Investments material associates disclosures

Investments material associates disclosuresInvestments material associates disclosures – The subject of investments material associates disclosures may be aggregated for interests in similar entities, with the method of aggregation being disclosed (aggregation being consolidation). A quantitative and qualitative analysis, taking into account the different risk and return characteristics of each entity, is made in order to determine the aggregation level. IFRS 12 gives the following examples of aggregation levels: by nature of activities, by industry or by geography. [IFRS 12.4, B2–B6]

However, as a minimum, information is given separately for interests in subsidiaries, joint ventures, joint operations, associates and unconsolidated structured entities. [IFRS 12.B4–B6]

IFRS 12 emphasises that it’s necessary for financial statement preparers to strike a balance between burdening financial statements with excessive detail that may not assist users of financial statements and obscuring information as a result of too much aggregation.

An entity shall consider the following when determining whether to aggregate information: Investments material associates disclosures

  • Quantitative and qualitative information about the risk and return characteristics of each entity considered for possible aggregation; and
  • The significance of each entity to the reporting entity.

Examples of aggregation levels that may be appropriate are:

  • Nature of activities. Investments material associates disclosures
  • Industry classification.  Investments material associates disclosures
  • Geography Investments material associates disclosures

Significant judgements and assumptions

Information about significant judgements and assumptions (including changes to those judgements and assumptions) made by an entity in determining the following should be disclosed:

  • That it has control of another entity; Investments material associates disclosures
  • That it has joint control of an arrangement or significant influence over another entity; and Investments material associates disclosures
  • The type of joint arrangement (joint operation or joint venture) when it has been structured through a separate vehicle.

Examples of situations that require disclosure

The entity: Investments material associates disclosures

  • Does not control another entity even though it holds more than half of the voting rights. Investments material associates disclosures
  • Controls another entity even though it holds less than half of the voting rights. Investments material associates disclosures
  • Is a principal or an agent. Investments material associates disclosures
  • Does not have a significant influence even though it holds 20% or more of the voting rights. Investments material associates disclosures
  • Has significant influence even though it holds less than 20% of the voting rights Investments material associates disclosures

Disclosure Investments material associates disclosures

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

An entity shall disclose: Investments material associates disclosures

  • For each joint arrangement and associate that is material to the reporting entity Investments material associates disclosures
    • The name of the joint arrangement or associate Investments material associates disclosures
    • The nature of the entity’s relationship with the joint arrangement or associate Investments material associates disclosures
    • The principal place of business and country of incorporation of the joint arrangement or associate Investments material associates disclosures
    • The proportion of ownership interest or participating share held by the entity and if different, the proportion of voting rights held (if applicable)
  • For each joint venture and associate that is material to the reporting entity Investments material associates disclosures
    • Whether the investment is measured using the equity method or fair value Investments material associates disclosures
    • Summarised financial information about the joint venture or associate as specified Investments material associates disclosures
    • If there is a quoted market price for the investment and the joint venture or associate is accounted for using the equity method, the fair value of its investment in the joint venture or associate Investments material associates disclosures
  • Financial information about the entity’s investments in joint ventures and associates that are not individually material
    • In aggregate for all individually immaterial joint ventures Investments material associates disclosures
    • In aggregate for all individually immaterial associates Investments material associates disclosuresNote: Joint ventures and Associates should be aggregated in two separate groups. Investments material associates disclosures
  • An entity shall also disclose
    • The nature and extent of any significant restrictions on the ability of joint ventures or associates to transfer funds to the entity in the form of cash dividends, or to repay loans or advances made by the entity
    • Where there is a difference in the reporting date or period of a joint venture or associate’s financial statements used in applying the equity method
      • The date of the end of the reporting period of that joint venture or associate and
      • The reason for using the different date or period
  • The unrecognised share of losses of a joint venture or associate, both for the reporting period and cumulatively, if the entity has stopped recognising its share of losses of the joint venture or associate when applying the equity method
Something else -   Debt instrument

Risks associated with an entity’s interest in joint ventures and associates

An entity shall disclose:

  • Commitments that it has relating to its joint ventures separately from the amount of other commitments.
  • In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, unless the probability of loss is remote, contingent liabilities incurred relating to its interest in joint venture or associates, separately from the amount of other contingent liabilities. This includes an entity’s share of contingent liabilities incurred jointly with other investors with joint control of, or significant influence over, the joint ventures or associates

Note a) [IFRS 12 B14(a)] Investments material associates disclosures


IFRS 12 indicates that the amounts included in the summarised financial information are those prepared in accordance with IFRS, modified to reflect adjustments made by the entity in applying equity accounting; fair value adjustments and accounting policy alignments are noted as examples.

