Global Standards for the world economy

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IFRS 10 and IAS 28 (2011)

Meeting summaries and observer notes

 IASB September 2012


The IASB continued discussions from its May 2012 meeting on the accounting for the sale or contribution of assets between an investor and its associate or joint venture.

The issue relates to an inconsistency between the requirements in IAS 27 Consolidated and Separate Financial Statements (2008) and SIC-13 Jointly Controlled Entities—Non-Monetary Contributions by Venturers in accounting for the loss of control of a subsidiary when it is contributed to a Jointly Controlled Entity (JCE)/Joint Venture (JV) or an associate. IAS 27 requires full profit or loss recognition on the loss of control of the subsidiary, while SIC-13 restricts gains and losses arising from contributions of non-monetary assets to a JCE to the amount of interest attributable to the other equity holders in the JCE.

At the September 2012 meeting, the IASB agreed to a recommendation from the IFRS Interpretations Committee to propose amendments to IAS 28 and IFRS 10 to address this inconsistency. The consequence of these proposed amendments is that a full gain or loss would be recognised on the loss of control of a subsidiary that constitutes a business, including cases in which the investor retains joint control of, or significant influence over, the investee. The IASB also decided that the proposed amendments should be applied prospectively to contributions or sales occurring in annual periods beginning on or after the date that the proposed amendments would become effective.

The IASB noted that IAS 27 and SIC-13 do not need to be amended because they will be superseded by the time the proposed amendments would become effective. The IASB therefore decided to publish an Exposure Draft with a 120-day comment period. The Exposure-Draft is expected to be published in December 2012.

All IASB members agreed with the recommendations.

Date: 9/28/2012