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            COMMISSION REGULATION (EC) No 2236/2004

of 29 December 2004         

amending Regulation (EC) No 1725/2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standards (IFRSs) Nos 1, 3 to 5, International Accounting Standards (IASs) Nos 1, 10, 12, 14, 16 to 19, 22, 27, 28, 31 to 41 and the interpretations by the Standard Interpretation Committee (SIC) Nos 9, 22, 28 and 32

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (1), and in particular Article 3(1) thereof,

Whereas:

HAS ADOPTED THIS REGULATION:

Article 1

The Annex to Regulation (EC) No 1725/2003 is amended as follows:

Article 2

This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union.

It shall apply from 1 January 2005 at the latest.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 29 December 2004.

For the Commission

Charlie McCREEVY            

Member of the Commission

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(1)OJ L 243, 11.9.2002, p. 1.

(2)OJ L 261, 13.10.2003, p. 1. Regulation as last amended by Regulation (EC) No 2086/2004 (OJ L 363, 9.12.2004, p. 1).

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ANNEX

INTERNATIONAL FINANCIAL REPORTING STANDARDS
No
Title

Reproduction allowed within the European Economic. Area. All existing rights reserved outside the EEA, with the exception of the right to reproduce for the purposes of personal use or other fair dealing. Further information can be obtained from the IASB at www.iasb.org.uk

INTERNATIONAL FINANCIAL REPORTING STANDARD 3

Business combinations

SUMMARY

OBJECTIVE

SCOPE

Identifying a business combination

Business combinations involving entities under common control

METHOD OF ACCOUNTING

APPLICATION OF THE PURCHASE METHOD

Identifying the acquirer

Cost of a business combination

Adjustments to the cost of a business combination contingent on future events

Allocating the cost of a business combination to the assets acquired and liabilities and contingent liabilities assumed

Acquiree’s identifiable assets and liabilities

Acquiree’s intangible assets

Acquiree’s contingent liabilities

Goodwill

Excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost

Business combination achieved in stages

Initial accounting determined provisionally

Adjustments after the initial accounting is complete

Recognition of deferred tax assets after the initial accounting is complete

DISCLOSURE

TRANSITIONAL PROVISIONS AND EFFECTIVE DATE

Previously recognised goodwill

Previously recognised negative goodwill

Previously recognised intangible assets

Equity accounted investments

Limited retrospective application

WITHDRAWAL OF OTHER PRONOUNCEMENTS

APPENDIX A

Defined terms

This appendix is an integral part of the IFRS.

APPENDIX B

Application supplement

This appendix is an integral part of the IFRS.

Reverse acquisitions

Cost of the business combination

Preparation and presentation of consolidated financial statements

Minority interest

Earnings per share

Allocating the cost of a business combination

APPENDIX C

Amendments to other IFRSs

The amendments in this appendix shall be applied to the accounting for business combinations for which the agreement date is on or after 31 March 2004, and to the accounting for any goodwill and intangible assets acquired in those business combinations. In all other respects, these amendments shall be applied for annual periods beginning on or after 31 March 2004.

However, if an entity elects in accordance with paragraph 85 to apply IFRS 3 from any date before the effective dates outlined in paragraphs 78-84, it shall also apply these amendments prospectively from that same date.

INTERNATIONAL FINANCIAL REPORTING STANDARD 4

Insurance contracts

SUMMARY

OBJECTIVE

SCOPE

Embedded derivatives

Unbundling of deposit components

RECOGNITION AND MEASUREMENT

Temporary exemption from some other IFRSs

Liability adequacy test

Impairment of reinsurance assets

Changes in accounting policies

Current market interest rates

Continuation of existing practices

Prudence

Future investment margins

Shadow accounting

Insurance contracts acquired in a business combination or portfolio transfer

Discretionary participation features

Discretionary participation features in insurance contracts

Discretionary participation features in financial instruments

DISCLOSURE

Explanation of recognised amounts

Amount, timing and uncertainty of cash flows

EFFECTIVE DATE AND TRANSITION

Disclosure

Redesignation of financial assets

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(*1)  The relevant insurance liabilities are those insurance liabilities (and related deferred acquisition costs and related intangible assets) for which the insurer’s accounting policies do not require a liability adequacy test that meets the minimum requirements of paragraph 16.

