The International Accounting Standards Board’s IFRS Interpretations Committee has issued this Draft IFRIC Interpretation on Put Options Written on Non-controlling Interests on 31 May 2012. A put option is a contract that gives the holder of the option the right to sell a specified asset to the writer of the option at a specified price within a specified time.

If a parent entity is obliged to purchase the shares of its subsidiary for cash or for another financial asset, the parent must recognise a financial liability in its consolidated financial statements for the present value of the option exercise price. The Interpretations Committee was asked to consider how to subsequently measure that financial liability, because diversity exists in practice.

In response to that request, the Interpretations Committee has proposed that all changes in the measurement of that financial liability should be recognised in profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.

Invitation to comment

ASB invites comments on the said Draft from the public. The downloadable version of the Document is available at: http://www.ifrs.org/Open-to-Comment/draft-interpretation-put-options/Documents/DraftInterpretationPutOptions_Website.pdf

Comments would be most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording.

Comments should be submitted in writing to the Secretary, Accounting Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi-110002, so as to be received not later than August 30, 2012. Comments can also be sent by e-mail at asb@icai.org or edcommentsasb@icai.org.