IAS 27

IAS 27

Separate Financial Statements

In April 2001 the International Accounting Standards Board (Board)
adopted IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries,
which had originally been issued by the International Accounting Standards Committee
in April 1989. That standard replaced IAS 3 Consolidated Financial Statements (issued in June
1976), except for those parts that dealt with accounting for investment in associates.

In December 2003 the Board issued a revised IAS 27 with a new title—Consolidated and
Separate Financial Statements. This revised IAS 27 was part of the IASB’s initial agenda of
technical projects. The revised IAS 27 also incorporated the guidance from two related
Interpretations (SIC‑12 Consolidation—Special Purpose Entities and SIC‑33 Consolidation and
Equity Method—Potential Voting Rights and Allocation of Ownership Interests).

The Board amended IAS 27 in January 2008 to address the accounting for non‑controlling
interests and loss of control of a subsidiary as part of its business combinations project.

In May 2011 the Board issued a revised IAS 27 with a modified title—Separate Financial
Statements. IFRS 10 Consolidated Financial Statements addresses the principle of control and
the requirements relating to the preparation of consolidated financial statements.

In October 2012 IAS 27 was amended by Investment Entities (Amendments to IFRS 10,
IFRS 12 and IAS 27). These amendments introduced new disclosure requirements for
investment entities.

In August 2014 IAS 27 was amended by Equity Method in Separate Financial

Statements (Amendments to IAS 27). These amendments allowed entities to use the equity
method to account for investments in subsidiaries, joint ventures and associates in their
separate financial statements.

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CONTENTS
from paragraph

INTERNATIONAL ACCOUNTING STANDARD 27

SEPARATE FINANCIAL STATEMENTS
OBJECTIVE 1
SCOPE 2
DEFINITIONS 4
PREPARATION OF SEPARATE FINANCIAL STATEMENTS 9
DISCLOSURE 15
EFFECTIVE DATE AND TRANSITION 18
References to IFRS 9 19
WITHDRAWAL OF IAS 27 (2008) 20
APPROVAL BY THE BOARD OF IAS 27 ISSUED IN DECEMBER 2003
APPROVAL BY THE BOARD OF AMENDMENTS TO IAS 27:
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
(Amendments to IFRS 1 and IAS 27) issued in May 2008
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) issued in
October 2012
Equity Method in Separate Financial Statements (Amendments to IAS 27)
issued in August 2014

FOR THE ACCOMPANYING GUIDANCE LISTED BELOW, SEE PART B OF THIS EDITION

TABLE OF CONCORDANCE

FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION

BASIS FOR CONCLUSIONS

DISSENTING OPINIONS

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International Accounting Standard 27 Separate Financial Statements (IAS 27) is set out in
paragraphs 1–20. All the paragraphs have equal authority but retain the IASC format
of the Standard when it was adopted by the IASB. IAS 27 should be read in the context
of its objective and the Basis for Conclusions, the Preface to IFRS Standards and the
Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors provides a basis for selecting and applying accounting policies in
the absence of explicit guidance.

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International Accounting Standard 27

Separate Financial Statements

Objective
1 The objective of this Standard is to prescribe the accounting and disclosure
requirements for investments in subsidiaries, joint ventures and associates
when an entity prepares separate financial statements.

Scope
2 This Standard shall be applied in accounting for investments in
subsidiaries, joint ventures and associates when an entity elects, or is
required by local regulations, to present separate financial statements.

3 This Standard does not mandate which entities produce separate financial
statements. It applies when an entity prepares separate financial statements
that comply with International Financial Reporting Standards.

Definitions
4 The following terms are used in this Standard with the meanings specified:

Consolidated financial statements are the financial statements of a group in

which the assets, liabilities, equity, income, expenses and cash flows of the
parent and its subsidiaries are presented as those of a single economic
entity.

Separate financial statements are those presented by an entity in which the

entity could elect, subject to the requirements in this Standard, to account
for its investments in subsidiaries, joint ventures and associates either at
cost, in accordance with IFRS 9 Financial Instruments, or using the equity
method as described in IAS 28 Investments in Associates and Joint Ventures.

5 The following terms are defined in Appendix A of IFRS 10 Consolidated Financial

Statements, Appendix A of IFRS 11 Joint Arrangements and paragraph 3 of IAS 28:

• associate

• control of an investee

• equity method

• group

• investment entity

• joint control

• joint venture

• joint venturer

• parent

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• significant influence

• subsidiary.

