Interests in Other Entities

IFRS 12 Disclosure of Interests in

Other Entities
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Overview
IFRS 12 Disclosure of Interests in Other Entities is a consolidated disclosure standard
reuiring a wide range of disclosures about an entit!"s interests in subsidiaries# $oint
arrangements# associates and unconsolidated "structured entities"% &isclosures are
'resented as a series of ob$ectives# with detailed guidance on satisf!ing those ob$ectives%
IFRS 12 was issued in Ma! 2(11 and a''lies to annual 'eriods beginning on or after 1
)anuar! 2(1*%

History of IFRS 12
Date Development Comments
+'ril 2((2
,ro$ect on consolidation added to the I+S-"s
agenda .'ro$ect histor!/
0ovember 2((1
,ro$ect on $oint arrangements added to the I+S-"s
agenda .'ro$ect histor!/
1* Se'tember 2((2 E& 3 Joint Arrangements 'ublished
4omment deadline
11 )anuar! 2((5
15 &ecember 2((5
E& 1( Consolidated Financial Statements
'ublished
4omment deadline
2( March 2((3
)anuar! 2(1(
I+S- decision to issue a se'arate disclosure
standard addressing a re'orting entit!"s
involvement with other entities that are not in the
sco'e of I+S *36IFRS 3 .including subsidiaries#
associates and $oint arrangements and
unconsolidated S,Es6structured entities/
12 Ma! 2(11 IFRS 12 Disclosure of Interests in Other Entities
'ublished
Effective for
annual 'eriods
beginning on or
after 1 )anuar!
2(1*
25 )une 2(12
+mended b! Consolidated Financial Statements,
Joint Arrangements and Disclosure of Interests in
Other Entities: Transition Guidance .'ro$ect
histor!/
Effective for
annual 'eriods
beginning on or
after 1 )anuar!
2(1*
*1 October 2(12
+mended b! Investment Entities Amendments to
IF!S "#, IF!S "$ and IAS $%& .'ro$ect histor!/
Effective for
annual 'eriods
beginning on or
after 1 )anuar!
2(11
Relate Interpretations
0one
!u"lications an resources
IF!S in Focus 0ewsletter I+S- issues new standard on disclosure of interests in
other entities summarising the reuirements of IFRS 12 .,&F 78k# Ma! 2(11/
Effect anal!sis for IFRS 1( and IFRS 12 .link to I+S- website/
Summary of IFRS 12
O"#ective an scope
9he ob$ective of IFRS 12 is to reuire the disclosure of information that enables users of
financial statements to evaluate: ;IFRS 12:1<
the nature of# and risks associated with# its interests in other entities
the effects of those interests on its financial 'osition# financial 'erformance and
cash flows%
=here the disclosures reuired b! IFRS 12# together with the disclosures reuired b!
other IFRSs# do not meet the above ob$ective# an entit! is reuired to disclose whatever
additional information is necessar! to meet the ob$ective% ;IFRS 12:*<
IFRS 12 is reuired to be a''lied b! an entit! that has an interest in an! of the following:
;IFRS 12:8<
subsidiaries
$oint arrangements .$oint o'erations or $oint ventures/
associates
unconsolidated structured entities
IFRS 12 does not a''l! to certain em'lo!ee benefit 'lans# se'arate financial statements to
which I+S 22 Se'arate Financial Statements a''lies .e>ce't in relation to
unconsolidated structured entities and investment entities in some cases/# certain interests
in $oint ventures held b! an entit! that does not share in $oint control# and the ma$orit! of
interests in another entit! accounted for in accordance with IFRS 3 Financial
Instruments% ;IFRS 12:7<
$ey efinitions
;IFRS 12:+''endi> +<
Interest in
another
entity
Refers to contractual and non?contractual involvement that e>'oses an
entit! to variabilit! of returns from the 'erformance of the other entit!% +n
interest in another entit! can be evidenced b!# but is not limited to# the
holding of euit! or debt instruments as well as other forms of
involvement such as the 'rovision of funding# liuidit! su''ort# credit
enhancement and guarantees% It includes the means b! which an entit! has
control or $oint control of# or significant influence over# another entit!% +n
entit! does not necessaril! have an interest in another entit! solel! because
of a t!'ical customer su''lier relationshi'%
Structure
entity
+n entit! that has been designed so that voting or similar rights are not the
dominant factor in deciding who controls the entit!# such as when an!
voting rights relate to administrative tasks onl! and the relevant activities
are directed b! means of contractual arrangements%
Disclosures re%uire
Important note& 9he summar! of disclosures that follows is a high?level summar! of the
main reuirements of IFRS 12% It does not list ever! s'ecific disclosure reuired b! the
standard# but instead highlights the broad ob$ectives# categories and nature of the
disclosures reuired% IFRS 12 lists s'ecific e>am'les and additional disclosures which
further e>'and u'on the disclosure ob$ectives# and includes other guidance on the
