International Financial

Reporting Standard 12
Disclosure of Interests in
Other Entities

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IFRS 12 Disclosure of Interests in Other Entities is issued by the International
Accounting Standards Board (IASB), 30 Cannon Street, London EC4M 6XH, United
Kingdom.
Tel: +44 (0)20 7246 6410
Fax: +44 (0)20 7246 6411
Email: [email protected]
Web: www.ifrs.org

The IASB, the IFRS Foundation, the authors and the publishers do not accept
responsibility for loss caused to any person who acts or refrains from acting in
reliance on the material in this publication, whether such loss is caused by
negligence or otherwise.

Copyright © 2011 IFRS Foundation®

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IFRS 12 and its accompanying documents are published in two parts.

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ISBN for this part: 978-1-907877-19-3

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ISBN for complete publication (two parts): 978-1-907877-18-6

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International Financial Reporting Standards (including International Accounting
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Standards and SIC and IFRIC Interpretations), Exposure Drafts, and other IASB
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publications are copyright of the IFRS Foundation. The approved text of

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published by the IASB in the English language. Copies may be obtained from the
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IFRS Foundation. Please address publications and copyright matters to:

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IFRS Foundation Publications Department,

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1st Floor, 30 Cannon Street, London EC4M 6XH, United Kingdom.

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Tel: +44 (0)20 7332 2730 Fax: +44 (0)20 7332 2749
Email: [email protected] Web: www.ifrs.org
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All rights reserved. No part of this publication may be translated, reprinted or

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

CONTENTS
paragraphs
INTRODUCTION IN1–IN11

INTERNATIONAL FINANCIAL REPORTING STANDARD 12

DISCLOSURE OF INTERESTS IN OTHER ENTITIES
OBJECTIVE 1–4
Meeting the objective 2–4
SCOPE 5–6
SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS 7–9
INTERESTS IN SUBSIDIARIES 10–19
The interest that non-controlling interests have in the group’s activities
and cash flows 12

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The nature and extent of significant restrictions 13
Nature of the risks associated with an entity’s interests in consolidated

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structured entities 14–17
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Consequences of changes in a parent’s ownership interest in a
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subsidiary that do not result in a loss of control 18
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Consequence of losing control of a subsidiary during the reporting

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period 19
INTERESTS IN JOINT ARRANGEMENTS AND ASSOCIATES 20–23
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Nature, extent and financial effects of an entity’s interests in joint

arrangements and associates 21–22
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Risks associated with an entity’s interests in joint ventures and

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associates 23
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INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES 24–31

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Nature of interests 26–28

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Nature of risks 29–31

APPENDICES
A Defined terms
B Application guidance
C Effective date and transition
D Amendments to other IFRSs
APPROVAL BY THE BOARD OF IFRS 12 ISSUED IN MAY 2011
BASIS FOR CONCLUSIONS (see separate booklet)

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 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

International Financial Reporting Standard 12 Disclosure of Interests in Other

Entities (IFRS 12) is set out in paragraphs 1–31 and Appendices A–D. All the
paragraphs have equal authority. Paragraphs in bold type state the main
principles. Terms defined in Appendix A are in italics the first time they appear
in the IFRS. Definitions of other terms are given in the Glossary for
International Financial Reporting Standards. IFRS 12 should be read in the
context of its objective and the Basis for Conclusions, the Preface to International
Financial Reporting Standards and the Conceptual Framework for Financial Reporting.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis
for selecting and applying accounting policies in the absence of explicit
guidance.

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

Introduction
IN1 IFRS 12 Disclosure of Interests in Other Entities applies to entities that have an
interest in a subsidiary, a joint arrangement, an associate or an
unconsolidated structured entity.

IN2 The IFRS is effective for annual periods beginning on or after 1 January 2013.
Earlier application is permitted.

Reasons for issuing the IFRS

IN3 Users of financial statements have consistently requested improvements

to the disclosure of a reporting entity’s interests in other entities to help

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identify the profit or loss and cash flows available to the reporting entity
and determine the value of a current or future investment in the

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reporting entity.

