Sale of a Subsidiary to a Customer

The IFRS Interpretations Committee (Committee) received a request about the accounting for a transaction in which an entity, as part of its ordinary activities, enters into a contract with a customer to sell real estate by selling its equity interest in a subsidiary. The entity established the subsidiary some time before it enters into the contract with the customer; the subsidiary has one asset—real estate inventory—and a related tax asset or liability. The entity has applied IFRS 10 in consolidating the subsidiary before it loses control of the subsidiary as a result of the transaction with the customer.

Following the Committee’s consideration of the request, the IASB considered whether to add a narrow-scope project to its work plan that would address whether an entity would account for disposals of subsidiaries with particular characteristics applying IFRS 15, instead of IFRS 10.