|
Commission Regulation (EC) No 1725/2003 of 29 September
2003 adopting certain international accounting standards
in accordance with Regulation (EC) No 1606/2002 of the
European Parliament and of the Council.
Content |
|
- |
Elimination
of unrealised profits and losses on transactions with
associates
Paragraph 11 of IAS 1 (revised
1997), presentation of financial statements, requires that
financial statements should not be described as complying with
International Accounting Standards unless they comply with all
the requirements of each applicable standard and each
applicable interpretation issued by the Standing
Interpretations Committee. SIC interpretations are not
intended to apply to immaterial items.
Reference: IAS
28, accounting for investments in associates.
Issue
1. Although IAS 28.16 refers to
consolidation procedures set out in IAS 27, it does not give
explicit guidance on the elimination of unrealised profits and
losses resulting from "upstream" or "downstream" transactions
between an investor (or its consolidated subsidiaries) and
associates. "Upstream" transactions are, for example, sales of
assets from an associate to the investor (or its consolidated
subsidiaries). "Downstream" transactions are, for example,
sales of assets from the investor (or its consolidated
subsidiaries) to an associate.
2. The issue is to what extent an
investor should eliminate unrealised profits and losses
resulting from transactions between an investor (or its
consolidated subsidiaries) and associates accounted for using
the equity method.
Consensus
3. Where an associate is
accounted for using the equity method, unrealised profits and
losses resulting from "upstream" and "downstream" transactions
between an investor (or its consolidated subsidiaries) and
associates should be eliminated to the extent of the
investor's interest in the associate.
4. Unrealised losses should not
be eliminated to the extent that the transaction provides
evidence of an impairment of the asset transferred.
Date of consensus: July 1997.
Effective date: periods beginning
on or after 1 January 1998; earlier application is encouraged.
Changes in accounting policies should be accounted for
according to the transition requirements of IAS 8.46.
Previous |
Index |
Next
|