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IN4 They highlighted the need for better information about the subsidiaries
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that are consolidated, as well as an entity’s interests in joint
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arrangements and associates that are not consolidated but with which
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the entity has a special relationship.

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IN5 The global financial crisis that started in 2007 also highlighted a lack of
transparency about the risks to which a reporting entity was exposed
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from its involvement with structured entities, including those that it had
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sponsored.
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IN6 In response to input received from users and others, including the G20
leaders and the Financial Stability Board, the Board decided to address in
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IFRS 12 the need for improved disclosure of a reporting entity’s interests

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in other entities when the reporting entity has a special relationship with
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those other entities.

IN7 The Board identified an opportunity to integrate and make consistent the
disclosure requirements for subsidiaries, joint arrangements, associates
and unconsolidated structured entities and present those requirements
in a single IFRS. The Board observed that the disclosure requirements of
IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in
Associates and IAS 31 Interests in Joint Ventures overlapped in many areas.
In addition, many commented that the disclosure requirements for
interests in unconsolidated structured entities should not be located in a

5 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

consolidation standard. Therefore, the Board concluded that a combined

disclosure standard for interests in other entities would make it easier to
understand and apply the disclosure requirements for subsidiaries, joint
ventures, associates and unconsolidated structured entities.

Main features of the IFRS

IN8 The IFRS requires an entity to disclose information that enables users of
financial statements to evaluate:

(a) the nature of, and risks associated with, its interests in other
entities; and

(b) the effects of those interests on its financial position, financial

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performance and cash flows.

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General requirements

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IN9 The IFRS establishes disclosure objectives according to which an entity
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discloses information that enables users of its financial statements
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(a) to understand:
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(i) the significant judgements and assumptions (and changes to

those judgements and assumptions) made in determining the
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nature of its interest in another entity or arrangement

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(ie control, joint control or significant influence), and in

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determining the type of joint arrangement in which it has an

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interest; and
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(ii) the interest that non-controlling interests have in the group’s

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activities and cash flows; and

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(b) to evaluate:

(i) the nature and extent of significant restrictions on its ability

to access or use assets, and settle liabilities, of the group;

(ii) the nature of, and changes in, the risks associated with its
interests in consolidated structured entities;

(iii) the nature and extent of its interests in unconsolidated

structured entities, and the nature of, and changes in, the
risks associated with those interests;

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

(iv) the nature, extent and financial effects of its interests in joint
arrangements and associates, and the nature of the risks
associated with those interests;

(v) the consequences of changes in a parent’s ownership interest

in a subsidiary that do not result in a loss of control; and

(vi) the consequences of losing control of a subsidiary during the

reporting period.

IN10 The IFRS specifies minimum disclosures that an entity must provide.
If the minimum disclosures required by the IFRS are not sufficient to
meet the disclosure objective, an entity discloses whatever additional
information is necessary to meet that objective.

IN11 The IFRS requires an entity to consider the level of detail necessary to

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satisfy the disclosure objective and how much emphasis to place on each

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of the requirements in the IFRS. An entity shall aggregate or disaggregate

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disclosures so that useful information is not obscured by either the
inclusion of a large amount of insignificant detail or the aggregation of
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items that have different characteristics.
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International Financial Reporting Standard 12

Disclosure of Interests in Other Entities

Objective

1 The objective of this IFRS is to require an entity to disclose

information that enables users of its financial statements to evaluate:

(a) the nature of, and risks associated with, its interests in other entities;
and

(b) the effects of those interests on its financial position, financial

performance and cash flows.

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Meeting the objective

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

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(a) the significant judgements and assumptions it has made in
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determining the nature of its interest in another entity or
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arrangement, and in determining the type of joint arrangement in
which it has an interest (paragraphs 7–9); and
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(b) information about its interests in:

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(i) subsidiaries (paragraphs 10–19);

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(ii) joint arrangements and associates (paragraphs 20–23); and

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(iii) structured entities that are not controlled by the entity

(unconsolidated structured entities) (paragraphs 24–31).
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3 If the disclosures required by this IFRS, together with disclosures required

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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).

