IFRS 12

Disclosure of Interests in Other Entities

Overview

 IFRS 12 Disclosure of Interests in Other Entities is a

consolidated disclosure standard requiring a wide range
of disclosures about an entity's interests in subsidiaries,
joint arrangements, associates and unconsolidated
'structured entities'. Disclosures are presented as a
series of objectives, with detailed guidance on
satisfying those objectives.
 IFRS 12 was issued in May 2011 and applies to annual
periods beginning on or after 1 January 2013.
 History of IFRS 12
Date Development Comments

Project on consolidation added to the IASB's

April 2002
agenda (project history)
Project on joint arrangements added to the
November 2004
IASB's agenda (project history)
13 September 2007 ED 9 Joint Arrangements published Comment deadline 11 January 2008
ED 10 Consolidated Financial Statements
18 December 2008 Comment deadline 20 March 2009
published
IASB decision to issue a separate disclosure
standard addressing a reporting entity's
involvement with other entities that are not
January 2010 in the scope of IAS 39/IFRS 9 (including
subsidiaries, associates and joint
arrangements and unconsolidated
SPEs/structured entities)
IFRS 12 Disclosure of Interests in Other Effective for annual periods beginning on or
12 May 2011
Entities published after 1 January 2013
Amended by Consolidated Financial
Statements, Joint Arrangements and Effective for annual periods beginning on or
28 June 2012
Disclosure of Interests in Other Entities: after 1 January 2013
Transition Guidance (project history)
Amended by Investment Entities
Effective for annual periods beginning on or
31 October 2012 (Amendments to IFRS 10, IFRS 12 and IAS 27)
after 1 January 2014
(project history)
Amendments under
consideration by the IASB

 None
The IASB has signalled an intention to conduct a
post-implementation review, commencing in 2016.
Related Interpretations

 None
Publications and resources

 IFRS in Focus Newsletter

IASB issues new standard on disclosure of interests in other
entities
summarising the requirements of IFRS 12 (PDF 65k, May
2011)
 Effect analysis for IFRS 10 and IFRS 12 (link to IASB
website)
Summary of IFRS
12
Objective and scope

The objective of IFRS 12 is to require the

disclosure of information that enables users of
financial statements to evaluate: [IFRS 12:1]
 the nature of, and risks associated with, its interests in other entities
 the effects of those interests on its financial position, financial performance and
cash flows.

Where the disclosures required by IFRS 12,

together with the disclosures required by other
IFRSs, do not meet the above objective, an
entity is required to disclose whatever
additional information is necessary to meet the
objective. [IFRS 12:3]
 IFRS 12 is required to be applied by an entity that has an
interest in any of the following: [IFRS 12:5]
 subsidiaries
 joint arrangements (joint operations or joint ventures)
 associates
 unconsolidated structured entities

 IFRS 12 does not apply to certain employee benefit plans,

separate financial statements to which IAS 27 Separate
Financial Statements applies (except in relation to
unconsolidated structured entities and investment entities
in some cases), certain interests in joint ventures held by
an entity that does not share in joint control, and the
majority of interests in another entity accounted for in
accordance with IFRS 9 Financial Instruments. [IFRS 12:6]
 Key definitions [IFRS
12:Appendix A]

Refers to contractual and non-contractual involvement

that exposes an entity to variability of returns from the
performance of the other entity. An interest in another
entity can be evidenced by, but is not limited to, the
holding of equity or debt instruments as well as other
forms of involvement such as the provision of funding,
Interest in another entity
liquidity support, credit enhancement and guarantees.
It includes the means by which an entity has control or
joint control of, or significant influence over, another
entity. An entity does not necessarily have an interest
in another entity solely because of a typical customer
supplier relationship.
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
Structured entity
relate to administrative tasks only and the relevant
activities are directed by means of contractual
arrangements.
Disclosures required

