IFRS 12

Disclosures of Interest in Other Entities

Overview
IFRS 12 Disclosure of Interests in Other Entities is a consolidated disclosure
standard requiring a wide range of disclosures about an entity's interests in subsidiaries,
joint arrangements, associates and unconsolidated 'structured entities'. Disclosures are
presented as a series of objectives, with detailed guidance on satisfying those
objectives.
Objective and scope
The objective of IFRS 12 is to require the disclosure of information that enables users of
financial statements to evaluate:
 the nature of, and risks associated with, its interests in other entities
 the effects of those interests on its financial position, financial performance and
cash flows.
Where the disclosures required by IFRS 12, together with the disclosures required by
other IFRSs, do not meet the above objective, an entity is required to disclose whatever
additional information is necessary to meet the objective.
IFRS 12 is required to be applied by an entity that has an interest in any of the following:
[IFRS 12:5]
 subsidiaries
 joint arrangements (joint operations or joint ventures)
 associates
 unconsolidated structured entities
IFRS 12 does not apply to certain employee benefit plans, separate financial statements
to which IAS 27 Separate Financial Statements applies (except in relation to
unconsolidated structured entities and investment entities in some cases), certain
interests in joint ventures held by an entity that does not share in joint control, and the
majority of interests in another entity accounted for in accordance with IFRS 9 Financial
Instruments.
An investment entity that prepares financial statements in which all of its subsidiaries
are measured at fair value through profit or loss presents the disclosures relating to
investment entities required by IFRS 12.
Key definitions
Interest in another entity
Refers to contractual and non-contractual involvement that exposes an entity to
variability of returns from the performance of the other entity. An interest in another
entity can be evidenced by, but is not limited to, the holding of equity or debt
instruments as well as other forms of involvement such as the provision of funding,
liquidity support, credit enhancement and guarantees. It includes the means by which
an entity has control or joint control of, or significant influence over, another entity. An
entity does not necessarily have an interest in another entity solely because of a typical
customer supplier relationship.
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.
Disclosures required
Significant judgements and assumptions
An entity discloses information about significant judgements and assumptions it has
made (and changes in those judgements and assumptions) in determining:
 that it controls another entity
 that it has joint control of an arrangement or significant influence over another
entity
 the type of joint arrangement (i.e. joint operation or joint venture) when the
arrangement has been structured through a separate vehicle.
Interests in subsidiaries
An entity shall disclose information that enables users of its consolidated financial
statements to:
 understand the composition of the group
 understand the interest that non-controlling interests have in the group's activities
and cash flows
 evaluate the nature and extent of significant restrictions on its ability to access or
use assets, and settle liabilities, of the group
 evaluate the nature of, and changes in, the risks associated with its interests in
consolidated structured entities
 evaluate the consequences of changes in its ownership interest in a subsidiary
that do not result in a loss of control
 evaluate the consequences of losing control of a subsidiary during the reporting
period.
Interests in unconsolidated subsidiaries
In accordance with IFRS 10 Consolidated Financial Statements, an investment entity is
required to apply the exception to consolidation and instead account for its investment
in a subsidiary at fair value through profit or loss.
Where an entity is an investment entity, IFRS 12 requires additional disclosure,
including:
 the fact the entity is an investment entity
  information about significant judgements and assumptions it has made in
determining that it is an investment entity, and specifically where the entity does
not have one or more of the 'typical characteristics' of an investment entity 
 details of subsidiaries that have not been consolidated (name, place of business,
ownership interests held)
 details of the relationship and certain transactions between the investment entity
and the subsidiary (e.g. restrictions on transfer of funds, commitments, support
arrangements, contractual arrangements)
 information where an entity becomes, or ceases to be, an investment entity
[IFRS 12:9B]
An entity making these disclosures are not required to provide various other disclosures
required by IFRS 12.
Interests in joint arrangements and associates
An entity shall disclose information that enables users of its financial statements to
evaluate: [IFRS 12:20]
 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
 the nature of, and changes in, the risks associated with its interests in joint
ventures and associates.
Interests in unconsolidated structured entities
An entity shall disclose information that enables users of its financial statements to:
[IFRS 12:24]
 understand the nature and extent of its interests in unconsolidated structured
entities
 evaluate the nature of, and changes in, the risks associated with its interests in
unconsolidated structured entities.