6 Separate financial statements are those presented in addition to consolidated

financial statements or in addition to the financial statements of an investor
that does not have investments in subsidiaries but has investments in
associates or joint ventures in which the investments in associates or joint
ventures are required by IAS 28 to be accounted for using the equity method,
other than in the circumstances set out in paragraphs 8–8A.

7 The financial statements of an entity that does not have a subsidiary, associate
or joint venturer’s interest in a joint venture are not separate financial
statements.

8 An entity that is exempted in accordance with paragraph 4(a) of

IFRS 10 from consolidation or paragraph 17 of IAS 28 (as amended in 2011)
from applying the equity method may present separate financial
statements as its only financial statements.

8A An investment entity that is required, throughout the current period and all
comparative periods presented, to apply the exception to consolidation for all
of its subsidiaries in accordance with paragraph 31 of IFRS 10 presents
separate financial statements as its only financial statements.

Preparation of separate financial statements

9 Separate financial statements shall be prepared in accordance with all
applicable IFRSs, except as provided in paragraph 10.

10 When an entity prepares separate financial statements, it shall account for

investments in subsidiaries, joint ventures and associates either:

(a) at cost;

(b) in accordance with IFRS 9; or

(c) using the equity method as described in IAS 28.

The entity shall apply the same accounting for each category of
investments. Investments accounted for at cost or using the equity method
shall be accounted for in accordance with IFRS 5 Non‑current Assets Held for
Sale and Discontinued Operations when they are classified as held for sale or
for distribution (or included in a disposal group that is classified as held
for sale or for distribution). The measurement of investments accounted
for in accordance with IFRS 9 is not changed in such circumstances.

11 If an entity elects, in accordance with paragraph 18 of IAS 28 (as amended in

2011), to measure its investments in associates or joint ventures at fair value
through profit or loss in accordance with IFRS 9, it shall also account for those
investments in the same way in its separate financial statements.

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11A If a parent is required, in accordance with paragraph 31 of IFRS 10, to measure

its investment in a subsidiary at fair value through profit or loss in accordance
with IFRS 9, it shall also account for its investment in a subsidiary in the same
way in its separate financial statements.

11B 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, as follows:

(a) when an entity ceases to be an investment entity, the entity shall

account for an investment in a subsidiary in accordance with
paragraph 10. The date of the change of status shall be the deemed
acquisition date. The fair value of the subsidiary at the deemed
acquisition date shall represent the transferred deemed consideration
when accounting for the investment in accordance with paragraph 10.

(i) [deleted]

(ii) [deleted]

(b) when an entity becomes an investment entity, it shall account for an

investment in a subsidiary at fair value through profit or loss in
accordance with IFRS 9. The difference between the previous carrying
amount of the subsidiary and its fair value at the date of the change of
status of the investor shall be recognised as a gain or loss in profit or
loss. The cumulative amount of any gain or loss previously recognised
in other comprehensive income in respect of those subsidiaries shall be
treated as if the investment entity had disposed of those subsidiaries at
the date of change in status.

12 Dividends from a subsidiary, a joint venture or an associate are recognised

in the separate financial statements of an entity when the entity’s right to
receive the dividend is established. The dividend is recognised in profit or
loss unless the entity elects to use the equity method, in which case the
dividend is recognised as a reduction from the carrying amount of the
investment.

13 When a parent reorganises the structure of its group by establishing a new

entity as its parent in a manner that satisfies the following criteria:

(a) the new parent obtains control of the original parent by issuing equity
instruments in exchange for existing equity instruments of the
original parent;

(b) the assets and liabilities of the new group and the original group are
the same immediately before and after the reorganisation; and

(c) the owners of the original parent before the reorganisation have the
same absolute and relative interests in the net assets of the original
group and the new group immediately before and after the
reorganisation,

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and the new parent accounts for its investment in the original parent in
accordance with paragraph 10(a) in its separate financial statements, the new
parent shall measure cost at the carrying amount of its share of the equity
items shown in the separate financial statements of the original parent at the
date of the reorganisation.

14 Similarly, an entity that is not a parent might establish a new entity as its
parent in a manner that satisfies the criteria in paragraph 13. The
requirements in paragraph 13 apply equally to such reorganisations. In such
cases, references to ‘original parent’ and ‘original group’ are to the ‘original
entity’.

Disclosure
15 An entity shall apply all applicable IFRSs when providing disclosures in its
separate financial statements, including the requirements in paragraphs
16–17.

