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EFRAG suggests the IASB addresses interests in joint operations structured through separate vehicles

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

01 Mar 2014

In a letter to the IASB, the EFRAG requests that the IASB review the issues surrounding the accounting for interests in joint operations structured through a separate vehicle in separate financial statements.

Specifically, the guidance in IFRS 11 Joint Arrangements, which requires a joint operator to follow in its separate financial statements in the same manner as in the consolidated financial statements when accounting for interest in a joint operation structured through a separate vehicle, provides different options than the guidance in IAS 27 Separate Financial Statements, which requires investments in subsidiaries, associates or joint ventures to be accounted for at cost or fair value in the separate financial statements of the investor. These differences have created issues for companies that present separate financial statements in accordance with IFRSs.

In the letter submitted to the IASB, EFRAG notes that a practical solution to address the issue is for the IASB to amend IAS 27 to allow joint operations, structured through a separate vehicle, to be accounted for in the same way as joint ventures (i.e. at cost or fair value) in the separate financial statements of the joint operator.

For more information, see the press release and the letter to the IASB on the EFRAG website.

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