TMI BlogDisclosure of Interests in Other EntitiesX X X X Extracts X X X X X X X X Extracts X X X X ..... ion of an investment entity, if applicable (paragraph 9A); and (b) information about its interests in: (i) subsidiaries (paragraphs 10 19); (ii) arrangements and associates (paragraphs 20 23); and (iii) structured entities that are not controlled by the entity (unconsolidated structured entities) (paragraphs 24 31). 3 If the disclosures required by this Ind AS, together with disclosures required by other Ind ASs, do not meet the objective in paragraph 1, an entity shall disclose whatever additional information is necessary to meet that objective. 4 An entity shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the requirements in this Ind AS. It shall aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have different characteristics (see paragraphs B2 B6). Scope 5 This Ind AS shall be applied by an entity that has an interest in any of the following: (a) subsidiaries (b) joint arrangements (ie joint operations or joint ventures) (c) associates (d) u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration or joint venture) when the arrangement has been structured through a separate vehicle. 8 The significant judgements and assumptions disclosed in accordance with paragraph 7 include those made by the entity when changes in facts and circumstances are such that the conclusion about whether it has control, joint control or significant influence changes during the reporting period. 9 To comply with paragraph 7, an entity shall disclose, for example, significant judgements and assumptions made in determining that: (a) it does not control another entity even though it holds more than half of the voting rights of the other entity. (b) it controls another entity even though it holds less than half of the voting rights of the other entity. (c) it is an agent or a principal (see paragraphs B58 B72 of Ind AS 110). (d) it does not have significant influence even though it holds 20 per cent or more of the voting rights of another entity. (e) it has significant influence even though it holds less than 20 per cent of the voting rights of another entity. Investment entity status 9A When a parent determines that it is an investment entity in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or period. The interest that non-controlling interests have in the group s activities and cash flows 12 An entity shall disclose for each of its subsidiaries that have non-controlling interests that are material to the reporting entity: (a) the name of the subsidiary. (b) the principal place of business (and country of incorporation if different from the principal place of business) of the subsidiary. (c) the proportion of ownership interests held by non-controlling interests. (d) the proportion of voting rights held by non-controlling interests, if different from the proportion of ownership interests held. (e) the profit or loss allocated to non-controlling interests of the subsidiary during the reporting period. (f) accumulated non-controlling interests of the subsidiary at the end of the reporting period. (g) summarised financial information about the subsidiary (see paragraph B10). The nature and extent of significant restrictions 13 An entity shall disclose: (a) significant restrictions (eg statutory, contractual and regulatory restrictions) on its ability to access or use the assets and settle the liabilities of the group, such as: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y current intentions to provide financial or other support to a consolidated structured entity, including intentions to assist the structured entity in obtaining financial support. Consequences of changes in a parent s ownership interest in a subsidiary that do not result in a loss of control 18 An entity shall present a schedule that shows the effects on the equity attributable to owners of the parent of any changes in its ownership interest in a subsidiary that do not result in a loss of control. Consequences of losing control of a subsidiary during the reporting period 19 An entity shall disclose the gain or loss, if any, calculated in accordance with paragraph 25 of Ind AS 110, and: (a) the portion of that gain or loss attributable to measuring any investment retained in the former subsidiary at its fair value at the date when control is lost; and (b) the line item(s) in profit or loss in which the gain or loss is recognised (if not presented separately). Interests in unconsolidated subsidiaries (investment entities) 19A An investment entity that, in accordance with Ind AS 110, is required to apply the exception to consolidation and instead acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to purchase assets of the structured entity or to provide financial support). 19G If during the reporting period an investment entity or any of its unconsolidated subsidiaries has, without having a contractual obligation to do so, provided financial or other support to an unconsolidated, structured entity that the investment entity did not control, and if that provision of support resulted in the investment entity controlling the structured entity, the investment entity shall disclose an explanation of the relevant factors in reaching the decision to provide that support. Interests in joint arrangements and associates 20 An entity shall disclose information that enables users of its financial statements to evaluate: (a) the nature, extent and financial effects of its interests in joint arrangements and associates, including the nature and effects of its contractual relationship with the other investors with joint control of, or significant influence over, joint arrangements and associates (paragraphs 21 and 22); and (b) the nature of, and changes in, the risks associated with its interests in joint ventures and associates (paragraph 23). Nature, ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of the entity: (i) the date of the end of the reporting period of the financial statements of that joint venture or associate; and (ii) the reason for using a different date or period. (c) the unrecognised share of losses of a joint venture or associate, both for the reporting period and cumulatively, if the entity has stopped recognising its share of losses of the joint venture or associate when applying the equity method. Risks associated with an entity s interests in joint ventures and associates 23 An entity shall disclose: (a) commitments that it has relating to its joint ventures separately from the amount of other commitments as specified in paragraphs B18 B20. (b) in accordance with Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, unless the probability of loss is remote, contingent liabilities incurred relating to its interests in joint ventures or associates (including its share of contingent liabilities incurred jointly with other investors with joint control of, or significant influence over, the joint ventures or associates), separately from the amount of other contingent liabilities. Interests in unconsolidated stru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those assets and liabilities are recognised. (c) the amount that best represents the entity s maximum exposure to loss from its interests in unconsolidated structured entities, including how the maximum exposure to loss is determined. If an entity cannot quantify its maximum exposure to loss from its interests in unconsolidated structured entities it shall disclose that fact and the reasons. (d) a comparison of the carrying amounts of the assets and liabilities of the entity that relate to its interests in unconsolidated structured entities and the entity s maximum exposure to loss from those entities. 