The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to amend International Financial Reporting Standard (IFRS) 10 Consolidated Financial Statements and International Accounting Standard (IAS) 28 Investments in Associates and Joint Ventures relating to three issues about the application of the requirement for investment entities to measure subsidiaries at fair value.
The objective of this project is to clarify 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; and
- 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 non-investment entity joint venturer that applies the equity method cannot retain the fair value measurement applied by that investment entity joint venture to its interests in subsidiaries.
The AcSB participates in the activities of the project to ensure that Canadian entities’ financial reporting needs are considered by the IASB. The amendments will be incorporated into Canadian GAAP in accordance with the AcSB’s strategy of adopting IFRSs for publicly accountable enterprises.