PFRS 12

DISCLOSURE OF
INTEREST IN OTHER
ENTITIES
 CO
OVERVIEW

N
OBJECTIVE AND SCOPE

TE
N
DISCLOSURE: INFORMATION

TS
REQUIRED
INTEREST IN UNCONSOLIDATED STRUCTURED
ENTITIES
OVERVIEW
PFRS 12 requires all disclosures that were previously required by
IAS 27 Consolidated Financial Statements, IAS 31 Interest in Joint
Ventures and IAS 28 Investment in Associates. In addition, PFRS 12
requires a number of new disclosures and one of the most
significant of these is the judgements made by an entity to
determine whether it controls another entity.

These changes were introduced by the IASB partly in response to

the financial crisis and are intended to improve transparency as to
the judgements made in deciding whether or not to consolidate
and the financial impact if management reached a different
conclusion
OBJECTIVE

The objective of PFRS 12 as set out in the standard is to

REQUIRE AN ENTITY TO DISCLOSE INFORMATION that
enables users of its financial statements.

• the nature of, and risks associated with, its interests in

other entities; and
• the effects of those interests on its financial position,
financial performance and cash flows
SCOPE

PFRS 12 shall be applied by an entity that has an

interest in ANY of the following:
• Subsidiaries
• Joint arrangements (joint operations or joint
ventures)
• Associates
• Unconsolidated structured entities
PFRS 12 does not apply to:
• POST-EMPLOYMENT BENEFIT PLANS or other long-term
employee benefit plans to which IAS 19 Employee Benefits
applies. • An entity’s SEPARATE FINANCIAL STATEMENTS to
which IAS 27 Separate Financial Statements applies.
• An interest held by an entity that participates in, but DOES
NOT HAVE JOINT CONTROL OR SIGNIFICANT INFLUENCE
over a joint arrangement.
• An interest accounted for in accordance with IFRS 9 Financial
Instruments, except for:
* Interest in an associate or joint venture measured at fair
value through profit or loss in accordance with IAS 28
Investments in Associates and Joint Ventures; or
*Interest in an unconsolidated structured entity
DISCLOSURE INFORMATION REQUIRED

Interest in Subsidiary

Interest in Joint Arrangements and

Associates

Interest in Unconsolidated Stuctured

Entity
1
INTEREST IN
SUBSIDIARY
An entity is required to disclose information that
enables users of its consolidated financial statements
to
Understand
• The composition of the group; and
• The interest that non-controlling interests have in the group’s
activities and cash flows; and

Evaluate
• The nature and extent of significant restrictions on its ability to
access or use assets, and settle liabilities, of the group;
• The nature of, and changes in, the risks associated with its interests
in consolidated structured entities;
• The consequences of changes in its ownership interest in a
subsidiary that do not result in a loss of control
DISCLOSURE INFORMATION REQUIRED:
INTEREST IN SUBSIDIARIES

Non-controlling interesting group activities and cash

flows
I. The name of the subsidiary
II. The principle place of the business and
country of incorporation of the subsidiary
III. The profit or loss allocated to NCI of the
subsidiary during the reporting period
IV. Summarized financial information about
the subsidiary
DISCLOSURE INFORMATION
REQUIRED: INTEREST IN
SUBSIDIARIES
°Significant restrictions on its ability to access or use
assets and settle the liabilities of the group
°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
°The carrying amounts in the consolidated financial
statements of the assets and liabilities to which those
restrictions apply
2
Interest in Joint
Arrangements and
Associates
OBJECTIVE
An entity shall disclose For each joint arrangement and
associate that is material to the reporting entity  The
name of the joint arrangement or associate  The
nature of the entity’s relationship with the joint
arrangement or associate  The principal place of
business and country of incorporation of the joint
arrangement or associate  The proportion of
ownership interest or participating share held by the
entity and if different, the proportion of voting rights
held (if applicable)
INFORMATION REQUIRED: INTEREST IN JOINT
ARRANGEMENTS & ASSOCIATES
°Nature, extent and financial effects of an entity’s interests in joint
arrangements and associates For each joint venture and associate
that is material to the reporting entity
°Whether the investment is measured using the equity method or
fair value  Summarised financial information about the joint
venture or associate as specified
° If there is a quoted market price for the investment and the joint
venture or associate is accounted for using the equity method, the
fair value of its investment in the joint venture or associate Financial
information about the entity’s investments in joint ventures and
associates that are not individually material
° In aggregate for all individually immaterial joint ventures and in
aggregate for all individually immaterial associates
An entity shall also disclose
°The nature and extent of any significant restrictions 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  Where
there is a difference in the reporting date or period of a
joint venture or associate’s financial statements used in
applying the equity method

°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
Risks associated with an entity’s interest in joint
ventures and associates An entity shall disclose
° Commitments that it has relating to its joint ventures
separately from the amount of other commitments
° In accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, unless the probability of
loss is remote, contingent liabilities incurred relating to
its interest in joint venture or associates, separately from
the amount of other contingent liabilities. This includes
an entity’s share of contingent liabilities incurred jointly
with other investors with joint control of, or significant
influence over, the joint ventures or associates
3
Interest in Unconsolidated
structured entity
Interests in unconsolidated structured entities

Overview of disclosure requirements relating to interests in

unconsolidated structured entities

Objectives:

Disclosure requirements in IFRS 12 should enable users of its

financial statements:
◾to understand the nature and extent of its interests in
unconsolidated structured entities; and
◾ to evaluate the nature of, and changes in, the risks associated
with its interests in unconsolidated structured entities.
DISCLOSURE INFORMATION REQUIRED: INTEREST IN
UNCONSOLIDATED STRUCTURED ENTITIES

An entity is required to disclose qualitative and

quantitative information about its interests in
unconsolidated structured entities. This includes
but is not limited to the nature, purpose, size,
activities and how the structured entity is financed.
If an entity has sponsored an unconsolidated
structured entity for which it does not provide
information required.
(for example, because it does not have an
interest in the entity at the reporting date),
it must disclose
° how it has determined which structured
entities it has sponsored
° income from those structured entities during
the reporting period, including a description of
the types of income presented and
°the carrying amount (at the time of transfer) of
all assets transferred to those structured entities
during the reporting period.
NATURE OF RISKS

An entity is required to disclose

°The carrying amounts of the assets and liabilities recognised in its
financial statements relating to its interests in unconsolidated
structured entities
°The line items in the statement of financial position in which those
assets and liabilities are recognized
° The entity’s maximum exposure to loss from its interests in
unconsolidated structured entities if determinable and how that
exposure is determined. 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.

DISCLOSURE INFORMATION REQUIRED: INTEREST IN UNCONSOLIDATED

 Group 1:

Tampoy, Aljelica M.

Lopez, Melchor Jr. A.

Navida, Melanie S.
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