At the July 2012 Interpretations Committee meeting, some amendments to IAS 28 Investments in Associates and Joint Ventures (2011) and IFRS 10 Consolidated Financial Statements were proposed due to the conflict between the requirements of IAS 28 (2011) and IFRS 10. The IASB and the Interpretations Committee had also concluded that a full gain or loss should be recognised on the loss of control of a business, whether the business is housed in a subsidiary or not.
The Committee recommended that IAS 28 (2011) be amended so that:
- the current requirements regarding the partial gain or loss recognition for transactions between an investor and its associate or joint venture only apply to the gain or loss resulting from the sale or contribution of assets that do not constitute a business as defined in IFRS 3 Business Combinations
- the gain or loss resulting from the sale or contribution to an associate or a joint venture of assets that constitute a business as defined in IFRS 3 is recognised in full.
It was also recommended to amend IFRS 10 so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 to an associate or joint venture is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.