Commission Regulation (EC) No 69/2009 of 23 January 2009 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards amendments to International Financial Reporting Standard (IFRS) 1 and International Accounting Standard (IAS) 27 (Text with EEA relevance)
Date: 2009-01-23
Institutions: European Commission
Subjects: accounting, capital market, financial transaction, information, international standard, management accounting, standardised accounting system

L 21/10

EN

Official Journal of the European Union

24.1.2009

COMMISSION REGULATION (EC) No 69/2009

of 23 January 2009

amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in
accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council
as regards amendments to International Financial Reporting Standard (IFRS) 1 and International
Accounting Standard (IAS) 27

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

obtains control of the original parent by issuing equity
instruments in exchange for existing equity instruments
of the original parent.

Having regard to the Treaty
Community,

establishing the European

(3)

Having regard to Regulation (EC) No 1606/2002 of
the
European Parliament and of the Council of 19 July 2002 on
the application of international accounting standards (1), and in
particular Article 3(1) thereof,

Whereas:

By Commission Regulation (EC) No 1126/2008 (2)
certain international standards and interpretations that
were extant at 15 October 2008 were adopted.

(4)

(5)

(1)

(2)

The consultation with the Technical Expert Group (TEG)
of
the European Financial Reporting Advisory Group
(EFRAG) confirms that the amendments to IFRS 1 and
IAS 27 meet
the technical criteria for adoption set
out in Article 3(2) of Regulation (EC) No 1606/2002.
In accordance with Commission Decision 2006/505/EC
of 14 July 2006 setting up a Standards Advice Review
Group to advise the Commission on the objectivity and
neutrality of the European Financial Reporting Advisory
Group's (EFRAG’s) opinions (3),
the Standards Advice
Review Group considered EFRAG's opinion on endor­
is well-
sement and advised the Commission that
balanced and objective.

it

Regulation (EC) No 1126/2008 should therefore be
amended accordingly.

The measures provided for in this Regulation are in
accordance with the opinion of the Accounting Regu­
latory Committee,

the

following:

an Investment

‘amendments
are

In May 2008, the International Accounting Standards
Board (IASB) published the amendments to IFRS 1
First-time Adoption of International Financial Reporting
and IAS 27 Consolidated and Separate
Standards
‘Cost of
Financial Statements
in a
Subsidiary, Jointly Controlled Entity or Associate’, here­
to IFRS 1 and IAS 27’. The
inafter
amendments
first-time
allow a
adopter in its separate financial statements to use as
the deemed cost of an investment
in a subsidiary,
the fair
jointly controlled entity or associate either
value at the entity's date of transition to IFRSs or the
previous GAAP carrying amount of the investment at
that date; delete from IAS 27 the definition of the ‘cost
method’, with the result that an investor is required to
recognise as income in its separate financial statements
all dividends received from a subsidiary, jointly controlled
entity or associate, even if the dividend is paid out of
pre-acquisition reserves; clarify how to determine the cost
of an investment under IAS 27 when a parent company
reorganises the operating structure of its group by estab­
lishing a new entity as its parent and this new parent

HAS ADOPTED THIS REGULATION:

Article 1

The Annex to Regulation (EC) No 1126/2008 is amended as
follows:

1. International Reporting Financial Standard (IFRS) 1 First-time
is

International Financial Reporting Standards

Adoption of
amended as set out in the Annex to this Regulation;

2. International Accounting Standard (IAS 27) Consolidated and
Separate Financial Statements is amended as set out in the
Annex to this Regulation;

(1) OJ L 243, 11.9.2002, p. 1.
(2) OJ L 320, 29.11.2008, p. 1.

(3) OJ L 199, 21.7.2006, p. 33.

24.1.2009

EN

Official Journal of the European Union

L 21/11

3. IAS 18, IAS 21 and IAS 36 are amended in accordance with
the amendments to IAS 27 as set out in the Annex to this
Regulation.

from the commencement date of its first financial year starting
after 31 December 2008.

Article 3

Article 2

Each company shall apply the amendments to IFRS 1 and IAS
27, as set out in the Annex to this Regulation, at the latest, as

This Regulation shall enter into force on the third day following
that of
the European
Union.

its publication in the Official

Journal of

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 23 January 2009.

