Discussion on the equity method

Keywords: Mazars, Thailand, IFRS, IASB, Equity Method, IFRS 12 

The IASB tentatively decided that an investor should disclose the gain or loss from recognising its share of other changes in its associate’s net assets that change its ownership interest, while retaining significant influence. 

At the meeting, the IASB also tentatively decided that an investor that has entered into a contingent consideration arrangement should disclose: 

• on obtaining significant influence in the associate: 
  • the amount recognised as part of the cost of the investment; 
  • a description of the arrangement and the basis for determining the amount of the contingent consideration; and 
  • an estimate of the range of amounts of the contingent consideration (undiscounted) or, if a range cannot be estimated, the reasons why not.  

• for each subsequent reporting period, until the investor collects or settles the contingent consideration or it is cancelled or expires: 
  • any changes in the amounts recognised, including any differences arising upon settlement; 
  • any changes in the range of outcomes (undiscounted) and the reasons for those changes; and 
  • the valuation techniques and key model inputs used to measure the contingent consideration. 

Lastly, the IASB tentatively decided that an investor should:  

• disclose its gains or losses on transactions to its associates; 
• disclose information that enable users of its financial statements to understand the changes in investments in associates, and  
• disclose a reconciliation between the opening and closing carrying amounts.