The International Accounting Standards Board (IASB) has published Equity Method in Separate Financial Statements (Amendments to IAS 27), which reinstates the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements.
The amendments respond to requests that the IASB had received during its inaugural public agenda consultation.
The amendments will help some jurisdictions move to IFRS for separate financial statements, reducing compliance costs without reducing the information available to investors.
It also allows entities to use the equity method as decribed in IAS 28 Investments in Associates and Joint Ventures.
The accounting option must be applied by category of investments.
The amendments also clarify that when a parent ceases to be an investment entity, or becomes an investment entity, it shall account for the change from the date when the change in status occurred.
In addition to the amendments to IAS 27, there are consequential amendments to IAS 28 to avoid a potential conflict with IFRS 10 Consolidated Financial Statements and to IFRS 1 First-time Adoption of International Financial Reporting Standards.