The amendments provide relief for first-time adopters when measuring the cost of investments in subsidiaries, associates, and jointly controlled entities. IAS 27 has been amended to change among others the rules for recognition of dividend revenue.
EFRAG asks for comments on the endorsement for use in the EU of the Amendments to IFRS 1 and IAS 27 - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate.
The amendments provide relief for first-time adopters when measuring the cost of investments in subsidiaries, associates, and jointly controlled entities. IAS 27 has been amended to change the rules for recognition of dividend revenue from subsidiaries, associates, and jointly controlled entities, and for measuring the cost of investments arising in certain group reorganisations.
EFRAG’s tentative conclusion is that the amendments meet the endorsement criteria and that EFRAG should recommend their endorsement for use in the EU.
EFRAG has also carried out an initial assessment of the costs and benefits expected to arise from the implementation of the amendments and has tentatively concluded that these will:
- involve preparers and users incurring only insignificant incremental year one and insignificant incremental ongoing costs. In some cases it could even result in cost savings; and
- improve the quality of the financial information provided.
As a result, EFRAG’s overall initial assessment of the costs and benefits is that the additional costs of implementing the Amendments will not be significant and are likely to be exceeded by the benefits resulting from its application.
Again, EFRAG’s reasoning is set out in the Invitation to Comment and EFRAG is inviting comments on all aspects of this initial assessment.
Deadline for comments is 1 July 2008.
Effect Study Amendments
© EFRAG - European Financial Reporting Advisory Group
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