# Commission Regulation (EU) No 1361/2014Show full title

Commission Regulation (EU) No 1361/2014 of 18 December 2014 amending Regulation (EC) No 1126/2008 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 3 and 13 and International Accounting Standard 40 (Text with EEA relevance)         

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U.K.

# Commission Regulation (EU) No 1361/2014                     

# of 18 December 2014

# amending Regulation (EC) No 1126/2008 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 3 and 13                        and International Accounting Standard 40                     

# (Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

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:

(1)By Commission Regulation (EC) No 1126/2008(2) certain international standards and interpretations that were in existence at 15 October 2008 were adopted.

(2)On 12 December 2013, the International Accounting Standards Board (IASB) published Annual Improvements to International Reporting                              Standards 2011-2013 Cycle (the annual improvements), in the framework of its regular improvement process which aims at streamlining                              and clarifying the standards. The objective of the annual improvements is to address non-urgent, but necessary issues discussed                              by the IASB during the project cycle that began in 2011 on areas of inconsistency in International Financial Reporting Standards                              (IFRS) or where clarification of wording is required. Amendments to IFRS 3 and 13 are clarifications or corrections to the                              respective standards. Amendments to International Accounting Standard (IAS) 40 involve changes to the existing requirements                              or additional guidance on the implementation of those requirements.

(3)Those amendments to existing standards contain some references to IFRS 9 that at present cannot be applied as IFRS 9 has not                              been adopted by the Union yet. Therefore any references to IFRS 9 as laid down in the Annex to this Regulation should be read                              as a reference to IAS 39 *Financial instruments: recognition and measurement*.

(4)The consultation with the Technical Expert Group of the European Financial Reporting Advisory Group confirms that the improvements                              meet the technical criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002.

(5)Regulation (EC) No 1126/2008 should therefore be amended accordingly.

(6)The measures provided for in this Regulation are in accordance with the opinion of the Accounting Regulatory Committee,

HAS ADOPTED THIS REGULATION:

# Article 1U.K.

1.The Annex to Regulation (EC) No 1126/2008 is amended as follows:                  

(a)IFRS 3 *Business combinations* is amended as set out in the Annex to this Regulation;                  

(b)IFRS 13 *Fair value measurement* is amended as set out in the Annex to this Regulation;                  

(c)IAS 40 *Investment property* is amended as set out in the Annex to this Regulation.                  

2.Any reference to IFRS 9 as laid down in the Annex to this Regulation shall be read as a reference to IAS 39 *Financial instruments: recognition and measurement*.                  

# [X1Article 2U.K.

Each company shall apply the amendments referred to in Article 1(1), at the latest, as from the commencement date of its first                        financial year starting on or after 1 January 2015.]                   

Editorial Information

X1Substituted by Corrigendum to Commission Regulation (EU) No 1361/2014 of 18 December 2014 amending Regulation (EC) No 1126/2008 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 3 and 13 and International Accounting Standard 40 (Official                                 Journal of the European Union L 365 of 19 December 2014).

# Article 3U.K.

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

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

## ANNEXU.K.Annual Improvements to IFRSs 2011–2013 Cycle(3) 

### **Amendment to IFRS 3 *Business Combinations***U.K.

Paragraph 2 is amended and paragraph 64J is added.

#### SCOPEU.K.

##### 2This IFRS applies to a transaction or other event that meets the definition of a business combination. This IFRS does not                        apply to:U.K.

the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself.

...

##### **Effective date**U.K.

...

###### 64J*Annual Improvements Cycle 2011–2013* issued in December 2013 amended paragraph 2(a). An entity shall apply that amendment prospectively for annual periods beginning                        on or after 1 July 2014. Earlier application is permitted. If an entity applies that amendment for an earlier period it shall                        disclose that fact.U.K.

### **Amendment to IFRS 13 *Fair Value Measurement***U.K.

Paragraph 52 is amended and paragraph C4 is added.

#### *Application to financial assets and financial liabilities with offsetting positions in market risks or counterparty credit                           risk*U.K.