16 When a parent, in accordance with paragraph 4(a) of IFRS 10, elects not to
prepare consolidated financial statements and instead prepares separate
financial statements, it shall disclose in those separate financial
statements:

(a) the fact that the financial statements are separate financial
statements; that the exemption from consolidation has been used;
the name and principal place of business (and country of
incorporation, if different) of the entity whose consolidated
financial statements that comply with International Financial
Reporting Standards have been produced for public use; and the
address where those consolidated financial statements are
obtainable.

(b) a list of significant investments in subsidiaries, joint ventures and

associates, including:

(i) the name of those investees.

(ii) the principal place of business (and country of incorporation,

if different) of those investees.

(iii) its proportion of the ownership interest (and its proportion

of the voting rights, if different) held in those investees.

(c) a description of the method used to account for the investments

listed under (b).

16A When an investment entity that is a parent (other than a parent covered
by paragraph 16) prepares, in accordance with paragraph 8A, separate
financial statements as its only financial statements, it shall disclose that
fact. The investment entity shall also present the disclosures relating to
investment entities required by IFRS 12 Disclosure of Interests in Other
Entities.

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17 When a parent (other than a parent covered by paragraphs 16–16A) or an

investor with joint control of, or significant influence over, an investee
prepares separate financial statements, the parent or investor shall identify
the financial statements prepared in accordance with IFRS 10, IFRS 11 or
IAS 28 (as amended in 2011) to which they relate. The parent or investor
shall also disclose in its separate financial statements:

(a) the fact that the statements are separate financial statements and
the reasons why those statements are prepared if not required by
law.

(b) a list of significant investments in subsidiaries, joint ventures and

associates, including:

(i) the name of those investees.

(ii) the principal place of business (and country of incorporation,

if different) of those investees.

(iii) its proportion of the ownership interest (and its proportion

of the voting rights, if different) held in those investees.

(c) a description of the method used to account for the investments

listed under (b).

Effective date and transition

18 An entity shall apply this Standard for annual periods beginning on or after
1 January 2013. Earlier application is permitted. If an entity applies this
Standard earlier, it shall disclose that fact and apply IFRS 10, IFRS 11, IFRS 12
and IAS 28 (as amended in 2011) at the same time.

18A Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), issued in
October 2012, amended paragraphs 5, 6, 17 and 18, and added paragraphs 8A,
11A–11B, 16A and 18B–18I. An entity shall apply those amendments for
annual periods beginning on or after 1 January 2014. Early adoption is
permitted. If an entity applies those amendments earlier, it shall disclose that
fact and apply all amendments included in Investment Entities at the same time.

18B If, at the date of initial application of the Investment Entities amendments
(which, for the purposes of this IFRS, is the beginning of the annual reporting
period for which those amendments are applied for the first time), a parent
concludes that it is an investment entity, it shall apply paragraphs 18C–18I to
its investment in a subsidiary.

18C At the date of initial application, an investment entity that previously

measured its investment in a subsidiary at cost shall instead measure that
investment at fair value through profit or loss as if the requirements of this
IFRS had always been effective. The investment entity shall adjust
retrospectively the annual period immediately preceding the date of initial
application and shall adjust retained earnings at the beginning of the
immediately preceding period for any difference between:

(a) the previous carrying amount of the investment; and

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(b) the fair value of the investor’s investment in the subsidiary.

18D At the date of initial application, an investment entity that previously

measured its investment in a subsidiary at fair value through other
comprehensive income shall continue to measure that investment at fair
value. The cumulative amount of any fair value adjustment previously
recognised in other comprehensive income shall be transferred to retained
earnings at the beginning of the annual period immediately preceding the
date of initial application.

18E At the date of initial application, an investment entity shall not make
adjustments to the previous accounting for an interest in a subsidiary that it
had previously elected to measure at fair value through profit or loss in
accordance with IFRS 9, as permitted in paragraph 10.

18F Before the date that IFRS 13 Fair Value Measurement is adopted, an investment
entity shall use the fair value amounts previously reported to investors or to
management, if those amounts represent the amount for which the
investment could have been exchanged between knowledgeable, willing
parties in an arm’s length transaction at the date of the valuation.

18G If measuring the investment in the subsidiary in accordance

with paragraphs 18C–18F is impracticable (as defined in IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors), an investment entity shall
apply the requirements of this IFRS at the beginning of the earliest period for
which application of paragraphs 18C–18F is practicable, which may be the
current period. The investor shall adjust retrospectively the annual period
immediately preceding the date of initial application, unless the beginning of
the earliest period for which application of this paragraph is practicable is the
current period. When the date that it is practicable for the investment entity
to measure the fair value of the subsidiary is earlier than the beginning of the
immediately preceding period, the investor shall adjust equity at the
beginning of the immediately preceding period for any difference between:

(a) the previous carrying amount of the investment; and

(b) the fair value of the investor’s investment in the subsidiary.

