IAS 27

IAS 27: Separate Financial Statements

IAS 27 is relevant where an entity has investments in subsidiaries, associates and joint ventures and is required to present separate financial statements - these are usually required when an entity does not have to prepare consolidated financial statements.

Investments in subsidiaries, associates and joint ventures, in the separate financial statements of the investor, are accounted for, either:

• at cost, or
• in accordance with IFRS 9 (Financial Instruments), or
• using the equity method as decribed in IAS 28 Investments in Associates and Joint Ventures

IAS 27 requires the same accounting to be applied to each category of investment.

When an investments is carried at cost, it should be measured at: the lower of their carrying amount and fair value less costs to sell.

Invesment Entitities

If a parent is an investment entity, it is required, in accordance with IFRS 10, to measure its investment in a subsidiary at fair value through profit or loss, in accordance with IFRS 9.

Investments Held for Sale

Investments that are accounted for at cost and classified as held for sale in accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued Operations, are accounted for in accordance with that IFRS, not IAS 27.

Investments in Associates or Joint Ventures

If an entity elects, in accordance with IAS 28, to measure its investments in associates or joint ventures at fair value through profit or loss in accordance with IFRS 9, it shall also account for those investments in the same way in its separate financial statements, in accordance with IFRS 9, not IAS 27.

Dividends

Dividends from subsidiaries, joint ventures or associates are recognised in profit or loss in the investor’s separate financial statements when a right to receive the dividend is established.

Disclosure

When a parent, in accordance with IFRS 10, elects not to prepare consolidated financial statements and instead prepares separate financial statements, it shall disclose in those separate financial statements:

• The fact that the financial statements are separate financial statements; that the exemption from consolidation has been used; the name and principal place of business (and country of incorporation if different), of the entity whose consolidated financial statements that comply with IFRS have been produced for public use; and the address where those consolidated financial statements are obtainable,
• A list of significant investments in subsidiaries, jointly controlled entities, and associates, including the name, principal place of business (and country of incorporation if different), proportion of ownership interest and, if different, proportion of voting rights, and
• A description of the method used to account for the foregoing investments

When an investment entity that is a parent prepares separate financial statements as its only financial statements, it shall disclose that fact. The investment entity shall also present the disclosures relating to investment entities required by IFRS 12.

When a parent (other than a parent covered by the above circumstances) or an investor with joint control of, or significant influence over, an investee prepares separate financial statements, the parent or investor shall identify the financial statements prepared in accordance with IFRS 10, IFRS 11 or IAS 28 (as amended in 2011) to which they relate. The parent or investor shall also disclose in its separate financial statements:

• The fact that the statements are separate financial statements and the reasons why those statements are prepared if not required by law,
• A list of significant investments in subsidiaries, jointly controlled entities, and associates, including the name, principal place of business (and country of incorporation if different), proportion of ownership interest and, if different, proportion of voting rights, and
• A description of the method used to account for the foregoing investments.

Further Information