Posted by & filed under Financial Reporting.

12 February 2013

 

Mr Hans Hoogervorst
Chairman
International Accounting Standards Board
30 Cannon Street
London EC 4M 6XH
UNITED KINGDOM

Dear Mr Hoogervorst

ED/2012/6 Sale on contribution of assets between an investor and its associate or joint venture

The Group of 100 (G100) is an organization of chief financial officers from Australia’s largest business enterprises with the purpose of advancing Australia’s financial competitiveness is pleased to offer comment on this Exposure Draft.

Q1 The IASB proposes to amend IFRS 10 so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture is recognised only to the extent of the unrelated investors’ interests in the associate or joint venture. The consequence is that a full gain or loss is recognised on the loss of control of a subsidiary that constitutes a business, as defined in IFRS 3, including cases in which the investor retains joint control of, or significant influence over, the investee.

The G100 supports the proposed amendments that clarify that the full gain or loss on the sale of, or loss of control, of a subsidiary is recognised when the subsidiary constitutes a business as defined in IFRS 3 ‘Business Combinations’ and that if the activity is not a business the gain or loss recognised depends on the extent of the unrelated investor’s interests in the activity.

Q2 The IASB proposes to amend IAS 28 (2011) so that:

  1. The current requirements for the partial gain or loss for transactions between an investor and its associate or joint venture only apply to the gain or loss resulting from the sale or contribution of assets that do not constitute a business, as defined in IFRS 3; and
  2. The gain or loss resulting from the sale or contributions of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture is recognised in full.

Do you agree with the amendment proposed? Why or why not? If not, what alternative do you propose?

The G100 supports the principle underlying the proposed amendments to IFRS 10 ‘Consolidation Financial Statements’ and agrees that they should apply as proposed in IAS 28.

Q3 The IASB proposed to apply the proposes amendments to IFRS 10 and IAS 28 (2011) prospectively to sales or contributions occurring in annual periods beginning on or after the date that the proposed amendments would become effective. Do you agree with the proposed transition requirements? Why or why not? If not, what alternative do you propose?

The G100 agrees with making the amendments applicable prospectively because this will avoid the administrative burdens of restating previously issued information.

 

Yours sincerely
Group of 100 Inc

 

Terry Bowen
President


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