25 July 2006

Mr David Boymal
Chairman
Australian Accounting Standards Board
PO Box 204
COLLINS STREET WEST VIC 8007

Dear Sir/Madam

ED 150 Proposed Amendments to AASB 132 and AASB 101

The Group of 100 (G100) is pleased to provide comments on the proposed amendments to AASB 132 ‘Financial Instruments: Presentation’ and AASB 101 ‘Presentation of Financial Statements’. The G100 represents the interests of the CFOs of Australia’s major business enterprises.

AASB Questions

1. Are there any regulatory issues or other issues arising in the Australian environment that may affect the implementation of the proposals, particularly any issues relating to:
 
i) not-for-profit entities; and
ii) public sector entities?

No.
 
2. Are the proposals in the best interests of the Australian economy?

Yes.

IASB Questions

Q1.  The Exposure Draft proposes to eliminate the option in IAS 23 of recognising immediately as an expense borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. Do you agree with the proposal? If not, why? What alternative would you propose and why?

Yes. The G100 supports the capitalisation of borrowing costs as part of the cost of a qualifying asset.
 
Q2.

The Exposure Draft proposes that entities should apply the amendments to borrowing costs for which the commencement date for capitalisation is on or after the effective date. However, an entity would be permitted to designate any date before the effective date and to apply the proposed amendments to borrowing costs relating to all qualifying assets for which the commencement date for capitalisation is on or after that date.

Do you agree with the proposal? If not, why? What alternative would you propose and why?

Yes. While the G100 supports proposals to permit an entity to select an earlier date to adopt the amended requirements. However, where an entity avails itself of application of the requirements from an earlier date than the effective date this will mean that items that have previously been expensed will be reinstated and included in the carrying amount of the qualifying asset. We believe that the Basis for Conclusions should discuss the acceptable treatment of these reinstatements under AASB 108/IAS 8 ‘Accounting Policies, Changes in Estimates and Errors’.

Yours sincerely

Tom Honan
National President