The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) Amendments to the Fair Value Option (IAS 28) project on narrow-scope amendments to broaden the scope of investments in an associate or joint venture that can be measured using the fair value option.
The IASB decided to issue these amendments because interested and affected parties, particularly those in the insurance industry, have reported diversity in practice. Specifically, these parties reported diversity in how they interpret the scope of investments to which the fair value option in paragraphs 18-19 of IAS 28 Investments in Associates and Joint Ventures applies.
The IASB concluded that the concerns raised could be addressed by clarifying the meaning of a 'similar entity’ using IFRS 18 Presentation and Disclosure in Financial Statements requirements that refer to specified main business activities. Therefore, the amendments clarify that, for the purposes of applying paragraphs 18–19 of IAS 28, similar entities include entities that have a main business activity of investing in particular types of assets, as set out in paragraph 49(a) of IFRS 18.