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WorkpaperIFRS 12 — Disclosure of Interests in Other EntitiesL2 · L3

Disclosures on subsidiaries: material non-controlling interests, summarised information, restrictions, changes in ownership and loss of control

4 missions10 sections to document75 min
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Status
Published

Objective of the workpaper

List, for each subsidiary, the profit, the share of third parties, the dividends and the accumulated balance of the non-controlling interests, then prepare the summarised information (before intragroup eliminations), the restrictions and the effects of changes in ownership. Percentages, dividends and amounts are case data; the accounting belongs to IFRS 10, IFRS 12 governs the disclosure.

10 sections · 34 blocks · 6 calculations · 2 entries

  • IFRS 12 §10
  • IFRS 12 §12
  • IFRS 12 §B10
  • IFRS 12 §B11
  • IFRS 12 §13

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

4 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity
Subsidiary with material non-controlling interests: disclosures per subsidiary, basis of the summarised information, restrictions, materiality and information on associates
Case tasks documented here
  • Are the non-controlling interests of Brevane material, and on what basis should this be assessed?
  • Compute the profit allocated to the non-controlling interests of Brevane.
  • Compute the accumulated closing balance of the non-controlling interests.
  • Which revenue should be presented in the summarised information of Brevane, and before or after intragroup eliminations?
  • Is the loan clause of Brevane a significant restriction to describe, and what should be said about it?
  • Record the dividend paid to the non-controlling interests of Brevane.
1

Facts and data

Inputs

  • Subsidiary: name, principal place of business, share of third parties, context of the restrictions

    TextRequired

    SIXTY_PERCENT_SUBSIDIARY_FORTY_PERCENT_THIRD_PARTIES_LOAN_COVENANT_LIMITS_DIVIDENDS

  • Profit of the subsidiary for the period

    Number

    900,000

  • Share of the non-controlling interests (%)

    Number

    40 %

  • Non-controlling interests: opening balance

    Number

    2,100,000

  • Share of non-controlling interests in other comprehensive income

    Number

  • Dividends paid to the non-controlling interests

    Number

    200,000

  • Non-controlling interests: closing balance reported

    Number

    2,260,000

  • Revenue of the subsidiary with parties outside the group

    Number

    3,000,000

  • Revenue of the subsidiary with the other group entities

    Number

    1,200,000

  • Revenue to present in the summarised information (before intragroup eliminations)

    Number

    4,200,000

  • Restrictions: loan covenants, legal requirements, protective rights of third parties

    Text

    LOAN_AGREEMENT_PROHIBITS_DIVIDENDS_UNTIL_THE_LENDER_NOTES_A_SUFFICIENT_RATIO

  • Carrying amount of the non-controlling interests acquired or sold

    Number

  • Fair value of the consideration paid or received

    Number

  • Fair value of the retained investment

    Number

  • Carrying amount of the retained investment before remeasurement

    Number

  • Total gain on loss of control (case data, under IFRS 10)

    Number

2

Supporting documents

Evidence

  • Documents obtained and referenced (accounts of the subsidiary, dividend statement, loan agreements, purchase or sale agreement)

    EvidenceRequired

3

Analysis of the disclosures on subsidiaries

Analysis

IFRS 12 §10IFRS 12 §12IFRS 12 §B10IFRS 12 §B11IFRS 12 §13IFRS 12

  • Points examined: disclosures on subsidiaries

    ChecklistRequired

    • Composition of the group and share of third parties in the activities and cash flows
    • For each material subsidiary: name, place, share of third parties, profit allocated, accumulated balance
    • Summarised information: dividends paid to third parties, assets, liabilities, profit, cash flows
    • Summarised information presented before intragroup eliminations
    • Significant restrictions on access to the assets and settlement of the liabilities of the group
    • Risks related to consolidated structured entities, including financial support
    • Change in ownership without loss of control: effects on the equity of the owners of the parent
    • Loss of control: gain or loss including the part attributable to the remeasurement of the retained investment
4

Calculations

Calculations

IFRS 12 §12IFRS 12 §B10IFRS 12 §B11

  • Profit allocated to the non-controlling interests (profit × share of third parties)

