Annual Report 2015
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2 SIGNIFICANT ACCOUNTING POLICIES
(continued)
2.4 Standards in issue not yet effective
(continued)
IFRS 10, IFRS 12 and IAS 28 – Investment Entities: Applying the Consolidation Exception – Amendments to IFRS 10, IFRS
12 and IAS 28 (effective January 1, 2016)
The amendments address issues that have arisen in applying the investment entities exception under IFRS 10.
The amendments to IFRS 10 clarify that the exemption (in IFRS 10.4) from presenting consolidated financial statements applies to
a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value.
Furthermore, the amendments to IFRS 10 clarify that only a subsidiary of an investment entity that is not an investment entity
itself and that provides support services to the investment entity is consolidated. All other subsidiaries of an investment entity
are measured at fair value.
The amendments to IAS 28 allow the investor, when applying the equity method, to retain the fair value measurement applied
by the investment entity associate or joint venture to its interests in subsidiaries.
The amendments to IFRS 10 and IAS 28 provide helpful clarifications that will assist preparers in applying the standards more
consistently. However, it may still be difficult to identify investment entities in practice when they are part of a multilayered group
structure.
IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture –
Amendments to IFRS 10 and IAS 28 (effective January 1, 2016)
The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or
contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution
of assets that constitute a business, as defined in IFRS 3 Business Combinations, between an investor and its associate or joint
venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business,
however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.
The amendments will effectively eliminate diversity in practice and give preparers a consistent set of principles to apply for such
transactions. However, the application of the definition of a business is judgemental and entities need to consider the definition
carefully in such transactions.
IFRS 11 – Accounting for Acquisitions of Interests in Joint Operations – Amendments to IFRS 11 (effective January 1,
2016)
The amendments require an entity acquiring an interest in a joint operation in which the activity of the joint operation constitutes
a business, to apply, to the extent of its share, all of the principles in IFRS 3, and other IFRSs, that do not conflict with the
requirements of IFRS 11. Furthermore, entities are required to disclose the information required in those IFRSs in relation to
business combinations.
The amendments also apply to an entity on the formation of a joint operation if, and only if, an existing business is contributed
by the entity to the joint operation on its formation.
