SIC Interpretations

SIC Interpretations
SIC Interpretations were previously issued by the Standard Interpretations Committee (SIC),
and were subsequently endorsed by the International Accounting Standards Board (IASB). The
IFRS Interpretations Committee has reissued Interpretations in this series if it considers it
necessary.
Issue
# Name
d
Consistency – Different Cost Formulas for Inventories

SIC-1 1997
Superseded
Consistency – Capitalisation of Borrowing Costs

SIC-2 1997
Superseded
Elimination of Unrealised Profits and Losses on Transactions with

SIC-3 Associates 1997
Superseded
Classification of Financial Instruments - Contingent Settlement Pro-

SIC-5 visions 1998
Superseded
Costs of Modifying Existing Software

SIC-6 1998
Superseded
SIC-7 Introduction of the Euro 1998
First-Time Application of IASs as the Primary Basis of Accounting

SIC-8 1998
Superseded
SIC-9 Business Combinations – Classification either as Acquisitions or 1998

Unitings of Interests
Superseded
Government Assistance – No Specific Relation to Operating Activi-

SIC-10 1998
ties
Foreign Exchange – Capitalisation of Losses Resulting from Severe

SIC-11 Currency Devaluations 1998
Superseded
Consolidation – Special Purpose Entities

SIC-12 1998
Superseded by IFRS 10 and IFRS 12 effective 1 January 2013
Jointly Controlled Entities – Non-Monetary Contributions by

Venturers
SIC-13 1998
Superseded by IFRS 11 and IFRS 12, effective for annual periods beginning on or after
1 January 2013
Property, Plant and Equipment – Compensation for the Impairment

SIC-14 or Loss of Items 1998
Superseded
SIC-15 Operating Leases – Incentives 1999
Share Capital – Reacquired Own Equity Instruments (Treasury

SIC-16 Shares) 1999
Superseded
Equity – Costs of an Equity Transaction

SIC-17 2000
Superseded
Consistency – Alternative Methods

SIC-18 2000
Superseded
SIC-19 Reporting Currency – Measurement and Presentation of Financial 2000

Statements under IAS 21 and IAS 29
Superseded
Equity Accounting Method – Recognition of Losses

SIC-20 2000
Superseded
Income Taxes – Recovery of Revalued Non-Depreciable Assets

SIC-21 Superseded by, and incorporated into, IAS 12 by amendments made by Deferred Tax: 2000
Recovery of Underlying Assets, effective for annual periods beginning on or after 1
January 2012
Business Combinations – Subsequent Adjustment of Fair Values

SIC-22 and Goodwill Initially Reported 2000
Superseded
Property, Plant and Equipment – Major Inspection or Overhaul

SIC-23 Costs 2000
Superseded
Earnings Per Share – Financial Instruments and Other Contracts

SIC-24 that May Be Settled in Shares 2000
Superseded
Income Taxes – Changes in the Tax Status of an Enterprise or its

SIC-25 2000
Shareholders
Evaluating the Substance of Transactions in the Legal Form of a

SIC-27 2000
Lease
Business Combinations – 'Date of Exchange' and Fair Value of

SIC-28 Equity Instruments 2001
Superseded
SIC-29 Service Concession Arrangements: Disclosures 2001
SIC-30 Reporting Currency – Translation from Measurement Currency to 2001

Presentation Currency
Superseded
Revenue – Barter Transactions Involving Advertising Services

SIC-31 2001
Will be superseded by IFRS 15 as of 1 January 2017
SIC-32 Intangible Assets – Web Site Costs 2001
Consolidation and Equity Method – Potential Voting Rights and Allo-

SIC-33 cation of Ownership Interests 2001
Superseded
Note
The above table lists the most recent version (or versions if a pronouncement has not yet been superseded) of each pro-
nouncement and the date that revisions was originally issued. Where a pronouncement has been reissued with the same or
a different name, the date indicated in the above table is the date the revised pronouncement was reissued (these are
indicated with an asterisk (*)). The majority of the pronouncements have also been amended through IASB or IFRS Interpre-
tations Committee projects, for consequential amendments arising on the issue of other pronouncements, the annual im-
provements process, and other factors. Our page for each pronouncement has a full history of the pronouncement, its devel-
opment, amendments and other information.
SIC-1 — Consistency – Different

Cost Formulas for Inventories
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References
IAS 2 Inventories
History
Issued December 1997.

Effective date: Periods beginning on or after 1 January 1999.
Superseded by, and incorporated into, IAS 2 Inventories (Revised 2003) effective for
annual periods beginning on or after 1 January 2005.
Summary of SIC-1
SIC-1 requires that under IAS 2.21 and IAS 2.23, the same cost formula be used for inventories
having the same characteristics. Where the nature or use of a group of inventory items differs
from other groups, different methods may be used for the different groups.
SIC-2 — Consistency -
Capitalisation of Borrowing Costs
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IAS 23 Borrowing Costs
History

Effective date: Periods beginning on or after 1 January 1998.
Superseded by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Revised 2003) effective for annual periods beginning on or after 1 January 2005.
Summary of SIC-2
If an enterprise adopts the accounting policy of capitalising borrowing costs as permitted by IAS
23, it should apply that policy consistently for all qualifying assets and periods.
SIC-3 — Elimination of Unrealised
Profits and Losses on Transactions
with Associates
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IAS 28 Investments in Associates
History

Effective date: Periods beginning on or after 1 June 1998.
Superseded by IAS 28 Investments in Associates (Revised 2003), effective for annual
periods beginning on or after 1 January 2005.
Summary of SIC-3
Under IAS 28.16, unrealised gains and losses resulting from transactions with associates
should be eliminated proportionately. This is consistent with the application of the equity method
for joint ventures as required by IAS 31.39 and .40.
SIC-5 — Classification of Financial

Instruments – Contingent
Settlement Provisions
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References
IAS 32 Financial Instruments: Presentation
History
Issued May 1998.

