BCZ160 IAS 27 (as revised in 2003) stated that when losses attributed to the minority (non‑controlling) interests exceed the minority's interests in the subsidiary's equity, the excess, and any further losses applicable to the minority, is allocated against the majority interest except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

BCZ161 In 2005 the Board decided that this treatment was inconsistent with its conclusion that non‑controlling interests are part of the equity of the group, and proposed that an entity should attribute total comprehensive income applicable to non‑controlling interests to those interests, even if this results in the non‑controlling interests having a deficit balance.

BCZ162 If the parent enters into an arrangement that places it under an obligation to the subsidiary or to the non‑controlling interests, the Board believes that the entity should account for that arrangement separately and the arrangement should not affect how the entity attributes comprehensive income to the controlling and non‑controlling interests.

BCZ163 Some respondents to the 2005 exposure draft agreed with the proposal, noting that non‑controlling interests share proportionately in the risks and rewards of the subsidiary and that the proposal was consistent with the classification of non‑controlling interests as equity.