IFRS 12 — Disclosures for a subsidiary with a material non-controlling interest and for a material joint venture or associate

Date recorded:

The project manager introduced Agenda Paper 11 (link to IASB's website) which relates to a request received by the IC to clarify the requirements to disclose information in respect of a subsidiary that has a non-controlling interest that is material to the reporting entity. This request is with reference to paragraphs 12(e)–(g) and B10(b) of IFRS 12 Disclosure of Interests in Other Entities.

The staff concluded that a reporting entity could meet the requirements in paragraphs 12(e) and (f) by disclosing disaggregated information from the amounts included in the consolidated financial statements of the reporting entity. The staff observed that a reporting entity should apply its judgement in determining the level of disaggregation of this information; i.e. whether the entity disaggregated this information:

  1. to the subgroup level for the subsidiary together with those of its investees; or
  2. to the subsidiary level on an individual basis (ie excluding information of its investees).

A reporting entity could meet the requirements in paragraph 12(g) by either:

  1. disclosing information of the individual subsidiary (ie the legal entity), based on the subsidiary’s separate financial statements; or
  2. disclosing information of the subgroup of the subsidiary together with those of its investees. This information would be based on the consolidated amounts for the subgroup. Transactions and balances between the subgroup and other entities outside the subgroup would be presented on a gross (non-eliminated) basis.

The staff noted that the decision of which approach was presented in respect of the disclosures required by paragraph 12(e)-(g) should reflect the one that best meets the disclosure objective of paragraph 10 of IFRS 12 in the circumstances. Accordingly, it considered that this judgement would be made separately for each subsidiary that had a material non-controlling interest.

The staff concluded that the materiality assessment in paragraph 12 of IFRS 12 should be made by the reporting entity on the basis of the consolidated financial statements of the reporting entity. In this assessment, a reporting entity would consider both quantitative considerations (i.e. the size of the subsidiary) and qualitative considerations (i.e. the nature of the subsidiary).

The staff concluded that the issue should not be taken onto the agenda.


Several members expressed support for the staff recommendation. There were some concerns raised as detailed below.

One member indicated that he did not believe that this was an issue on which to provide guidance on materiality. The Staff responded that they believed that it was necessary to consider materiality, although it was difficult to express it in the agenda decision because in some cases focusing at the subsidiary level would be sufficient (entity B in the example) while in other cases it would be necessary to go further down.

One member indicated that he was not sure users would get consistent and useful information. In relation to intercompany elimination, he indicated that it would be useful to have information with elimination but it would also be necessary to have information without eliminations (views 2a and 2b).  On that point, the Chairman asked whether that member believed that a consolidation spreadsheet would be useful. The IC member responded that users needed information in a context, users did not want everything, a simple spreadsheet would not be a proper approach, users needed the information suggested in both views 2a and 2b (with and without elimination), because users needed to understand how the information fitted in the consolidated financial statements, but not necessarily a complete consolidation spreadsheet.

Further, the Chairman asked the staff if their proposal was to provide an option (an accounting policy choice) or if in a particular situation there was one judgement that had to be taken. The Staff responded that their intention was not to provide an option, rather it was a question of different circumstances that an entity needed to identify and determine how the disclosure requirements could best be met. The Implementation Director also clarified that the decision had to be made with the objective of how to best meet the disclosure requirements.

Several IC members pointed out that they believed that this was not an option, although some were not sure if this would be read properly from the agenda decision as currently written and that the wording should be improved.   One IASB member pointed out that the agenda decision needed to reflect the overriding objective of IFRS 12, the context of achieving the objective and that an entity needed to identify how best to meet the objective. Also, by focusing on the objective it would help to prevent a “check box” mentality and lead towards a communication mentality. 

One member pointed out that IFRS 12 paragraph 12g required an understanding of what is relevant. In some cases separate financial statements did not provide that information (because the purchase price allocation, fair value adjustments etc were recorded at consolidated level) and then entities needed to obtain the information from the consolidated financial statements. There could be significant differences in the amounts related to a particular subsidiary as shown in separate and consolidated financial statements. Also, he pointed out that non-controlling interest could be meaningless at a subsidiary level.

One member objected to one sentence of the agenda decision that stated that materiality should be based on the nature of the subsidiary. Another member responded that in some cases it would be important to analyse materiality in the context of the nature of the subsidiary and that this consideration should be kept in the agenda decision.

The Implementation Director responded that the rationale for assessing materiality was not necessarily about size because there could be other factors, for example a subsidiary may have intellectual property that could be very relevant to the operations of the consolidating entity; even though the amount of the licence could be immaterial. One IASB member pointed out that the nature of the operations might have different implications depending on the structure of the group so in same cases it may be relevant to assess materiality for a particular subsidiary to meet the objective of IFRS 12.


The Chairman called a vote on the agenda decision (subject to rewording to address the comments raised, particularly focusing on the principle of IFRS 12). The proposal was approved by 13 votes.

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