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The International Accounting Standards Board (IASB) is undertaking research to assess whether application questions with the equity method as set out in IAS 28 Investments in Associates and Joint Ventures can be addressed in consolidated and individual financial statements by identifying and explaining principles in IAS 28.

IASB® Update April 2022

The IASB met on 27 April 2022 to continue its discussion on the Equity Method research project. The IASB:

  • discussed applying the equity method to the purchase of an additional interest in an associate without a change in significant influence (Agenda Paper 13A).
  • reviewed the research findings on changes made to IFRS Accounting Standards arising from the Conceptual Framework, Business Combinations and Joint Arrangements projects (Agenda Paper 13B). The IASB was not asked to make any decisions relating to the research findings.

Purchases of an additional ownership interest in an associate without a change in significant influence (Agenda Paper 13A)

The IASB tentatively decided to consult with stakeholders on measuring the cost of an investment, when an investor obtains significant influence, as the fair value of the consideration transferred, including the fair value of any previously held interest in the investee.

All 10 IASB members agreed with this decision.

The IASB also:

  1. considered three approaches to applying the equity method when an investor purchases an additional ownership interest in an associate without a change in significant influence; and
  2. asked the staff to proceed with an approach whereby an investor that has obtained significant influence would measure the investment in the associate as an accumulation of purchases.

Next milestone

Decide Project Direction