27/09/2022 - EFRAG Discussion Paper - Accounting for Variable Consideration - from a Purchaser's Perspective
EFRAG has published a Discussion Paper on Accounting for Variable Consideration and invites constituents to comment by 31 May 2023.
Following the 2018 EFRAG Research Agenda consultation, EFRAG added a project on variable and contingent consideration to its research agenda (since then renamed variable consideration).
TheDiscussion Paper identifies the accounting issues about variable consideration faced by purchaser entities. The Discussion Paper focusses on two issues faced by purchaser entities where there is divergence in practice. These are (a) when to recognise a liability for variable consideration; and (b) whether/when subsequent changes in the estimate of variable consideration should be reflected in the cost of the acquired asset.
The Discussion Paper also presents alternatives for accounting requirements for the two issues and outlines the qualitative characteristics of useful information for each of these alternatives. In addition, the Discussion Paper assesses the general IFRS requirements for variable consideration.
The IASB may have to include a project on variable consideration in its work plan in the future and/or address issues related to variable consideration within other projects. Accordingly, this Discussion Paper can contribute to any future related work by the IASB.
Comments are welcome by 31 May 2023.
