IASB proposes amendments to clarify the unit of account and measurement of quoted investments in subsidiaries
September 25, 2014
The proposed amendments would clarify that the unit of account of investments in subsidiaries, joint ventures or associates is the investment as a whole.
However, if the investment is made up of financial instruments that are quoted in an active market (i.e. level 1 investments), the fair value measurement of that investment would be based on the quoted price without adjustments (i.e. P x Q). Similarly, the ED proposes that in determining the recoverable amount of a cash generating unit that corresponds to a quoted entity in an active market, the fair value less cost of disposal should be based on the quote price of the investment without adjustments (i.e. P x Q).
The ED also proposes to add an example to IFRS 13 to illustrate that when applying the portfolio exception in paragraph 48 of IFRS 13 to a net risk exposure of Level 1 financial assets and financial liabilities, the fair value measurement of the net risk exposure would be based on the net number of financial instruments, multiplied by the corresponding Level 1 price.
Comments on the proposals are due by 16 January 2015.