IFRS Standard: IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 requires disclosure of the significant judgements and assumptions that an entity has made in determining the nature of its interest in another entity or arrangement. It also contains extensive disclosure requirements for subsidiaries, associates, joint ventures and unconsolidated structured entities.

IFRS 12 Objective and Scope

Objective

1 The objective of this IFRS is to require an entity to disclose information that enables users of its financial statements to evaluate: the nature of, and risks associated with, its interests in other entities; and the effects of those interests on its financial position, financial performance and cash flows.

Meeting the objective

2 To meet the objective in paragraph 1, an entity shall disclose:

  1. the significant judgements and assumptions it has made in determining:
    1. the nature of its interest in another entity or arrangement;
    2. the type of joint arrangement in which it has an interest (paragraphs 7–9);
    3. that it meets the definition of an investment entity, if applicable (paragraph 9A); and
  2. information about its interests in:
    1. subsidiaries
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IFRS 12 Judgements and assumptions

Significant judgements and assumptions

7 An entity shall disclose information about significant judgements and assumptions it has made (and changes to those judgements and assumptions) in determining: that it has control of another entity, ie an investee as described in paragraphs 5 and 6 of IFRS 10 Consolidated Financial Statements;

  1. that it has joint control of an arrangement or significant influence over another entity; and
  2. the type of joint arrangement (ie joint operation or joint venture) when the arrangement has been structured through a separate vehicle.

8 The significant judgements and assumptions disclosed in accordance with paragraph 7 include those made by the entity when changes in facts and circumstances are such that the conclusion about whether it … Read more

IFRS 12 Interests in subsidiaries

Interests in subsidiaries

10 An entity shall disclose information that enables users of its consolidated financial statements

  1. to understand:
    1. the composition of the group; and
    2. the interest that non-controlling interests have in the group’s activities and cash flows (paragraph 12); and
  2. to evaluate:
    1. the nature and extent of significant restrictions on its ability to access or use assets, and settle liabilities, of the group (paragraph 13);
    2. the nature of, and changes in, the risks associated with its interests in consolidated structured entities (paragraphs 14–17);
    3. the consequences of changes in its ownership interest in a subsidiary that do not result in a loss of control (paragraph 18); and
    4. the consequences of losing control of a subsidiary during the reporting period (paragraph
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IFRS 12 Disclosure Unconsolidated subsidiaries

Interests in unconsolidated subsidiaries (investment entities)

19A An investment entity that, in accordance with IFRS 10, is required to apply the exception to consolidation and instead account for its investment in a subsidiary at fair value through profit or loss shall disclose that fact.

19B For each unconsolidated subsidiary, an investment entity shall disclose:

  1. the subsidiary’s name;
  2. the principal place of business (and country of incorporation if different from the principal place of business) of the subsidiary; and
  3. the proportion of ownership interest held by the investment entity and, if different, the proportion of voting rights held.

19C If an investment entity is the parent of another investment entity, the parent shall also provide the disclosures in 19B(a)–(c) for investments … Read more

IFRS 12 Disclosures Joint arrangements and Associates

Interests in joint arrangements and associates

20 An entity shall disclose information that enables users of its financial statements to evaluate:

  1. the nature, extent and financial effects of its interests in joint arrangements and associates, including the nature and effects of its contractual relationship with the other investors with joint control of, or significant influence over, joint arrangements and associates (paragraphs 21 and 22); and
  2. the nature of, and changes in, the risks associated with its interests in joint ventures and associates (paragraph 23).

Nature, extent and financial effects of an entity’s interests in joint arrangements and associates

21 An entity shall disclose:

  1. for each joint arrangement and associate that is material to the reporting entity:
    1. the name of
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IFRS 12 Disclosure unconsolidated structured entities

Interests in unconsolidated structured entities

24 An entity shall disclose information that enables users of its financial statements: to understand the nature and extent of its interests in unconsolidated structured entities (paragraphs 26–28); and to evaluate the nature of, and changes in, the risks associated with its interests in unconsolidated structured entities (paragraphs 29–31).

25 The information required by paragraph 24(b) includes information about an entity’s exposure to risk from involvement that it had with unconsolidated structured entities in previous periods (eg sponsoring the structured entity), even if the entity no longer has any contractual involvement with the structured entity at the reporting date.

25A An investment entity need not provide the disclosures required by paragraph 24 for an … Read more

IFRS 12 Aggregation of interest in similar entities

Appendix B Application guidance

This appendix is an integral part of the IFRS. It describes the application of paragraphs 1–31 and has the same authority as the other parts of the IFRS.

B1 The examples in this appendix portray hypothetical situations. Although some aspects of the examples may be present in actual fact patterns, all relevant facts and circumstances of a particular fact pattern would need to be evaluated when applying IFRS 12.

Aggregation (paragraph 4)

B2 An entity shall decide, in the light of its circumstances, how much detail it provides to satisfy the information needs of users, how much emphasis it places on different aspects of the requirements and how it aggregates the information. It is necessary … Read more

IFRS 12 Interest in Other entities

B7 An interest in another entity refers to contractual and non-contractual involvement that exposes the reporting entity to variability of returns from the performance of the other entity. Consideration of the purpose and design of the other entity may help the reporting entity when assessing whether it has an interest in that entity and, therefore, whether it is required to provide the disclosures in this IFRS. That assessment shall include consideration of the risks that the other entity was designed to create and the risks the other entity was designed to pass on to the reporting entity and other parties.

B8 A reporting entity is typically exposed to variability of returns from the performance of another entity by holding instruments … Read more

IFRS 12 Disclosure Subsidiaries, joint ventures and associates

Summarised financial information for subsidiaries, joint ventures and associates (paragraphs 12 and 21)

B10 For each subsidiary that has non-controlling interests that are material to the reporting entity, an entity shall disclose:

  1. dividends paid to non-controlling interests.
  2. summarised financial information about the assets, liabilities, profit or loss and cash flows of the subsidiary that enables users to understand the interest that non-controlling interests have in the group’s activities and cash flows. That information might include but is not limited to, for example, current assets, non-current assets, current liabilities, non-current liabilities, revenue, profit or loss and total comprehensive income.

B11 The summarised financial information required by paragraph B10(b) shall be the amounts before inter-company eliminations.… Read more

IFRS 12 Commitments to joint ventures

Commitments for joint ventures (paragraph 23(a))

B18 An entity shall disclose total commitments it has made but not recognised at the reporting date (including its share of commitments made jointly with other investors with joint control of a joint venture) relating to its interests in joint ventures. Commitments are those that may give rise to a future outflow of cash or other resources.

B19 Unrecognised commitments that may give rise to a future outflow of cash or other resources include:

  1. unrecognised commitments to contribute funding or resources as a result of, for example:
    1. the constitution or acquisition agreements of a joint venture (that, for example, require an entity to contribute funds over a specific period).
    2. capital-intensive projects undertaken by
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