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

Scope

5 This IFRS shall be applied by an entity that has an interest in any of the
following:

(a) subsidiaries

(b) joint arrangements (ie joint operations or joint ventures)

(c) associates

(d) unconsolidated structured entities.

6 This IFRS does not apply to:

(a) post-employment benefit plans or other long-term employee

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benefit plans to which IAS 19 Employee Benefits applies.

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(b) an entity’s separate financial statements to which IAS 27 Separate
Financial Statements applies. However, if an entity has interests in

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unconsolidated structured entities and prepares separate financial
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statements as its only financial statements, it shall apply the
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requirements in paragraphs 24–31 when preparing those separate
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financial statements.
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(c) an interest held by an entity that participates in, but does not have
joint control of, a joint arrangement unless that interest results in
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significant influence over the arrangement or is an interest in a

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structured entity.
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(d) an interest in another entity that is accounted for in accordance

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with IFRS 9 Financial Instruments. However, an entity shall apply this

IFRS:
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(i) when that interest is an interest in an associate or a joint

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venture that, in accordance with IAS 28 Investments in Associates

and Joint Ventures, is measured at fair value through profit or
loss; or

(ii) when that interest is an interest in an unconsolidated

structured entity.

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 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

Significant judgements and assumptions

7 An entity shall disclose information about significant judgements and

assumptions it has made (and changes to those judgements
and assumptions) in determining:

(a) that it has control of another entity, ie an investee as described in

paragraphs 5 and 6 of IFRS 10 Consolidated Financial Statements;

(b) that it has joint control of an arrangement or significant influence

over another entity; and

(c) the type of joint arrangement (ie joint operation or joint venture)
when the arrangement has been structured through a separate
vehicle.

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8 The significant judgements and assumptions disclosed in accordance

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with paragraph 7 include those made by the entity when changes in facts

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and circumstances are such that the conclusion about whether it has

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control, joint control or significant influence changes during the
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reporting period.
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9 To comply with paragraph 7, an entity shall disclose, for example,

significant judgements and assumptions made in determining that:
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(a) it does not control another entity even though it holds more than
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half of the voting rights of the other entity.

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(b) it controls another entity even though it holds less than half of the
voting rights of the other entity.
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(c) it is an agent or a principal (see paragraphs 58–72 of IFRS 10).

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(d) it does not have significant influence even though it holds

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20 per cent or more of the voting rights of another entity.

(e) it has significant influence even though it holds less than

20 per cent of the voting rights of another entity.

Interests in subsidiaries

10 An entity shall disclose information that enables users of its consolidated

financial statements

(a) to understand:

(i) the composition of the group; and

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

(ii) the interest that non-controlling interests have in the group’s

activities and cash flows (paragraph 12); and

(b) to evaluate:

(i) the nature and extent of significant restrictions on its ability

to access or use assets, and settle liabilities, of the group
(paragraph 13);

(ii) the nature of, and changes in, the risks associated with its
interests in consolidated structured entities (paragraphs 14–17);

(iii) the consequences of changes in its ownership interest in a

subsidiary that do not result in a loss of control (paragraph 18);
and

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(iv) the consequences of losing control of a subsidiary during the

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reporting period (paragraph 19).

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11 When the financial statements of a subsidiary used in the preparation of
consolidated financial statements are as of a date or for a period that is
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different from that of the consolidated financial statements
(see paragraphs B92 and B93 of IFRS 10), an entity shall disclose:
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(a) the date of the end of the reporting period of the financial
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statements of that subsidiary; and

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(b) the reason for using a different date or period.

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The interest that non-controlling interests have in the

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group’s activities and cash flows

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12 An entity shall disclose for each of its subsidiaries that have

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non-controlling interests that are material to the reporting entity:

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(a) the name of the subsidiary.