30 If during the reporting period an entity has, without having a contractual obligation to do so, provided financial or other support to an unconsolidated structured entity in which it previously had or currently has an interest (for example, purchasing assets of or instruments issued by the structured entity), the entity shall disclose: (a) the type and amount of support provided, including situations in which the entity assisted the structured entity in obtaining financial support; and (b) the reasons for providing the support. 31 An entity shall disclose any cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment entity joint arrangement joint control joint operation joint venture non-controlling interest parent protective rights relevant activities separate financial statements separate vehicle significant influence subsidiary. Appendix B Application guidance This appendix is an integral part of the Ind AS. It describes the application of paragraphs 1 31 and has the same authority as the other parts of the Ind AS. B1 The examples in this appendix portray hypothetical situations. Although some aspects of the examples may be present in actual fact patterns, all relevant facts and circumstances of a particular fact pattern would need to be evaluated when applying Ind AS 112. Aggregation (paragraph 4) B2 An entity shall decide, in the light of its circumstances, how much detail it provides to satisfy the information needs of users, how much emphasis it places on different aspects of the requirements and how it aggregates the information. It is necessary to strike a balance between burdening financial statements with excessive detail that may not assist users of financial statements and obsc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity (the reporting entity) to protect itself from the default of interest and principal payments on the loans. The reporting entity has involvement that exposes it to variability of returns from the performance of the structured entity because the credit default swap absorbs variability of returns of the structured entity. B9 Some instruments are designed to transfer risk from a reporting entity to another entity. Such instruments create variability of returns for the other entity but do not typically expose the reporting entity to variability of returns from the performance of the other entity. For example, assume a structured entity is established to provide investment opportunities for investors who wish to have exposure to entity Z s credit risk (entity Z is unrelated to any party involved in the arrangement). The structured entity obtains funding by issuing to those investors notes that are linked to entity Z s credit risk (credit-linked notes) and uses the proceeds to invest in a portfolio of risk-free financial assets. The structured entity obtains exposure to entity Z s credit risk by entering into a credit default swap (CDS) with a swap counterparty. The CDS passes ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) included in paragraph B12(b)(iii). (c) non-current financial liabilities (excluding trade and other payables and provisions) included in paragraph B12(b)(iv). (d) depreciation and amortisation. (e) interest income. (f) interest expense. (g) income tax expense or income. B14 The summarised financial information presented in accordance with paragraphs B12 and B13 shall be the amounts included in the Ind AS financial statements of the joint venture or associate (and not the entity s share of those amounts). If the entity accounts for its interest in the joint venture or associate using the equity method: (a) the amounts included in the Ind AS financial statements of the joint venture or associate shall be adjusted to reflect adjustments made by the entity when using the equity method, such as fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies. (b) the entity shall provide a reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint venture or associate. B15 An entity may present the summarised financial information required by paragraphs B12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r services that an entity is committed to purchasing from, or on behalf of, a joint venture. (iv) unrecognised commitments to provide loans or other financial support to a joint venture. (v) unrecognised commitments to contribute resources to a joint venture, such as assets or services. (vi) other non-cancellable unrecognised commitments relating to a joint venture. (b) unrecognised commitments to acquire another party s ownership interest (or a portion of that ownership interest) in a joint venture if a particular event occurs or does not occur in the future. B20 The requirements and examples in paragraphs B18 and B19 illustrate some of the types of disclosure required by paragraph 18 of Ind AS 24, Related Party Disclosures. Interests in unconsolidated structured entities (paragraphs 24 31) Structured entities B21 A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. B22 A structured entity often has some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its interests in unconsolidated structured entities. (d) whether the entity is required to absorb losses of an unconsolidated structured entity before other parties, the maximum limit of such losses for the entity, and (if relevant) the ranking and amounts of potential losses borne by parties whose interests rank lower than the entity s interest in the unconsolidated structured entity. (e) information about any liquidity arrangements, guarantees or other commitments with third parties that may affect the fair value or risk of the entity s interests in unconsolidated structured entities. (f) any difficulties an unconsolidated structured entity has experienced in financing its activities during the reporting period. (g) in relation to the funding of an unconsolidated structured entity, the forms of funding (eg commercial paper or medium-term notes) and their weighted-average life. That information might include maturity analyses of the assets and funding of an unconsolidated structured entity if the structured entity has longer-term assets funded by shorter-term funding. 4 [Appendix C Effective date and transition This appendix is an integral part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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