BDO submits comment letters on IFRS 18-related technical agenda decisions

Technical agenda decisions	The issue	BDO's comment
Management-defined Performance Measures—Hypothetical Income and Expenses	Whether subtotals adjusted for hypothetical income and expenses can be management-defined performance measures (MPMs) under IFRS 18.	BDO strongly disagrees with the TAD. Measures based on actual transactions and observable data may qualify, but wholly hypothetical amounts with no basis in actual performance (such as presenting net profit if a major crisis or geopolitical event did not occur) should not.
Assessment of Specified Main Business Activities for a Manufacturer-Lessor	Whether a manufacturer-lessor’s aggregated lease activity constitutes a main business activity of providing financing to customers.	BDO is concerned that the conclusion relies too heavily on subtotals and insufficiently explains the judgement and other evidence required to identify a specified main business activity.
Classification of Income and Expenses from Cash and Cash Equivalents	How income and expenses from cash and cash equivalents are classified when an entity has more than one specified main business activity.	BDO agrees with the Committee’s technical analysis and notes that it is consistent with BDO’s published view on this issue.
Classification of Income and Expenses when an Entity Has a Main Business Activity of Providing Financing to Customers	How the IFRS 18 classification accounting policy choices apply when an entity has a main business activity of providing financing to customers, including across a consolidated group.	BDO agrees with the technical analysis presented in the TAD, but encourages the Committee to consider whether classifying income and expenses from all ‘pure financing liabilities’ in the operating category provides useful information to the users of the financial statements where some of the liabilities can be distinguished as relating or not relating to providing financing to customers.

Technical agenda decisions

The issue

BDO's comment

Management-defined Performance Measures—Hypothetical Income and Expenses

Whether subtotals adjusted for hypothetical income and expenses can be management-defined performance measures (MPMs) under IFRS 18.

BDO strongly disagrees with the TAD. Measures based on actual transactions and observable data may qualify, but wholly hypothetical amounts with no basis in actual performance (such as presenting net profit if a major crisis or geopolitical event did not occur) should not.

Assessment of Specified Main Business Activities for a Manufacturer-Lessor

Whether a manufacturer-lessor’s aggregated lease activity constitutes a main business activity of providing financing to customers.

BDO is concerned that the conclusion relies too heavily on subtotals and insufficiently explains the judgement and other evidence required to identify a specified main business activity.

Classification of Income and Expenses from Cash and Cash Equivalents

How income and expenses from cash and cash equivalents are classified when an entity has more than one specified main business activity.

BDO agrees with the Committee’s technical analysis and notes that it is consistent with BDO’s published view on this issue.

Classification of Income and Expenses when an Entity Has a Main Business Activity of Providing Financing to Customers

How the IFRS 18 classification accounting policy choices apply when an entity has a main business activity of providing financing to customers, including across a consolidated group.

BDO agrees with the technical analysis presented in the TAD, but encourages the Committee to consider whether classifying income and expenses from all ‘pure financing liabilities’ in the operating category provides useful information to the users of the financial statements where some of the liabilities can be distinguished as relating or not relating to providing financing to customers.