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disclosure of interests in other entities
Objective

  • The objective of this Indian Accounting Standard (Ind AS) is to require an entity to disclose information that enables users of its financial statements to evaluate:

  • the nature of, and risks associated with, its interests in other entities; and
  • the effects of those interests on its financial position, financial performance and cash flows.
Meeting the objective
  1. To meet the objective in paragraph 1, an entity shall disclose:
    1. the significant judgements and assumptions it has made in determining:
      1. the nature of its interest in another entity or arrangement;
      2. the type of joint arrangement in which it has an interest (paragraphs 7–9);
      3. that it meets the definition of an investment entity, if applicable (paragraph 9A); and
    2. information about its interests in:
      1. subsidiaries (paragraphs 10–19);
      2. arrangements and associates (paragraphs 20–23); and  This Ind AS was notified vide G.S.R. 111(E) dated 16th February, 2015 and was amended vide Notification No. G.S.R. 365(E) dated 30th March, 2016 and G.S.R. 310(E) dated 28th March, 2018.
  1. structured entities that are not controlled by the entity (unconsolidated structured entities) (paragraphs 24–31).
  1. If the disclosures required by this Ind AS, together with disclosures required by other Ind ASs, do not meet the objective in paragraph 1, an entity shall disclose whatever additional information is necessary to meet that objective.
  2. An entity shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the requirements in this Ind AS. It shall aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have different characteristics (see paragraphs B2–B6).
Scope
  1. This Ind AS shall be applied by an entity that has an interest in any of the following:
    1. subsidiaries
    2. joint arrangements (ie joint operations or joint ventures)
    3. associates
    4. unconsolidated structured entities.

5A    1Except as described in paragraph B17, the requirements in this Ind AS apply to an entity’s interests listed in paragraph 5 that are classified (or included in a disposal group that is classified) as held for sale or discontinued operations in accordance with Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations

  1. This Ind AS does not apply to:
    1. post-employment benefit plans or other long-term employee benefit plans to which Ind AS 19, Employee Benefits, applies.
    2. 2an entity’s separate financial statements to which Ind AS 27, Separate Financial Statements, applies. However,

