PFRS 12 Disclosure of

Interest in Other Entities

Objective of PFRS 12
• To prescribe the minimum disclosure requirements for an entity’s interest in other
entities, particularly:
• A) The nature of, and risks associated with, those interests and
• B) The effects of those interests on the entity’s financial statements.

~ Interest in another entity

• Refers to involvement that exposes an entity to variability of returns from the
performance of another entity. It is evidenced by the holding of equity or debt
instruments or other form of involvement, such as the provision of funding, liquidity
support, credit enhancement and guarantees.
• It includes the means by which an entity obtains control, joint control or significant
influence over another entity.
Scope of PFRS 12
~ PFRS 12 applies to entities that have an interest in a(an):
• Subsidiary
• Joint arrangement (Joint operation or Joint venture)
• Associate
• Unconsolidated structured entity

~ PFRS 12 does not apply to an interest in another entity that is

accounted for in accordance with PFRS 9 Financial Instruments.
Significant judgments and assumptions
~ PFRS 12 requires disclosure of information about significant
judgments and assumptions that an entity has made in determining the
following:
• Existing of control, joint control or significant influence over an
investee
• The type of joint arrangement (joint operation or joint venture) when
the arrangement has been structured through a separate vehicle.
Investment entity status
• Obtains funds from one or more investors for the purpose of
providing those investor(s) with investment management services;
• Commits to its investor(s) that its business purpose is to invest funds
solely for returns from capital appreciation, investment income, or
both;
• Measures and evaluates the performances of substantially all of its
investments on a fair value basis
Interest in subsidiaries
Disclosures for an entity’s interest in a subsidiary:

• The composition of the group:

- Name of subsidiary
- Interest or voting held by non-controlling interest (NCI)
- Profit or loss allocated to NCI during the period
- NCI in net assets as of the end of the period
- Dividends paid to NCI
- Summary of the subsidiary’s assets, liabilities, profit or loss and cashflows

• Nature and extent of significant restrictions on the entity’s ability to access assets and liabilities of
the group.
• Changes in ownership interest that result and do not result in a loss of control.
• Any difference in reporting period with the subsidiary.
Interest in Joint Arrangements and Associates (material):
Disclosures for an entity’s interest in a joint arrangements and associates that are
material:

• Name of joint arrangements or associates, its principal place of business, and country of incorporation.
• Nature of relationship
• Ownership interest
• Measurement of the investment (equity method or fair value)
• The fair value of investments, if the equity method is used and there is a quoted market price for the
investment
• Dividends received from the joint venture or associate
• Summarized financial information about the joint venture or associte which includes the following:
- Current And non-current assets and liabilities
- Revenue and Profit and Loss
- Post tax profit or loss
- OCI and total comprehensive income
Interest in unconsolidated structured entities:
• Structured Entity – 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.
- Securitization vehicles
- Asset-backed financing
- Some investment fundss
Interest in unconsolidated structured entities:
Disclosures for an entity’s interest in an unconsolidated structured entity:
• Qualitative and quantitative information
• Summary of the following in a tabular format:
- Carrying amounts of the assets and liabilities
- Line items in the statement of financial position in which those assets and liabilities are recognized
- Best estimate of the entity’s maximum exposure to loss from its interest in unconsolidated
structured entities
- Comparison of the carrying amounts of assets and liabilities
• If the entity has provided financial or other support to an unconsolidated structured entity, it
discloses:
- Type and amount of support provided
- Reasons for providing the support