19 December 2014

EFRAG: Final Endorsement Advice on "IAS 27 Equity Method in Separate Financial Statements"

Based on the requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards EFRAG has provided its opinion on the Amendments to IAS 27 Equity Method in Separate Financial Statements (‘the Amendments’), which were issued by the IASB on 12 August 2014. It was issued as an ED in December 2013 and EFRAG commented on that draft.

The objective of the Amendments is to permit entities to use the equity method, as described in IAS 28 Investments in Associates and Joint Ventures, to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The Amendments become effective for annual periods beginning on or after 1 January 2016. Earlier application is permitted, however entities shall disclose that fact.

EFRAG has carried out an evaluation of the Amendments. As part of that process, EFRAG issued its initial assessment for public comment and, when finalising its advice and the content of this letter, it took the comments received in response into account. EFRAG’s evaluation is based on input from standard setters, market participants and other interested parties, and its discussions of technical matters are open to the public.

EFRAG supports the Amendments and has concluded that they meet the requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards in that they:

• Are not contrary to the principle of ‘true and fair view’ set out in Article 4(3) of Council Directive 2013/34/EU
• Meet the criteria of understandability, relevance, reliability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management

Press release

Endorsement advice letter

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