disclosures reuired% +ccordingl!# readers should not consider this to be a com'rehensive
or com'lete listing of the disclosure reuirements of IFRS 12%
Si'nificant #u'ements an assumptions
+n entit! discloses information about significant $udgements and assum'tions it has
made .and changes in those $udgements and assum'tions/ in determining: ;IFRS 12:2<
that it controls another entit!
that it has $oint control of an arrangement or significant influence over another
entit!
the t!'e of $oint arrangement .i%e% $oint o'eration or $oint venture/ when the
arrangement has been structured through a se'arate vehicle%
Interests in su"siiaries
+n entit! shall disclose information that enables users of its consolidated financial
statements to: ;IFRS 12:1(<
understand the com'osition of the grou'
understand the interest that non?controlling interests have in the grou'"s activities
and cash flows
evaluate the nature and e>tent of significant restrictions on its abilit! to access or
use assets# and settle liabilities# of the grou'
evaluate the nature of# and changes in# the risks associated with its interests in
consolidated structured entities
evaluate the conseuences of changes in its ownershi' interest in a subsidiar! that
do not result in a loss of control
evaluate the conseuences of losing control of a subsidiar! during the re'orting
'eriod%
Interests in unconsoliate su"siiaries
;0ote: 9he investment entit! consolidation e>em'tion referred to in this section was
introduced b! Investment Entities# issued on *1 October 2(12 and effective for annual
'eriods beginning on or after 1 )anuar! 2(11%<
In accordance with IFRS 1( Consolidated Financial Statements# an investment entit! is
reuired to a''l! the e>ce'tion to consolidation and instead account for its investment in
a subsidiar! at fair value through 'rofit or loss% ;IFRS 1(:*1<%
=here an entit! is an investment entit!# IFRS 12 reuires additional disclosure#
including:
the fact the entit! is an investment entit! ;IFRS 12:13+<
information about significant $udgements and assum'tions it has made in
determining that it is an investment entit!# and s'ecificall! where the entit! does
not have one or more of the "t!'ical characteristics" of an investment entit! ;IFRS
12:3+<
details of subsidiaries that have not been consolidated .name# 'lace of business#
ownershi' interests held/ ;IFRS 12:13-<
details of the relationshi' and certain transactions between the investment entit!
and the subsidiar! .e%g% restrictions on transfer of funds# commitments# su''ort
arrangements# contractual arrangements/ ;IFRS 12: 13&?13@<
information where an entit! becomes# or ceases to be# an investment entit! ;IFRS
12:3-<
+n entit! making these disclosures are not reuired to 'rovide various other disclosures
reuired b! IFRS 12 ;IFRS 12:21+# IFRS 12:28+<%
Interests in #oint arran'ements an associates
+n entit! shall disclose information that enables users of its financial statements to
evaluate: ;IFRS 12:2(<
the nature# e>tent and financial effects of its interests in $oint arrangements and
associates# including the nature and effects of its contractual relationshi' with the
other investors with $oint control of# or significant influence over# $oint
arrangements and associates
the nature of# and changes in# the risks associated with its interests in $oint
ventures and associates%
Interests in unconsoliate structure entities
+n entit! shall disclose information that enables users of its financial statements to:
;IFRS 12:21<
understand the nature and e>tent of its interests in unconsolidated structured
entities
evaluate the nature of# and changes in# the risks associated with its interests in
unconsolidated structured entities%
(pplica"ility an early aoption
0ote: 9his section has been u'dated to reflect the amendments to IFRS 12 made in )une
2(12 and October 2(12%
;IFRS 12: +''endi> 4<
IFRS 12 is a''licable to annual re'orting 'eriods beginning on or after 1 )anuar! 2(1*%
Earl! a''lication is 'ermitted%
9he disclosure reuirements of IFRS 12 need not be a''lied for an! 'eriod 'resented that
begins before the annual 'eriod immediatel! 'receding the first annual 'eriod for which
IFRS 12 is a''lied ;IFRS 12:42+<
Entities are encouraged to voluntaril! 'rovide the information reuired b! IFRS 12 'rior
to its ado'tion% ,roviding some of the disclosures reuired b! IFRS 12 does not com'el
an entit! to com'l! with all of the reuirements of the IFRS or to also a''l!:
IFRS 1( Consolidated Financial Statements
IFRS 11 Joint Arrangements
I+S 22 Se'arate Financial Statements .2(11/
I+S 25 Investments in Associates and Joint (entures .2(11/%
9he amendments to IFRS 12 made b! Investment Entities are a''licable to annual
re'orting 'eriods beginning on or after 1 )anuar! 2(11 ;IFRS 12:41-<%