Effective date: Financial instruments issued in periods beginning on or after 1 June
1998.
Superseded by, and incorporated into, IAS 32 Financial Instruments: Disclosure and
Presentation (Revised 2003, later renamed), effective for annual periods beginning
on or after 1 January 2005.
Summary of SIC-5
SIC-5 addresses how to classify a financial instrument when the manner of settlement (in cash
or in equity instruments of the issuer) depends on the outcome of uncertain future events that
are beyond the control of both the issuer and the holder. SIC-5 states that such instruments
should be classified in accordance with IAS 32.05 and .18 as liabilities, regardless of their legal
form unless the possibility of settlement in cash appears to be remote, in which case the instru-
ments should be classified as equity.
SIC-6 — Costs of Modifying Existing

Software
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The IASC Framework

IAS 38 Intangible Assets
History
Issued May 1998.

Effective date: 1 June 1998.
Superseded by, and incorporated into, IAS 16 Property, Plant and Equipment (Revised
2003) effective for annual periods beginning on or after 1 January 2005.
Summary of SIC-6
The issue is how to account for expenditures such as those for modifications necessary to
prepare existing software systems for the turn of the millennium (often referred to as "Year 2000
Costs") or the introduction of the euro.
In accordance with paragraphs 89 and 90 of the Framework (and applying IAS 16.24 by
analogy) expenditure incurred to restore or maintain the future economic benefits that an enter-
prise expected from the original standard of performance of existing software systems should
not be capitalised. This solution is consistent with IAS 38 Intangible Assets as well.
In addition, expenditure should be recognised as incurred in accordance with paragraphs 94-98

of the Framework, that is, for work undertaken "in house", as materials are used or labour time
is consumed. For work undertaken by external contractors, expenditure should be recognised
only as the work is carried out.
The Interpretation does not apply to purchased software.
SIC-7 — Introduction of the Euro

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IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10 Events After the Reporting Period
IAS 21 The Effects of Changes in Foreign Exchange Rates
History
Issued May 1998.

Effective date: 1 June 1998.
Revised December 2003, effective 1 January 2005, as part of the IASB's Improvements
project. The summary below reflects those revisions.
Summary of SIC-7
This Interpretation addresses how the introduction of the Euro, resulting from the European
Economic and Monetary Union (EMU), affects the application of IAS 21 The Effects of Changes
in Foreign Exchange Rates. SIC-7 states that the requirements of IAS 21 should be strictly
applied when a country joins the EU's Economic and Monetary Union.
Therefore:
foreign currency monetary assets and liabilities resulting from transactions continue to
be translated into the functional currency at the closing rate. Any resulting exchange
differences are recognised as income or expense immediately, except that an entity
continues to apply its existing accounting policy for exchange gains and losses
related to hedges of the currency risk of a forecast transaction
cumulative exchange differences relating to the translation of financial statements of
foreign operations continue to be recognised in other comprehensive income and
are recognised as income or expense only on the disposal of the net investment in
the foreign operation
exchange differences resulting from translating liabilities denominated in participating
currencies are not included in the carrying amount of related assets.
SIC-8 — First-time Application of
IASs as the Primary Basis of
Accounting
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IAS 1 Presentation of Financial Statements
History
Issued July 1998.

Effective date: 1 August 1998.
Superseded by IFRS 1 First-time Adoption of International Financial Reporting
Standards (issued June 2003), effective for an entity's first IFRS financial statements
for a period beginning on or after 1 January 2004
Summary of SIC-8
The issues dealt with in SIC-8 are:
how the financial statements of an enterprise should be prepared and presented in the
period of first-time application of the full set of IASs
how the specific transitional provisions set out in certain Standards and Interpretations
are to be applied in the period of first-time application of IASs to balances of items
that existed already at the effective date of those Standards and Interpretations.
Under SIC-8, in the period of first-time application of IASs as the primary accounting basis, the
financial statements of an enterprise, including comparative information, should be prepared
and presented as if the financial statements had always been prepared in accordance with the
IASs effective for the period of first-time application. Therefore, the Standards and Interpreta-
tions should be applied retrospectively except when Standards or Interpretations require or
permit a different transitional treatment or when the amount of the adjustment relating to prior
periods cannot be reasonably determined. Adjustment amounts should be treated as an adjust-
ment to the opening balance of retained earnings of the earliest period presented in accordance
with IASs. If adjustments relating to prior periods or comparative information cannot be deter-
mined, the fact should be disclosed.
On the first-time application of IASs, an enterprise may apply the transitional provisions only for
periods ending at the date prescribed in the respective Standards and Interpretations. The tran-
sitional treatment adopted should be disclosed. For example, goodwill may only be written off
directly against equity when it was acquired in periods beginning prior to January 1995.
SIC-9 — Business Combinations –

Classification either as Acquisitions
or Unitings of Interests
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IAS 22 Business Combinations
History
Issued July 1998.

Effective date: Business combinations given initial accounting recognition in periods
beginning on or after 1 August 1998
Superseded by and incorporated into IFRS 3 Business Combinations effective 31 March
2004.
Summary of SIC-9
The issue resolved by SIC-9 is how the definitions in IAS 22.09 and the additional guidance in
IAS 22.11 to 13 and in IAS 22.14 to 17 are to be interpreted and applied in classifying a
business combination and whether a business combination under IAS 22 might be classified as
neither an acquisition nor a uniting of interests.
SIC-9 concludes that the overriding criterion to distinguish an acquisition from a uniting of
interests is whether an acquirer can be identified, i.e. whether the shareholders of one of the
combining enterprises obtain control over the combined enterprise. The classification of a
business combination and the determination of whether control exists should be based on an
overall evaluation of all relevant facts and circumstances of the transaction; the guidance given
in IAS 22 provides examples of important factors to be considered, not a comprehensive set of
conditions to be met.
In addition, the Interpretation clarifies that a business combination is to be classified as an ac-

quisition, unless the criteria of IAS 22.16 are met (exchange or pooling of the substantial
majority of the voting common shares of the combining enterprises, relative equality in fair
values of the combining enterprises and continuance of substantially the same percentage in
voting rights and interests of the shareholders of each of the combining enterprises in the
combined enterprise). Even if all three criteria are met, a business combination is only to be
classified as a uniting of interests if no acquirer can be identified.
SIC-10 — Government Assistance –

No Specific Relation to Operating
Activities
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IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
History
Issued July 1998.

