Overview
IFRS 12 Disclosure of interests in other entities – The objective of IFRS 12 is to require companies to disclose information that enables users of their 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. These IFRS 12 summary notes are prepared by mindmaplab team and covering, IFRS 12 revised amendment, the key definitions, full standard with illustrative examples, with IFRS 12 disclosure requirements, IFRS 12 disclosure of interests in other entities, structured entity IFRS 12. This is the IFRS 12 full text guide; we have also prepared IFRS 12 pdf version download.
IAS Standards
IAS 2 Inventories
IAS 7 Statements of cash flows
IAS 7 Statement of cash flows – Revisited
IAS 8 Accounting policies, changes in accounting estimates, and errors
IAS 10 Events after the reporting period
IAS 16 Property, plant and equipment
IAS 20 Accounting for government grants and disclosure of government assistance
IAS 21 The effects of changes in foreign exchange rates
IAS 24 Related party disclosures
IAS 27 Consolidated and separate financial statements
IAS 28 Investments in associates and joint ventures
IAS 32 Financial instruments: presentation
IAS 33 Earnings per share – Revisited
IAS 37 Provisions, contingent liabilities and contingent assets
IFRS Standards
IFRS 5 Non-current assets held for sale and discontinued operations
IFRS 7 Financial instruments: disclosures
IFRS 10 Consolidated financial statements
IFRS 12 Disclosure of interests in other entities
IFRS 13 Fair value measurement
IFRS 15 Revenues from contracts with customers
IAS 17 VS IFRS 16 Lease – Differences
Introduction to IFRS 12
IFRS 12 must be applied by a company that has an interest in any of the following:
- subsidiaries;
- joint arrangements (i.e. joint operations or joint ventures);
- associates;
- unconsolidated structured entities.
The objective of IFRS 12 is to require companies to disclose information that enables users of their 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.
Significant judgements and assumptions
A company must disclose information about significant judgements and assumptions it has made in determining:
- that it has control of another entity;
- that it has joint control of an arrangement or significant influence over another entity; and
- the type of joint arrangement (i.e. joint operation or joint venture) when the arrangement has been structured through a separate vehicle.
Interests in subsidiaries
A company must disclose information that enables users of its consolidated financial statements:
- to understand the composition of the group and the interest that non-controlling interests have in the group’s activities and cash flows; and
- to evaluate the consequences of changes in its ownership interest in a subsidiary that do not result in a loss of control and of losing control of a subsidiary during the reporting period.
When the financial statements of a subsidiary used in the preparation of consolidated financial statements are as of a date or for a period that is different from that of the consolidated financial statements, a company must disclose the date of the end of the reporting period of the financial statements of that subsidiary the reason for using a different date or period.
Non-controlling interests
A company must disclose for each of its subsidiaries that have non-controlling interests that are material to the reporting entity:
- the name and the principal place of business of the subsidiary
- the proportion of ownership interests held by non-controlling interests
- the profit or loss allocated to non-controlling interests of the subsidiary during the reporting period
Interests in joint arrangements and associates
A company must disclose information that enables users of its financial statements to evaluate:
- the nature, extent and financial effects of its interests in joint arrangements and associates,
- the nature of, and changes in, the risks associated with its interests in joint ventures and associates.
Nature, extent and financial effects of interests in joint arrangements and associates
A company must disclose:
- the name and the nature of the entity’s relationship with the joint arrangement or associate.
- the principal place of business and the proportion of ownership interest or participating share held by the entity.
- The method used for measurement (equity method or at fair value).
Risks associated with an entity’s interests in joint ventures and associates
A company must disclose:
- commitments that it has relating to its joint ventures
- contingent liabilities incurred relating to its interests in joint ventures or associates
Structured entities
Structured entity – An entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.
A structured entity might be consolidated or unconsolidated depending on the results of the analysis of whether control exists.
Consolidated structured entities
- A company must disclose the terms of any contractual arrangements that could require the parent or its subsidiaries to provide financial support to a consolidated structured entity.
- A company must also disclose any support given where there is no contractual obligation and any intention to provide financial or other support to a consolidated structured entity.
Unconsolidated structured entities
A company must disclose information that enables users of its financial statements:
- to understand the nature and extent of its interests in unconsolidated structured entities; and
- to evaluate the nature of, and changes in, the risks associated with its interests in unconsolidated structured entities.