Global Standards for the world economy

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Meeting Summaries and Observer Notes

 IFRIC November 2007


The IFRIC received a request for guidance on the accounting for demergers and other in specie distributions in the financial statements of the entity making the distribution. The submission focused on situations in which an entity distributes its ownership interests in a subsidiary to its shareholders.

The IFRIC noted that IFRSs do not address the issue at present. The IFRIC acknowledged a need to address the issue because of the emergence of diversity in practice in respect of the basis on which in specie distributions should be recognised (ie at carrying amounts or at fair values).

The IFRIC noted that the accounting by an entity for the loss of control of its subsidiary as a result of a distribution to its shareholders of its shares in the subsidiary was being considered as part of the redeliberations on Business Combinations phase II. It was possible that in specie distributions generally would be considered in those redeliberations. The IFRIC agreed that it would like to undertake an interpretative project on in specie distributions. However, the IFRIC also agreed that a project could not be started until after the decisions in Business Combinations phase II on loss of control were finalised. The IFRIC will monitor the Board�s deliberations and determine the scope of any such project, or whether a project is still required, once Business Combinations phase II has been completed.

Date: 11/3/2007