IASB Update May 2026: Equity Method Overhaul, IAS 28 Ballot and IAS 7 Reforms

Six Active Projects, One Packed Agenda

The IASB met on 18-20 May 2026 and reached tentative decisions across six standard-setting projects: the Equity Method of Accounting, IAS 28 fair value option amendments, Statement of Cash Flows improvements, Pillar Two tax presentation under IFRS 18, targeted improvements to IAS 37 Provisions, and intangible assets research.

Equity Method — Accounting Policy Choice Introduced

The most consequential decisions from the May meeting concern IAS 28 Investments in Associates and Joint Ventures under the Equity Method project.

First, the IASB confirmed the loss recognition sequence: when both an investor's share of an associate's profit or loss and its share of other comprehensive income are losses that in aggregate exceed the carrying amount of the net investment, the investor recognises the P&L share first, then the OCI share. All 13 members agreed.

More significantly, the IASB tentatively introduced an accounting policy choice for recognising gains and losses on transactions with associates — either full recognition or restricted recognition — applicable to all transactions except transfers of businesses, which must always be recognised in full. Twelve of 13 members agreed. The IASB also decided to withdraw the 2014 amendments to Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, resolving a longstanding inconsistency between IAS 28 and IFRS 10.

New disclosure requirements accompany both policy options. Entities choosing restricted recognition must provide a reconciliation of restricted gains and losses including opening and closing balances, amounts recognised in profit or loss in each period, and where restricted amounts are presented in the balance sheet.

IAS 28 Fair Value Option — Amendments Moving to Ballot

Separately, the IASB finalised its proposals on the fair value option in IAS 28. The amendments clarify that an entity whose main business activity is investing in particular types of assets (per paragraph 49(a) of IFRS 18) is eligible to elect the fair value option for investments in associates and joint ventures. The amendments will be issued without re-exposure — all 13 members confirmed compliance with due process. The IASB expects to issue the IAS 28 amendments in mid-2026.

Statement of Cash Flows — IAS 7 Improvements

The IASB tentatively decided to add application guidance to IAS 7 to strengthen the link between the cash flow statement and the balance sheet. An entity would use the disaggregation of related balance sheet line items as the basis for disaggregating cash flow line items, and disclose any differences between the two presentations.

On financing liabilities, the IASB decided to clarify the disclosure objective in IAS 7 paragraph 44A, requiring a reconciliation of opening and closing balances for liabilities arising from financing activities. The IASB confirmed it will not define the concept of 'net debt' nor introduce net debt disclosure requirements (eight of 13 members agreed).

IFRS 18 / Pillar Two — Non-Income Tax Presentation

The IASB decided to explore amending IFRS 18 to permit or require entities to classify non-income tax charges that meet the definition of 'covered taxes' under the OECD Pillar Two model rules within the income taxes category of the profit or loss statement. Eleven of 13 members agreed to proceed with this exploration. A final decision on whether to amend IFRS 18 and on the related IFRIC agenda decisions will follow.

Provisions — IAS 37 Levy Application Requirements

The IASB finalised the structure of levy application requirements for IAS 37. The constraining presumption will be non-rebuttable: the past-event recognition condition for a levy is met when an entity has obtained the economic benefit or conducted the activity required by levy legislation. Where multiple economic benefits or activities are required, the relevant one is whichever best reflects what the government is seeking to levy. The IASB also decided to omit the proposed paragraph 14Q from IAS 37.

Intangible Assets — Research Phase

The IASB discussed user needs for information about recognised and unrecognised intangible assets and associated expenditure, but no decisions were taken. The IASB will consult its advisory groups on the implications for the project direction and will begin discussing potential changes to the definition of an intangible asset.

Risk Mitigation Accounting — Comment Period Extended

The IASB unanimously extended the comment letter deadline for the Exposure Draft on Risk Mitigation Accounting to 30 November 2026, aligning it with the submission deadline for fieldwork results.