IFRS 12 Disclosure of Interests in Other Entities

2.To meet the objective in paragraph 1, an entity shall disclose:

1. the significant judgements and assumptions it has made in determining:

   1. the nature of its interest in another entity or arrangement;

   2. the type of joint arrangement in which it has an interest (paragraphs 7–9);

   3. that it meets the definition of an investment entity, if applicable (paragraph 9A); and

2. information about its interests in:

   1. subsidiaries (paragraphs 10–19);

   2. joint arrangements and associates (paragraphs 20–23); and

   3. structured entities that are not controlled by the entity (unconsolidated structured entities) (paragraphs 24–31).

3.If the disclosures required by this IFRS, together with disclosures required by other IFRSs, do not meet the objective in paragraph 1, an entity shall disclose whatever additional information is necessary to meet that objective.

4.An entity shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the requirements in this IFRS. It shall aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have different characteristics (see paragraphs B2–B6).

9A.When a parent determines that it is an investment entity in accordance with paragraph 27 of IFRS 10, the investment entity shall disclose information about significant judgements and assumptions it has made in determining that it is an investment entity. If the investment entity does not have one or more of the typical characteristics of an investment entity (see paragraph 28 of IFRS 10), it shall disclose its reasons for concluding that it is nevertheless an investment entity.

9B.When an entity becomes, or ceases to be, an investment entity, it shall disclose the change of investment entity status and the reasons for the change. In addition, an entity that becomes an investment entity shall disclose the effect of the change of status on the financial statements for the period presented, including:

1. the total fair value, as of the date of change of status, of the subsidiaries that cease to be consolidated;

2. the total gain or loss, if any, calculated in accordance with paragraph B101 of IFRS 10; and

3. the line item(s) in profit or loss in which the gain or loss is recognised (if not presented separately).

12.An entity shall disclose for each of its subsidiaries that have non-controlling interests that are material to the reporting entity:

1. the name of the subsidiary.

2. the principal place of business (and country of incorporation if different from the principal place of business) of the subsidiary.

3. the proportion of ownership interests held by non-controlling interests.

4. the proportion of voting rights held by non-controlling interests, if different from the proportion of ownership interests held.

5. the profit or loss allocated to non-controlling interests of the subsidiary during the reporting period.

6. accumulated non-controlling interests of the subsidiary at the end of the reporting period.

7. summarised financial information about the subsidiary (see paragraph B10).

13.An entity shall disclose:

1. significant restrictions (eg statutory, contractual and regulatory restrictions) on its ability to access or use the assets and settle the liabilities of the group, such as:

   1. those that restrict the ability of a parent or its subsidiaries to transfer cash or other assets to (or from) other entities within the group.

   2. guarantees or other requirements that may restrict dividends and other capital distributions being paid, or loans and advances being made or repaid, to (or from) other entities within the group.

2. the nature and extent to which protective rights of non-controlling interests can significantly restrict the entity’s ability to access or use the assets and settle the liabilities of the group (such as when a parent is obliged to settle liabilities of a subsidiary before settling its own liabilities, or approval of non-controlling interests is required either to access the assets or to settle the liabilities of a subsidiary).

3. the carrying amounts in the consolidated financial statements of the assets and liabilities to which those restrictions apply.

14.An entity shall disclose the terms of any contractual arrangements that could require the parent or its subsidiaries to provide financial support to a consolidated structured entity, including events or circumstances that could expose the reporting entity to a loss (eg liquidity arrangements or credit rating triggers associated with obligations to purchase assets of the structured entity or provide financial support).

15.If during the reporting period a parent or any of its subsidiaries has, without having a contractual obligation to do so, provided financial or other support to a consolidated structured entity (eg purchasing assets of or instruments issued by the structured entity), the entity shall disclose:

1. the type and amount of support provided, including situations in which the parent or its subsidiaries assisted the structured entity in obtaining financial support; and

2. the reasons for providing the support.

16.If during the reporting period a parent or any of its subsidiaries has, without having a contractual obligation to do so, provided financial or other support to a previously unconsolidated structured entity and that provision of support resulted in the entity controlling the structured entity, the entity shall disclose an explanation of the relevant factors in reaching that decision.

17.An entity shall disclose any current intentions to provide financial or other support to a consolidated structured entity, including intentions to assist the structured entity in obtaining financial support.

18.An entity shall present a schedule that shows the effects on the equity attributable to owners of the parent of any changes in its ownership interest in a subsidiary that do not result in a loss of control.

19.An entity shall disclose the gain or loss, if any, calculated in accordance with paragraph 25 of IFRS 10, and:

1. the portion of that gain or loss attributable to measuring any investment retained in the former subsidiary at its fair value at the date when control is lost; and

2. the line item(s) in profit or loss in which the gain or loss is recognised (if not presented separately).