(*2)  In this paragraph, insurance liabilities include related deferred acquisition costs and related intangible assets, such as those discussed in paragraphs 31 and 32.

APPENDIX A

Defined terms

This appendix is an integral part of the IFRS.

APPENDIX B

Definition of an insurance contract

This appendix is an integral part of the IFRS.

Uncertain future event

Payments in kind

Distinction between insurance risk and other risks

Examples of insurance contracts

Significant insurance risk

Changes in the level of insurance risk

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(*1)  For this purpose, contracts entered into simultaneously with a single counterparty (or contracts that are otherwise interdependent) form a single contract.

APPENDIX C

Amendments to other IFRSs

The amendments in this appendix shall be applied for annual periods beginning on or after 1 January 2005. If an entity adopts this IFRS for an earlier period, these amendments shall be applied for that earlier period.

Amendments to IAS 32 and IAS 39

Amendments to other IFRSs

INTERNATIONAL FINANCIAL REPORTING STANDARD 5

Non-current assets held for sale and discontinued operations

SUMMARY

OBJECTIVE

SCOPE

CLASSIFICATION OF NON-CURRENT ASSETS (OR DISPOSAL GROUPS) AS HELD FOR SALE

Non-current assets that are to be abandoned

MEASUREMENT OF NON-CURRENT ASSETS (OR DISPOSAL GROUPS) CLASSIFIED AS HELD FOR SALE

Measurement of a non-current asset(or disposal group)

Recognition of impairment losses and reversals

Changes to a plan of sale

PRESENTATION AND DISCLOSURE

Presenting discontinued operations

Gains or losses relating to continuing operations

Presentation of a non-current asset or disposal group classified as held for sale

Additional disclosures

TRANSITIONAL PROVISIONS

EFFECTIVE DATE

WITHDRAWAL OF IAS 35

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(*1)  For assets classified according to a liquidity presentation, non-current assets are assets that include amounts expected to be recovered more than twelve months after the balance sheet date. Paragraph 3 applies to the classification of such assets.

(*2)  However, once the cash flows from an asset or group of assets are expected to arise principally from sale rather than continuing use, they become less dependent on cash flows arising from other assets, and a disposal group that was part of a cash-generating unit becomes a separate cash-generating unit.

(*3)  Other than paragraphs 18 and 19, which require the assets in question to be measured in accordance with other applicable IFRSs.

(*4)  If the non-current asset is part of a cash-generating unit, its recoverable amount is the carrying amount that would have been recognised after the allocation of any impairment loss arising on that cash-generating unit in accordance with IAS 36.

(*5)  Unless the asset is property, plant and equipment or an intangible asset that had been revalued in accordance with IAS 16 or IAS 38 before classification as held for sale, in which case the adjustment shall be treated as a revaluation increase or decrease.

APPENDIX A

Defined terms

This appendix is an integral part of the IFRS.

APPENDIX B

Application supplement

This appendix is an integral part of the IFRS.

EXTENSION OF THE PERIOD REQUIRED TO COMPLETE A SALE

APPENDIX C

Amendments to other IFRSs

The amendments in this appendix shall be applied for annual periods beginning on or after 1 January 2005. If an entity applies this IFRS for an earlier period, these amendments shall be applied for that earlier period.

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(*1)  As amended by IAS 16 in 2003.

INTERNATIONAL ACCOUNTING STANDARD 36

Impairment of assets

SUMMARY

This revised standard supersedes IAS 36 (1998) Impairment of assets and should be applied:

Earlier application is encouraged.

