IFRS 12 Disclosure of Interests in Other Entities is a pure disclosure Standard: it changes neither recognition nor measurement. It requires an entity to disclose information that enables users 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 (IFRS 12.1). It applies to any entity with an interest in subsidiaries, joint arrangements, associates or unconsolidated structured entities (IFRS 12.5), and it is the disclosure companion to IFRS 10, IFRS 11 and IAS 28.
Objective and structure
To meet the objective, an entity discloses two things (IFRS 12.2):
- Significant judgements and assumptions made in determining the nature of its interests, the type of joint arrangement, and, where relevant, that it meets the definition of an investment entity.
- Information about its interests in subsidiaries, in joint arrangements and associates, and in unconsolidated structured entities.
If these disclosures, together with those required by other Standards, do not meet the objective, the entity adds whatever is necessary (IFRS 12.3). It decides the level of detail, aggregating or disaggregating so that useful information is not lost in insignificant detail or in aggregates of dissimilar items (IFRS 12.4). It does, however, present information separately for subsidiaries, joint ventures, joint operations, associates and unconsolidated structured entities (IFRS 12.B4).
Scope: what is an "interest in another entity"?
An interest is contractual or non-contractual involvement that exposes an entity to variability of returns from the performance of the other entity, for example holding equity or debt instruments, or providing funding, liquidity support, credit enhancement or guarantees. An entity does not necessarily have an interest in another entity solely because of a typical customer-supplier relationship (IFRS 12, Appendix A).
Interests classified as held for sale or within discontinued operations are in scope, except for the summarised financial information about them (IFRS 12.5A, B17). The Standard does not apply to (IFRS 12.6):
- post-employment and other long-term employee benefit plans within IAS 19;
- separate financial statements; however, an entity whose separate statements are its only financial statements discloses its interests in unconsolidated structured entities there, and an investment entity that measures all its subsidiaries at fair value through profit or loss gives the investment entity disclosures;
- an interest held by a party that participates in a joint arrangement without joint control, unless it gives significant influence or is an interest in a structured entity; and
- an interest accounted for under IFRS 9, except an interest in an associate or joint venture measured at fair value through profit or loss, and an interest in an unconsolidated structured entity.
Significant judgements and assumptions
An entity discloses the significant judgements and assumptions, and changes to them, made in determining that it controls another entity, has joint control or significant influence, and the type of a joint arrangement structured through a separate vehicle (IFRS 12.7), including those made when changed facts alter the conclusion during the period (IFRS 12.8). Examples (IFRS 12.9):
- not controlling an entity despite holding more than half of its voting rights, or controlling it with less than half;
- being an agent or a principal; and
- not having significant influence despite holding 20% or more of the votes, or having it with less than 20%.
A parent that concludes it is an investment entity discloses the judgements and assumptions behind that conclusion (IFRS 12.9A), and any change in that status with the reasons; an entity that becomes an investment entity also discloses the effect of the change (IFRS 12.9B).
Subsidiaries and non-controlling interests
The aim is to help users understand the composition of the group and the share of non-controlling interests in its activities and cash flows, and to evaluate significant restrictions, the risks of consolidated structured entities, and the effects of ownership changes and loss of control (IFRS 12.10). The main requirements:
- Material non-controlling interests. For each subsidiary with material NCI: its name, principal place of business, the NCI's ownership share and voting share if different, the profit or loss allocated to NCI, accumulated NCI, and summarised financial information (IFRS 12.12), plus dividends paid to NCI (IFRS 12.B10). The summarised information is before intercompany eliminations (IFRS 12.B11).
- Significant restrictions, whether statutory, contractual or regulatory, on access to group assets or settling group liabilities, including protective rights of NCI, with the carrying amounts affected (IFRS 12.13).
- Different reporting dates. If a subsidiary's statements have a different date, disclose that date and the reason (IFRS 12.11).
- Ownership changes without loss of control. A schedule showing the effect on equity attributable to owners of the parent (IFRS 12.18).
- Loss of control. The gain or loss, the portion attributable to measuring the retained investment at fair value, and the line item in which it is recognised (IFRS 12.19).
- Consolidated structured entities. The terms of any arrangement that could require financial support (IFRS 12.14), any support given without a contractual obligation and why (IFRS 12.15), and current intentions to provide support (IFRS 12.17).
Investment entities
An investment entity that measures subsidiaries at fair value instead of consolidating them discloses that fact (IFRS 12.19A), the name, principal place of business and ownership interest of each unconsolidated subsidiary (IFRS 12.19B), and significant restrictions and support given or intended (IFRS 12.19D, 19E). It is exempt from the summarised financial information for joint ventures and associates (IFRS 12.21A).
Joint arrangements and associates
An entity discloses information that lets users evaluate the nature, extent and financial effects of its interests in joint arrangements and associates, and the risks of its interests in joint ventures and associates (IFRS 12.20):
- For each material joint arrangement or associate: name, nature of the relationship and whether the activities are strategic, principal place of business, and ownership share and voting share if different (IFRS 12.21).
- For each material joint venture or associate: whether it is measured using the equity method or at fair value, summarised financial information, and the fair value of the investment if a quoted price exists (IFRS 12.21). Dividends received are disclosed too, and the summarised information covers current and non-current assets and liabilities, revenue, profit or loss and comprehensive income (IFRS 12.B12). For a joint venture, add cash and cash equivalents, current and non-current financial liabilities (excluding trade and other payables and provisions), depreciation and amortisation, interest income and expense, and income tax (IFRS 12.B13).
- Immaterial ones: an aggregate carrying amount and an aggregate share of profit and comprehensive income, separately for joint ventures and associates (IFRS 12.B16).