(b) the principal place of business (and country of incorporation if

different from the principal place of business) of the subsidiary.

(c) the proportion of ownership interests held by non-controlling

interests.

(d) the proportion of voting rights held by non-controlling interests, if

different from the proportion of ownership interests held.

(e) the profit or loss allocated to non-controlling interests of the

subsidiary during the reporting period.

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 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

(f) accumulated non-controlling interests of the subsidiary at the end

of the reporting period.

(g) summarised financial information about the subsidiary

(see paragraph B10).

The nature and extent of significant restrictions

13 An entity shall disclose:

(a) 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:

(i) those that restrict the ability of a parent or its subsidiaries to

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transfer cash or other assets to (or from) other entities within
the group.

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(ii) guarantees or other requirements that may restrict dividends

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and other capital distributions being paid, or loans and
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advances being made or repaid, to (or from) other entities
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within the group.
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(b) the nature and extent to which protective rights of non-controlling

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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
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parent is obliged to settle liabilities of a subsidiary before settling

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its own liabilities, or approval of non-controlling interests is

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required either to access the assets or to settle the liabilities of a

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subsidiary).

(c) the carrying amounts in the consolidated financial statements of

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the assets and liabilities to which those restrictions apply.

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Nature of the risks associated with an entity’s

interests in consolidated structured entities
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).

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

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:

(a) 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

(b) 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

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entity, the entity shall disclose an explanation of the relevant factors in

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reaching that decision.

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17 An entity shall disclose any current intentions to provide financial or
other support to a consolidated structured entity, including intentions to
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assist the structured entity in obtaining financial support.
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Consequences of changes in a parent’s ownership

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interest in a subsidiary that do not result in a loss of

control
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18 An entity shall present a schedule that shows the effects on the equity
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attributable to owners of the parent of any changes in its ownership

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interest in a subsidiary that do not result in a loss of control.

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Consequences of losing control of a subsidiary during

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the reporting period

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19 An entity shall disclose the gain or loss, if any, calculated in accordance

with paragraph 25 of IFRS 10, and:

(a) 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

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

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Interests in joint arrangements and associates

20 An entity shall disclose information that enables users of its financial

statements to evaluate:

(a) the nature, extent and financial effects of its interests in joint
arrangements and associates, including the nature and effects of its
contractual relationship with the other investors with joint control
of, or significant influence over, joint arrangements and associates
(paragraphs 21 and 22); and

(b) the nature of, and changes in, the risks associated with its interests
in joint ventures and associates (paragraph 23).

Nature, extent and financial effects of an entity’s

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interests in joint arrangements and associates

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21 An entity shall disclose:

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for each joint arrangement and associate that is material to the
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reporting entity:
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(i) the name of the joint arrangement or associate.

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(ii) the nature of the entity’s relationship with the joint

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arrangement or associate (by, for example, describing the

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nature of the activities of the joint arrangement or associate

and whether they are strategic to the entity’s activities).
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(iii) the principal place of business (and country of incorporation,

if applicable and different from the principal place of
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business) of the joint arrangement or associate.

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(iv) the proportion of ownership interest or participating share

held by the entity and, if different, the proportion of voting
rights held (if applicable).

(b) for each joint venture and associate that is material to the
reporting entity:

(i) whether the investment in the joint venture or associate is

measured using the equity method or at fair value.

(ii) summarised financial information about the joint venture or

associate as specified in paragraphs B12 and B13.

(iii) if the joint venture or associate is accounted for using the

equity method, the fair value of its investment in the joint

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

venture or associate, if there is a quoted market price for the

investment.

(c) financial information as specified in paragraph B16 about the

entity’s investments in joint ventures and associates that are not
individually material:

(i) in aggregate for all individually immaterial joint ventures

and, separately,

(ii) in aggregate for all individually immaterial associates.