Summary of SIC-10
In some countries, government assistance to enterprises can be aimed at encouragement or

long-term support of business activities either in certain regions or industry sectors. Conditions
to receive such assistance may not be specifically related to the operating activities of the enter-
prise, e.g. operating in a particular industry, continuing to operate or running a business in un-
derdeveloped areas. The issue is whether such government assistance is "a government grant"
within the scope of IAS 20 and should therefore be accounted for in accordance with that
Standard.
Under SIC-10, government assistance to enterprises that is aimed at encouragement or long-

term support of business activities either in certain regions or industry sectors meets the defini-
tion of government grants in IAS 20. Such grants should therefore not be credited directly to
shareholders' interests.
SIC-11 — Foreign Exchange -

Capitalisation of Losses Resulting
from Severe Currency Devaluations
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History
Issued July 1998.

Superseded by IAS 21 The Effects of Changes in Foreign Exchange Rates (Revised
2003), effective for annual periods beginning on or after 1 January 2005.
Summary of SIC-11
The allowed alternative treatment in IAS 21.21 requires several conditions to be met cumula-
tively before an enterprise can include exchange losses on foreign currency liabilities in the
carrying amount of related assets. The issue is how the conditions of IAS 21.21 should be inter-
preted that the liability "cannot be settled" and that there is "no practical means of hedging"
against the foreign currency exchange risk and that the liability should arise on the "recent ac-
quisition" of an asset.
The SIC agreed that foreign exchange losses on liabilities that result from the recent acquisition
of assets should only be included in the carrying amount of the assets if those liabilities could
not have been settled or if it was not practically feasible to hedge the foreign currency exposure
before the severe devaluation or depreciation occurred. Only in these cases foreign exchange
losses are unavoidable and therefore part of the asset's acquisition costs. "Recent" acquisitions
of assets are acquisitions within twelve months prior to the severe devaluation or depreciation of
the reporting currency.
SIC-12 — Consolidation – Special
Purpose Entities
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IAS 27 Consolidated and Separate Financial Statements
History
Issued November 1998.

Effective date: Annual financial periods beginning on or after 1 July 1999.
Amended by IFRIC: November 2004 to remove the exclusion of equity compensation
plans from the scope of SIC-12
Superseded by IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of
Interests in Other Entities, effective for annual periods beginning on or after 1
January 2013
Summary of SIC-12
SIC-12 addresses when a special purpose entity should be consolidated by a reporting enter-
prise under the consolidation principles in IAS 27. Under SIC-12, an entity must consolidate a
special purpose entity ("SPE") when, in substance, the entity controls the SPE. The control of
an SPE by an entity may be indicated if:
The SPE conducts its activities to meet the entity's specific needs
The entity has decision-making powers to obtain the majority of the benefits of the SPE's
activities
The entity is able to obtain the majority of the benefits of the SPE's activities through an
'auto-pilot' mechanism
By having a right to the majority of the SPE's benefits, the entity is exposed to the SPE's
business risks
The entity has the majority of residual interest in the SPE
Examples of SPEs include entities set up to effect a lease, a securitisation of financial assets, or
R&D activities. The concept of control used in IAS 27 requires having the ability to direct or
dominate decision making accompanied by the objective of obtaining benefits from the SPE's
activities.
Some enterprises may also need to separately evaluate the topic of derecognition of assets, for
example, related to assets transferred to an SPE. In some circumstances, such a transfer of
assets may result in those assets being derecognised and accounted for as a sale. Even if the
transfer qualifies as a sale, the provisions of IAS 27 and SIC-12 may mean that the enterprise
should consolidate the SPE. SIC-12 does not address the circumstances in which sale
treatment should apply for the reporting enterprise or the elimination of the consequences of
such a sale upon consolidation.
SIC-13 — Jointly Controlled Entities

– Non-Monetary Contributions by
Venturers
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IAS 31 Interests In Joint Ventures
History
Issued November 1998
Effective date: Annual financial periods beginning on or after 1 January 1999
Superseded by IFRS 11 Joint Arrangements, effective for annual periods beginning on
or after 1 January 2013
Summary of SIC-13
SIC-13 clarifies the circumstances in which the appropriate portion of gains or losses resulting
from a contribution of a non-monetary asset to a jointly controlled entity (JCE) in exchange for
an equity interest in the JCE should be recognised by the venturer in the income statement.
SIC-13 indicates that under IAS 31.39, recognition of gains or losses on contributions of non-
monetary assets is appropriate unless:
(a) the significant risks and rewards related to the non-monetary asset are not trans-
ferred to the jointly controlled entity;
(b) the gain or loss cannot be measured reliably; or
(c) similar assets are contributed by the other venturers.
Non-monetary assets contributed by venturers are similar when they have a similar nature, a
similar use in the same line of business and a similar fair value. A contribution meets the similar-
ity test only if all significant component assets included in the contribution are similar to each of
the significant component assets contributed by the other venturers. A gain should also be
recognised if, in addition to the equity interest in the jointly controlled entity, the venturer
receives consideration in the form of either cash or other assets which are dissimilar to the non-
monetary assets contributed.
SIC-14 — Property, Plant and