- Restrictions on transferring funds to the entity, different reporting dates, and the unrecognised share of losses (IFRS 12.22).
- Commitments relating to joint ventures, separately from other commitments, and contingent liabilities relating to joint ventures and associates unless the possibility of loss is remote (IFRS 12.23).
Watch out: the summarised financial information is the joint venture's or associate's full amounts, not the entity's share, adjusted for equity-method adjustments such as fair value adjustments at acquisition, and accompanied by a reconciliation to the carrying amount of the interest (IFRS 12.B14).
Unconsolidated structured entities
A structured entity is designed so that voting or similar rights are not the dominant factor in deciding who controls it, for example when votes relate to administrative tasks only and the relevant activities are directed through contracts (IFRS 12.B21). Examples include securitisation vehicles, asset-backed financings and some investment funds (IFRS 12.B23). An entity discloses:
- qualitative and quantitative information about its interests, such as the nature, purpose, size and activities of the structured entity and how it is financed (IFRS 12.26);
- if it sponsored a structured entity in which it has no interest at the reporting date: how it determined which entities it sponsored, its income from them, and the carrying amount of assets transferred to them (IFRS 12.27);
- a summary, usually in a table, of the carrying amounts of related assets and liabilities and their line items, its maximum exposure to loss and how that was determined, and a comparison of the two (IFRS 12.29); and
- support given without a contractual obligation and why, and current intentions to provide support (IFRS 12.30–31).
Risk disclosures include exposure arising from involvement in earlier periods, such as sponsoring, even if the contractual involvement has ended by the reporting date (IFRS 12.25).
Example: reconciling a joint venture's summarised information
Illustrative figures: the entity holds 40% of a material joint venture accounted for using the equity method. The venture's net assets in its own statements, after equity-method adjustments, are 5,000,000, and the investment includes goodwill of 300,000 from the acquisition.
| Line item | Amount |
|---|---|
| Joint venture net assets (100%) | 5,000,000 |
| Entity's share (40%) | 2,000,000 |
| Goodwill | 300,000 |
| Carrying amount of the interest | 2,300,000 |
The 5,000,000 and its summarised line items are disclosed in full, not the 2,000,000, followed by this reconciliation to the carrying amount (IFRS 12.B14).
A practical disclosure checklist
| Interest | Key disclosures | Reference |
|---|---|---|
| All interests | Significant judgements and assumptions on control, joint control, significant influence and arrangement type | (IFRS 12.7) |
| Subsidiaries | Group composition, significant restrictions, support for consolidated structured entities | (IFRS 12.10) |
| Material NCI | Shares, profit allocated, accumulated NCI, dividends, summarised information | (IFRS 12.12) |
| Ownership changes | Schedule of effects on parent equity; gain or loss on loss of control | (IFRS 12.18–19) |
| Material joint arrangements and associates | Name, relationship, place, share, measurement basis, summarised information and reconciliation | (IFRS 12.21) |
| Immaterial joint ventures and associates | Aggregate carrying amount and aggregate share of results | (IFRS 12.B16) |
| Risks of joint ventures and associates | Restrictions, unrecognised losses, commitments, contingent liabilities | (IFRS 12.22–23) |
| Unconsolidated structured entities | Nature, purpose, financing, carrying amounts, maximum exposure to loss, support | (IFRS 12.26–31) |
| Investment entities | Use of the exception, details of each unconsolidated subsidiary, restrictions and support | (IFRS 12.19A–19G) |
What has changed in IFRS 12?
- Origin. Issued in May 2011, IFRS 12 replaced the disclosure requirements in IAS 27, IAS 28 and IAS 31; the Investment Entities amendments (October 2012) added disclosures for investment entities (IFRS Foundation: IFRS 12).
- Interests held for sale. Annual Improvements to IFRS Standards 2014–2016 Cycle (December 2016) clarified that IFRS 12's requirements apply to interests classified as held for sale or discontinued operations, effective for annual periods beginning on or after 1 January 2017 (IFRS Foundation: project page).
- Post-implementation Review. On 20 June 2022 the IASB concluded that IFRS 10, IFRS 11 and IFRS 12 are working as intended and rated none of the matters raised as high or medium priority (IFRS Foundation: PIR page).
- IFRS 18. It made consequential amendments to IFRS 12 that apply with it for annual periods beginning on or after 1 January 2027 (IFRS Foundation: changes in the 2026 edition).
- IFRS 19. Effective from 1 January 2027, it permits some subsidiaries without public accountability to apply IFRS Accounting Standards with reduced disclosures: they apply the other Standards' requirements except their disclosure requirements, and apply IFRS 19 instead (same source).
How it fits with other Standards
IFRS 10 defines control and consolidation, IFRS 11 classifies joint arrangements, and IAS 28 sets the equity method; IFRS 12 gathers their disclosures. Disclosures about an acquisition in the year it happens come from IFRS 3 Business Combinations. For writing notes in general, see Accounting policies and notes.
A practical tool
If you prepare consolidated statements, the Consolidated Financial Statements and Group Trial Balance Merging workbook organises the combine-and-eliminate steps in one file, producing the figures that the subsidiary and NCI disclosures build on.
Sources
- IFRS Foundation: IFRS 12 Disclosure of Interests in Other Entities. References in brackets are to paragraphs of the Standard and its appendices.
- IFRS Foundation: Changes in this edition (2026), covering IFRS 18 and IFRS 19.
- IFRS Foundation project pages: Clarification of the scope of IFRS 12 and Post-implementation Review of IFRS 10–12.
- IFRS Foundation: IAS 28 Investments in Associates and Joint Ventures.