At Grant Thornton International Ltd. we have submitted our comment letter to the IASB, responding to their Exposure Draft proposing amendments to IAS 28 and the Equity Method of Accounting for investments in associates and joint ventures.
We recently submitted a comment letter to the International Accounting Standards Board (IASB) responding to the Exposure Draft ED/2024/07 Equity Method of Accounting - IAS 28 Investments in Associates and Joint Ventures (revised 202x)
At Grant Thornton International Ltd. we are supportive of the IASB's efforts to reduce diversity in practice and to provide more useful guidance on the application of the equity method of accounting. We also indicated that the proposals broadly make the standard more easily understandable. However, we also raised concerns in the following areas:
- Transaction costs - The proposals are not clear on how transaction costs are to be treated when acquiring an interest in an associate or joint venture
- Consideration of circumstances where an ownership change might not result in gaining or losing significant influence - We would like to see more cross referencing to the requirements of IFRS 10 to help preparers, and also believe it would be helpful for the IASB to consider providing guidance on a wider range of scenarios
- Recognition of an investor's share of losses - We would encourage the IASB to provide additional guidance on a wider range of scenarios that could arise when an investor resumes recognising its share of profit or loss
- Application of the equity method in separate financial statements - We said that we strongly support the alternative view set out in the Exposure Draft, in which parents would have the option to apply the equity method, while still applying some of the procedures of consolidation. In our view this will enable more consistency between separate and consolidated financial statements and reduce compliance costs.
If you have any questions on our response, or wish to learn more, please contact us.