Equipment – Compensation for the
Impairment or Loss of Items
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References
IAS 16 Property, Plant and Equipment
History
Issued November 1998

Effective date: Annual financial periods beginning on or after 1 July 1999.
Superseded by and incorporated into IAS 16 Property, Plant and Equipment (Revised
Summary of SIC-14
SIC-14 addresses how an enterprise should account for impairments or losses of items of
property, plant and equipment, the related compensation from third parties, and the subsequent
restoration, purchase or construction of assets.
SIC-14 confirms that three separate economic events are involved and that each event should
be accounted for separately. The three separate events are:
the impairment or loss,

the related compensation from third parties, and
the subsequent restoration, purchase or construction of assets.
Therefore, if a fixed asset is impaired or lost, any claim for compensation from a third party or
any subsequent cost of repair or acquisition of a replacement asset are separate economic
events and should be accounted for separately. Impairments should be recognised under IAS
36 Impairment of Assets. Monetary or non-monetary compensation from third parties (insurance
companies, governments, or lawsuits) should be included in the income statement when it
probable and measurable. Compensation that is contingent on the occurrence of some future
event, such as winning a lawsuit, must be virtually certain before it can be recognised. The cost
of a replacement asset would normally be capitalised. Restoration cost would be capitalised
only if increases the performance capability of the asset.
SIC-15 — Operating Leases –
Incentives
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Note: SIC-15 will be superseded by IFRS 16 Leases as of 1 January 2019.
References
IAS 17 Leases
History
Issued July 1999

Effective date: Lease terms beginning on or after 1 January 1999
SIC-15 will be superseded by IFRS 16 Leases as of 1 January 2019.
Summary of SIC-15
SIC-15 clarifies the recognition of incentives related to operating leases by both the lessee and
lessor. The Interpretation indicates that lease incentives (such as rent-free periods or contribu-
tions by the lessor to the lessee's relocation costs) should be considered an integral part of the
consideration for the use of the leased asset. IAS 17.24 and .42 (rev. 1997) require an enter-
prise to treat incentives as a reduction of lease income or lease expense. As they are an
integral part of the net consideration agreed for the use of the leased asset, incentives should
be recognised by both the lessor and the lessee over the lease term, with each party using a
single amortisation method applied to the net consideration.
SIC-16 — Share Capital –

Reacquired Own Equity Instruments
(Treasury Shares)
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History
Issued January 1999

Effective date: Annual financial periods beginning on or after 1 July 1999
Presentation (Revised 2003, later renamed) effective for annual periods beginning
Summary of SIC-16
SIC-16 clarifies the accounting for an enterprise's own equity instruments which have been
reacquired by the enterprise or any of its subsidiaries. Such reacquired equity instruments are
frequently referred to as treasury shares.
SIC-16 states that treasury shares should be presented in the balance sheet as a deduction
from equity, and the acquisition of treasury shares should be presented in the financial state-
ments as a change in equity. Treasury shares may not be reported as an asset. Additionally, no
gain or loss should be recognised in the income statement on the sale, issuance, or cancellation
of treasury shares, and consideration received should be presented in the financial statements
as a change in equity.
SIC-17 — Equity – Costs of an

Equity Transaction
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History
Issued January 2000

Presentation (Revised 2003, later renamed) effective for annual periods beginning
Summary of SIC-17
SIC-17 states that transaction costs, defined as incremental external costs directly attributable
to an equity transaction, should be accounted for as a deduction from equity. The Interpretation
applies to transactions involving the issuance or acquisition of instruments of the reporting en-
terprise that are classified by that enterprise as equity and result in a net increase or decrease
to equity.
Typical examples of equity transactions subject to the Interpretation would include the issuance
of common shares for cash and the acquisition by an enterprise of its own equity instruments.
Costs of a stock exchange listing of shares already outstanding, a secondary offering of shares
(e.g. one or more stockholders in a company selling all or a portion of their holdings), a share
split, or a stock dividend would not be considered costs of an equity transaction subject to the
Interpretation.
SIC-18 — Consistency – Alternative

Methods
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History
Issued January 2000

Effective date: Annual financial periods beginning on or after 1 July 2000
Superseded by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Revised 2003), effective for annual periods beginning on or after 1 January 2005.
Summary of SIC-18
Under SIC-18, if more than one accounting policy is available under an International Accounting
Standard or Interpretation, an enterprise should choose and apply consistently one of those
policies unless the Standard or Interpretation specifically requires or permits categorisation of
items (transactions, events, balances, or amounts) for which different policies may be appropri-
ate. If a Standard requires or permits categorisation of items, the most appropriate accounting
policy should be selected and applied consistently to each category.
Additional guidance on the application of the Interpretation to specific choices available under
IAS is provided in an appendix to SIC-18.
SIC-19 — Reporting Currency –

Measurement and Presentation of
Financial Statements Under IAS 21
and IAS 29
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IAS 29 Financial Reporting in Hyperinflationary Economies
History
Issued: November 2000

Summary of SIC-19
SIC-19 emphasises that the currency an enterprise uses in measuring items in its financial
statements should be selected to provide information about the enterprise that is useful and
reflects the economic substance of the underlying events and circumstances relevant to that en-
terprise. All other currencies are treated as foreign currencies in the measurement of items in
the financial statements and translation of financial statements. It follows that an enterprise does
not have an arbitrary choice to avoid restatement under IAS 29 of financial statements which
are measured in the currency of a hyperinflationary economy.
For example, assume a Russian enterprise uses the Russian Rouble as an appropriate
currency for measurement of items in its financial statements. The enterprise determines the
treatment of foreign exchange transactions under IAS 21 and it also restates those financial
statements under IAS 29 if circumstances indicate that the Rouble is the currency of a hyperin-
flationary economy. However, the enterprise is not precluded from converting those financial
statements to another currency for presentation, for example converting those financial state-
ments to be presented in German Marks.
Click for IASC Press Release on SIC-19 (PDF 33k)
SIC-20 — Equity Accounting

