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Deloitte comment letter on equity method ED

  • Deloitte Comment Letter Image

Mar 22, 2013

Deloitte's IFRS Global Office has submitted a letter of comment responding to the IASB exposure draft 'Equity Method: Share of Other Net Asset Changes'. While we welcome the initiative taken by the IASB to address the gap in the guidance on the application of the equity method of accounting, we do not agree with the proposed solution.

We recommend that any solution should based off the current practice which is consistent with the approach tentatively agreed upon by the IFRS Interpretations Committee. The IFRIC approach states that indirect increases in ownership interest are substantially different from indirect decreases in ownership interest and that both should be accounted for in a manner consistent with a direct change in ownership interest.

If the Board is not in favour of this approach and needs a shorter-term solution, we recommend an approach that favours recognition of the investor's share of equity transactions in the investor's profit or loss to recognition in the investor's equity.

More information and the full Deloitte comment letter can be found here.

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