, Plant and Equipment is measured based on the tax consequences that would follow from recovery of the carrying amount of that asset through sale. Because the asset is not depreciated, no part of its carrying amount is considered to be recovered (that is, consumed) through use.

Effective date: 15 July 2000

SIC 22: Business Combinations - Subsequent Adjustment of Fair Values and Goodwill Initially Reported Summary of SIC-22

SIC-22 interprets the application of the purchase method in IAS 22, Business Combinations and addresses adjustments to identifiable assets and liabilities and goodwill, which are made to recognise identifiable assets and liabilities (other than those related to income taxes) that previously did not satisfy recognition criteria, and adjustments made to reflect additional evidence of the amounts initially assigned in accounting for an acquisition under the purchase method. Such adjustments should be calculated as if the newly assigned values had been used from the date of the acquisition. The Interpretation also clarifies that adjustments to amounts included in the income statement, such as depreciation or amortisation of goodwill, are included in the corresponding category of income or expense presented on the face of the income statement.

The Interpretation requires disclosure of the amount of an adjustment recognised in the income statement of the current period which relates to comparative and prior periods. For example, if the adjustment increases depreciation expense in the current period by 150 and 100 of the increase results from the recalculation of the effects of the adjustment to identifiable assets over the comparative year, that fact would be disclosed.

Effective date: Adjustments made in annual periods ending on or after 15 July 2000

SIC 23: Property, Plant and Equipment - Major Inspection or Overhaul Costs Summary of SIC-23

The costs of a major inspection or overhaul of property, plant and equipment occurring subsequent to the acquisition of that property, plant and equipment are generally expensed. However, such costs are capitalised when the enterprise has identified as a separate component of the asset an amount representing major inspection or overhaul and has already depreciated that component to reflect the consumption of benefits which are replaced or restored by the subsequent major inspection or overhaul. The criteria for recognition of an asset under IAS 16: Property, Plant and Equipment must also be met.

Effective date: 15 July 2000

SIC 24: Earnings Per Share - Financial Instruments and Other Contracts that May Be Settled in Shares Summary of SIC-24

This SIC Interpretation is an interpretation of IAS 33: Earnings per Share. SIC-24 addresses the treatment of instruments which may be settled by a reporting enterprise either by payment of financial assets or by issuance of ordinary shares of the reporting enterprise to the holder. The SIC agreed that all instruments which may result in the issuance of ordinary shares of the reporting enterprise to the holder of the financial instrument or other contract, at the option of the issuer or the holder, are potential ordinary shares of that enterprise. If a potential ordinary share is dilutive, (that is, its conversion to ordinary shares would decrease net profit per share from continuing ordinary operations) then its dilutive effect is included in calculating diluted earnings per share.

Effective Date: 1 December 2000

SIC 25: Income Taxes - Changes in the Tax Status of an Enterprise or its Shareholders Summary of SIC-25

This SIC Interpretation is an interpretation of IAS 12: Income Taxes. SIC-25 addresses changes in the tax status of an enterprise or of a shareholder that has consequences for an enterprise by increasing or decreasing its tax liabilities or assets. A change in the tax status of an enterprise or its shareholders does not give rise to increases or decreases in the pre-tax amounts recognised directly in equity. Therefore, the current and deferred tax consequences of a change in tax status should be included in net profit or loss for the period, unless those consequences relate to transactions and events that result, in the same or a different period, in a direct credit or charge to the recognised amount of equity. An example of an event that is recognised directly in equity is a change in the carrying amount of property, plant or equipment revalued under IAS 16: Property, Plant and Equipment. Those tax consequences that relate to changes in the recognised amount of equity, in the same or a different period (not included in net profit or loss) should be charged or credited directly to equity.