Method – Recognition of Losses
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History
Issued: July 2000

Effective date: 15 July 2000
Superseded by IAS 28 Investments in Associates (Revised 2003) effective for annual
periods beginning on or after 1 January 2005.
Summary of SIC-20
SIC-20 confirms that in applying the equity method of accounting, the investor normally stops
recording its share of the continuing losses of an associate once the carrying amounts of
financial interests which are accounted for under the equity method are reduced to nil.
SIC-21 — Income Taxes –

Recovery of Revalued Non-
Depreciable Assets
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IAS 12 Income Taxes
History
Issued: July 2000

Superseded by, and incorporated into, IAS 12 Income Taxes, by Deferred Tax:
Recovery of Underlying Assets, effective for annual periods beginning on or after 1
January 2012
Summary of SIC-21
SIC-21 deals with cases where a non-depreciable asset (freehold land) is carried at revaluation
under IAS 16. No part of the carrying amount of such an asset is considered to be recovered
through its use. Therefore, SIC-21 concludes that the deferred tax liability or asset that arises
from revaluation must be measured based on the tax consequences that would follow from the
sale of the asset rather than through use. In some jurisdictions, this will result in the use of a
capital gains tax rate rather than the rate applicable to corporate earnings.
Click for IASC Press Release on SIC-21 (PDF 36k).

Subsequent Adjustment of Fair
Values and Goodwill Initially
Reported
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History
Issued: July 2000

Effective date: Annual periods ending on or after 15 July 2000
Superseded by, and incorporated into, IFRS 3 Business Combinations, effective 31
March 2004.
Summary of SIC-22
In very limited circumstances, IAS 22 permits the subsequent recognition of identifiable assets
and liabilities that had not been recognised in the original accounting for an acquisition under
the purchase method or adjustment of the amounts initially assigned to identifiable assets and li-
abilities to reflect additional evidence which has become available. SIC-22 indicates that the ad-
justment made in such circumstances should be calculated as if the newly assigned values had
been used from the date of the acquisition. In some cases there will also be an effect on
goodwill or negative goodwill. SIC-22 also addresses the presentation and disclosure of such an
adjustment.
SIC-23 — Property, Plant and

Equipment – Major Inspection or
Overhaul Costs
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References
IAS 16 Property, Plant and Equipment
History
Issued: July 2000

Superseded by, and incorporated into, IAS 16 Property, Plant and Equipment (Revised
Summary of SIC-23
SIC-23 confirms that the cost of a major inspection or overhaul generally should be expensed
as incurred. The exception is where the enterprise treats the cost of a major inspection or
overhaul as a separate "component" asset for accounting purposes and depreciates that
component to reflect the consumption of benefits resulting from the major inspection or
overhaul.
SIC-24 — Earnings Per Share –

Financial Instruments and Other
Contracts that May Be Settled in
Shares
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References
IAS 33 Earnings Per Share
History
Issued: November 2000

Effective date: 1 December 2000
Superseded by, and incorporated into, IAS 33 Earnings Per Share (Revised 2003),
effective for annual periods beginning on or after 1 January 2005.
Summary of SIC-24
SIC-24 addresses the treatment of instruments that may be settled by a reporting enterprise
either by payment of financial assets or by payment in the form of a transfer of ordinary shares
of the reporting enterprise to the holder. SIC-24 states that all instruments that may result in the
issuance of ordinary shares of the reporting enterprise to the holder of the financial instrument,
at the option of the issuer or the holder, are potential ordinary shares of that enterprise. If a
potential ordinary share is dilutive, (that is, its conversion to ordinary shares would decrease net
profit per share from continuing ordinary operations) its dilutive effect is included in calculating
diluted earnings per share.
SIC-25 — Income Taxes – Changes

in the Tax Status of an Enterprise or
its Shareholders
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IAS 12 Income Taxes
History
Date Development Comments
11 July SIC-25 Income Taxes – Changes in the Tax Effective 15

2000 Status of an Enterprise or its Shareholders July 2000
issued
Summary of SIC-25
A change in the tax status of an enterprise or its shareholders, e.g. due to an initial public
offering or restructuring, does not give rise to increases or decreases in the pre-tax amounts
recognised directly in equity. Therefore, SIC-25 concludes that the current and deferred tax con-
sequences of the change in tax status should be included in net profit or loss for the period.
However, where a transaction or event does result in a direct credit or charge to equity or
amounts recognised in other comprehensive income, for example the revaluation of property,
plant or equipment under IAS 16 Property, Plant and Equipment, the related tax consequences
would be recognised directly in equity or as part of other comprehensive income.
SIC-27 — Evaluating the Substance

of Transactions in the Legal Form of
a Lease
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Note: SIC-27 will be superseded by IFRS 16 Leases as of 1 January 2019.
References

IAS 17 Leases
IAS 18 Revenue
History
October 2000 SIC-D27 Evaluating the Substance of

Transactions in the Legal Form of a Lease
published
April 2001 Proposed final Interpretation remanded by

IASB to SIC for redrafting to focus on the
principles involved
October 2001 Revised proposed final Interpretation

remanded by IASB to SIC for further redraft-
ing
24 December SIC-27 Evaluating the Substance of Trans- Effective 31

2001 actions in the Legal Form of a Lease issued December 2001
1 January 2019 SIC-27 will be superseded by IFRS 16