22 An entity shall also disclose:

(a) the nature and extent of any significant restrictions (eg resulting
from borrowing arrangements, regulatory requirements or

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contractual arrangements between investors with joint control of

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or significant influence over a joint venture or an associate) on the
ability of joint ventures or associates to transfer funds to the entity

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in the form of cash dividends, or to repay loans or advances made
by the entity. o
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(b) when the financial statements of a joint venture or associate used
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in applying the equity method are as of a date or for a period that is

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different from that of the entity:

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(i) the date of the end of the reporting period of the financial
statements of that joint venture or associate; and
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(ii) the reason for using a different date or period.

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(c) the unrecognised share of losses of a joint venture or associate,

both for the reporting period and cumulatively, if the entity has
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stopped recognising its share of losses of the joint venture or

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associate when applying the equity method.

Risks associated with an entity’s interests in joint

ventures and associates
23 An entity shall disclose:

(a) commitments that it has relating to its joint ventures separately

from the amount of other commitments as specified in paragraphs
B18–B20.

(b) 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

15 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

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.

Interests in unconsolidated structured entities

24 An entity shall disclose information that enables users of its financial

statements:

(a) to understand the nature and extent of its interests in

unconsolidated structured entities (paragraphs 26–28); and

(b) to evaluate the nature of, and changes in, the risks associated with its

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interests in unconsolidated structured entities (paragraphs 29–31).

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25 The information required by paragraph 24(b) includes information about

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an entity’s exposure to risk from involvement that it had with
unconsolidated structured entities in previous periods (eg sponsoring the
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structured entity), even if the entity no longer has any contractual
involvement with the structured entity at the reporting date.
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Nature of interests
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26 An entity shall disclose qualitative and quantitative information about

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its interests in unconsolidated structured entities, including, but not

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limited to, the nature, purpose, size and activities of the structured entity
and how the structured entity is financed.
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27 If an entity has sponsored an unconsolidated structured entity for which

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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
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shall disclose:

(a) how it has determined which structured entities it has sponsored;

(b) income from those structured entities during the reporting period,
including a description of the types of income presented; and

(c) 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).

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

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

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

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

(c) 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

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entity cannot quantify its maximum exposure to loss from its
interests in unconsolidated structured entities it shall disclose that

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fact and the reasons.

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

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30 If during the reporting period an entity has, without having a contractual

obligation to do so, provided financial or other support to an
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unconsolidated structured entity in which it previously had or currently

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has an interest (for example, purchasing assets of or instruments issued

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by the structured entity), the entity shall disclose:

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(a) the type and amount of support provided, including situations in

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which the entity assisted the structured entity in obtaining

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financial support; and

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(b) 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.

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Appendix A
Defined terms
This appendix is an integral part of the IFRS.

income from a For the purpose of this IFRS, income from a structured
structured entity entity includes, but is not limited to, recurring and
non-recurring fees, interest, dividends, gains or losses
on the remeasurement or derecognition of interests in
structured entities and gains or losses from the transfer
of assets and liabilities to the structured entity.
interest in another For the purpose of this IFRS, an interest in another
entity

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entity refers to contractual and non-contractual
involvement that exposes an entity to variability of

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returns from the performance of the other entity.

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An interest in another entity can be evidenced by, but is

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not limited to, the holding of equity or debt
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instruments as well as other forms of involvement such
as the provision of funding, liquidity support, credit
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enhancement and guarantees. It includes the means by

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which an entity has control or joint control of, or

significant influence over, another entity. An entity
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does not necessarily have an interest in another entity

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solely because of a typical customer supplier

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relationship.
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Paragraphs B7–B9 provide further information about

interests in other entities.
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Paragraphs B55–B57 of IFRS 10 explain variability of

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returns.
structured entity An entity that has been designed so that voting or
similar rights are not the dominant factor in deciding
who controls the entity, such as when any voting rights
relate to administrative tasks only and the relevant
activities are directed by means of contractual
arrangements.
Paragraphs B22–B24 provide further information about
structured entities.

