Global Standards for the world economy

Saturday 11 July 2020

Banner graphic

Project news

Project news

The Interpretations Committee reviewed other transactions and tentatively agreed on the scope of the project

 14 July 2015

IFRS 11 Joint Arrangements—Should a pre-existing interest in a joint operation be remeasured when the entity becomes a joint operator through acquisition of an additional interest in the joint operation? (Agenda Paper 6)

The Interpretations Committee received a request to clarify whether a previously held interest in the assets and liabilities of a joint operation is remeasured to fair value when the investor’s acquisition of an additional interest results in the investor becoming a joint operator (ie obtaining joint control) in the joint operation.

At this meeting the Interpretations Committee discussed an analysis of other transactions involving changes of interests in a business (as defined by IFRS 3 Business Combinations) for which there is a lack of guidance, or where there is diversity of views, on determining whether or not previously held interests should be remeasured. The analysis identified 14 such transactions. The analysis indicated that several of these transactions were either not widespread, not resulting in diversity in practice or were the subject of another IASB project. On the basis of the analysis, the Interpretations Committee agreed that the scope of the project, initially, should include transactions involving:

  1. obtaining control of a joint operation, either from having joint control in a joint operation or being a party to a joint operation prior to the transaction;
  2. loss of control resulting in the entity having joint control in a joint operation or being a party to a joint operation subsequent to the transaction; and
  3. change of interests resulting in a party to a joint operation obtaining joint control in a joint operation.

The Interpretations Committee observed that it would be useful to also analyse similar transactions involving assets, or groups of assets and liabilities, that do not meet the definition of a business.

The Interpretations Committee asked the staff to prepare a paper that analyses the accounting for previously held interests for the transactions identified, taking into account existing principles that can be carried over to these transactions. It also expressed a preference that any guidance that might be developed as part of this work should be informed by the other IASB projects referred to, and should consider the implications on the accounting for other similar transactions.

The staff will present this further analysis at a future meeting.

Related information