1 Inserted vide Notification No. G.S.R. 310(E) dated 28th March, 2018.

2 Substituted vide Notification No. G.S.R. 365(E) dated 30th March, 2016.

  1. if an entity has interests in unconsolidated structured entities and prepares separate financial statements as its only financial statements, it shall apply the requirements in paragraphs 24–31 when preparing those separate financial statements.
  2. an investment entity that prepares financial statements in which all of its subsidiaries are measured at fair value through profit or loss in accordance with paragraph 31 of Ind AS 110 shall present the disclosures relating to investment entities required by this Ind AS.
  1. an interest held by an entity that participates in, but does not have joint control of, a joint arrangement unless that interest results in significant influence over the arrangement or is an interest in a structured entity.
  2. an interest in another entity that is accounted for in accordance with Ind AS 109, Financial Instruments. However, an entity shall apply this Ind AS:
    1. when that interest is an interest in an associate or a joint venture that, in accordance with Ind AS 28, Investments in Associates and Joint Ventures, is measured at fair value through profit or loss; or
    2. when that interest is an interest in an unconsolidated structured entity.
Significant judgements and assumptions
  • An entity shall disclose information about significant judgements and assumptions it has made (and changes to those judgements and assumptions) in determining:
  • that it has control of another entity, ie an investee as described in paragraphs 5 and 6 of Ind AS 110, Consolidated Financial Statements;
  • that it has joint control of an arrangement or significant influence over another entity; and
  • the type of joint arrangement (ie joint operation or joint venture) when the arrangement has been structured through a separate vehicle.
  1. The significant judgements and assumptions disclosed in accordance with paragraph 7 include those made by the entity when changes in facts and circumstances are such that the conclusion about whether it has control, joint control or significant influence changes during the reporting period.
  2. To comply with paragraph 7, an entity shall disclose, for example, significant judgements and assumptions made in determining that:
    1. it does not control another entity even though it holds more than half of the voting rights of the other entity.
    2. it controls another entity even though it holds less than half of the voting rights of the other entity.
    3. it is an agent or a principal (see paragraphs B58–B72 of Ind AS 110).
    4. it does not have significant influence even though it holds 20 per cent or more of the voting rights of another entity.
    5. it has significant influence even though it holds less than 20 per cent of the voting rights of another entity.
Investment entity status
When a parent determines that it is an investment entity in accordance with paragraph 27 of Ind AS 110, the investment entity shall disclose information about significant judgements and assumptions it has made in determining that it is an investment entity. If the investment entity does not have one or more of the typical characteristics of an investment entity (see paragraph 28 of Ind AS 110), it shall disclose its reasons for concluding that it is nevertheless an investment entity.
9B When an entity becomes, or ceases to be, an investment entity, it shall disclose the change of investment entity status and the reasons for the change. In addition, an entity that becomes an   investment entity shall disclose the effect of the change of status on the financial statements for the period presented, including:
  1. the total fair value, as of the date of change of status, of the subsidiaries that cease to be consolidated;
  2. the total gain or loss, if any, calculated in accordance with paragraph B101 of Ind AS 110; and
  3. the line item(s) in profit or loss in which the gain or loss is recognised (if not presented separately).
Interests in subsidiaries
  • An entity shall disclose information that enables users of its consolidated financial statements
  • to understand:
  • the composition of the group; and
  • the interest that non-controlling interests have in the group’s activities and cash flows (paragraph 12); and
  • to evaluate:
  • the nature and extent of significant restrictions on its ability to access or use assets, and settle liabilities, of the group (paragraph 13);
  • the nature of, and changes in, the risks associated with its interests in consolidated structured entities (paragraphs 14–17);
  • the consequences of changes in its ownership interest in a subsidiary that do not result in a loss of control (paragraph 18); and
  • the consequences of losing control of a subsidiary during the reporting period (paragraph 19).
  1. When the financial statements of a subsidiary used in the preparation of consolidated financial statements are as of a date or for a period that is different from that of the consolidated financial
  statements (see paragraphs B92 and B93 of Ind AS 110), an entity shall disclose:
  1. the date of the end of the reporting period of the financial statements of that subsidiary; and
  2. the reason for using a different date or period.
The interest that non-controlling interests have in the group’s activities and cash flows
  1. An entity shall disclose for each of its subsidiaries that have non- controlling interests that are material to the reporting entity:
    1. the name of the subsidiary.
    2. the principal place of business (and country of incorporation if different from the principal place of business) of the subsidiary.
    3. the proportion of ownership interests held by non-controlling interests.
    4. the proportion of voting rights held by non-controlling interests, if different from the proportion of ownership interests held.
    5. the profit or loss allocated to non-controlling interests of the subsidiary during the reporting period.
    6. accumulated non-controlling interests of the subsidiary at the end of the reporting period.
    7. summarised financial information about the subsidiary (see paragraph B10).
The nature and extent of significant restrictions
  1. An entity shall disclose:
    1. significant restrictions (eg statutory, contractual and regulatory restrictions) on its ability to access or use the assets and settle the liabilities of the group, such as:
  1. those that restrict the ability of a parent or its subsidiaries to transfer cash or other assets to (or from) other entities within the group.
  2. guarantees or other requirements that may restrict dividends and other capital distributions being paid, or loans and advances being made or repaid, to (or from) other entities within the group.
  1. the nature and extent to which protective rights of non- controlling interests can significantly restrict the entity’s ability to access or use the assets and settle the liabilities of the group (such as when a parent is obliged to settle liabilities of a subsidiary before settling its own liabilities, or approval of non-controlling interests is required either to access the assets or to settle the liabilities of a subsidiary).
  2. the carrying amounts in the consolidated financial statements of the assets and liabilities to which those restrictions apply.
Nature of the risks associated with an entity’s interests in consolidated structured entities
  1. An entity shall disclose the terms of any contractual arrangements that could require the parent or its subsidiaries to provide financial support to a consolidated structured entity, including events or circumstances that could expose the reporting entity to a loss (eg liquidity arrangements or credit rating triggers associated with obligations to purchase assets of the structured entity or provide financial support).
  2. If during the reporting period a parent or any of its subsidiaries has, without having a contractual obligation to do so, provided financial or other support to a consolidated structured entity (eg purchasing assets of or instruments issued by the structured entity), the entity shall disclose:
    1. the type and amount of support provided, including situations in which the parent or its subsidiaries assisted the structured entity in obtaining financial support; and
    2. the reasons for providing the support.
  1. If during the reporting period a parent or any of its subsidiaries has, without having a contractual obligation to do so, provided financial or other support to a previously unconsolidated structured entity and that provision of support resulted in the entity controlling the structured entity, the entity shall disclose an explanation of the relevant factors in reaching that decision.
  2. An entity shall disclose any current intentions to provide financial or other support to a consolidated structured entity, including intentions to assist the structured entity in obtaining financial support.
Consequences of changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control
  1. An entity shall present a schedule that shows the effects on the equity attributable to owners of the parent of any changes in its ownership interest in a subsidiary that do not result in a loss of control.
Consequences of losing control of a subsidiary during the reporting period
  1. An entity shall disclose the gain or loss, if any, calculated in accordance with paragraph 25 of Ind AS 110, and:
    1. the portion of that gain or loss attributable to measuring any investment retained in the former subsidiary at its fair value at the date when control is lost; and
    2. the line item(s) in profit or loss in which the gain or loss is recognised (if not presented separately).
Interests in unconsolidated subsidiaries (investment entities)