21.An entity shall disclose:

1. for each joint arrangement and associate that is material to the reporting entity:

   1. the name of the joint arrangement or associate.

   2. the nature of the entity’s relationship with the joint arrangement or associate (by, for example, describing the nature of the activities of the joint arrangement or associate and whether they are strategic to the entity’s activities).

   3. the principal place of business (and country of incorporation, if applicable and different from the principal place of business) of the joint arrangement or associate.

   4. the proportion of ownership interest or participating share held by the entity and, if different, the proportion of voting rights held (if applicable).

2. for each joint venture and associate that is material to the reporting entity:

   1. whether the investment in the joint venture or associate is measured using the equity method or at fair value.

   2. summarised financial information about the joint venture or associate as specified in paragraphs B12 and B13.

   3. if the joint venture or associate is accounted for using the equity method, the fair value of its investment in the joint venture or associate, if there is a quoted market price for the investment.

3. financial information as specified in paragraph B16 about the entity’s investments in joint ventures and associates that are not individually material:

   1. in aggregate for all individually immaterial joint ventures and, separately,

   2. in aggregate for all individually immaterial associates.

21A.An investment entity need not provide the disclosures required by paragraphs 21(b)–21(c).

22.An entity shall also disclose:

1. the nature and extent of any significant restrictions (eg resulting from borrowing arrangements, regulatory requirements or contractual arrangements between investors with joint control of or significant influence over a joint venture or an associate) on the ability of joint ventures or associates to transfer funds to the entity in the form of cash dividends, or to repay loans or advances made by the entity.

2. when the financial statements of a joint venture or associate used in applying the equity method are as of a date or for a period that is different from that of the entity:

   1. the date of the end of the reporting period of the financial statements of that joint venture or associate; and

   2. the reason for using a different date or period.

3. the unrecognised share of losses of a joint venture or associate, both for the reporting period and cumulatively, if the entity has stopped recognising its share of losses of the joint venture or associate when applying the equity method.

23.An entity shall disclose:

1. commitments that it has relating to its joint ventures separately from the amount of other commitments as specified in paragraphs B18–B20.

2. in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, unless the probability of loss is remote, contingent liabilities incurred relating to its interests in joint ventures or associates (including its share of contingent liabilities incurred jointly with other investors with joint control of, or significant influence over, the joint ventures or associates), separately from the amount of other contingent liabilities.

26.An entity shall disclose qualitative and quantitative information about its interests in unconsolidated structured entities, including, but not limited to, the nature, purpose, size and activities of the structured entity and how the structured entity is financed.

27.If an entity has sponsored an unconsolidated structured entity for which it does not provide information required by paragraph 29 (eg because it does not have an interest in the entity at the reporting date), the entity shall disclose:

1. how it has determined which structured entities it has sponsored;

2. income from those structured entities during the reporting period, including a description of the types of income presented; and

3. the carrying amount (at the time of transfer) of all assets transferred to those structured entities during the reporting period.

28.An entity shall present the information in paragraph 27(b) and (c) in tabular format, unless another format is more appropriate, and classify its sponsoring activities into relevant categories (see paragraphs B2–B6).

29.An entity shall disclose in tabular format, unless another format is more appropriate, a summary of:

1. the carrying amounts of the assets and liabilities recognised in its financial statements relating to its interests in unconsolidated structured entities.

2. the line items in the statement of financial position in which those assets and liabilities are recognised.

3. the amount that best represents the entity’s maximum exposure to loss from its interests in unconsolidated structured entities, including how the maximum exposure to loss is determined. If an entity cannot quantify its maximum exposure to loss from its interests in unconsolidated structured entities it shall disclose that fact and the reasons.

4. a comparison of the carrying amounts of the assets and liabilities of the entity that relate to its interests in unconsolidated structured entities and the entity’s maximum exposure to loss from those entities.

30.If during the reporting period an entity has, without having a contractual obligation to do so, provided financial or other support to an unconsolidated structured entity in which it previously had or currently has an interest (for example, purchasing assets of or instruments issued by the structured entity), the entity shall disclose:

1. the type and amount of support provided, including situations in which the entity assisted the structured entity in obtaining financial support; and

2. the reasons for providing the support.

31.An entity shall disclose any current intentions to provide financial or other support to an unconsolidated structured entity, including intentions to assist the structured entity in obtaining financial support.

B2.An entity shall decide, in the light of its circumstances, how much detail it provides to satisfy the information needs of users, how much emphasis it places on different aspects of the requirements and how it aggregates the information. It is necessary to strike a balance between burdening financial statements with excessive detail that may not assist users of financial statements and obscuring information as a result of too much aggregation.

