The International Accounting Standards Board (IASB) has issued amendments to IFRS 1 First-time adoption of international financial reporting standards and IAS 27 Consolidated and separate financial statements.

The amendments are  in response to constituents' concerns that retrospective determination and application of the cost method, in accordance with IAS 27 on first-time adoption of International Financial Reporting Standards (IFRSs), cannot be achieved without undue cost and effort under some circumstances.

The amendments address the issue by:

• allowing first-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements
• removing the definition of the cost method from IAS 27 and replacing it with a requirement to present dividends as income in the separate financial statements of the investor

The Australian Accounting Standards Board (AASB) considered the amendments at its meeting on 25 - 26 June 2008, details of which can be found on the AASB website.

Further information

• read Cost of an investment in a subsidiary, joint controlled entity or associate on the IASB website (some documents are only available to eIFRS subscribers)
• read CPA Australia's Submission to the AASB and IASB
• visit the AASB website