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 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

The following terms are defined in IAS 27 (as amended in 2011), IAS 28
(as amended in 2011), IFRS 10 and IFRS 11 Joint Arrangements and are used in this
IFRS with the meanings specified in those IFRSs:

• associate

• consolidated financial statements

• control of an entity

• equity method

• group

• joint arrangement

• joint control

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• joint operation

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• joint venture

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• non-controlling interest
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• parent
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• protective rights
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• relevant activities
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• separate financial statements

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• separate vehicle
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• significant influence
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• subsidiary.
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19 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

Appendix B
Application guidance
This appendix is an integral part of the IFRS. It describes the application of paragraphs 1–31
and has the same authority as the other parts of the IFRS.

B1 The examples in this appendix portray hypothetical situations. Although

some aspects of the examples may be present in actual fact patterns, all
relevant facts and circumstances of a particular fact pattern would need
to be evaluated when applying IFRS 12.

Aggregation (paragraph 4)

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B2 An entity shall decide, in the light of its circumstances, how much detail

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it provides to satisfy the information needs of users, how much emphasis

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it places on different aspects of the requirements and how it aggregates
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the information. It is necessary to strike a balance between burdening
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financial statements with excessive detail that may not assist users of
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financial statements and obscuring information as a result of too much

aggregation.
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B3 An entity may aggregate the disclosures required by this IFRS for interests
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in similar entities if aggregation is consistent with the disclosure

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objective and the requirement in paragraph B4, and does not obscure the
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information provided. An entity shall disclose how it has aggregated its

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interests in similar entities.

B4 An entity shall present information separately for interests in:

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(a) subsidiaries;
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(b) joint ventures;

(c) joint operations;

(d) associates; and

(e) unconsolidated structured entities.

© IFRS Foundation 20
 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER 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:

(a) nature of activities (eg a research and development entity, a

revolving credit card securitisation entity).

(b) industry classification.

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(c) geography (eg country or region).

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Interests in other entities
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B7 An interest in another entity refers to contractual and non-contractual
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involvement that exposes the reporting entity to variability of returns

from the performance of the other entity. Consideration of the purpose
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and design of the other entity may help the reporting entity when
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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
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include consideration of the risks that the other entity was designed to
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create and the risks the other entity was designed to pass on to the
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reporting entity and other parties.

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B8 A reporting entity is typically exposed to variability of returns from the

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performance of another entity by holding instruments (such as equity or

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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

21 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

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

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variability to the structured entity, rather than absorbing variability of

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returns of the structured entity.

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Summarised financial information for subsidiaries, joint
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ventures and associates (paragraphs 12 and 21)
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B10 For each subsidiary that has non-controlling interests that are material to
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the reporting entity, an entity shall disclose:

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(a) dividends paid to non-controlling interests.

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(b) summarised financial information about the assets, liabilities,

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profit or loss and cash flows of the subsidiary that enables users to
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understand the interest that non-controlling interests have in the

group’s activities and cash flows. That information might include
:
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but is not limited to, for example, current assets, non-current

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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:

(a) dividends received from the joint venture or associate.

© IFRS Foundation 22
 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

(b) summarised financial information for the joint venture or

associate (see paragraphs B14 and B15) including, but not
necessarily limited to:

(i) current assets.

(ii) non-current assets.

(iii) current liabilities.

(iv) non-current liabilities.

(v) revenue.

(vi) profit or loss from continuing operations.

(vii) post-tax profit or loss from discontinued operations.

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(viii) other comprehensive income.

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(ix) total comprehensive income.

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B13 In addition to the summarised financial information required by
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paragraph B12, an entity shall disclose for each joint venture that is
material to the reporting entity the amount of:
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(a) cash and cash equivalents included in paragraph B12(b)(i).

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(b) current financial liabilities (excluding trade and other payables

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and provisions) included in paragraph B12(b)(iii).

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(c) non-current financial liabilities (excluding trade and other

payables and provisions) included in paragraph B12(b)(iv).
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(d) depreciation and amortisation.

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(e) interest income.

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(f) interest expense.