Effective date: 15 July 2000

SIC-27: Evaluating the Substance of Transactions in the Legal Form of a Lease Summary of SIC-27 This SIC Interpretation is an interpretation of IAS 17: Leases. The Interpretation addresses a number of issues when an arrangement between an Enterprise and an Investor involves the legal form of a lease. It addresses how to determine whether a series of transactions is linked and should be accounted for as one transaction. The SIC agreed that a series of transactions that involve the legal form of a lease is linked and should be accounted for as one transaction when the overall economic effect cannot be understood without reference to the series of transactions as a whole. The Interpretation also addresses whether an arrangement meets the definition of a lease under IAS 17. The SIC agreed that the accounting should reflect the substance of the arrangement, and that all aspects of an arrangement should be evaluated to determine its substance, with weight given to those aspects and implications that have an economic effect. In this respect, it agreed to a list of indicators that individually demonstrate that an arrangement may not, in substance, involve a lease under IAS 17. If an arrangement does not meet the definition of a lease, the Interpretation continues by addressing whether a separate investment account and lease payment obligations that might exist represent assets and liabilities of the Enterprise; how the Enterprise should account for other obligations resulting from the arrangement; and how the Enterprise should account for a fee it might receive from an Investor. The Committee agreed to a list of indicators that collectively demonstrate that, in substance, a separate investment account and lease payment obligations do not meet the definitions of an asset and a liability and should not be recognised by the Enterprise. It agreed that other obligations of an arrangement, including any guarantees provided and obligations incurred upon early termination, should be accounted for under IAS 37 or IAS 39, depending on the terms. Further, it agreed that the criteria in IAS 18.20 should be applied to the facts and circumstances of each arrangement in determining when to recognise a fee as income that an Enterprise might receive.

SIC-28: Business Combinations – “Date of Exchange” and Fair Value of Equity Instruments Summary of SIC-28 SIC-28 is an Interpretation of IAS 22: Business Combinations. The Interpretation addresses when the “date of exchange” occurs where shares are issued as purchase consideration in an acquisition. The SIC agreed that when an acquisition is achieved in one exchange transaction (i.e., not in stages), the “date of exchange” is the date of acquisition; that is, the date when the acquirer obtains control over the net assets and operations of the acquiree. When an acquisition is achieved in stages (e.g., successive share purchases), the Committee agreed that the fair value of the equity instruments issued as purchase consideration at each stage should be determined at the date that each individual investment is recognised in the financial statements of the acquirer. The Interpretation also addresses when it is appropriate to consider other evidence and valuation methods in addition to a published price at the date of exchange of a quoted equity instrument. The Committee agreed that the published price at the date of exchange provides the best evidence of the instrument’s fair value and should be used, except in rare circumstances. Other evidence and valuation methods should also be considered only in the rare circumstance when it can be demonstrated that the published price at that date is an unreliable indicator, and the other evidence and valuation methods provide a more reliable measure of fair value. The published price at the date of exchange is an unreliable indicator only when it has been affected by an undue price fluctuation or a narrowness of the market.

SIC-29: Disclosure – Service Concession Arrangements Summary of SIC-29 This SIC is an Interpretation of IAS 1: Presentation of Financial Statements. The Interpretation addresses what information should be disclosed in the notes to the financial statements of a Concession Operator and a Concession Provider when the two parties are joined by a service concession arrangement. A service concession arrangement exists when an enterprise (the Concession Operator) agrees with another enterprise (the Concession Provider) to provide services that give the public access to major economic and social facilities. Examples of service concession arrangements involve water treatment and supply facilities, motorways, car parks, tunnels, bridges, airports and telecommunication networks. Examples of arrangements that are not service concession arrangements include an enterprise outsourcing the operation of its internal services (e.g., employee cafeteria, building maintenance, and accounting or information technology functions). The SIC agreed that the following should be disclosed in each period:

1. a description of the arrangement;

2. significant terms of the arrangement that may affect the amount, timing and certainty of future cash flows (e.g., the period of the concession, re-pricing dates and the basis upon which re-pricing or re-negotiation is determined);

3. the nature and extent (e.g., quantity, time period or amount as appropriate) of:

o rights to use specified assets;

o obligations to provide or rights to expect provision of services;

o obligations to acquire or build items of property, plant and equipment;

o obligations to deliver or rights to receive specified assets at the end of the concession period;

o renewal and termination options; and

o other rights and obligations (e.g., major overhauls); and

4. changes in the arrangement occurring during the period.