B3.An entity may aggregate the disclosures required by this IFRS for interests in similar entities if aggregation is consistent with the disclosure objective and the requirement in paragraph B4, and does not obscure the information provided. An entity shall disclose how it has aggregated its interests in similar entities.

B4.An entity shall present information separately for interests in:

1. subsidiaries;

2. joint ventures;

3. joint operations;

4. associates; and

5. unconsolidated structured entities.

B5.In determining whether to aggregate information, an entity shall consider quantitative and qualitative information about the different risk and return characteristics of each entity it is considering for aggregation and the significance of each such entity to the reporting entity. The entity shall present the disclosures in a manner that clearly explains to users of financial statements the nature and extent of its interests in those other entities.

B6.Examples of aggregation levels within the classes of entities set out in paragraph B4 that might be appropriate are:

1. nature of activities (eg a research and development entity, a revolving credit card securitisation entity).

2. industry classification.

3. geography (eg country or region).

B7.An interest in another entity refers to contractual and non-contractual involvement that exposes the reporting entity to variability of returns from the performance of the other entity. Consideration of the purpose and design of the other entity may help the reporting entity when assessing whether it has an interest in that entity and, therefore, whether it is required to provide the disclosures in this IFRS. That assessment shall include consideration of the risks that the other entity was designed to create and the risks the other entity was designed to pass on to the reporting entity and other parties.

B8.A reporting entity is typically exposed to variability of returns from the performance of another entity by holding instruments (such as equity or debt instruments issued by the other entity) or having another involvement that absorbs variability. For example, assume a structured entity holds a loan portfolio. The structured entity obtains a credit default swap from another entity (the reporting entity) to protect itself from the default of interest and principal payments on the loans. The reporting entity has involvement that exposes it to variability of returns from the performance of the structured entity because the credit default swap absorbs variability of returns of the structured entity.

B9.Some instruments are designed to transfer risk from a reporting entity to another entity. Such instruments create variability of returns for the other entity but do not typically expose the reporting entity to variability of returns from the performance of the other entity. For example, assume a structured entity is established to provide investment opportunities for investors who wish to have exposure to entity Z’s credit risk (entity Z is unrelated to any party involved in the arrangement). The structured entity obtains funding by issuing to those investors notes that are linked to entity Z’s credit risk (credit-linked notes) and uses the proceeds to invest in a portfolio of risk-free financial assets. The structured entity obtains exposure to entity Z’s credit risk by entering into a credit default swap (CDS) with a swap counterparty. The CDS passes entity Z’s credit risk to the structured entity in return for a fee paid by the swap counterparty. The investors in the structured entity receive a higher return that reflects both the structured entity’s return from its asset portfolio and the CDS fee. The swap counterparty does not have involvement with the structured entity that exposes it to variability of returns from the performance of the structured entity because the CDS transfers variability to the structured entity, rather than absorbing variability of returns of the structured entity.

B10.For each subsidiary that has non-controlling interests that are material to the reporting entity, an entity shall disclose:

1. dividends paid to non-controlling interests.

2. summarised financial information about the assets, liabilities, profit or loss and cash flows of the subsidiary that enables users to understand the interest that non-controlling interests have in the group’s activities and cash flows. That information might include but is not limited to, for example, current assets, non-current assets, current liabilities, non-current liabilities, revenue, profit or loss and total comprehensive income.

B11.The summarised financial information required by paragraph B10(b) shall be the amounts before inter-company eliminations.

B12.For each joint venture and associate that is material to the reporting entity, an entity shall disclose:

1. dividends received from the joint venture or associate.

2. summarised financial information for the joint venture or associate (see paragraphs B14 and B15) including, but not necessarily limited to:

   1. current assets.

   2. non-current assets.

   3. current liabilities.

   4. non-current liabilities.

   5. revenue.

   6. profit or loss from continuing operations.

   7. post-tax profit or loss from discontinued operations.

   8. other comprehensive income.

   9. total comprehensive income.

B13.In addition to the summarised financial information required by paragraph B12, an entity shall disclose for each joint venture that is material to the reporting entity the amount of:

1. cash and cash equivalents included in paragraph B12(b)(i).

2. current financial liabilities (excluding trade and other payables and provisions) included in paragraph B12(b)(iii).

3. non-current financial liabilities (excluding trade and other payables and provisions) included in paragraph B12(b)(iv).

4. depreciation and amortisation.

5. interest income.

6. interest expense.

7. income tax expense or income.

B14.The summarised financial information presented in accordance with paragraphs B12 and B13 shall be the amounts included in the IFRS financial statements of the joint venture or associate (and not the entity’s share of those amounts). If the entity accounts for its interest in the joint venture or associate using the equity method:

1. the amounts included in the IFRS financial statements of the joint venture or associate shall be adjusted to reflect adjustments made by the entity when using the equity method, such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies.