(g) 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:

(a) 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

23 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

adjustments made at the time of acquisition and adjustments for

differences in accounting policies.

(b) 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:

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

(b) the joint venture or associate does not prepare IFRS financial
statements and preparation on that basis would be impracticable

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or cause undue cost.

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In that case, the entity shall disclose the basis on which the summarised

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

associates’:
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(a) profit or loss from continuing operations.

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(b) post-tax profit or loss from discontinued operations.

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(c) other comprehensive income.

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(d) total comprehensive income.

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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
as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, the entity is not required to disclose summarised
financial information for that subsidiary, joint venture or associate in
accordance with paragraphs B10–B16.

© IFRS Foundation 24
 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

Commitments for joint ventures (paragraph 23(a))

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:

(a) unrecognised commitments to contribute funding or resources as a

result of, for example:

(i) the constitution or acquisition agreements of a joint venture

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(that, for example, require an entity to contribute funds over

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a specific period).

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(ii) capital-intensive projects undertaken by a joint venture.

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

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(iv) unrecognised commitments to provide loans or other

financial support to a joint venture.
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(v) unrecognised commitments to contribute resources to a joint

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venture, such as assets or services.

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(vi) other non-cancellable unrecognised commitments relating to

a joint venture.
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(b) unrecognised commitments to acquire another party’s ownership

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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.

25 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

Interests in unconsolidated structured entities

(paragraphs 24–31)

Structured entities
B21 A structured entity is an entity that has been designed so that voting or
similar rights are not the dominant factor in deciding who controls the
entity, such as when any voting rights relate to administrative tasks only
and the relevant activities are directed by means of contractual
arrangements.

B22 A structured entity often has some or all of the following features or
attributes:

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(a) restricted activities.

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(b) a narrow and well-defined objective, such as to effect a tax-efficient

p.
lease, carry out research and development activities, provide a
source of capital or funding to an entity or provide investment
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opportunities for investors by passing on risks and rewards
associated with the assets of the structured entity to investors.
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(c) insufficient equity to permit the structured entity to finance its

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activities without subordinated financial support.

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(d) financing in the form of multiple contractually linked instruments

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to investors that create concentrations of credit or other risks

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(tranches).
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B23 Examples of entities that are regarded as structured entities include, but
are not limited to:
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(a) securitisation vehicles.

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(b) asset-backed financings.

(c) some investment funds.

B24 An entity that is controlled by voting rights is not a structured entity

simply because, for example, it receives funding from third parties
following a restructuring.

© IFRS Foundation 26
 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

Nature of risks from interests in unconsolidated

structured entities (paragraphs 29–31)
B25 In addition to the information required by paragraphs 29–31, an entity
shall disclose additional information that is necessary to meet the
disclosure objective in paragraph 24(b).

B26 Examples of additional information that, depending on the

circumstances, might be relevant to an assessment of the risks to which
an entity is exposed when it has an interest in an unconsolidated
structured entity are:

(a) the terms of an arrangement that could require the entity to

provide financial support to an unconsolidated structured entity
(eg liquidity arrangements or credit rating triggers associated with

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obligations to purchase assets of the structured entity or provide

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financial support), including:

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(i) a description of events or circumstances that could expose
the reporting entity to a loss.o
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(ii) whether there are any terms that would limit the obligation.
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(iii) whether there are any other parties that provide financial
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support and, if so, how the reporting entity’s obligation ranks

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with those of other parties.

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(b) losses incurred by the entity during the reporting period relating
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to its interests in unconsolidated structured entities.

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(c) the types of income the entity received during the reporting period
from its interests in unconsolidated structured entities.
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(d) whether the entity is required to absorb losses of an

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unconsolidated structured entity before other parties, the

maximum limit of such losses for the entity, and (if relevant) the
ranking and amounts of potential losses borne by parties whose
interests rank lower than the entity’s interest in the
unconsolidated structured entity.

(e) information about any liquidity arrangements, guarantees or other

commitments with third parties that may affect the fair value or
risk of the entity’s interests in unconsolidated structured entities.

