IFRS 12 sets out the disclosure requirements for interests in subsidiaries, joint arrangements, associates or unconsolidated structured entities. In general, the standard only applies to the entity's consolidated financial statements (IFRS 12.6b). According to IFRS 12, the term “interest in another entity” refers to contractual and non-contractual involvement (e.g. through equity instruments) that exposes an entity to variability of returns from the performance of the other entity (IFRS 12.Appendix A and 12.B7).

The new standard has to be applied in the financial statements as at Dec 31, 2013 (if the entity's reporting periods start on Jan 01 and end on Dec 31). Earlier application is permitted by the IASB (IFRS 12.C1). However, in the European Union, new IFRSs have to be endorsed by the European Union before they can be applied. There has been no endorsement of IFRS 12 as yet.

The general objective of IFRS 12 is to require an entity to disclose information that enables evaluation of (IFRS 12.1):

  • the nature of, and risks associated with, its interests in other entities, and
  • the effects of those interests on its financial position, financial performance, and cash flows.

In order to meet the objective, an entity has to disclose (IFRS 12.2):

  • the significant judgments and assumptions the entity has made in determining the nature of its interest in another entity or arrangement, and in determining the type of joint ...

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