IAS 28 — Acquisition of an associate or joint venture from an entity under common control

Date recorded:


In June 2017, the IC discussed how an entity accounts for the acquisition of an interest in an associate or joint venture from an entity under common control. The IC concluded that an entity applies IAS 28 to such transactions and should not apply the BCUCC scope exception in IFRS 3 by analogy. The IC believed that the scope of IAS 28 is clear in this regard and decided not to add this matter onto its agenda.

Staff analysis of comment letters received

Eleven comment letters were received and the responses were mixed: five agreed with the IC, five disagreed and one had mixed views.

Those who disagreed with the IC’s technical conclusion noted that it is inconsistent with the agenda decision published in May 2013 on the same issue, which explicitly acknowledged a lack of clarity in how to account for such transactions. They questioned what led the IC to change their view from 2013. In response, the Staff do not believe that there is any inconsistency between the two agenda decisions. They observe that the 2013 agenda decision did not provide any technical conclusion on the matter and merely set out the basis for diversity in practice.

Some respondents repeated some of the issues already considered by the IC in their June 2017 meeting without any new arguments. The Staff continue to agree with the IC’s decision on those issues.

More than half of the respondents also disagreed that the cost of the investment in an associate or joint venture should always be adjusted for the effects of a transaction with owners. The Staff acknowledge their concern and recommend removing that reference.

The Staff rejected suggestions of postponing the finalisation of the agenda decision until completion of the BCUCC project as that would unnecessarily perpetuate the diversity in practice.

Staff recommendation

The Staff recommend that the IC finalise the agenda decision subject to drafting changes.

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