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IFRIC issues guidance on distributions of non-cash assets to owners

27 November 2008


The  International Financial Reporting Interpretations Committee (IFRIC) issued today an Interpretation that will standardise practice in the accounting treatment of distribution of non‑cash assets to owners.

Existing International Financial Reporting Standards (IFRSs) do not address how an entity should measure distributions of assets other than cash when it pays dividends to its owners. At present the dividend payable is sometimes recognised at the carrying amount of the assets to be distributed and sometimes at their fair value. As a result significant diversity in practice has developed and the IFRIC was asked to provide guidance.

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The IFRIC released a draft Interpretation in January 2008 and in the light of the responses finalised the Interpretation issued today, IFRIC 17 Distributions of Non-cash Assets to Owners . The Interpretation clarifies that:

  • a dividend payable should be recognised when the dividend is appropriately authorised and is no longer at the discretion of the entity.
  • an entity should measure the dividend payable at the fair value of the net assets to be distributed.
  • an entity should recognise the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss.

The Interpretation also requires an entity to provide additional disclosures if the net assets being held for distribution to owners meet the definition of a discontinued operation.

IFRIC 17 applies to pro rata distributions of non-cash assets except for common control transactions.

Recognising the difficulty that entities would face in recognising past distributions at their fair values the IFRIC requires prospective application of the guidance. The Interpretation is effective for annual periods beginning on or after 1 July 2009. Earlier application is permitted.

IFRIC 17 Distributions of Non-cash Assets to Owners is available for e IFRS subscribers from today. Those wishing to subscribe to eIFRSs should visit the  online shop or contact:

IASC Foundation Publications Department,
30 Cannon Street, London EC4M 6XH, United Kingdom.

Tel: +44 (0)20 7332 2730
Fax +44 (0)20 7332 2749

For more information on IFRIC 17, visit the project Web pages.

Press enquiries

  • Sonja Horn, Communications Adviser, IASB
    Telephone: +44 (0)20 7246 6463

Technical enquiries

  • Robert Garnett, Chairman, IFRIC
    Telephone: +44 (0)20 7246 6410
  • Masashi Oki, Practice Fellow, IASB
    Telephone:+44 (0)20 7246 6924