IAS 28 Possible amendment to SIC-12

Date recorded:


The IASB, at its October 2002 meeting, requested that the IFRIC explore whether, an appropriate interim solution would be for the IFRIC to make a limited amendment to SIC-12 Consolidation - Special Purpose Entities, in the light of the fact that the Board’s project on consolidation policies and practices (including their application to SPEs) is unlikely to result in a new Standard in the near future.  The amendment would clarify that a “majority” of benefits or risks is intended to refer to exposure to the majority of the variability of expected economic outcome, rather than the absolute economic outcome. One aim of making such an amendment would be convergence towards the FASB’s approach in developing its project on SPEs.


Decision not to add

November 2002



The IFRIC discussed this issue at its November meeting, and decided not to recommend such an amendment to SIC-12. Reasons included:

• SIC-12 is not interpreted in practice as referring to absolute economic outcome, so the limited amendment proposed would likely have little, if any, practical effect;

• There are difficult issues about exactly what is meant by variability of outcome (as well as other issues about the interpretation of SIC-12), that the IFRIC believes are best resolved by the Board in its project; and

• As the FASB’s approach was still being finalised, the IFRIC considered it premature to amend SIC-12 in any partial manner. The IFRIC’s analysis was reported to the Board at its December meeting.


An Exposure Draft on Consolidation (including Special Purpose Entities) is expected to be issued in the 4th quarter of 2004.


IFRIC reference: IAS 28

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