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IFRS Disclosure of interests in other entities

IFRS Disclosure of interests in other entities: In April 2001 the International Accounting Standards Board (the Board) adopted IAS 31 Financial Reporting of Interests in Joint Ventures, which had originally been issued by the International Accounting Standards Committee in December 1990.
In December 2003 the Board amended and renamed IAS 31 with a new title—Interests in Joint Ventures. This amendment was done in conjunction with amendments to IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries and IAS 28 Accounting for
Investments in Associates.

In May 2011 the Board issued IFRS 11 Joint Arrangements to replace IAS 31. IFRS 12 Disclosure of Interests in Other Entities, also issued in May 2011, replaced the disclosure requirements in IAS 31. IFRS 11 incorporated the guidance contained in a related Interpretation (SIC-13 Jointly Controlled Entities-Non-Monetary Contributions by Ventures). In June 2012 IFRS 11 was amended by Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and
IFRS 12). These amendments provided additional transition relief to IFRS 11, limiting the requirement to present adjusted comparative information to only the annual period immediately preceding the first annual period for which IFRS 11 is applied. In May 2014 the Board amended IFRS 11 to provide guidance on the accounting of interests in joint operations in which the activity constitutes a business.

IFRS Disclosure of interests in other entities

The objective of the IFRS is to require an entity to disclose information that enables users of its financial statements to evaluate:

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  1. the nature of, and risks associated with, its interests in other entities.
  2. the effects of those interests on its financial position, financial performance and cash flows. The IFRS applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity.

IFRS Disclosure of interests in other entities: The IFRS establishes disclosure objectives according to which an entity discloses information that enables users of its financial statements to understand:

  1. the significant judgements and assumptions (and changes to those judgements and assumptions) made in determining the nature of its interest in another entity or arrangement (ie control, joint control or significant influence), and in determining the type of joint arrangement in which it has an interest.
  2. the interest that non-controlling interests have in the group’s activities and cash flows.
  3. the nature and extent of significant restrictions on its ability to access or use assets, and settle liabilities, of the group.
  4. the nature of, and changes in, the risks associated with its interests in consolidated structured entities.
  5. the nature and extent of its interests in unconsolidated structured entities, and the nature of, and changes in, the risks associated with those interests.
  6. the nature, extent and financial effects of its interests in joint arrangements and associates, and the nature of the risks associated with those interests.
  7. the consequences of changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control.
  8. the consequences of losing control of a subsidiary during the reporting period.

The IFRS specifies minimum disclosures that an entity must provide. If the minimum disclosures required by the IFRS are not sufficient to meet the disclosure objective, an entity discloses whatever additional information is necessary to meet that objective. The IFRS requires an entity to consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the requirements in the IFRS. An entity shall aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have different characteristics.

IFRS Disclosure of interests in other entities

Main features of the IFRS
The IFRS requires a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement.
General requirements
The IFRS is to be applied by all entities that are a party to a joint arrangement. A joint arrangement is an arrangement of which two or more parties have joint control. The IFRS defines joint control as the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (ie activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control.

IFRS Disclosure of interests in other entities
The IFRS classifies joint arrangements into two types—joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (ie joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the
arrangement (ie joint ventures) have rights to the net assets of the arrangement.

IFRS Disclosure of interests in other entities

An entity determines the type of joint arrangement in which it is involved by considering its rights and obligations. An entity assesses its rights and obligations by considering the structure and legal form of the arrangement, the contractual terms agreed to by the parties to the arrangement and, when
relevant, other facts and circumstances.
The IFRS requires a joint operator to recognise and measure the assets and liabilities (and recognise the related revenues and expenses) in relation to its interest in the arrangement in accordance with relevant IFRSs applicable to the particular assets, liabilities, revenues and expenses.

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A This IFRS requires the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in IFRS 3 Business Combinations, to apply all of the principles on business combinations accounting in IFRS 3 and other
IFRSs except for those principles that conflict with the guidance in this IFRS. In addition, the acquirer shall disclose the information required by IFRS 3 and other IFRSs for business combinations.

IFRS Disclosure of interests in other entities:The IFRS requires a joint venturer to recognise an investment and to account for that investment using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures, unless the entity is exempted from applying the equity method as specified in that standard.

The disclosure requirements for parties with joint control of a joint arrangement are specified in IFRS 12 Disclosure of Interests in Other Entities.

IFRS Disclosure of interests in other entities

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