OBJECTIVE

SCOPE

DEFINITIONS

IDENTIFYING AN ASSET THAT MAY BE IMPAIRED

MEASURING RECOVERABLE AMOUNT

Measuring the Recoverable Amount of an Intangible Asset with an Indefinite Useful Life

Fair Value less Costs to Sell

Value in Use

Basis for Estimates of Future Cash Flows

Composition of Estimates of Future Cash Flows

Foreign Currency Future Cash Flows

Discount Rate

RECOGNISING AND MEASURING AN IMPAIRMENT LOSS

CASH-GENERATING UNITS AND GOODWILL

identifying the cash-generating unit to which an asset belongs

Recoverable Amount and Carrying Amount of a Cash-generating Unit

Goodwill

Allocating Goodwill to Cash-generating Units

Testing Cash-generating Units with Goodwill for Impairment

Minority Interest

Timing of Impairment Tests

Corporate Assets

Impairment Loss for a Cash-generating Unit

REVERSING AN IMPAIRMENT LOSS

Reversing an Impairment Loss for an Individual Asset

Reversing an Impairment Loss for a Cash-generating Unit

Reversing an Impairment Loss for Goodwill

DISCLOSURE

Estimates used to Measure Recoverable Amounts of Cash-generating Units Containing Goodwill or Intangible Assets with Indefinite Useful Lives

TRANSITIONAL PROVISIONS AND EFFECTIVE DATE

WITHDRAWAL OF IAS 36 (ISSUED 1998)

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(*1)  In the case of an intangible asset, the term ‘amortisation’ is generally used instead of ‘depreciation’. The two terms have the same meaning.

(*2)  Once an asset meets the criteria to be classified as held for sale (or is included in a disposal group that is classified as held for sale), it is excluded from the scope of this Standard and is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

(*3)  In this Standard, monetary amounts are denominated in ‘currency units’ (CU).

APPENDIX A

Using PresentValue Techniques to Measure Value in Use

This appendix is an integral part of the Standard. It provides guidance on the use of present value techniques in measuring value in use. Although the guidance uses the term ‘asset’, it equally applies to a group of assets forming a cash-generating unit.

The Components of a Present Value Measurement

General Principles

Traditional and Expected Cash Flow Approaches to Present Value

Traditional Approach

Expected Cash Flow Approach

Discount Rate

APPENDIX B

Amendment to IAS 16

The amendment in this appendix shall be applied when an entity applies IAS 16 Property, Plant and Equipment (as revised in 2003). It is superseded when IAS 36 Impairment of Assets (as revised in 2004) becomes effective. This appendix replaces the consequential amendments made by IAS 16 (as revised in 2003) to IAS 36 Impairment of Assets (issued in 1998). IAS 36 (as revised in 2004) incorporates the requirements of the paragraphs in this appendix. Consequently, the amendments from IAS 16 (as revised in 2003) are not necessary once an entity is subject to IAS 36 (as revised in 2004). Accordingly, this appendix is applicable only to entities that elect to apply IAS 16 (as revised in 2003) before its effective date.

INTERNATIONAL ACCOUNTING STANDARD 38

Intangible assets

SUMMARY

This revised standard supersedes IAS 38 (1998) intangible assets and should be applied:

Earlier application is encouraged.

OBJECTIVE

SCOPE

DEFINITIONS

Intangible Assets

Identifiability

Control

Future Economic Benefits

RECOGNITION AND MEASUREMENT

Separate Acquisition

Acquisition as Part of a Business Combination

Measuring the Fair Value of an Intangible Asset Acquired in a Business Combination

Subsequent Expenditure on an Acquired In-process Research and Development Project

Acquisition by way of a Government Grant

Exchanges of Assets

Internally Generated Goodwill

Internally Generated Intangible Assets

Research Phase

Development Phase

Cost of an Internally Generated Intangible Asset

RECOGNITION OF AN EXPENSE

Past Expenses not to be Recognised as an Asset

MEASUREMENT AFTER RECOGNITION

Cost Model

Revaluation Model

USEFUL LIFE

INTANGIBLE ASSETS WITH FINITE USEFUL LIVES

Amortisation Period and Amortisation Method

Residual Value

Review of Amortisation Period and Amortisation Method

INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES

Review of Useful Life Assessment

RECOVERABILITY OF THE CARRYING AMOUNT - IMPAIRMENT LOSSES

RETIREMENTS AND DISPOSALS

DISCLOSURE

General

Intangible Assets Measured after Recognition using the Revaluation Model

Research and Development Expenditure

Other Information

TRANSITIONAL PROVISIONS AND EFFECTIVE DATE

Exchanges of Similar Assets

Early Application

WITHDRAWAL OF IAS 38 (ISSUED 1998)

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(*1)  In this Standard, monetary amounts are denominated in ‘currency units’ (CU).

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