Equity Method

The IASB met on 22 July 2026 to continue redeliberating the proposals in the Exposure Draft Equity Method of Accounting—IAS 28 Investments in Associates and Joint Ventures (revised 202x).

Transactions with associates—Disclosure requirements (Agenda Paper 13A)

The IASB continued its discussions on disclosure requirements for gains or losses from transactions with associates.

The IASB tentatively decided:

1. to require an entity to disclose its accounting policy choice for the recognition of gains or losses from transactions with associates.
   
   All 12 IASB members agreed with this decision.
   
   
2. to require:    
   1. an investor that chooses to recognise gains or losses in full to disclose gains or losses from ‘downstream’ transactions; and
   2. an investor that chooses to restrict the recognition of gains or losses to disclose gains or losses from both ‘downstream’ and ‘upstream’ transactions.
      
      Eight of 12 IASB members agreed with this decision.
       
3. to expand the disclosure objective in paragraph 20 of IFRS 12 Disclosure of Interests in Other Entities that investors use in determining the types of transactions with associates for which gains or losses would be disclosed.
   
   Nine of 12 IASB members agreed with this decision.
   
   
4. to require investors to disclose the nature of transactions with associates and whether those transactions are included in the disclosure of gains and losses.
   
   Nine of 12 IASB members agreed with this decision.
   
   
5. to provide an exemption from disclosing gains and losses from transactions with associates only if:
   1. the information disclosed can be attributed to an individual associate; and
   2. the transactions are part of the investor’s ordinary activities.
      
      Seven of 12 IASB members agreed with this decision.
       
6. not to prescribe whether an investor discloses the reconciliation between the opening balance and closing balance of restricted gains and losses separately from or combined with the reconciliation between the opening and closing balance of the carrying amounts of investments in associates.
   
   All 12 IASB members agreed with this decision.
   
   
7. not to change its tentative decision to require disclosure of the reconciliation of restricted gains and losses and the information to be disclosed in that reconciliation.
   
   Ten of 12 IASB members agreed with this decision.

Transition requirements in IAS 28 (revised 202x) (Agenda Paper 13B)

The IASB considered stakeholder feedback on its proposals in the Exposure Draft relating to transition requirements.

The IASB tentatively decided:

1. to confirm its proposal in the Exposure Draft to require an investor to retrospectively apply a change in the accounting policy for recognising gains or losses from transactions with associates, subject to (b)–(c).
   
   Eight of 12 IASB members agreed with this decision.
   
   
2. to provide relief from retrospective application for cases in which retrospective application would involve undue cost or effort.
   
   All 12 IASB members agreed with this decision.
   
   
3. to clarify that the requirement in (a) applies only to the unrecognised portion of a previously restricted gain or loss at the transition date. 
   
   Ten of 12 IASB members agreed with this decision.
   
   
4. not to clarify that the retrospective application in (a) is subject to the ‘impracticability exemption’ in IAS 8 Basis of Preparation of Financial Statements.
   
   All 12 IASB members agreed with this decision.

The IASB tentatively decided to confirm its other proposals in the Exposure Draft related to:

1. the transition requirements for contingent consideration, subject to clarifying that the requirement to recognise and measure contingent consideration at fair value at the transition date applies only to outstanding contingent consideration obligations at that date.
   
   All 12 IASB members agreed with this decision.
   
   
2. the transition requirements for the impairment of an investment in an associate at the transition date, subject to clarifying that the investor is permitted to estimate the recoverable amount of the investment at the transition date.
   
   All 12 IASB members agreed with this decision.
   
   
3. the prospective application of all the other requirements from the effective date of the amendments.
   
   All 12 IASB members agreed with this decision.
   
   
4. the reliefs from:
   1. restating any prior period presented in addition to the comparative period; and
   2. disclosing the effects of the proposed requirements on the current period or any unadjusted additional prior period (as required by paragraph 28(f) of IAS 8 and paragraph 178(f) of IFRS 19 Subsidiaries without Public Accountability: Disclosures).
      
      All 12 IASB members agreed with this decision.

The IASB also tentatively decided to add a transition requirement for an investor that has unrecognised losses at the transition date to recognise an adjustment to the opening balance of retained earnings at the transition date and a corresponding decrease in the carrying amount of the investment for the lower of:

1. the amount of the unrecognised losses; or
2. the amount of the increase to the carrying amount of the investment resulting from applying the transition requirements in paragraphs C4–C7 of Appendix C Effective date and transition of the Exposure Draft.

Eleven of 12 IASB members agreed with this decision.

The IASB also tentatively decided to require an investor to apply the transition requirements for a change in the accounting policy for recognising gains or losses from transactions with associates to the related amendments in preparing its consolidated financial statements (IFRS 10 Consolidated Financial Statements) and separate financial statements (IAS 27 Separate Financial Statements).

All 12 IASB members agreed with this decision.

Transition requirements for first-time adopters (Agenda Paper 13C)

The IASB discussed whether to introduce transition requirements for an entity’s first financial statements prepared in accordance with IFRS Accounting Standards.

The IASB tentatively decided:

1. to clarify that the exemption in paragraph C5 of IFRS 1 First-time Adoption of International Financial Reporting Standards for past acquisitions of investments in associates also applies on purchase of an additional ownership interest while retaining significant influence; and
2. not to include in IFRS 1 any other transition requirements for the amendments to IAS 28. 

All 12 IASB members agreed with these decisions.

Sweep issues (Agenda Paper 13D)

The IASB considered some sweep issues.

The IASB tentatively decided:

1. not to add a requirement to recognise in full gains or losses from transfers of a business in the accounting policy choice for gains or losses from transactions with subsidiaries in separate financial statements.
   
   All 12 IASB members agreed with this decision.
   
   
2. not to add requirements for the measurement of a retained interest when an investor loses control of a subsidiary that does not contain a business to an associate.
   
   Eight of 12 IASB members agreed with this decision.
   
   
3. not to add requirements on ‘sidestream’ transactions.
   
   All 12 IASB members agreed with this decision.
   
   
4. to confirm the proposal to remove from IAS 28 the requirement to include a bargain purchase gain in the determination of an entity’s share of an associate or joint venture’s profit or loss.
   
   All 12 IASB members agreed with this decision.
   
   
5. to withdraw:
   1. the Agenda Decision IAS 28 Investments in Associates—Potential effect of IFRS 3 Business Combinations (as revised in 2008) and IAS 27 Consolidated and Separate Financial Statements (as amended in 2008) on equity method accounting (July 2009);
   2. the Agenda Decision IAS 39—Impairment of an Equity Security (June 2005); and
   3. the Agenda Decision IAS 39 Financial Instruments: Recognition and Measurement—Meaning of ‘significant or prolonged’ (July 2009).
      
      All 12 IASB members agreed with this decision.
       
6. to amend the Agenda Decision Contributing property, plant and equipment to an associate (IAS 28 Investments in Associates and Joint Ventures) (January 2018).
   
   All 12 IASB members agreed with this decision.