IASB proposes amendments to IFRS 10 and IAS 28 related to the implementation of the investment entities exemption
June 24, 2014
This edition outlines the proposed amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures set out in the recent exposure draft (the “ED”) which was issued in June 2014 for public comment.
The ED proposes that:
- the exemption from preparing consolidated financial statements is available to a parent entity that is a subsidiary of an investment entity, even though the investment entity measures its subsidiaries at fair value in accordance with IFRS 10;
- the requirement for an investment entity to consolidate a subsidiary applies only to subsidiaries that are not themselves investment entities and whose main purpose is to provide services related to the parent’s investment activities;
- in applying the equity method to an associate that is an investment entity, an investor should retain the fair value measurements that the associate used for its subsidiaries. However, for a joint venture that is an investment entity, a joint venturer is required to adjust the fair value measurements the joint venture used for its subsidiaries and instead apply the joint venturer’s accounting policies, including consolidation.
The IASB did not propose an effective date for the proposed amendments. However, early application is proposed to be permitted. Comments on the proposals are due by 15 September 2014.