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Consolidation - Transition Guidance (Proposed amendments to IFRS 10)


In May 2011, the IASB published IFRS 10 Consolidated Financial Statements as part of a package of new standards on consolidation. The Standard included transitional provisions for its initial application.

The IFRS Interpretations Committee received requests to clarify two issues relating to the transitional provisions of IFRS 10. The Interpretations Committee discussed these issues at its September 2011 meeting.

The first issue was whether the 'date of initial application' in IFRS 10 is the beginning of the first reporting period in which the entity adopts IFRS 10 (i.e. the current period) or the beginning of the earliest period presented in the first financial statements in which the entity adopts this Standard. IFRS 10 does not provide a definition of 'the date of initial application'.

The other issue was whether the transition relief to the retrospective application in IFRS 10 applied to an investor's involvement with an entity that was disposed of in the comparative period(s) such that the consolidation conclusion would remain unchanged under IAS 27/SIC-12 and IFRS 10.

In December 2011, the IASB issued the Exposure Draft Transition Guidance (Amendments to IFRS 10) (the 'ED') to address the above issues. The ED clarifies that the 'date of initial application means the beginning of the annual reporting period in which IFRS 10 is applied for the first time.' The ED also confirms the relief from retrospective application would apply to an investor's interest in investees that were disposed before the date of initial application of IFRS 10.

EFRAG issued its final comment letter on 26 March 2012 whereby it supported the clarifications proposed by the ED.

On 29 August 2013, EFRAG issued its Endorsement Advice and Effects Study Report relating to the Amendments for use in the European Union and European Economic Area. EFRAG supported the adoption of the Amendments and recommended their endorsement. Notwithstanding the positive recommendation that the Amendments meet the endorsement criteria, and in order to align the mandatory effective date of the Amendments with the effective date of IFRS 10, IFRS11 and IFRS 12, EFRAG's recommendation was to defer the mandatory effective date of the Amendments from 1 January 2013 to 1 January 2014, with early adoption permitted.

On 5 April 2013 the Amendments were published in the Official Journal.

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