Three New Draft Interpretations
T he International Accounting Standards Committee issued three draft interpretations of international accounting standards (IASs). The interpretations, which were issued by the IASC standing interpretations committee (SIC), were exposed for public comment and are expected to be included in upcoming IASC authoritative literature.
This marks the first time IASC interpretations have been drafted by the SIC, a body that was recently formed to provide interpretations of IASs and that is comparable to the U.S. emerging issues task force. According to IASC Secretary General Sir Bryan Carsberg, the work of the SIC will "significantly improve the worldwide comparability of financial information and increase the acceptance of IASs by regulators and investors."
The three interpretations cover
- Whether to use one cost formula, such as last in first out
(Lifo), to measure different types of inventory or whether other
methods should be used.
- Whether an entity that capitalizes borrowing costs must use the
same policy for all qualified assets and periods.
- How profits and losses that result from transactions with associates should be eliminated in consolidated financial statements.
All three drafts can be obtained on the IASCs Web site at http://www. iasc.org.uk.