Fair value adjustments Investments material associates disclosures

Although the standard refers to fair value adjustments at the date of acquisition, this would include the effect of the subsequent accounting since that date.

There is no guidance on whether the fair value adjustments should be made on a net basis (reflecting only the investor’s interest) or grossed up to relate to the investee as a whole.

In this example, such adjustments have been grossed up and are embedded in the summarised financial information. An alternative would be to multiply the financial information by the investor’s interest and then adjust for fair value adjustments; this approach might result in a more complex disclosure.

Goodwill Investments material associates disclosures

There is no guidance on how goodwill that forms part of the carrying amount of an investment in an associate or joint venture is incorporated into the summarised financial information. Although it can be argued that goodwill is an adjustment made in applying equity accounting, the determination of goodwill is very specific to the particular transaction between the parties.

Therefore, in this example goodwill has been included in the reconciliation to the carrying amount of the investee in the statement of financial position, rather than being embedded in the summarised financial information of the associate.

Note b) [IFRS 12 B15] Investments material associates disclosures


The summarised financial information may be presented on the basis of the associate’s or joint venture’s financial statements if either:

  • the investee is accounted for at fair value; or
  • the investee does not prepare IFRS financial statements and preparation on that basis would be impracticable or cause undue cost.

Note c) [IFRS 12 B14(b)] Investments material associates disclosures


IFRS 12 requires the summarised financial information, which comprises financial position and financial performance, to be reconciled to the carrying amount in the statement of financial position.

One method of reconciliation is to focus the reconciliation on the financial position of equity-accounted investees. This example incorporates both elements – financial performance and financial position – into the reconciliation, which is then adjusted for reconciling items at the group level.

Note d) [IFRS 12 B11, B14, IAS 28 26, IAS 28 38]


In respect of summarised financial information for subsidiaries with material NCI, IFRS 12 specifies that such information should be before inter-company eliminations. However, the standard is silent in respect of transactions with associates and joint ventures.

In this example, the elimination of unrealised gains or losses is presented as part of the reconciliation. An alternative would be to present the summarised financial information after such eliminations because they are adjustments made in applying equity accounting (see above Note a) and Note b)).

Based on IFRS 12 21, IFRS 12 22, IFRS 12 B12, IFRS 12 B14 the disclosures are made like in this example from the Annual Report 2017 of Ahold Delhaize (page 166):

Investments material associates disclosures
Example Investments in joint ventures and associates

Integrated disclosure of material and non-material associates with link to the statement of financial position (DSM N.V. 2014 financial statements, pages 158 – 160) Disclosures material associates

This disclosure is both qualitative and quantitative. It states which associates are material to the company. Reference is also made in the financial statements to the discussion of the results in the annual report.The disclosure of the financial information distinguishes between material and non-material associates.

The financial information is not limited to the statement of financial position and the statement of income of the associates, but also includes for instance contingent liabilities. The disclosure also states the loans included in the statement of financial position item.


10 Associates and joint ventures Disclosures material associates

The application of IFRS 11 impacted the accounting for the DSM interest of 50% in DSM Sinochem Pharmaceuticals and POET-DSM Advanced Biofuels which were proportionally consolidated in earlier years. With the adoption of IFRS 11, it has been determined that the interests in both companies have to be classified as joint venture under IFRS 11 and accounted for using the equity method.

The transition was applied retrospectively and the comparative information was restated. DSM has a 49% interest and significant influence in DPx since the formation of this company early in 2014 and also accounts for this interest using the equity method. Relations with these joint ventures and their strategic importance are discussed in more detail in the sections Pharma Partnerships and Innovation Center in the Report by the Managing Board. Entities that meet the definition of joint operations of IFRS 11 were not identified.

DSM’s share in its most important associates and joint ventures is disclosed below:

Investments material associates disclosures

The following table provides an overview of DSM’s investments in associates and joint ventures.

Investments material associates disclosures

Disclosures material associates

Loans include a USD 61 million loan granted to DPx in 2014 with an annual fixed interest rate of 10.75% and an expected 5-year maturity. Loans of € 6 million and € 12 million to DSP maturing in 2016 together with a loan of CNY 115 million to be repaid in or before 2017. A USD 50 million loan to POET-DSM with a 5% interest repayable in 2018 and secured for 50% by a guarantee from the joint venture partner. Disclosures material associates

Investments material associates disclosures

Investments material associates disclosures

Annualreporting provides financial reporting narratives using IFRS keywords and terminology for free to students and others interested in financial reporting. The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. Use at your own risk. Annualreporting is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org or the local representative in your jurisdiction.

Something else -   Disclosures immaterial associates and joint ventures 10 best examples!

Leave a comment