If the earliest period for which application of this paragraph is practicable is

the current period, the adjustment to equity shall be recognised at the
beginning of the current period.

18H If an investment entity has disposed of, or lost control of, an investment in a
subsidiary before the date of initial application of the Investment
Entities amendments, the investment entity is not required to make
adjustments to the previous accounting for that investment.

18I Notwithstanding the references to the annual period immediately preceding

the date of initial application (the ‘immediately preceding period’) in
paragraphs 18C–18G, an entity may also present adjusted comparative
information for any earlier periods presented, but is not required to do so. If
an entity does present adjusted comparative information for any earlier
periods, all references to the ‘immediately preceding period’ in paragraphs

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18C–18G shall be read as the ‘earliest adjusted comparative period presented’.

If an entity presents unadjusted comparative information for any earlier
periods, it shall clearly identify the information that has not been adjusted,
state that it has been prepared on a different basis, and explain that basis.

18J Equity Method in Separate Financial Statements (Amendments to IAS 27), issued in
August 2014, amended paragraphs 4–7, 10, 11B and 12. An entity shall apply
those amendments for annual periods beginning on or after 1 January 2016
retrospectively in accordance with IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors. Earlier application is permitted. If an entity
applies those amendments for an earlier period, it shall disclose that fact.

References to IFRS 9
19 If an entity applies this Standard but does not yet apply IFRS 9, any reference
to IFRS 9 shall be read as a reference to IAS 39 Financial Instruments: Recognition
and Measurement.

Withdrawal of IAS 27 (2008)

20 This Standard is issued concurrently with IFRS 10. Together, the two IFRSs
supersede IAS 27 Consolidated and Separate Financial Statements (as amended in
2008).

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Approval by the Board of IAS 27 issued in December 2003

International Accounting Standard 27 Consolidated and Separate Financial Statements (as
revised in 2003) was approved for issue by thirteen of the fourteen members of the
International Accounting Standards Board. Mr Yamada dissented. His dissenting opinion
related to consolidated financial statements and is set out after the Basis for Conclusions
on IFRS 10 Consolidated Financial Statements.

Sir David Tweedie Chairman

Thomas E Jones Vice-Chairman
Mary E Barth
Hans-Georg Bruns
Anthony T Cope
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
Patricia L O’Malley
Harry K Schmid
John T Smith
Geoffrey Whittington
Tatsumi Yamada

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IAS 27

Approval by the Board of Cost of an Investment in a Subsidiary,

Jointly Controlled Entity or Associate (Amendments to IFRS 1 and
IAS 27) issued in May 2008
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (Amendments to
IFRS 1 First‑time Adoption of International Financial Reporting Standards and IAS 27) was
approved for issue by eleven of the thirteen members of the International Accounting
Standards Board. Professor Barth and Mr Danjou dissented. Their dissenting opinions are
set out after the Basis for Conclusions.

Sir David Tweedie Chairman

Thomas E Jones Vice-Chairman
Mary E Barth
Stephen Cooper
Philippe Danjou
Jan Engström
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
John T Smith
Tatsumi Yamada
Wei-Guo Zhang

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Approval by the Board of Investment Entities (Amendments to

IFRS 10, IFRS 12 and IAS 27) issued in October 2012
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) was approved for issue by
the fifteen members of the International Accounting Standards Board.

Hans Hoogervorst Chairman

Ian Mackintosh Vice-Chairman
Stephen Cooper
Philippe Danjou
Martin Edelmann
Jan Engström
Patrick Finnegan
Amaro Luiz de Oliveira Gomes
Prabhakar Kalavacherla
Patricia McConnell
Takatsugu Ochi
Paul Pacter
Darrel Scott
Chungwoo Suh
Zhang Wei-Guo

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Approval by the Board of Equity Method in Separate Financial

Statements (Amendments to IAS 27) issued in August 2014
Equity Method in Separate Financial Statements was approved for issue by the fourteen
members of the International Accounting Standards Board.

Hans Hoogervorst Chairman

Ian Mackintosh Vice-Chairman
Stephen Cooper
Philippe Danjou
Martin Edelmann
Patrick Finnegan
Amaro Luiz de Oliveira Gomes
Gary Kabureck
Suzanne Lloyd
Takatsugu Ochi
Darrel Scott
Chungwoo Suh
Mary Tokar
Wei-Guo Zhang

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