IAS 27 | Separate Financial Statements

1

Objective

The objective is to prescribe accounting and disclosure requirements for investments in subsidiaries, joint ventures, and associates when an entity prepares separate financial statements.

2

Scope

This Standard applies to accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulations, to present separate financial statements.

3

Mandate

The Standard does not mandate which entities produce separate financial statements. It applies when an entity prepares separate financial statements that comply with IFRS.

4

Definitions

The following terms are used in this Standard with the meanings specified:

• Consolidated financial statements are the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.
• Separate financial statements are those presented by an entity in which the entity could elect, subject to the requirements in this Standard, to account for its investments in subsidiaries, joint ventures and associates either at cost, in accordance with IFRS 9 Financial Instruments, or using the equity method as described in IAS 28 Investments in Associates and Joint Ventures.

5

Defined Terms

Terms defined in IFRS 10, IFRS 11, and IAS 28 (e.g., associate, control, group, investment entity, joint control, parent, significant influence, subsidiary) are used with the same meanings in this Standard.

6

Separate vs Consolidated

Separate financial statements are those presented in addition to consolidated financial statements or in addition to the financial statements of an investor that does not have subsidiaries but has investments in associates/joint ventures accounted for using the equity method.

7

Not Separate

The financial statements of an entity that does not have a subsidiary, associate, or joint venturer's interest in a joint venture are not separate financial statements.

8

Exempt Entities

An entity exempted from consolidation (IFRS 10) or applying the equity method (IAS 28) may present separate financial statements as its only financial statements.

8A

Investment Entities

An investment entity required to apply the exception to consolidation for all its subsidiaries presents separate financial statements as its only financial statements.

9

Preparation

Separate financial statements shall be prepared in accordance with all applicable IFRSs, except as provided in paragraph 10.

10

Accounting for Investments

When preparing separate financial statements, an entity shall account for investments in subsidiaries, joint ventures, and associates either: (a) at cost; (b) in accordance with IFRS 9; or (c) using the equity method as described in IAS 28. The entity shall apply the same accounting for each category of investments.

11

Held for Sale

Investments accounted for at cost or using the equity method shall be accounted for in accordance with IFRS 5 when classified as held for sale. Investments accounted for under IFRS 9 are not changed in such circumstances. If an entity elects to measure investments in associates/joint ventures at fair value through profit or loss (IAS 28), it shall account for them the same way in separate financial statements.

11A

Investment Entity Parent

If a parent is required to measure its investment in a subsidiary at fair value through profit or loss (IFRS 10), it shall also account for it in the same way in its separate financial statements.

11B

Change in Status

When a parent ceases to be an investment entity: it accounts for the investment in accordance with paragraph 10 (cost or equity method), treating the date of change as the deemed acquisition date (fair value becomes deemed cost). When an entity becomes an investment entity: it accounts for the investment at fair value through profit or loss; the difference between the previous carrying amount and fair value is recognised in profit or loss.

12

Dividends

Dividends from a subsidiary, joint venture, or associate are recognised in separate financial statements when the right to receive the dividend is established. The dividend is recognised in profit or loss unless the entity uses the equity method (where it reduces the carrying amount of the investment).

13

Group Reorganisation

When a parent reorganises the group structure by establishing a new entity as its parent (satisfying specific criteria regarding exchange of equity instruments and continuity of interests/assets), the new parent measures cost at the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the date of reorganisation.

14

Reorganisation Applicability

The requirements in paragraph 13 apply equally to entities that are not parents establishing a new entity as a parent.

15

Disclosures

An entity applies all applicable IFRSs when providing disclosures in separate financial statements.

16

Parent Electing Exemption

When a parent elects not to prepare consolidated financial statements (using the exemption in IFRS 10) and prepares separate ones instead, it discloses: (a) the fact that they are separate statements and the exemption used; (b) the name/address of the entity producing consolidated statements; and (c) a list of significant investments (name, place of business, ownership interest) and the accounting method used.

16A

Investment Entity Disclosure

When an investment entity that is a parent prepares separate financial statements as its only financial statements, it discloses that fact and presents the investment entity disclosures required by IFRS 12.

17

Other Parents/Investors

When a parent (not covered by 16-16A) or an investor with joint control/significant influence prepares separate financial statements, it shall identify the consolidated/equity-accounted statements to which they relate. It also discloses: (a) the fact that they are separate statements and the reasons for preparing them; (b) a list of significant investments (name, place of business, ownership interest); and (c) the accounting method used.

18

Effective Date

An entity shall apply this Standard for annual periods beginning on or after 1 January 2013. Earlier application is permitted.