The ED aims to reduce diversity in practice by answering application questions about the equity method of accounting and to improve the understandability of IAS 28. The proposed amendments are intended to clarify and amend the requirements of IAS 28, with new disclosure requirements to enhance the information companies provide about equity accounted investments. In addition, a reordering of the requirements is being proposed to improve the understandability of IAS 28.
We are supportive of the approach taken by IASB to address specific application questions which would provide solutions to long-standing application difficulties, reduce diversity in practice and lead to more comparable and understandable information for users. However, we note that further clarifications and guidance might be required to ensure consistent application of the proposed amendments. For example, the proposed definition of the cost of associate or joint venture is silent on the accounting of expenses directly attributable to the acquisition of the investment. Hence, we recommend IASB to provide clarity on whether such expenses should be included in the cost of associate or joint venture.
Read more in our comment letter.