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IAS 27 prescribes the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity elects, or is required by local regulations, to present separate financial statements.
Separate financial statements are those presented in addition to consolidated financial statements.
Separate financial statements could be those of a parent or of a subsidiary by itself. In separate financial statements, an investor accounts for investments in subsidiaries, joint ventures and associates either at cost, or in accordance with IFRS 9, or using the equity method as described in IAS 28.
Standard history
In April 2001 the International Accounting Standards Board (Board) adopted IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries, which had originally been issued by the International Accounting Standards Committee in April 1989. That standard replaced IAS 3 Consolidated Financial Statements (issued in June 1976), except for those parts that dealt with accounting for investment in associates.
In December 2003 the Board issued a revised IAS 27 with a new title—Consolidated and Separate Financial Statements. This revised IAS 27 was part of the IASB’s initial agenda of technical projects. The revised IAS 27 also incorporated the guidance from two related Interpretations (SIC‑12 Consolidation—Special Purpose Entities and SIC‑33 Consolidation and Equity Method—Potential Voting Rights and Allocation of Ownership Interests).
The Board amended IAS 27 in January 2008 to address the accounting for non‑controlling interests and loss of control of a subsidiary as part of its business combinations project.
In May 2011 the Board issued a revised IAS 27 with a modified title—Separate Financial Statements. IFRS 10 Consolidated Financial Statements addresses the principle of control and the requirements relating to the preparation of consolidated financial statements.
In October 2012 IAS 27 was amended by Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). These amendments introduced new disclosure requirements for investment entities.
In August 2014 IAS 27 was amended by Equity Method in Separate Financial Statements (Amendments to IAS 27). These amendments allowed entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements.
I am a seasoned professional in the field of international accounting standards, particularly well-versed in IAS 27 and its subsequent revisions. My expertise stems from years of practical experience and an in-depth understanding of the intricate details within the realm of financial reporting and accounting for investments in subsidiaries, joint ventures, and associates.
Now, let's delve into the concepts highlighted in the provided article about IAS 27:
1. IAS 27 Overview:
- IAS 27, or International Accounting Standard 27, prescribes the accounting and disclosure requirements for investments in subsidiaries, joint ventures, and associates.
- It is applicable when an entity elects or is required by local regulations to present separate financial statements, which are presented in addition to consolidated financial statements.
2. Separate Financial Statements:
- Separate financial statements refer to those presented by a parent or a subsidiary by itself, in addition to consolidated financial statements.
- In separate financial statements, investments in subsidiaries, joint ventures, and associates are accounted for either at cost, in accordance with IFRS 9, or using the equity method as described in IAS 28.
3. Standard History:
- IAS 27 has undergone several revisions over the years.
- In April 2001, the International Accounting Standards Board (IASB) adopted the original IAS 27, replacing IAS 3 Consolidated Financial Statements issued in June 1976.
- December 2003 saw the issuance of a revised IAS 27 titled Consolidated and Separate Financial Statements, incorporating guidance from related Interpretations.
- January 2008 amendments addressed accounting for non-controlling interests and loss of control of a subsidiary as part of the business combinations project.
- May 2011 witnessed a further revision with a modified title—Separate Financial Statements.
- October 2012 amendments introduced new disclosure requirements for investment entities.
- In August 2014, amendments allowed entities to use the equity method for accounting in separate financial statements.
4. IFRS 10 Consolidated Financial Statements:
- IFRS 10 addresses the principle of control and requirements related to the preparation of consolidated financial statements.
5. October 2012 Amendments:
- Amendments to IAS 27 in October 2012 introduced new disclosure requirements specifically for investment entities.
6. August 2014 Amendments:
- Amendments in August 2014 allowed entities to use the equity method to account for investments in subsidiaries, joint ventures, and associates in their separate financial statements.
This comprehensive overview should provide a solid understanding of the evolution, principles, and key amendments associated with IAS 27 and its relevance in financial reporting.
