IFRS 1 and IAS 27 Amendments - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

In January 2007 the IASB published an exposure draft on amendments to IFRS 1 - Cost of an Investment in a Subsidiary in the Separate Financial Statements of a Parent on First Time Adoption of IFRSs.

The exposure draft addressed the concern that retrospectively determining cost in accordance with IAS 27 on first-time adoption of International Financial Reporting Standards (IFRSs) cannot, in some circumstances, be achieved without undue cost or effort.

Consequently, this might create a barrier to entities' adoption of IFRSs in separate financial statements. Thus the purpose of the exposure draft was to identify a suitable exemption to restating cost in accordance with IAS 27 in circumstances where it is difficult to do so. However after considering respondents' comments, the IASB has decided to revise the exemption proposed in the exposure draft from January 2007 and make some additionally amendments to IAS 27. 

In the light of changes to the exemption proposed, the modified scope of the proposed amendments and a proposal of additional amendments to IAS 27 Consolidated and Separate Financial Statements, the IASB has published a second exposure draft Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate. 

On 7 March 2008 EFRAG published its comment letter to the IASB and on 21 July 2008 EFRAG issued its endorsement advice to the European Commission.