Leases
Summary of SIC-27
SIC-27 addresses issues that may arise when an arrangement between an enterprise and an
investor involves the legal form of a lease.
Among the provisions of SIC- 27:
Accounting for arrangements between an enterprise and an investor should reflect the
substance of the arrangement. All aspects of the arrangement should be evaluated
to determine its substance, with weight given to those aspects and implications that
have an economic effect. In this respect, SIC-27 includes a list of indicators that indi-
vidually demonstrate that an arrangement may not, in substance, involve a lease
under IAS 17 Leases.
If an arrangement does not meet the definition of a lease, SIC-27 addresses whether a
separate investment account and lease payment obligation that might exist
represent assets and liabilities of the enterprise; how the enterprise should account
for other obligations resulting from the arrangement; and how the enterprise should
account for a fee it might receive from an Investor. SIC-27 includes a list of indica-
tors that collectively demonstrate that, in substance, a separate investment account
and lease payment obligations do not meet the definitions of an asset and a liability
and should not be recognised by the enterprise. Other obligations of an arrange-
ment, including any guarantees provided and obligations incurred upon early termi-
nation, should be accounted for under IAS 37 Provisions, Contingent Liabilities and
Contingent Assets or IAS 39 Financial Instruments: Recognition and Measurement,
depending on the terms. Further, it agreed that the criteria in IAS 18.20 should be
applied to the facts and circumstances of each arrangement in determining when to
recognise a fee as income that an Enterprise might receive.
A series of transactions that involve the legal form of a lease is linked, and therefore
should be accounted for as one transaction, when the overall economic effect cannot
be understood without reference to the series of transactions as a whole.

'Date of Exchange' and Fair Value
of Equity Instruments
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References
History
SIC D28 was issued July 2001.

Final SIC-28 was approved by the IASB in December 2001.
Effective date: Acquisitions given initial accounting recognition on or after 31 December
2001
Superseded by, and incorporated into, IFRS 3 Business Combinations, effective 31
March 2004.
Summary of SIC-28
SIC-28 addresses when the 'date of exchange' occurs where shares are issued as purchase
consideration in an acquisition. SIC-28 provides that if an acquisition is achieved in one
exchange transaction (not in stages), the 'date of exchange' is the date of acquisition — that is,
the date when the acquirer obtains control over the net assets and operations of the acquiree.
When an acquisition is achieved in stages (for instance, successive share purchases), the fair
value of the equity instruments issued as purchase consideration at each stage should be deter-
mined at the date that each individual investment is recognised in the financial statements of the
acquirer.
SIC-28 also addresses when it is appropriate to consider other evidence and valuation methods
in addition to a published price at the date of exchange of a quoted equity instrument. The Inter-
pretation states that the published price at the date of exchange provides the best evidence of
the instrument's fair value and should be used, except in rare circumstances. Other evidence
and valuation methods should also be considered only in the rare circumstance when it can be
demonstrated that the published price at that date is an unreliable indicator, and the other
evidence and valuation methods provide a more reliable measure of fair value. The published
price at the date of exchange is an unreliable indicator only when it has been affected by an
undue price fluctuation or a narrowness of the market.
SIC-29 — Service Concession

Arrangements: Disclosures
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References
History
9 July 2001 SIC-D29 Disclosure – Service Con- Comment deadline

cession Arrangements published 10 September 2001
24 December SIC-29 Disclosure – Service Conces- Effective 31

2001 sion Arrangements issued December 2001
30 November Title of SIC-29 changed to Service Effective for annual

2006 Concession Arrangements: Disclo- periods beginning
sures on the issue of IFRIC 12 on or after 1
Service Concession Arrangements January 2008
Summary of SIC-29
SIC-29 prescribes the information that should be disclosed in the notes to the financial state-
ments of a concession operator and a concession provider when the two parties are joined by a
service concession arrangement. A service concession arrangement exists when an enterprise
(the concession operator) agrees with another enterprise (the concession provider) to provide
services that give the public access to major economic and social facilities.
Examples of service concession arrangements involve water treatment and supply facilities,
motorways, car parks, tunnels, bridges, airports and telecommunication networks. Examples of
arrangements that are not service concession arrangements include an enterprise outsourcing
the operation of its internal services (for instance, employee cafeteria, building maintenance,
and accounting or information technology functions).
Under SIC-29, the following should be disclosed in each period:
a description of the arrangement

significant terms of the arrangement that may affect the amount, timing, and certainty of
future cash flows (such as the period of the concession, re-pricing dates, and the
basis on which re-pricing or re-negotiation is determined)
the nature and extent (quantity, time period, or amount, as appropriate) of:
rights to use specified assets
obligations to provide or rights to expect provision of services
obligations to acquire or build items of property, plant and equipment
obligations to deliver or rights to receive specified assets at the end of the
concession period
renewal and termination options
other rights and obligations (for instance, major overhauls)
changes in the arrangement occurring during the period
how the service arrangement has been classified
the amount of revenue and profits or losses recognised in the period on exchanging
construction services for a financial asset or an intangible asset.
SIC-30 — Reporting Currency –

Translation from Measurement
Currency to Presentation Currency
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References

IAS 29 Financial Reporting in Hyperinflationary Economies
History
SIC D30 was issued July 2001

2003), effective for annual periods beginning 1 January 2005.
Summary of SIC-30
SIC-30 addresses how an enterprise translates items in its financial statements from a mea-
surement currency to a presentation currency. SIC-30 provides that when the measurement
currency is not the currency of a hyperinflationary economy, the requirements of SIC-19.9
should be applied as follows:
assets and liabilities for all balance sheets presented (including comparatives) are trans-
lated at the closing rate existing at the date of each balance sheet presented
income and expense items are translated at the exchange rates existing at the dates of
the transactions
equity items (other than the net profit or loss for the period that is included in retained
earnings) are translated at the closing rate existing at the date of each balance sheet
presented
all exchange differences resulting from translation should be recognised directly in
equity.
When the measurement currency is the currency of a hyperinflationary economy, the require-
ments of SIC-19.9 should be applied as follows:
assets, liabilities, and equity items for all balance sheets presented (including compara-
tives) should be translated at the closing rate existing at the date of the most recent
balance sheet presented
income and expense items for all periods presented should be translated at the closing
rate existing at the end of the most recent period presented.
SIC-30 also addresses the information that should be disclosed when additional information not
required by International Accounting Standards is displayed in financial statements and in a
currency, other than the currency used in presenting the financial statements, as a convenience
to certain users. An enterprise should:
clearly identify the information as supplementary information to distinguish it from the in-
formation required by International Accounting Standards and translated in accor-
dance with the Interpretation
disclose the measurement currency used to prepare the financial statements and the
method of translation used to determine the supplementary information displayed
disclose the fact that the measurement currency reflects the economic substance of the
underlying events and circumstances of the enterprise and that the supplementary
information is displayed in another currency for convenience purposes only
disclose the currency in which the supplementary information is displayed.
SIC-31 — Revenue – Barter