2. the entity shall provide a reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint venture or associate.

B15.An entity may present the summarised financial information required by paragraphs B12 and B13 on the basis of the joint venture’s or associate’s financial statements if:

1. the entity measures its interest in the joint venture or associate at fair value in accordance with IAS 28 (as amended in 2011); and

2. the joint venture or associate does not prepare IFRS financial statements and preparation on that basis would be impracticable or cause undue cost.

In that case, the entity shall disclose the basis on which the summarised financial information has been prepared.

B16.An entity shall disclose, in aggregate, the carrying amount of its interests in all individually immaterial joint ventures or associates that are accounted for using the equity method. An entity shall also disclose separately the aggregate amount of its share of those joint ventures’ or associates’:

1. profit or loss from continuing operations.

2. post-tax profit or loss from discontinued operations.

3. other comprehensive income.

4. total comprehensive income.

An entity provides the disclosures separately for joint ventures and associates.

B17.When an entity's interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) is classified (or included in a disposal group that is classified) as held for sale in accordance with IFRS 5, the entity is not required to disclose summarised financial information for that subsidiary, joint venture or associate in accordance with paragraphs B10–B16.

B18.An entity shall disclose total commitments it has made but not recognised at the reporting date (including its share of commitments made jointly with other investors with joint control of a joint venture) relating to its interests in joint ventures. Commitments are those that may give rise to a future outflow of cash or other resources.

B19.Unrecognised commitments that may give rise to a future outflow of cash or other resources include:

1. unrecognised commitments to contribute funding or resources as a result of, for example:

   1. the constitution or acquisition agreements of a joint venture (that, for example, require an entity to contribute funds over a specific period).

   2. capital-intensive projects undertaken by a joint venture.

   3. unconditional purchase obligations, comprising procurement of equipment, inventory or services that an entity is committed to purchasing from, or on behalf of, a joint venture.

   4. unrecognised commitments to provide loans or other financial support to a joint venture.

   5. unrecognised commitments to contribute resources to a joint venture, such as assets or services.

   6. other non-cancellable unrecognised commitments relating to a joint venture.

2. unrecognised commitments to acquire another party’s ownership interest (or a portion of that ownership interest) in a joint venture if a particular event occurs or does not occur in the future.

B20.The requirements and examples in paragraphs B18 and B19 illustrate some of the types of disclosure required by paragraph 18 of IAS 24 Related Party Disclosures.

Structured entities

Nature of risks from interests in unconsolidated structured entities (paragraphs 29–31)

C1.An entity shall apply this IFRS for annual periods beginning on or after 1 January 2013. Earlier application is permitted.

C1A.Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12), issued in June 2012, added paragraphs C2A–C2B. An entity shall apply those amendments for annual periods beginning on or after 1 January 2013. If an entity applies IFRS 12 for an earlier period, it shall apply those amendments for that earlier period.

C1B.Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), issued in October 2012, amended paragraph 2 and Appendix A, and added paragraphs 9A–9B, 19A–19G, 21A and 25A. An entity shall apply those amendments for annual periods beginning on or after 1 January 2014. Early adoption is permitted. If an entity applies those amendments earlier, it shall disclose that fact and apply all amendments included in Investment Entities at the same time.

C1C.Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28), issued in December 2014, amended paragraph 6. An entity shall apply that amendment for annual periods beginning on or after 1 January 2016. Earlier application is permitted. If an entity applies that amendment for an earlier period it shall disclose that fact.

C1D.Annual Improvements to IFRS Standards 2014–2016 Cycle, issued in December 2016, added paragraph 5A and amended paragraph B17. An entity shall apply those amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors for annual periods beginning on or after 1 January 2017.

C2.An entity is encouraged to provide information required by this IFRS earlier than annual periods beginning on or after 1 January 2013. Providing some of the disclosures required by this IFRS does not compel the entity to comply with all the requirements of this IFRS or to apply IFRS 10, IFRS 11, IAS 27 (as amended in 2011) and IAS 28 (as amended in 2011) early.

C2A.The disclosure requirements of this IFRS need not be applied for any period presented that begins before the annual period immediately preceding the first annual period for which IFRS 12 is applied.

C2B.The disclosure requirements of paragraphs 24–31 and the corresponding guidance in paragraphs B21–B26 of this IFRS need not be applied for any period presented that begins before the first annual period for which IFRS 12 is applied.

C3.If an entity applies this IFRS but does not yet apply IFRS 9, any reference to IFRS 9 shall be read as a reference to IAS 39 Financial Instruments: Recognition and Measurement.