iGAAP Alert: September 2011
IASB issues exposure draft on investment entities
Under the proposals investments entities will not consolidate entities they control in accordance with IFRS 10. Instead they will be required (vs. have an option) to recognise their interests in those entities at fair value through profit or loss in accordance with IAS 39 (or IFRS 9).
The same requirement, if adopted, will replace the existing option in current IAS 28 and IAS 31 that permits to either apply their recognition requirements or the requirements of IAS 39 to the investment entities’ interests in associates and joint ventures.
A strict criteria would have to be met for an entity to be considered an investment entity, as explained further in the Alert.
A parent of an investment entity would consolidate all entities it controls, including those controlled through an investment entity, unless the parent itself is an investment entity.