    Calculation

    360,000

    Profit of the subsidiary for the period ; Share of the non-controlling interests (%)

  • Accumulated closing balance (opening + profit + other comprehensive income − dividends)

    Calculation

    2,260,000

    Non-controlling interests: opening balance ; Non-controlling interests: closing balance reported ; Profit allocated to the non-controlling interests (profit × share of third parties) ; Share of non-controlling interests in other comprehensive income ; − Dividends paid to the non-controlling interests

  • Change in ownership: decrease in the equity of the owners (consideration − carrying amount of third parties)

    Calculation

    0

    Carrying amount of the non-controlling interests acquired or sold ; − Fair value of the consideration paid or received

  • Change in ownership: increase in the equity of the owners (carrying amount of third parties − consideration)

    Calculation

    0

    Carrying amount of the non-controlling interests acquired or sold ; − Fair value of the consideration paid or received

  • Part of the gain attributable to the remeasurement (fair value − carrying amount of the retained investment)

    Calculation

    0

    Fair value of the retained investment ; − Carrying amount of the retained investment before remeasurement

  • Summarised revenue before intragroup eliminations (third parties + other group entities)

    Calculation

    4,200,000

    Revenue of the subsidiary with parties outside the group ; Revenue of the subsidiary with the other group entities

5

Illustrative entries

Entries

  • Entry: dividend paid to the non-controlling interests

    Entry

    AccountDebitCredit
    Non-controlling interests200,000
    Cash paid200,000

  • Entry: purchase of non-controlling interests without loss of control

    Entry

    Debit Non-controlling interests acquired ← Carrying amount of the non-controlling interests acquired or sold ; Debit Equity attributable to owners of the parent (difference) ← Change in ownership: decrease in the equity of the owners (consideration − carrying amount of third parties) ; Credit Cash paid ← Fair value of the consideration paid or received

6

Judgments: materiality of the non-controlling interests and restrictions

Judgment

IFRS 12 §10IFRS 12 §12IFRS 12 §B10IFRS 12 §B11IFRS 12 §13IFRS 12

  • Material non-controlling interests: disclosure per subsidiary

    JudgmentRequired

    Material: disclosure per subsidiary

    Material: disclosure per subsidiary / Not material / Not applicable

    Professional judgment: materiality is assessed from the point of view of the consolidated financial statements and the choice between subsidiary and sub-group is made case by case according to the objective of the disclosure; the standard imposes no numerical threshold.

  • Rationale: point of view of the consolidated financial statements, subsidiary or sub-group

    Text

    IMPORTANT_FOR_THE_CONSOLIDATED_STATEMENTS_DISCLOSED_PER_SUBSIDIARY

  • Significant restrictions on the assets and liabilities of the group

    Judgment

    Significant restrictions to describe

    Significant restrictions to describe / No significant restriction / Not applicable

    Professional judgment: the standard does not require an exhaustive list of protective rights; the entity describes the nature and extent of the significant restrictions.

  • Rationale: nature and extent of the restrictions

    Text

    CONTRACTUAL_RESTRICTION_ON_ACCESS_TO_GROUP_ASSETS

7

Items to document for the disclosures on subsidiaries

Disclosure

IFRS 12 §10IFRS 12 §12IFRS 12 §13

  • Information to prepare on subsidiaries

    Checklist

    • Table per material subsidiary of the non-controlling interests
    • Note on the significant restrictions
8

Effect on the financial statements

FS impact

  • Effect derived from the entries

    Table

9

Conclusion

Conclusion

  • Disclosures per material subsidiary with the basis before eliminations, restrictions and effects of changes in ownership on equity

    ConclusionRequired

10

Normative references

References

  • Normative references cited in this workpaper

    References

11

Checks and financial statement impact

  • Subsidiary describedPass
  • Materiality judged and supportedPass
  • Calculated balance equals the reported balancePass
  • Dividend entry balancedPass
  • Purchase entry balancedNot evaluated
  • Summarised revenue recalculated = amount reportedPass
Assets
-200,000
Liabilities
0
Profit or loss
0
OCI
0
Equity
-200,000