 An investment entity that, in accordance with Ind AS 110, is required to apply the exception to consolidation and instead account for its investment in a subsidiary at fair value through profit or loss shall disclose that fact.

19B For each unconsolidated subsidiary, an investment entity shall disclose:

  1. the subsidiary’s name;
  2. the principal place of business (and country of incorporation if different from the principal place of business) of the subsidiary; and
  3. the proportion of ownership interest held by the investment entity and, if different, the proportion of voting rights held.

19C If an investment entity is the parent of another investment entity, the parent shall also provide the disclosures in 19B(a)–(c) for investments that are controlled by its investment entity subsidiary. The disclosure may be provided by including, in the financial statements of the parent, the financial statements of the subsidiary (or subsidiaries) that contain the above information.

19D   An investment entity shall disclose:

  1. the nature and extent of any significant restrictions (eg resulting from borrowing arrangements, regulatory requirements or contractual arrangements) on the ability of an unconsolidated subsidiary to transfer funds to the investment entity in the form of cash dividends or to repay loans or advances made to the unconsolidated subsidiary by the investment entity; and
  2. any current commitments or intentions to provide financial or other support to an unconsolidated subsidiary, including commitments or intentions to assist the subsidiary in obtaining financial support.

19E If, during the reporting period, an investment entity or any of its subsidiaries has, without having a contractual obligation to do so, provided financial or other support to an unconsolidated subsidiary (eg purchasing assets of, or instruments issued by, the subsidiary or assisting the subsidiary in obtaining financial support), the entity shall disclose:

  1. the type and amount of support provided to each unconsolidated subsidiary; and
  1. the reasons for providing the support.

19F An investment entity shall disclose the terms of any contractual arrangements that could require the entity or its unconsolidated subsidiaries to provide financial support to an unconsolidated, controlled, structured entity, including events or circumstances that could expose the reporting entity to a loss (eg liquidity arrangements or credit rating triggers associated with obligations to purchase assets of the structured entity or to provide financial support).

19G If during the reporting period an investment entity or any of its unconsolidated subsidiaries has, without having a contractual obligation to do so, provided financial or other support to an unconsolidated, structured entity that the investment entity did not control, and if that provision of support resulted in the investment entity controlling the structured entity, the investment entity shall disclose an explanation of the relevant factors in reaching the decision to provide that support.

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