Revised ED on 'deemed cost' of investments

  • IASB Exposure Draft (original) Image

13 Dec 2007

The IASB published for public comment a revised exposure draft (ED) of proposed amendments to IFRS 1 'First-time Adoption of IFRSs' and IAS 27 'Consolidated and Separate Financial Statements'.

The revised ED – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate – responds to comments received on a related exposure draft published in January 2007.

The proposals address concern that retrospectively determining cost in accordance with IAS 27 on first-time adoption of IFRSs cannot, in some circumstances, be achieved without undue cost or effort. Under the revised proposal:

  • Entities, in their separate financial statements, would be allowed to use a 'deemed cost' option for determining the cost of an investment.
  • That 'deemed cost' could be either fair value (determined in accordance with IAS 39 Financial Instruments: Recognition and Measurement) or the carrying amount under previous national standards.
  • The 'deemed cost' option to would apply to jointly controlled entities and associates as well as subsidiaries.
  • A new parent would be required to measure cost using the carrying amounts of the existing entity at the date when the new parent is formed.

Comment deadline on the revised ED is 26 February 2008. Click for:


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