 Important note: The summary of disclosures that

follows is a high-level summary of the main
requirements of IFRS 12. It does not list every specific
disclosure required by the standard, but instead
highlights the broad objectives, categories and nature
of the disclosures required. IFRS 12 lists specific
examples and additional disclosures which further
expand upon the disclosure objectives, and includes
other guidance on the disclosures required. Accordingly,
readers should not consider this to be a comprehensive
or complete listing of the disclosure requirements of
IFRS 12.
Significant judgements and
assumptions
 An entity discloses information about
significant judgements and
assumptions it has made (and changes
in those judgements and assumptions)
in determining: [IFRS 12:7]
 that it controls another entity
 that it has joint control of an arrangement or significant
influence over another entity
 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

 Anentity shall disclose information that

enables users of its consolidated financial
statements to: [IFRS 12:10]
 understand the composition of the group
 understand the interest that non-controlling interests have in the group's
activities and cash flows
 evaluate the nature and extent of significant restrictions on its ability to
access or use assets, and settle liabilities, of the group
 evaluate the nature of, and changes in, the risks associated with its
interests in consolidated structured entities
 evaluate the consequences of changes in its ownership interest in a
subsidiary that do not result in a loss of control
 evaluate the consequences of losing control of a subsidiary during the
reporting period.
Interests in unconsolidated
subsidiaries
 [Note: The investment entity consolidation exemption
referred to in this section was introduced by Investment
Entities, issued on 31 October 2012 and effective for
annual periods beginning on or after 1 January 2014.]
 In accordance with IFRS 10 Consolidated Financial
Statements, an investment entity is required to apply
the exception to consolidation and instead account for
its investment in a subsidiary at fair value through profit
or loss. [IFRS 10:31].
 Where an entity is an investment entity, IFRS
12 requires additional disclosure, including:
 the fact the entity is an investment entity [IFRS 12:19A]
 information about significant judgements and assumptions it has made in
determining that it is an investment entity, and specifically where the entity
does not have one or more of the 'typical characteristics' of an investment entity 
[IFRS 12:9A]
 details of subsidiaries that have not been consolidated (name, place of business,
ownership interests held) [IFRS 12:19B]
 details of the relationship and certain transactions between the investment
entity and the subsidiary (e.g. restrictions on transfer of funds, commitments,
support arrangements, contractual arrangements) [IFRS 12: 19D-19G]
 information where an entity becomes, or ceases to be, an investment entity
[IFRS 12:9B]
 An entity making these disclosures are not required to provide various
other disclosures required by IFRS 12 [IFRS 12:21A, IFRS 12:25A].
Interests in joint
arrangements and associates
 Anentity shall disclose information
that enables users of its financial
statements to evaluate: [IFRS
12:20]
 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
 the nature of, and changes in, the risks associated with its
interests in joint ventures and associates.
Interests in unconsolidated
structured entities
 Anentity shall disclose information
that enables users of its financial
statements to: [IFRS 12:24]
 understand the nature and extent of its interests in
unconsolidated structured entities
 evaluate the nature of, and changes in, the risks associated
with its interests in unconsolidated structured entities.
Applicability and early
adoption
 Note: This section has been updated to reflect the
amendments to IFRS 12 made in June 2012 and October
2012.
 [IFRS 12: Appendix C]
 IFRS 12 is applicable to annual reporting periods
beginning on or after 1 January 2013. Early application
is permitted.
 The disclosure requirements of IFRS 12 need not be
applied for any period presented that begins before the
annual period immediately preceding the first annual
period for which IFRS 12 is applied [IFRS 12:C2A]
 Entities are encouraged to voluntarily provide
the information required by IFRS 12 prior to its
adoption. Providing some of the disclosures
required by IFRS 12 does not compel an entity
to comply with all of the requirements of the
IFRS or to also apply:
 IFRS 10 Consolidated Financial Statements
 IFRS 11 Joint Arrangements
 IAS 27 Separate Financial Statements (2011)
 IAS 28 Investments in Associates and Joint Ventures (2011).
 The amendments to IFRS 12 made by Investment Entities are applicable to
annual reporting periods beginning on or after 1 January 2014 [IFRS
12:C1B].