The meeting of the National Accounting Standards Board, devoted to the discussion of the draft comment-letters to ED of proposed Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate and to ED of Proposed Amendments to IFRS 2 Share-based Payment and IFRIC 11 IFRS 2 – Group and Treasury Share Transactions: Group Cash-settled Share-based Payment Transactions prepared by the project manager of NASB for public discussion was held on February 21, 2008. The meeting of the National Accounting Standards Board, devoted to the discussion of the draft comment-letters to ED of proposed Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate and to ED of Proposed Amendments to IFRS 2 Share-based Payment and IFRIC 11 IFRS 2 – Group and Treasury Share Transactions: Group Cash-settled Share-based Payment Transactions prepared by the project manager of NASB for public discussion was held on February 21, 2008. Presenting to NASB members the prepared draft comment-letter to ED of proposed Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate, the project manager noted that in accordance with the preliminary discussion on this document at the pervious NASB meeting, the finalized draft comment letter constitutes support to the IASB’s proposal, that an entity at its date of transition to IFRS may use two alternatives to determine a deemed cost of the investment in a subsidiary, namely the fair value of such investment or its carrying amount determined in accordance with previously used national GAAP. Besides that, the project manager suggested to support the IASB’s proposal to apply the proposed modifications to jointly controlled entities or associates, which were not within the scope of the previous version of the document. Moreover, it was suggested to agree with the IASB’s proposal to delete the definition of the cost method from IAS 27 and with the requirement to recognize as income the dividends received regardless of what retained earnings are used for dividends distribution. However, it was decided to disagree with the proposed requirement to implement impairment testing of such investments every time when dividends are paid. In addition to that, project manager suggested to support a specific treatment proposed by IASB to measure investments made by a new parent company to the existing parent company, under specific conditions. In general, the members of the NASB supported the draft comment-letter prepared by project manager. However, some of them noted, that impairment testing should be limited only to the case of the initial recognition of investment in separate financial statements directly after transition to IFRS. In their opinion, such accounting treatment will contribute to the reliability of assessment of this investment in the financial statements. Finally, it was decided to bring up all the proposed alternative versions to voting by correspondence. Presenting to the members of the NASB the prepared draft comment letter to ED of Proposed Amendments to IFRS 2 Share-based Payment and IFRIC 11 IFRS 2 – Group and Treasury Share Transactions: Group Cash-settled Share-based Payment, project manager noted that in accordance with the results of the discussion at the previous meeting, the draft comment-letter constitutes the support of the NASB members with IASB proposal that subsidiaries, whose employees receive an amount of cash bonuses from the parent company determined on the basis of the value of the equity instruments belonging to either the subsidiary or the parent , should apply IFRS 2. Also, it is suggested to agree with the IASB’s approach that the subsidiary shall recognize any changes in the fair value of the liability incurred by the parent in the subsidiary’s profit and loss with simultaneous adjustments to contributions from the parent. During the discussion, that took place after the presentation of the draft comment-letter, some of the members agreed with the position presented by project manager. Others found such accounting treatment inappropriate as it does not provide reliable presentation of a subsidiary’s financial position. In their opinion, liabilities can be incurred only by parent and, therefore, should be recognized only in parent’s financial statements. Finally, it was decided to bring up all the proposed alternative versions to voting by correspondence.