-

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

-

43. An entity shall apply this Standard for annual periods beginning on or after 1 January 2005. Earlier application is encouraged. If an entity applies this Standard for a period beginning before 1 January 2005, it shall disclose that fact.

44. This Standard supersedes IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries (revised in 2000).

45. This Standard supersedes SIC-33 Consolidation and Equity Method— Potential Voting Rights and Allocation of Ownership Interests.

The amendments in this appendix shall be applied for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period.

A1. In IAS 22 Business Combinations paragraph 1 is amended to read as follows:

1. The following terms are used in this Standard with the meanings specified:

…

A subsidiary is an entity, including an unincorporated entity such as a partnership, that is controlled by another entity (known as the parent). 

Minority interest is that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent.

A2. [Amendment not applicable to bare Standards]

A3. SIC-12 Consolidation—Special Purpose Entities is amended as described below.

The reference is amended to read as follows:

Reference: IAS 27 Consolidated and Separate Financial Statements

Paragraphs 9, 10 and 11 are amended to read as follows:

9. In the context of an SPE, control may arise through the predetermination of the activities of the SPE (operating on “autopilot”) or otherwise. IAS 27.13 indicates several circumstances which result in control even in cases where an entity owns one half or less of the voting power of another entity. Similarly, control may exist even in cases where an entity owns little or none of the SPE’s equity. The application of the control concept requires, in each case, judgement in the context of all relevant factors.

10. In addition to the situations described in IAS 27.13, the following circumstances, for example, may indicate a relationship in which an entity controls an SPE and consequently should consolidate the SPE (additional guidance is provided in the Appendix to this Interpretation):

(a) in substance, the activities of the SPE are being conducted on behalf of the entity according to its specific business needs so that the entity obtains benefits from the SPE’s operation;

(b) in substance, the entity has the decision-making powers to obtain the majority of the benefits of the activities of the SPE or, by setting up an “autopilot” mechanism, the entity has delegated these decision-making powers;

(c) in substance, the entity has rights to obtain the majority of the benefits of the SPE and therefore may be exposed to risks incident to the activities of the SPE; or

(d) in substance, the entity retains the majority of the residual or ownership risks related to the SPE or its assets in order to obtain benefits from its activities.

11. [Deleted]

A4. In International Financial Reporting Standards, including International Accounting Standards and Interpretations, applicable at December 2003, references to the current version of IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries are amended to IAS 27 Consolidated and Separate Financial Statements.

Previous | Index