(f) any difficulties an unconsolidated structured entity has

experienced in financing its activities during the reporting period.

27 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

(g) in relation to the funding of an unconsolidated structured entity,

the forms of funding (eg commercial paper or medium-term notes)
and their weighted-average life. That information might include
maturity analyses of the assets and funding of an unconsolidated
structured entity if the structured entity has longer-term assets
funded by shorter-term funding.

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© IFRS Foundation 28
 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

Appendix C
Effective date and transition
This appendix is an integral part of the IFRS and has the same authority as the other parts of
the IFRS.

Effective date and transition

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

C2 An entity is encouraged to provide information required by this IFRS

earlier than annual periods beginning on or after 1 January 2013.

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Providing some of the disclosures required by this IFRS does not compel

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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

p.
in 2011) early.
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References to IFRS 9
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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:
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Recognition and Measurement.

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29 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

Appendix D
Amendments to other IFRSs
This appendix sets out amendments to other IFRSs that are a consequence of the Board issuing
IFRS 12. An entity shall apply the amendments for annual periods beginning on or after
1 January 2013. If an entity applies IFRS 12 for an earlier period, it shall apply the
amendments for that earlier period. Amended paragraphs are shown with new text
underlined and deleted text struck through.

IAS 1 Presentation of Financial Statements

D1 Paragraphs 119 and 124 are amended and paragraph 139H is added as
follows.

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119 … An example is disclosure of whether a venturer recognises its
interest in a jointly controlled entity using proportionate

p.
consolidation or the equity method (see IAS 31 Interests in Joint
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Ventures) an entity applies the fair value or cost model to its
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investment property (see IAS 40 Investment Property). Some IFRSs
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specifically require disclosure of particular accounting policies,

including choices made by management between different
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policies they allow. …

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124 Some of the disclosures made in accordance with

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paragraph 122 are required by other IFRSs. For example, IAS 27

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requires an entity to disclose the reasons why the entity’s

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ownership interest does not constitute control, in respect of an

investee that is not a subsidiary even though more than half of
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its voting or potential voting power is owned directly or

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indirectly through subsidiaries IFRS 12 Disclosure of Interests in

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Other Entities requires an entity to disclose the judgements it has

made in determining whether it controls another entity. IAS 40
Investment Property requires…

139H IFRSs 10 and 12, issued in May 2011, amended paragraphs 4, 119,
123 and 124. An entity shall apply those amendments when it
applies IFRSs 10 and 12.

© IFRS Foundation 30
 IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES

IAS 24 Related Party Disclosures

D2 Paragraph 15 is amended and paragraph 28A is added as follows.

15 The requirement to disclose related party relationships

between a parent and its subsidiaries is in addition to the
disclosure requirements in IAS 27 and, IAS 28 Investments in
Associates and IAS 31 Interests in Joint Ventures IFRS 12 Disclosure of
Interests in Other Entities.

28A IFRS 10, IFRS 11 Joint Arrangements and IFRS 12, issued in
May 2011, amended paragraphs 3, 9, 11(b), 15, 19(b) and (e) and
25. An entity shall apply those amendments when it applies
IFRS 10, IFRS 11 and IFRS 12.

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31 © IFRS Foundation
 INTERNATIONAL FINANCIAL REPORTING STANDARD MAY 2011

Approval by the Board of IFRS 12 issued in May 2011

International Financial Reporting Standard 12 Disclosure of Interests in Other Entities
was approved for issue by the fifteen members of the International Accounting
Standards Board.

Sir David Tweedie Chairman

Stephen Cooper
Philippe Danjou
Jan Engström
Patrick Finnegan
Amaro Luiz de Oliveira Gomes

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Prabhakar Kalavacherla

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Elke König

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Patricia McConnell
Warren J McGregor
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Paul Pacter
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Darrel Scott
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John T Smith
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Tatsumi Yamada
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Wei-Guo Zhang
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© IFRS Foundation 32