...

##### 52The exception in paragraph 48 applies only to financial assets, financial liabilities and other contracts within the scope                        of IAS 39 *Financial Instruments: Recognition and Measurement* or IFRS 9 *Financial Instruments*. The references to financial assets and financial liabilities in paragraphs 48–51 and 53–56 should be read as applying to                        all contracts within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, regardless of whether they meet                        the definitions of financial assets or financial liabilities in IAS 32 *Financial Instruments: Presentation*.U.K.

...

#### **Appendix C****Effective date and transition**U.K.

...

##### C4*Annual Improvements Cycle 2011–2013* issued in December 2013 amended paragraph 52. An entity shall apply that amendment for annual periods beginning on or after                        1 July 2014. An entity shall apply that amendment prospectively from the beginning of the annual period in which IFRS 13 was                        initially applied. Earlier application is permitted. If an entity applies that amendment for an earlier period it shall disclose                        that fact.U.K.

### **Amendment to IAS 40 *Investment Property***U.K.

Before paragraph 6, a heading is added. Paragraph 14A is added. After paragraph 84 a heading and paragraphs 84A and 85D are                     added.                  

#### **Classification of property as investment property or owner-occupied property**U.K.

##### **6****A *property interest* that is held by a lessee under an operating lease may be classified and accounted for as investment property if, and only                           if, the property would otherwise meet the definition of an investment property and the lessee uses the fair value model set                           out in paragraphs 33–55 for the asset recognised. This classification alternative is available on a property-by-property basis.                           However, once this classification alternative is selected for one such property interest held under an operating lease, all                           property classified as investment property shall be accounted for using the fair value model. When this classification alternative                           is selected, any interest so classified is included in the disclosures required by paragraphs 74–78.**U.K.

...

##### 14Judgement is needed to determine whether a property qualifies as investment property. An entity develops criteria so that                        it can exercise that judgement consistently in accordance with the definition of investment property and with the related                        guidance in paragraphs 7–13. Paragraph 75(c) requires an entity to disclose these criteria when classification is difficult.U.K.

##### 14AJudgement is also needed to determine whether the acquisition of investment property is the acquisition of an asset or a group                        of assets or a business combination within the scope of IFRS 3 *Business Combinations*. Reference should be made to IFRS 3 to determine whether it is a business combination. The discussion in paragraphs 7–14                        of this Standard relates to whether or not property is owner-occupied property or investment property and not to determining                        whether or not the acquisition of property is a business combination as defined in IFRS 3. Determining whether a specific                        transaction meets the definition of a business combination as defined in IFRS 3 and includes an investment property as defined                        in this Standard requires the separate application of both Standards.U.K.

...

#### **Transitional provisions**U.K.

...

##### *Cost model*U.K.

...

##### *Business Combinations*U.K.

###### **84A*****Annual Improvements Cycle 2011–2013* issued in December 2013 added paragraph 14A and a heading before paragraph 6. An entity shall apply that amendment prospectively                           for acquisitions of investment property from the beginning of the first period for which it adopts that amendment. Consequently,                           accounting for acquisitions of investment property in prior periods shall not be adjusted. However, an entity may choose to                           apply the amendment to individual acquisitions of investment property that occurred prior to the beginning of the first annual                           period occurring on or after the effective date if, and only if, information needed to apply the amendment to those earlier                           transactions is available to the entity.**U.K.

#### EFFECTIVE DATEU.K.

...

##### 85D*Annual Improvements Cycle 2011–2013* issued in December 2013 added headings before paragraph 6 and after paragraph 84 and added paragraphs 14A and 84A. An entity                        shall apply those amendments for annual periods beginning on or after 1 July 2014. Earlier application is permitted. If an                        entity applies those amendments for an earlier period it shall disclose that fact.U.K.

1

OJ L 243, 11.9.2002, p. 1.                           

2

Commission Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance                              with Regulation (EC) No 1606/2002 of the European Parliament and of the Council (OJ L 320, 29.11.2008, p. 1).                           

3

‘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’