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On 19 September 2024 the International Accounting Standards Board (IASB) published the Exposure Draft Equity Method of Accounting—IAS 28 Investments in Associates and Joint Ventures (revised 202x). The Exposure Draft sets out:

  • proposed amendments to IAS 28 to answer application questions about how to apply the equity method of accounting; and
  • proposals to improve the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements to complement the proposed amendments to IAS 28.

As part of the IASB’s work to improve the understandability of IFRS Accounting Standards, the IASB is proposing to re-order the requirements in IAS 28 in a more logical and consistent way. A copy of IAS 28 (revised 202x), as set out in the Exposure Draft, marked-up against the current version of IAS 28, is available.

The comment period closed on 20 January 2025.

At its May 2025 meeting, the IASB discussed a summary of the feedback from comment letters and from outreach activities on its Exposure Draft. The IASB was not asked to make any decisions.

IASB® Update May 2026

The IASB met on 20 May 2026 to continue redeliberating the proposals in the Exposure Draft Equity Method of Accounting.

Presentation of the investor’s share of the associate’s profit or loss and other comprehensive income (Agenda Paper 13A)

The IASB tentatively decided to confirm the proposal in the Exposure Draft that an investor would first recognise its share of an associate’s profit or loss and then the share of the associate’s other comprehensive income, if both shares are losses and in aggregate exceed the carrying amount of the net investment in the associate.

All 13 IASB members agreed with this decision.

The IASB tentatively decided to withdraw the proposal in the Exposure Draft that an investor would continue to recognise its share of an associate’s profit or loss and its share of the associate’s other comprehensive income after the investor has reduced the net investment to nil.

Eleven of 13 IASB members agreed with this decision.

The IASB decided not to add to the scope of the project a question on whether an investor, on resuming the recognition of its share of profit after the investment has been reduced to nil, should first recognise its share of an associate’s profit or loss or its share of the associate’s other comprehensive income.

All 13 IASB members agreed with this decision.

Transactions with associates—Staff analysis of feedback (Agenda Paper 13B)

The IASB met to discuss an analysis of feedback on the proposal that an investor would recognise gains and losses in full from transactions with associates.

The IASB was not asked to make any decisions.

Transactions with associates—Staff analysis of feedback on proposed disclosure requirement (Agenda Paper 13C)

The IASB met to discuss an analysis of feedback on the proposal that an investor would disclose gains or losses from ‘downstream’ transactions with its associates or joint ventures.

The IASB was not asked to make any decisions.

Transactions with associates—Ways forward (Agenda Paper 13D)

The IASB decided to retain within the scope of the project the application question on inconsistency between IAS 28 Investments in Associates and Joint Ventures and IFRS 10 Consolidated Financial Statements.

All 13 IASB members agreed with this decision.

The IASB tentatively decided:

  1. to introduce an accounting policy choice that permits an investor to choose either full or restricted recognition of gains or losses on all transactions with associates, except for gains or losses on transfer of businesses, which would be recognised in full;
  2. to confirm its proposal in the Exposure Draft to withdraw the amendments in Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (2014); and
  3. to amend IFRS 10 to require an investor that chooses to restrict gains and losses on transactions with associates to also restrict gains and losses on the loss of a control of a subsidiary that is not a business.

Twelve of 13 IASB members agreed with this decision.

The IASB tentatively decided that:

  1. if an investor chooses to recognise gains or losses in full, the investor discloses:
    1. the accounting policy for recognising gains or losses on transactions with associates; and
    2. gains or losses from ‘downstream’ transactions with its associates (as proposed in the Exposure Draft); and
  2. if an investor chooses to restrict the recognition of gains or losses, the investor discloses:
    1. its accounting policy for recognising gains or losses on transactions with associates;
    2. a reconciliation of the opening balance to the closing balance of restricted gains or losses on transactions with associates and joint ventures, including:
      1. the opening balance of the restricted gains or losses;
      2. the amounts of restricted gains or losses recognised in profit and loss included in the opening balance;
      3. the amounts of restricted gains and losses during the period, separately disclosing the amounts recognised in profit and loss in the current period; and
      4. the closing balance of restricted gains or losses;
    3. the amount of gains or losses restricted at the end of the period and where it is included in the statement of financial position; and
    4. the line items in the statement of comprehensive income where the restricted gains or losses have been recognised.

All 13 IASB members agreed with this decision.

Next milestone

Final Amendments