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The Interpretations Committee tentatively decided not to add this issue to its agenda

 22 March 2016


IFRS 11 Joint Arrangements and IFRS 10 Consolidated Financial Statements—Accounting for loss of control transactions (Agenda Paper 3)

The Interpretations Committee discussed whether an entity should remeasure its retained interest in the assets and liabilities of a joint operation when the entity loses control of an asset or group of assets. In the transaction discussed, the entity either retains joint control of a joint operation or is a party to a joint operation (with rights to assets and obligations for liabilities) after the transaction. The asset, or group of assets, over which the entity loses control may or may not constitute a business.

The Interpretations Committee noted that paragraphs B34–B35 of IFRS 11 Joint Arrangements specify that an entity recognises gains or losses on the sale or contribution of assets to a joint operation only to the extent of the other parties’ interests in the joint operation. The requirements in these paragraphs could be viewed as conflicting with the requirements in IFRS 10 Consolidated Financial Statements, which specify that an entity should remeasure any retained interest when it loses control of a subsidiary.

The Interpretations Committee observed that the Board had issued amendments to IFRS 10 and IAS 28 Investments in Associates and Joint Ventures in September 2014 to address the accounting for the sale or contribution of assets to an associate or a joint venture. Those amendments address a similar conflict that exists between the requirements in IFRS 10 and IAS 28. After issuing the amendments, the Board considered a number of other related issues. The Board decided to address these issues as part of its research project on equity accounting, and also decided to defer the effective date of the amendments to IFRS 10 and IAS 28.

Because of the similarity between the transaction being considered by the Interpretations Committee and a sale or contribution of assets to an associate or a joint venture, the Interpretations Committee concluded that the accounting for the two transactions should be considered concurrently by the Board. Consequently, the Interpretations Committee [decided] not to add this issue to its agenda but, instead, to recommend to the Board that the issue is considered at the same time that the Board further considers the accounting for the sale or contribution of assets to an associate or a joint venture.