Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) - IASB

Date recorded:

At its meeting on January 20-22, 2015, the IASB was informed that the elimination of a gain required by this September 2014 amendment appeared to create a conflict with paragraph 32(b) of IAS 28 which requires that an entity should recognize as income any excess of the fair value of the net assets of an acquired associate (or joint venture) over the cost of that associate (or joint venture). Applying the requirements of paragraph 32(b) of IAS 28 in the limited circumstances described would result in a reversal of elimination of a gain required by this September 2014 amendment. The IASB tentatively decided to clarify the requirements of IFRS 10 and IAS 28 to explain that, for the purposes of the acquisition accounting required in paragraph 32 of IAS 28, the cost on initial recognition of that associate or joint venture is the fair value of the investment at the date that control is lost and is determined before any elimination of the gains or losses required by paragraph 99A of IFRS 10.

The IASB also tentatively decided to propose a postponement of the effective date of the September 2014 amendments to IFRS 10 and IAS 28 in the light of the interaction between this proposed clarification and the September 2014 amendments. The IASB intends the effective date of this proposal and the September 2014 amendments to be the same. The IASB plans to bundle these proposed amendments with other proposals to amend IAS 28 that have already been balloted and to publish the ED in Q2/2015.

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