Transactions Involving Advertising
Services
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Note: SIC-31 will be superseded by IFRS 15 Revenue from Contracts with Customers as
off 1 January 2018
References
IAS 18 Revenue
History

9 July 2001 SIC-D31 Revenue – Barter Comment deadline 10
Transactions Involving Ad- September 2001
vertising Services published
24 December SIC-31 Revenue – Barter Effective 31 December 2001

2001 Transactions Involving Ad-
vertising Services issued
28 May 2014 Superseded by IFRS 15 Effective for an entity's first

Revenue from Contracts with annual IFRS financial state-
Customers ments for periods beginning
on or after 1 January 2018
Summary of SIC-31
Under IAS 18, revenue cannot be recognised if the amount of revenue is not reliably measur-
able. SIC-31 deals with the circumstances in which a seller can reliably measure revenue at the
fair value of advertising services received or provided in a barter transaction.
Under SIC-31, revenue from a barter transaction involving advertising cannot be measured
reliably at the fair value of advertising services received. However, a seller can reliably measure
revenue at the fair value of the advertising services it provides in a barter transaction by
reference only to non-barter transactions that:
involve advertising similar to the advertising in the barter transaction

occur frequently
represent a predominant number of transactions and amount when compared to all
transactions to provide advertising that is similar to the advertising in the barter
transaction
involve cash and/or another form of consideration (such as marketable securities, non-
monetary assets, and other services) that has a reliably measurable fair value
do not involve the same counterparty as in the barter transaction.
SIC-32 — Intangible Assets – Web
Site Costs
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References
IAS 38 Intangible Assets
History
9 July 2001 SIC-D32 Intangible Assets — Web Comment deadline 10

Site Costs published September 2001.
25 March SIC-32 Intangible Assets — Web Effective 25 March 2002.

2002 Site Costs issued
Summary of SIC-32
SIC-32 concludes that a website developed by an entity using internal expenditure, whether for
internal or external access, is an internally generated intangible asset that is subject to the re-
quirements of IAS 38 Intangible Assets.
SIC-32 identifies the following stages of website development:
Planning
Application and infrastructure development
Graphical design development
Content development
Operating
SIC-32 addresses the appropriate accounting treatment for internal expenditure on each of
those stages of development and operation:
a. A website arising from development should be recognised as an intangible asset

if, and only if, in addition to complying with the general requirements described in
IAS 38.21 for recognition and initial measurement, an enterprise can satisfy the re-
quirements in IAS 38.57. In particular, an enterprise may be able to satisfy the re-
quirement to demonstrate how its website will generate probable future economic
benefits under IAS 38.57(d) when, for example, the website is capable of generat-
ing revenues, including direct revenues from enabling orders to be placed. An en-
terprise is not able to demonstrate how a website developed solely or primarily for
promoting and advertising its own products and services will generate probable
future economic benefits, and consequently all expenditure on developing such a
website should be recognised as an expense when incurred.
b. Any internal expenditure on the development and operation of an enterprise's own
website should be accounted for in accordance with IAS 38. The nature of each
activity for which expenditure is incurred (eg training employees and maintaining
the website) and the website's stage of development or post-development should
be evaluated to determine the appropriate accounting treatment. For example:
a. Planning. The planning stage is similar in nature to the research
phase in IAS 38.54-.56. Expenditure incurred in this stage should be
recognised as an expense when it is incurred.
b. Application and infrastructure development, graphical design and
content development stages. To the extent that content is developed
for purposes other than to advertise and promote an enterprise's own
products and services, are similar in nature to the development phase
in IAS 38.57-.64. Expenditure incurred in these stages should be
included in the cost of a website recognised as an intangible asset in
accordance with this Interpretation when the expenditure can be
directly attributed, or allocated on a reasonable and consistent basis, to
preparing the website for its intended use. For example, expenditure
on purchasing or creating content (other than content that advertises
and promotes an enterprise's own products and services) specifically
for a website, or expenditure to enable use of the content (such as a
fee for acquiring a licence to reproduce) on the website, should be
included in the cost of development when this condition is met.
However, in accordance with IAS 38.71, expenditure on an intangible
item that was initially recognised as an expense in previous financial
statements should not be recognised as part of the cost of an intangi-
ble asset at a later date (for instance, when the costs of a copyright
have been fully amortised, and the content is subsequently provided on
a website).
c. Content development. Expenditure incurred in the content develop-
ment stage, to the extent that content is developed to advertise and
promote an enterprise's own products and services (such as digital
photographs of products), should be recognised as an expense when
incurred in accordance with IAS 38.69(c). For example, when
accounting for expenditure on professional services for taking digital
photographs of an enterprise's own products and for enhancing their
display, expenditure should be recognised as an expense as the pro-
fessional services are received during the process, not when the digital
photographs are displayed on the website.
d. Operating. The operating stage begins once development of a website
is complete. Expenditure incurred in this stage should be recognised
as an expense when it is incurred unless it meets the criteria in IAS
38.18.
c. A website that is recognised as an intangible asset under SIC-32 should be
measured after initial recognition by applying the requirements of IAS 38.72-.87.
The best estimate of a website's useful life should be short.
SIC-33 — Consolidation and Equity

Method – Potential Voting Rights
and Allocation of Ownership
Interests
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References
IAS 27 Consolidated and Separate Financial Statements

IAS 39 Financial Instruments: Recognition and Measurement
History
SIC D33 was issued 12 September 2001.

