What is the key difference between IFRS and UK GAAP regarding non-controlling interest valuation?

The key distinction in the valuation of non-controlling interests under IFRS and UK GAAP lies in the flexibility provided by IFRS. Under IFRS, entities can choose between two methods for measuring non-controlling interests: the proportionate share of the acquiree's identifiable net assets or the fair value on the acquisition date. This allows for a more tailored approach to accounting for non-controlling interests based on the specific circumstances of the acquisition and the accounting policies of the reporting entity.

In contrast, UK GAAP has a more restrictive approach to the measurement of non-controlling interests, typically only allowing the fair value method. This lack of options makes IFRS the more versatile framework in this regard, thereby enabling reporting entities to select the most suitable approach for their specific financial reporting needs.

The ability to apply either method under IFRS can lead to different financial outcomes and provides entities with greater flexibility in reflecting their economic reality in their financial statements. This is central to the understanding of how non-controlling interests can be presented, and why IFRS accommodates multiple valuation approaches.