Benchmark treatment?

Question

it is an accounting policy.

Answer 1

In the past, the IASB offered choices in the application of some of their standards. The preferred choice was labelled the benchmark treatment and the other choice the allowed alternative treatment. Following either would still mean that you've complied with the standard. However, because the benchmark was touted as the more rigorous treatment, you could move from the allowed alt. to the benchmark, but not in the other direction.

As an e.g., IAS 22 provides for benchmark and an allowed alternative treatments for measuring the acquired assets and liabilities:

Under the benchmark treatment, the assets and liabilities are measured at the aggregate of the fair value of the identifiable assets and liabilities acquired to the extent of the acquirer's interest obtained, and the minority's proportion of the pre-acquisition carrying amounts of the assets and liabilities. [IAS 22.32]

Under the allowed alternative treatment, the assets and liabilities should be measured at their fair values as at the date of acquisition with the minority's interest being stated at its proportion of the fair value of the assets and liabilities. [IAS 22.34]

In April 2001, the International Accounting Standards Board announced its intention to launch a project to 'improve' the IASC Standards.

The Improvements project, which was completed by 31 March 2004, removed some of the alternative accounting treatments. Where an IAS retains alternative treatments, the IASB removed references to 'benchmark treatment' and 'allowed alternative treatment', instead using descriptive references, such as 'cost model' and 'revaluation model'. The Improvements project standards are effective for annual periods beginning on or after 1 January 2005.