Need to Know: IFRS 10 - Consolidated Financial ... - BDO Canada

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54 IFRS 10 Consolidated Financial Statements8.6. Transitional provisionsThe amendments are mandatory for annual periods beginning 1 January 2014. They are to be applied retrospectivelybut with some transitional provisions. Previously the exposure draft had proposed that the amendments should beapplied prospectively.An entity is required to assess whether it is an investment entity on the basis of the facts and circumstances thatexist at the date of initial application (the beginning of the annual reporting period for which the amendments areapplied for the first time).An investment entity is required to retrospectively adjust the annual period that immediately precedes the date ofinitial application, and equity at the beginning of that immediately preceding period, for any difference between:––The previous carrying amount of the subsidiary––The fair value of the investment entity’s investment in the subsidiary.Any amounts of fair value adjustments previously recognised in other comprehensive income are transferred toretained earnings at the beginning of the immediately preceding period.For periods before the date on which IFRS 13 Fair Value Measurement is adopted, an investment entity uses the fairvalue amounts that were previously reported to investors or to management. This is subject to the proviso thatthose amounts represent the amount for which the investment could have been exchanged between knowledgeable,willing parties in an arm’s length transaction at the date of the valuation.If measuring an investment in a subsidiary at fair value as described above is impracticable (i.e. when the entitycannot measure an investment at fair value after making every reasonable effort to do so, which is a high hurdle),an investment entity must determine the fair value of its subsidiary at the beginning of the earliest period for whichit is practicable, which may be the current period. In the latter case, the adjustment to equity is recognised at thebeginning of the current period.An investment entity is not required to make adjustments to the previous accounting for subsidiaries that it disposedof, or lost control of, before the date of initial application.
IFRS 10 Consolidated Financial Statements559. Disclosure requirements in IFRS 12The objective of IFRS 12 Disclosure of Interests in Other Entities is to require a reporting entity to disclose information thathelps users of its financial statements understand:––The nature of, and risks associated with, its interests in other entities (whether these are subsidiaries, joint operations, jointventures, associates or interests in structured entities that are not consolidated)––The effects of those interests on the reporting entity’s financial position, financial performance and cash flows.IFRS 12 combines, and makes consistent, certain existing disclosures that were previously included, in some cases withoverlapping requirements, in IAS 27(2008) Consolidated and Separate Financial Statements, IAS 28(2008) Investments inAssociates and IAS 31 Interests in Joint Ventures. In addition, it introduces certain new disclosure requirements, including thoserelated to unconsolidated structured entities where a lack of transparency about entities’ exposures to related risks washighlighted by the global financial crisis.For investees consolidated under IFRS 10 Consolidated Financial Statements, the disclosure requirements in IFRS 12 are:––Significant judgements and assumptions (and changes to those judgements and assumptions) in determining that it hascontrol of another entity (IFRS 12.7(a)). These may include:––Why it does not control another entity even though it holds more than half of the voting rights of the other entity(IFRS 12.9(a))––Why it controls another entity even though it holds less than half of the voting rights of the other entity (IFRS 12.9(b))––Why it is an agent or a principal (IFRS 12.9(c)).––Composition of the group (IFRS 12.10(a)(i))––Non-controlling interests (NCI) in the group’s activities and cash flows (IFRS 12.10(a)(ii). For each of its subsidiaries thathave material NCI (IFRS 12.12):––Name––Principal place of business (and country of incorporation if different from the principal place of business)––Proportion of ownership interests held by NCI––Proportion of voting rights held by NCI, if different from the proportion of ownership interests held––Profit or loss allocated to NCI of the subsidiary during the reporting period––Accumulated controlling interests of the subsidiary at the end of the reporting period––Summarised financial information about the subsidiary (e.g. dividends paid to NCI, current assets, non-current assets,current liabilities, non-current liabilities, revenue, profit or loss and total comprehensive income).––Significant restrictions (e.g. statutory, contractual and regulatory restrictions) on the ability to access or use the assets andsettle the liabilities of the group, such as:––Those that restrict the ability of a parent or its subsidiaries to transfer cash or other assets to (or from) other entitieswithin the group––Guarantees or other requirements that may restrict dividends and other capital distributions being paid, or loans andadvances being made or repaid, to (or from) other entities within the group (IFRS 12.13(a)).––The nature and extent to which protective rights of NCI can significantly restrict the entity’s ability to access or use theassets and settle the liabilities of the group (such as when a parent is obliged to settle liabilities of a subsidiary beforesettling its own liabilities, or approval of NCI is required either to access the assets or to settle the liabilities of a subsidiary)(IFRS 12.13(b))– – The carrying amounts in the consolidated financial statements of the assets and liabilities to which those restrictions apply(IFRS 12.13(c))
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Need to Know: IFRS 10 - Consolidated Financial ... - BDO Canada

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