IFRS 10 and IAS 28 - Effective Date of Amendments

Project History

In September 2014 the IASB issued amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture ("the 2014 Amendments"). On 10 August 2015, the IASB issued the Exposure Draft Effective Date of Amendments to IFRS 10 and IAS 28 ("the ED") to propose deferring indefinitely the effective date of the 2014 Amendments.

The publication of the ED results from the IASB's decision in June 2015 that its ongoing research project Equity Method of Accounting should take over all the issues currently being considered by the Interpretations Committee on IAS 28 Investments in Associates and Joint Ventures.

In regard to the endorsement of the 2014 Amendments, EFRAG recommended, in a February 2015 letter to the European Commission, that the endorsement process should be postponed until internal inconsistencies identified were solved through additional amendments to IAS 28 that were contemplated at the time.

EFRAG's Comment Letter

On 10 August 2015, the IASB issued Exposure Draft Effective Date of Amendments to IFRS 10 and IAS 28 ("the ED"). The ED proposes deferring indefinitely the effective date of the amendments to IFRS 10 and IAS 28, issued in September 2014, on Sale or Contribution of Assets between an Investor and its Associate or Joint Venture ("the 2014 Amendments").

The publication of the ED resulted from the IASB's decision in June 2015 that its ongoing research project Equity Method of Accounting should take over all the issues currently being considered by the Interpretations Committee on IAS 28 Investments in Associates and Joint Ventures, including the resolution of internal inconsistencies that were identified by EFRAG on the 2014 Amendments.

On 8 September 2015, EFRAG published its draft comment letter. In the letter EFRAG agreed with the IASB's proposal to defer indefinitely the effective date of the 2014 Amendments. EFRAG considered that this deferral would give the IASB the opportunity to address the application problems arising from the equity method requirements set out in IAS 28 in a comprehensive way and in a single project. It would also give the IASB the opportunity to reconsider the issues and challenges identified by EFRAG during its consultative phase. Finally, EFRAG considered that deferring the effective date of the 2014 Amendments indefinitely would also reduce the risk of requiring successive rounds of changes to IAS 28 in a short period of time. 

Given the interaction between the 2014 Amendments and the ED published on 10 August 2015, EFRAG decided to recommend that the endorsement process relating to the 2014 Amendments should continue to be postponed until the IASB finalises its due process on its proposals to amend the effective date of the 2014 Amendments. 

On 23 October 2015, EFRAG published its final comment letter. In its letter, EFRAG supported the IASB's decision to defer ad hoc changes to IAS 28 Investments in Associates and Joint Ventures until the research on the equity method of accounting is completed. EFRAG urged the IASB to progress that project as a priority, focusing on bringing solutions to the outstanding issues in a timely manner.  However, EFRAG was opposed to early application remaining possible after the effective date of the amendments had been postponed.

Latest Developments

In December 2015, the IASB published Effective Date of Amendments to IFRS 10 and IAS 28 (“the 2015 Amendments”) which deferred indefinitely the effective date of Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) (“the 2014 Amendments”) by removing the original effective date of 1 January 2016 and indicating that a new effective date would be determined at future date when the IASB finalises the revisions, if any, that would result from the research project on equity method.

In February 2016, EFRAG sent a letter to the European Commission. In the letter, EFRAG brings a number of issues to the European Commission’s attention before it takes a decision on the endorsement process of the two amendments and highlights that whether the amendments are endorsed or not in Europe, entities will still be able to claim compliance with IFRS as issued by the IASB.