Effective Date: Annual financial periods beginning on or after 1 January 2002
Superseded by IAS 27 Consolidated and Separate Financial Statements (Revised 2003)
and IAS 28 Investments in Associates (Revised 2003), effective for annual periods
beginning on or after 1 January 2005.
Summary of SIC-33
An enterprise may own share warrants, share call options, debt, or equity instruments that are
convertible into ordinary shares, or other similar instruments that have the potential, if exercised
or converted, to give the enterprise voting power or reduce another party's voting power over
the financial and operating policies of another enterprise (potential voting rights). SIC-33
addresses whether the existence and effect of potential voting rights should be considered, in
addition to the factors described in IAS 27.12 and IAS 28.4-.5, when assessing whether an en-
terprise controls or significantly influences another enterprise according to IAS 27 and IAS 28
respectively.
Under SIC-33, the existence and effect of potential voting rights that are currently exercisable or
convertible should be considered, in addition to the factors described in IAS 27.12 and IAS
28.4-.5.
SIC-33 also addresses whether any other facts and circumstances related to potential voting
rights should be assessed. It provides that all facts and circumstances that affect potential
voting rights should be examined, except the intention of management and the financial capabil-
ity to exercise or convert.
Further, SIC-33 addresses whether the proportion allocated to the parent and minority interests
in preparing consolidated financial statements, and the proportion allocated to an investor that
accounts for its investment in an associate using the equity method, should be determined
based on present ownership interests or ownership interests that would be held if the potential
voting rights were exercised or converted. Under SIC-33, the proportion allocated should be de-
termined based solely on present ownership interests. An enterprise may, in substance, have a
present ownership interest when for example, it sells and simultaneously agrees to repurchase,
but does not lose control of, access to economic benefits associated with an ownership interest.
In this circumstance, under SIC-33 the proportion allocated should be determined taking into
account the eventual exercise of potential voting rights and other derivatives that, in substance,
presently give access to the economic benefits associated with an ownership interest.
Under SIC-33, when applying the consolidation and the equity method of accounting, instru-
ments containing potential voting rights should be accounted for as part of the investment in a
subsidiary and the investment in an associate respectively only when the proportion of
ownership interests is allocated by taking into account the eventual exercise of those potential
voting rights. In all other circumstances, instruments containing potential voting rights should be
accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

SIC Interpretations

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SIC Interpretations

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SIC Interpretations

Consistency – Different Cost Formulas for Inventories

Consistency – Capitalisation of Borrowing Costs

Elimination of Unrealised Profits and Losses on Transactions with

Classification of Financial Instruments - Contingent Settlement Pro-

Costs of Modifying Existing Software

SIC-7 Introduction of the Euro 1998

First-Time Application of IASs as the Primary Basis of Accounting

SIC-9 Business Combinations – Classification either as Acquisitions or 1998

Government Assistance – No Specific Relation to Operating Activi-

Foreign Exchange – Capitalisation of Losses Resulting from Severe

Consolidation – Special Purpose Entities

Jointly Controlled Entities – Non-Monetary Contributions by

Property, Plant and Equipment – Compensation for the Impairment

SIC-15 Operating Leases – Incentives 1999

Share Capital – Reacquired Own Equity Instruments (Treasury

Equity – Costs of an Equity Transaction

Consistency – Alternative Methods

SIC-19 Reporting Currency – Measurement and Presentation of Financial 2000

Equity Accounting Method – Recognition of Losses

Income Taxes – Recovery of Revalued Non-Depreciable Assets

Business Combinations – Subsequent Adjustment of Fair Values

Property, Plant and Equipment – Major Inspection or Overhaul

Earnings Per Share – Financial Instruments and Other Contracts

Income Taxes – Changes in the Tax Status of an Enterprise or its

Evaluating the Substance of Transactions in the Legal Form of a

Business Combinations – 'Date of Exchange' and Fair Value of

SIC-29 Service Concession Arrangements: Disclosures 2001

SIC-30 Reporting Currency – Translation from Measurement Currency to 2001

Revenue – Barter Transactions Involving Advertising Services

SIC-32 Intangible Assets – Web Site Costs 2001

Consolidation and Equity Method – Potential Voting Rights and Allo-

SIC-1 — Consistency – Different

Issued December 1997.

IAS 23 Borrowing Costs

Issued December 1997.

IAS 28 Investments in Associates

Issued December 1997.

SIC-5 — Classification of Financial

IAS 32 Financial Instruments: Presentation

Issued May 1998.

SIC-6 — Costs of Modifying Existing

The IASC Framework

Issued May 1998.

In addition, expenditure should be recognised as incurred in accordance with paragraphs 94-98

The Interpretation does not apply to purchased software.

SIC-7 — Introduction of the Euro

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Issued May 1998.

IAS 1 Presentation of Financial Statements

Issued July 1998.

The issues dealt with in SIC-8 are:

SIC-9 — Business Combinations –

IAS 22 Business Combinations

Issued July 1998.

In addition, the Interpretation clarifies that a business combination is to be classified as an ac-

SIC-10 — Government Assistance –

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance

Issued July 1998.

In some countries, government assistance to enterprises can be aimed at encouragement or

Under SIC-10, government assistance to enterprises that is aimed at encouragement or long-

SIC-11 — Foreign Exchange -

IAS 21 The Effects of Changes in Foreign Exchange Rates

Issued July 1998.