On 12 December 2013, the International Accounting Standards Board issued Annual Improvements to IFRSs 2011–2013 Cycle. The amendment has an effective date of 1 July 2014.
About
The objective of this amendment was to clarify that paragraph 2(a) of IFRS 3 Business Combinations:
- excludes the formation of all types of joint arrangements as defined in IFRS 11 Joint Arrangements from the scope of IFRS 3; and
- the scope exception only applies to the financial statements of the joint venture or the joint operation itself.
The IASB concluded that paragraph 2(a) of IFRS 3 should be amended to address all types of joint arrangements and to remove uncertainty about the financial statements to which it applies. Consequently, the IASB proposes to amend paragraph 2(a) of IFRS 3 to:
- exclude the formation of all types of joint arrangements from the scope of IFRS 3 by replacing ‘joint venture’ with ‘joint arrangement’; and
- clarify that it only excludes the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself from the scope of IFRS 3.
This proposed amendment was included as part of the Annual Improvements Cycle 2011-2013.
