This free, guided checker walks your finance team through the key decision points for IAS 27 Separate Financial Statements. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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IAS 27 applies when an entity prepares separate FS, whether or not it also prepares consolidated FS under IFRS 10; local law may require separate FS for the parent alone. Financial statements in which associates or joint ventures are the only equity-accounted investments are not separate FS. Test the scope before selecting a measurement basis.
IAS 27 does not apply; the entity prepares only consolidated financial statements under IFRS 10 and does not make the IAS 27.10 measurement election (IAS 27.2).
Official guidance: IFRS issued standards
Separate FS account for investments in controlled and influenced entities using IAS 27 measurement options rather than full IFRS 10 consolidation procedures. Confirm control under IFRS 10 and significant influence or joint control under IAS 28/IFRS 11 before concluding an investee is in scope. Financial-asset holdings that are not investees are measured under IFRS 9.
Prepare the separate FS under all other applicable IFRSs; the IAS 27.10 investment measurement election is not engaged (IAS 27.10).
Official guidance: IFRS issued standards
IAS 27.10 permits cost or IFRS 9/FVTPL for investments in subsidiaries in separate FS; equity method is also permitted and is required for associates and joint ventures unless cost or IFRS 9 is elected. The same accounting must be applied to each category of investments. Document the election, as it drives dividend, impairment, and remeasurement treatment downstream.
Measure the subsidiary investment at fair value through profit or loss under IFRS 9, remeasuring at each reporting date with changes in profit or loss (IAS 27.10(b)).
Official guidance: IFRS issued standards
IAS 27.12 requires dividend income in profit or loss under the cost method; dividends received in excess of accumulated investee profits may indicate impairment requiring IAS 36 testing. Recognize on the date the right to receive is established, usually declaration. A dividend exceeding the investee's total comprehensive income is a specific IAS 36.12(h) impairment indicator.
Correct the recognition trigger to the date the right to receive payment is established, not the cash-collection date, and assess whether the dividend is an IAS 36.12(h) impairment indicator (IAS 27.12).
Official guidance: IFRS issued standards
IAS 28 applies in separate FS when equity method is elected; dividends received reduce carrying amount rather than being recognized as income. On initial recognition the investment is at cost and is then adjusted for the investor's share of post-acquisition profit or loss in P&L and its share of OCI in OCI. Align investee reporting dates and accounting policies before the pick-up.
Complete the equity-method pick-up of the share of profit or loss and OCI before the separate FS close (IAS 28.10).
Official guidance: IFRS issued standards
Under equity method, dividends reduce investment carrying amount because the investor's share of profit already includes investee earnings; double-counting dividend income is a common error. Trace each distribution to the rollforward to confirm it reduces the carrying amount. Recognizing it as income overstates both profit and the investment balance.
Reclassify the recognized dividend income to a reduction of the investment's carrying amount to remove the double count (IAS 28.10).
Official guidance: IFRS issued standards
Cost-method investments are tested for impairment under IAS 36 when indicators arise; carrying amount must not exceed recoverable amount. Assess indicators at each reporting date, including the IAS 36.12(h) trigger where a dividend exceeds the investee's total comprehensive income for the period. Recoverable amount is the higher of fair value less costs of disposal and value in use.
Perform the IAS 36 impairment-indicator assessment, including the IAS 36.12(h) dividend trigger, before sign-off and write down to recoverable amount if impaired (IAS 36.9; IAS 36.59).
Official guidance: IFRS issued standards
IAS 27.10 lets an entity account for associates and joint ventures in separate FS at cost, under IFRS 9, or using the equity method, applying the same basis to each category. Where a venture capital or similar entity elects fair value through profit or loss under IAS 28.18, IAS 27.11 requires the same treatment in the separate FS. Confirm significant influence or joint control before applying the equity method.
Apply the IAS 27.10 measurement election consistently to associates and joint ventures, or document a valid IFRS 9 or IAS 28.18 fair value election (IAS 27.11).
Official guidance: IFRS issued standards
IAS 8 requires consistent application of the cost, equity, or FVTPL policy; changes are accounting policy changes requiring retrospective application unless impracticable. IAS 27.10 also requires the same accounting for each category of investments. A voluntary change is permitted only when it results in reliable and more relevant information under IAS 8.14(b).
Assess the change against the IAS 8.14 criteria for a voluntary policy change and apply it retrospectively unless impracticable (IAS 8.19).
Official guidance: IFRS issued standards
IAS 27.16-17 requires disclosure of investments in subsidiaries, associates, and joint ventures, the measurement basis, and any restrictions on ability to remit funds. Where the parent uses the IFRS 10 exemption from consolidation, IAS 27.16 adds the exemption disclosures. Tie the disclosure checklist to the investment register so nothing is omitted.
Complete the IAS 27.16-17 disclosures - list of significant investees, measurement method, and restrictions on remitting funds - before issuance (IAS 27.17).
Official guidance: IFRS issued standards
IAS 27.8 requires separate FS to be identified as such; when consolidated FS are also published, users must not confuse separate and consolidated information. IAS 27.17(a) requires the fact that the statements are separate FS and, where not required by law, the reasons they are prepared. Label the statements on the face and in the basis-of-preparation note and cross-reference the consolidated FS.
The separate financial statements are complete: investments are measured and disclosed under IAS 27 and identified as separate FS (IAS 27.17(a)). Add the separate-FS identification statement and a cross-reference to the consolidated FS on the face and in the basis-of-preparation note (IAS 27.17(a)).
Official guidance: IFRS issued standards
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