Scope of IFRIC D23

IFRIC D23 addresses the accounting by an entity that makes a non-cash asset distribution.

IFRIC D23 would apply to all types of distributions of non-cash assets with one exception. IFRIC D23 would not apply to a distribution of a non-cash asset to an entity within the same consolidated group that contains a parent and all its subsidiaries.

In addition, IFRIC D23 does not address when an entity should recognise a liability for a distribution. The applicable IFRSs and the Framework provide guidance on when an entity should recognise such a liability.

Moreover, when an entity distributes some of its ownership interest in a subsidiary to its owners and will lose control as a result of the distribution, IFRIC D23 does not address how an entity should measure the ownership interest retained by the entity. Instead, IAS 27 Consolidated and Separate Financial Statements (revised in January 2008) addresses this issue. 

IFRIC D23 does not require the assets to be distributed to be remeasured to their fair values

Instead, the Invitation to Comment of the draft Interpretation asks respondents whether they agree that the measurement, classification and presentation requirements applicable to non-current assets classified as held for sale and discontinued operations, as set out in IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, should also be applied to non-current assets (or disposal groups) held for distribution to owners.

However, a question arises as to when the requirements in IFRS 5 should be applied (ie when an entity is committed to make a distribution or when it has an obligation to distribute the assets). IFRS 5 requires an entity to classify a non-current asset as held for sale when the sale is highly probable and the entity is committed to a plan to sell.

IFRIC D23 does not include any proposed amendment to IFRS 5. Instead, the Board and the IFRIC would like to receive public comment on this issue before proposing an amendment.