EFRAG Issues Feedback Statement on the IASB ED Equity Method of Accounting

EFRAG has published its Feedback Statement on the IASB Exposure Draft IASB/ED/2024/7 Equity Method of Accounting, IAS 28 Investments in Associates and Joint Ventures (revised 202x). The Feedback Statement summarises constituents’ feedback including responses to EFRAG’s draft comment letter (DCL). It explains how the feedback received was considered by EFRAG in reaching the positions reflected in its final comment letter, published on 20 January 2025.

Based on the feedback received, in its final comment letter, EFRAG confirmed its DCL positions agreeing with several of the ED’s proposals including those for the measurement of cost of an associate or joint venture, and those for an investor's transactions with its investees. EFRAG also confirmed its DCL positions airing concerns with several ED proposals including those for step acquisitions of ownership interests in an investee while retaining significant influence and those for non-exchange changes in ownership interests. With refinements, EFRAG retained its DCL recommendations calling for further simplification of the ED’s proposals for step acquisitions and the development of a holistic, principle-based solution for non-exchange changes in ownership interests.

Based on the feedback, unlike its position in the DCL, EFRAG disagreed with the ED proposals for transactions for equity-accounted subsidiaries in separate financial statements. EFRAG also suggested that the forthcoming IASB agenda consultation should seek constituents’ views on whether a fundamental review of the equity method is needed.