"IAS 27: Separate Financial Statements (2011)"

IAS 27: Separate Financial Statements (2011)

International Accounting Standard (IAS) 27 (2011), "Separate Financial Statements," addresses the accounting and disclosure requirements for separate financial statements. This standard is crucial for entities that prepare separate financial statements in addition to consolidated financial statements. Separate financial statements are those presented by a parent, an investor in an associate or a joint venture, where the investments are accounted for at cost or in accordance with IFRS 9 Financial Instruments.

Key Provisions of IAS 27 (2011):

1. Objective: The objective of IAS 27 is to prescribe the accounting and disclosure requirements for investments in subsidiaries, joint ventures, and associates when an entity prepares separate financial statements.

2. Scope: The standard applies to the preparation of separate financial statements by an entity that also prepares consolidated financial statements. It does not address the issues of consolidated financial statements, which are covered under IFRS 10 Consolidated Financial Statements.

3. Separate Financial Statements Defined: Separate financial statements are those presented by a parent or an investor in an associate or joint venture in which the investments are accounted for on the basis of direct ownership rather than on the basis of consolidated or equity accounting.

4. Accounting for Investments: In separate financial statements, investments in subsidiaries, associates, and joint ventures can be accounted for either at cost, in accordance with IFRS 9 (at fair value), or using the equity method as prescribed in IAS 28 Investments in Associates and Joint Ventures.

5. Disclosure: The standard requires entities to disclose the reasons why the separate financial statements are prepared if not required by law. The method of accounting for the investments listed in the separate financial statements also needs to be disclosed.

6. Application of Accounting Policies: The accounting policies applied in the separate financial statements should be consistent with those applied in the consolidated financial statements, except for accounting for investments as specified in IAS 27.

7. Dividends and Other Distributions: Dividends and other distributions received from subsidiaries, associates, or joint ventures are recognized in the separate financial statements of the investor.