For the Commission

Charlie McCREEVY
Member of the Commission

L 21/12

EN

Official Journal of the European Union

24.1.2009

ANNEX

INTERNATIONAL ACCOUNTING STANDARDS

IFRS 1 and IAS 27

Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS
27 Consolidated and Separate Financial Statements — Cost of an Investment in a Subsidiary,
Jointly Controlled Entity or Associate

Reproduction allowed within the European Economic Area. All existing rights reserved outside the EEA, with
the exception of the right to reproduce for the purposes of personal use or other fair dealing. Further infor­
mation can be obtained from the IASB at www.iasb.org

24.1.2009

EN

Official Journal of the European Union

L 21/13

AMENDMENTS TO IFRS 1 FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS AND
IAS 27 CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

COST OF AN INVESTMENT IN A SUBSIDIARY, JOINTLY CONTROLLED ENTITY OR ASSOCIATE

Amendments to IFRS 1

First-time Adoption of International Financial Reporting Standards

After paragraph 13(e), paragraph 13(ea) is added. After paragraph 23, a heading and paragraphs 23A and 23B are added.
Paragraphs 25A and 34C are amended. After paragraph 44, a heading and paragraph 44A are added. After paragraph 47J,
paragraph 47K is added.

RECOGNITION AND MEASUREMENT

Exemptions from other IFRSs

13

An entity may elect to use one or more of the following exemptions:

(a) …

(ea) investments in subsidiaries, jointly controlled entities and associates (paragraphs 23A and 23B);

(f) …

Investments in subsidiaries, jointly controlled entities and associates

23A When an entity prepares separate financial statements, IAS 27 Consolidated and Separate Financial Statements requires

it to account for its investments in subsidiaries, jointly controlled entities and associates either:

(a) at cost or

(b) in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

23B

If a first-time adopter measures such an investment at cost in accordance with paragraph 23A(a), it shall measure
that investment at one of the following amounts in its separate opening IFRS statement of financial position:

(a) cost determined in accordance with IAS 27 or

(b) deemed cost. The deemed cost of such an investment shall be its:

(i) fair value (determined in accordance with IAS 39) at the entity’s date of transition to IFRSs in its separate

financial statements or

(ii) previous GAAP carrying amount at that date.

A first-time adopter may choose either (i) or (ii) above to measure its investment in each subsidiary, jointly
controlled entity or associate that it elects to measure using a deemed cost.

Designation of previously recognised financial instruments

25A IAS 39 permits…

Exceptions to retrospective application of other IFRSs

Non-controlling interests

34C A first-time adopter shall apply the following requirements of IAS 27 (as amended in 2008) …

PRESENTATION AND DISCLOSURE

Use of deemed cost for investments in subsidiaries, jointly controlled entities and associates

44A Similarly, if an entity uses a deemed cost in its opening IFRS statement of financial position for an investment in a
subsidiary, jointly controlled entity or associate in its separate financial statements (see paragraph 23B), the entity’s
first IFRS separate financial statements shall disclose:

(a) the aggregate deemed cost of those investments for which deemed cost is their previous GAAP carrying

amount;

L 21/14

EN

Official Journal of the European Union

24.1.2009

(b) the aggregate deemed cost of those investments for which deemed cost is fair value; and

(c) the aggregate adjustment to the carrying amounts reported under previous GAAP.

EFFECTIVE DATE

47K Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (Amendments to IFRS 1 and IAS 27), issued
in May 2008, added paragraphs 13(ea), 23A, 23B and 44A. An entity shall apply those paragraphs for annual
periods beginning on or after 1 January 2009. Earlier application is permitted. If an entity applies the paragraphs
for an earlier period, it shall disclose that fact.

Amendments to IAS 27

Consolidated and Separate Financial Statements (as amended by Improvements to IFRSs in May 2008)
In paragraph 4, the reference to the ‘cost method’ is deleted. After paragraph 38, paragraphs 38A-38C are added. After paragraph
45A, paragraphs 45B and 45C are added.

DEFINITIONS
[The reference to the ‘cost method’ is deleted.]

ACCOUNTING FOR INVESTMENTS IN SUBSIDIARIES,
SEPARATE FINANCIAL STATEMENTS

JOINTLY CONTROLLED ENTITIES AND ASSOCIATES IN

38A An entity shall recognise a dividend from a subsidiary, jointly controlled entity or associate in profit or loss in its

separate financial statements when its right to receive the dividend is established.

