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IFRS 11 — Acquisition of an interest in a joint operation

Date recorded:

The project manager summarised the proposed amendments in the Exposure Draft and gave an overview over the feedback received from the comment letters and the Interpretations Committee.

The majority agreed with the IASB’s conclusion in the Exposure Draft to apply the principles of IFRS 3. Only a few disagreed, however they provided many arguments against the approach.

A majority was uncertain if there will be issues with the application of the guidance on business combinations because of the limited application guidance in the proposed amendment which could potentially lead to diversity in practice. The respondents’ views were mixed on whether additional guidance should be added to the proposed amendments.

The staff recommended finalising the project and adding additional guidance. This recommendation was supported by a majority of the IFRS IC members. Those who did not support finalisation, found that business combination accounting was inappropriate and proposed that further research and analysis should be performed to develop more comprehensive guidance.

The staff recommended clarifying the following:

  • The acquisition of an interest in a joint operation includes both the initial interest in the joint operation and the acquisition of an additional interest in the joint operation.
  • The principles of business combination accounting comprise all principles of business combinations accounting in the Standards unless they conflict with IFRS 11.
  • Cases in which the principles apply on the formation of a joint operation.

The project manager asked the IASB whether it agrees to finalise the project with the changes made by the staff.

One Board member pointed out that one IC member disagreed with the proposed changes regarding additional interests and wondered whether there will be support from the majority of the IC when going forward with the changes.

The project manager replied that none of the other IC members had a problem with the proposed additional guidance.

When taking a vote, 15 Board members supported the staff recommendation to finalise the project with the suggested amendments.

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