SIC-30: Reporting Currency – Translation from Measurement Currency to Presentation Currency Summary of SIC-30 This is an Interpretation of IAS 21: The Effects of Changes in Foreign Exchange Rates and IAS 29: Financial Reporting in Hyperinflationary Economies. This Interpretation addresses how an enterprise translates items in its financial statements from a measurement currency to a presentation currency. The SIC agreed that when the measurement currency is not the currency of a hyperinflationary economy, the requirements of SIC-19.9 should be applied as follows:

• assets and liabilities for all balance sheets presented (i.e., including comparatives) should be translated at the closing rate existing at the date of each balance sheet presented;

• income and expense items for all periods presented should be translated at the exchange rates existing at the dates of the transactions;

• equity items other than the net profit or loss for the period that is included in the balance of accumulated profit or loss should be translated at the closing rate existing at the date of each balance sheet presented; and

• all exchange differences resulting from translation should be recognised directly in equity.

When the measurement currency is the currency of a hyperinflationary economy, the Committee agreed that the requirements of SIC-19.9 should be applied as follows:

• assets, liabilities and equity items for all balance sheets presented (i.e., including comparatives) should be translated at the closing rate existing at the date of the most recent balance sheet presented; and

• income and expense items for all periods presented should be translated at the closing rate existing at the end of the most recent period presented.

The Interpretation also addresses the information that should be disclosed when additional information not required by International Accounting Standards is displayed in financial statements and in a currency, other than the currency used in presenting the financial statements, as a convenience to certain users. The SIC agreed that an enterprise should:

• clearly identify the information as supplementary information to distinguish it from the information required by International Accounting Standards and translated in accordance with this Interpretation,

• disclose the measurement currency used to prepare the financial statements and the method of translation used to determine the supplementary information displayed,

• disclose the fact that the measurement currency reflects the economic substance of the underlying events and circumstances of the enterprise and that the supplementary information is displayed in another currency for convenience purposes only, and

• disclose the currency in which the supplementary information is displayed.

SIC-31: Revenue – Barter Transactions Involving Advertising Services Summary of SIC-31 This is an Interpretation of IAS 18: Revenue. The Interpretation address the circumstances when a Seller can reliably measure revenue at the fair value of advertising services received or provided in a barter transaction. The SIC agreed that revenue from a barter transaction involving advertising cannot be measured reliably at the fair value of advertising services received. However, a Seller can reliably measure revenue at the fair value of the advertising services it provides in a barter transaction, by reference only to non-barter transactions that:

• involve advertising similar to the advertising in the barter transaction;

• occur frequently;

• represent a predominant number of transactions and amount when compared to all transactions to provide advertising that is similar to the advertising in the barter transaction;

• involve cash and/or another form of consideration (e.g., marketable securities, non-monetary assets, and other services) that has a reliably measurable fair value; and

• do not involve the same counterparty as in the barter transaction.

SIC-32: Intangible Assets – Web Site Costs The Interpretation addresses whether a web site developed by an enterprise from internal expenditure for internal or external access is an internally generated intangible asset that is subject to the requirements of IAS 38: the SIC agreed that such a web site is subject to the requirements of IAS 38. The Interpretation also addresses the appropriate accounting treatment for internal expenditure on the development and operation of an enterprise’s own web site for internal or external access. The Committee agreed that:

(a) a web site arising from development should be recognised as an intangible asset if, and only if, in addition to complying with the general requirements described in IAS 38.19 for recognition and initial measurement, an enterprise can satisfy the requirements in IAS 38.45. In particular, an enterprise may be able to satisfy the requirement to demonstrate how its web site will generate probable future economic benefits under IAS 38.45(d) when, for example, the web site is capable of generating revenues, including direct revenues from enabling orders to be placed. An enterprise is not able to demonstrate how a web site developed solely or primarily for promoting and advertising its own products and services will generate probable future economic benefits, and consequently all expenditure on developing such a web site should be recognised as an expense when incurred. (b) any internal expenditure on the development and operation of an enterprise’s own web site should be accounted for in accordance with IAS 38. The nature of each activity for which expenditure is incurred (eg training employees and maintaining the web site) and the web site’s stage of development or post-development should be evaluated to determine the appropriate accounting treatment. For example:

(i) the Planning stage is similar in nature to the research phase in IAS 38.42-.44. Expenditure incurred in this stage should be recognised as an expense when it is incurred. (ii) the Application and Infrastructure Development stage, the Graphical Design stage and the Content Development stage, to the extent that content is developed for purposes other than to advertise and promote an enterprise’s own products and services, are similar in nature to the development phase in IAS 38.45-.52. Expenditure incurred in these stages should be included in the cost of a web site recognised as an intangible asset in accordance with this Interpretation when the expenditure can be directly attributed, or allocated on a reasonable and consistent basis, to preparing the web site for its intended use. For example, expenditure on purchasing or creating content (other than content that advertises and promotes an enterprise’s own products and services) specifically for a web site, or expenditure to enable use of the content (eg a fee for acquiring a licence to reproduce) on the web site, should be included in the cost of development when this condition is met. However, in accordance with IAS 38.59, expenditure on an intangible item that was initially recognised as an expense in previous financial statements should not be recognised as part of the cost of an intangible asset at a later date (eg when the costs of a copyright have been fully amortised, and the content is subsequently provided on a web site). (iii) expenditure incurred in the Content Development stage, to the extent that content is developed to advertise and promote an enterprise’s own products and services (eg digital

photographs of products), should be recognised as an expense when incurred in accordance with IAS 38.57(c). For example, when accounting for expenditure on professional services for taking digital photographs of an enterprise’s own products and for enhancing their display, expenditure should be recognised as an expense as the professional services are received during the process, not when the digital photographs are displayed on the web site. (iv) the Operating stage begins once development of a web site is complete. Expenditure incurred in this stage should be recognised as an expense when it is incurred unless it meets the criteria in IAS 38.60.

(c) a web site that is recognised as an intangible asset under this Interpretation should be measured after initial recognition by applying the requirements of IAS 38.63-.78. The best estimate of a web site’s useful life should be short.

SIC-33: Consolidation and Equity Method – Potential Voting Rights and Allocation of Ownership Interests Summary of SIC-33 This is an Interpretation of IAS 27: Consolidated Financial Statements, IAS 28: Investments in Associates and IAS 39: Financial Instruments: Recognition and Measurement. An enterprise may own share warrants, share call options, debt or equity instruments that are convertible into ordinary shares, or other similar instruments that have the potential, if exercised or converted, to give the enterprise voting power or reduce another party’s voting power over the financial and operating policies of another enterprise (potential voting rights). The Interpretation addresses whether the existence and effect of potential voting rights should be considered, in addition to the factors described in IAS 27.12 and IAS 28.4-.5 when assessing whether an enterprise controls or significantly influences another enterprise according to IAS 27 and IAS 28 respectively. The SIC agreed that the existence and effect of potential voting rights that are presently (i.e., currently) exercisable or presently convertible should be considered, in addition to the factors described in IAS 27.12 and IAS 28.4-.5. The Interpretation also addresses whether any other facts and circumstances related to potential voting rights should be assessed. The Committee agreed that all facts and circumstances that affect potential voting rights should be examined, except the intention of management and the financial capability to exercise or convert. Further, the Interpretation addresses whether the proportion allocated to the parent and minority interests in preparing consolidated financial statements, and the proportion allocated to an investor that accounts for its investment in an associate using the equity method, should be determined based on present ownership interests or ownership interests that would be held if the potential voting rights were exercised or converted. The SIC agreed that the proportion allocated should be determined based solely on present ownership interests. An enterprise may, in substance, have a present ownership interest when for example, it sells and simultaneously agrees to repurchase, but does not lose control of, access to economic benefits associated with an ownership interest. In this circumstance, Committee agreed the proportion allocated should be determined taking into account the eventual exercise of potential voting rights and other derivatives that, in substance, presently give access to the economic benefits associated with an ownership interest. In responding to respondants’ comments, the Committee agreed to address the appropriate accounting treatment for potential voting rights until they are exercised or expire. The SIC agreed that when applying the consolidation and the equity method of accounting, instruments containing potential voting rights should be accounted for as part of the investment in a subsidiary and the investment in an associate respectively only when the proportion of ownership interests is allocated by taking into account the eventual exercise of those potential voting rights. In all other circumstances, instruments containing potential voting rights should be accounted for in accordance with IAS 39.