38B When a parent reorganises the structure of its group by establishing a new entity as its parent in a manner that

satisfies the following criteria:

(a) the new parent obtains control of the original parent by issuing equity instruments in exchange for existing

equity instruments of the original parent;

(b) the assets and liabilities of the new group and the original group are the same immediately before and after the

reorganisation; and

(c) the owners of the original parent before the reorganisation have the same absolute and relative interests in the

net assets of the original group and the new group immediately before and after the reorganisation

and the new parent accounts for its investment in the original parent in accordance with paragraph 38(a) in its
separate financial statements, the new parent shall measure cost at the carrying amount of its share of the equity
items shown in the separate financial statements of the original parent at the date of the reorganisation.

38C Similarly, an entity that is not a parent might establish a new entity as its parent in a manner that satisfies the
criteria in paragraph 38B. The requirements in paragraph 38B apply equally to such reorganisations. In such cases,
references to ‘original parent’ and ‘original group’ are to the ‘original entity’.

EFFECTIVE DATE AND TRANSITION

45B

Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (Amendments to IFRS 1 and IAS 27), issued
in May 2008, deleted the definition of the cost method from paragraph 4 and added paragraph 38A. An entity
shall apply those amendments prospectively for annual periods beginning on or after 1 January 2009. Earlier
application is permitted. If an entity applies the changes for an earlier period, it shall disclose that fact and apply
the related amendments to IAS 18, IAS 21 and IAS 36 at the same time.

45C Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (Amendments to IFRS 1 and IAS 27), issued
in May 2008, added paragraphs 38B and 38C. An entity shall apply those paragraphs prospectively to reorga­
nisations occurring in annual periods beginning on or after 1 January 2009. Earlier application is permitted. In
addition, an entity may elect to apply paragraphs 38B and 38C retrospectively to past reorganisations within the
scope of those paragraphs. However, if an entity restates any reorganisation to comply with paragraph 38B or
38C, it shall restate all later reorganisations within the scope of those paragraphs. If an entity applies paragraph
38B or 38C for an earlier period, it shall disclose that fact.

24.1.2009

EN

Official Journal of the European Union

L 21/15

Appendix

Amendments to other IFRSs

Entities shall apply the following amendments to IAS 18, IAS 21 and IAS 36 when they apply the related amendments to
paragraphs 4 and 38A of IAS 27.

IAS 18 Revenue

A1

IAS 18 is amended as described below.

Paragraph 32 is amended and paragraph 38 is added as follows.

32 When unpaid interest has accrued before the acquisition of an interest-bearing investment, the subsequent
receipt of interest is allocated between pre-acquisition and post-acquisition periods; only the post-acquisition
portion is recognised as revenue.

38 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (Amendments to IFRS 1 First-time
Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements),
issued in May 2008, amended paragraph 32. An entity shall apply that amendment prospectively for annual
periods beginning on or after 1 January 2009. Earlier application is permitted. If an entity applies the related
amendments in paragraphs 4 and 38A of IAS 27 for an earlier period, it shall apply the amendment in
paragraph 32 at the same time.

IAS 21 The Effects of Changes in Foreign Exchange Rates

A2

In IAS 21, paragraph 49 is amended as follows:

49 An entity may dispose or partially dispose of its interest in a foreign operation through sale, liquidation,
repayment of share capital or abandonment of all, or part of, that entity. A write-down of the carrying
amount of a foreign operation, either because of its own losses or because of an impairment recognised by
the investor, does not constitute a partial disposal. Accordingly, no part of the foreign exchange gain or loss
recognised in other comprehensive income is reclassified to profit or loss at the time of a write-down.

IAS 36 Impairment of Assets

A3

In IAS 36, after paragraph 12(g), a heading and subparagraph (h) are added. After paragraph 140C, paragraph
140D is added.

12 In assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a

minimum, the following indications:

…

Dividend from a subsidiary, jointly controlled entity or associate

(h) for an investment in a subsidiary, jointly controlled entity or associate, the investor recognises a dividend

from the investment and evidence is available that:

(i) the carrying amount of the investment in the separate financial statements exceeds the carrying
amounts in the consolidated financial statements of the investee’s net assets, including associated
goodwill; or

(ii) the dividend exceeds the total comprehensive income of the subsidiary, jointly controlled entity or

associate in the period the dividend is declared.

140D Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (Amendments to IFRS 1 First-time Adoption
of International Financial Reporting Standards and IAS 27), issued in May 2008, added paragraph 12(h). An entity
shall apply that amendment prospectively for annual periods beginning on or after 1 January 2009. Earlier
application is permitted. If an entity applies the related amendments in paragraphs 4 and 38A of IAS 27 for an
earlier period, it shall apply the amendment in paragraph 12(h) at the same time.