IAS 27 — Treatment of transaction costs on acquisition or disposal of non-controlling interests

Date recorded:

The IFRIC has been asked to clarify the treatment of transaction costs relating to acquisitions and disposals of non-controlling interests (NCI) that do not result in a loss of control of the entity. Paragraph 30 of IAS 27 (2008) requires those transactions to be accounted for as equity transactions. However, the standard does not contain explicit requirements for transaction costs incurred in relation to the acquisition or disposal of NCI. Therefore, some constituents have asked the IFRIC to clarify whether an entity should either expense those transaction costs or deduct them from equity.

The staff recommended that the IFRIC not add a project to its agenda to clarify how an entity should account for transaction costs that it incurs in a transaction with NCI that does not result in the loss of control of a subsidiary. The staff believes that relevant guidance already exists in IFRSs. Directly attributable transaction costs that are incurred in an acquisition or disposal of NCI that does not result in the loss of control of an entity should be deducted from equity.

The IFRIC agreed with the staff; however, one IFRIC member said that the rationale for supporting the rejection should be IAS 1.106(d)(iii). The other IFRIC members agreed, and the staff were requested to amend the agenda decision accordingly.

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