IFRS in Focus — IASB issues exposure draft on investment entities
On 25 August 2011, the International Accounting Standards Board (IASB) published ED/2011/4 Investment Entities. The ED would require an investment entity to recognise entities it controls at fair value through profit or loss in accordance with IFRS 9 Financial Instruments (or IAS 39 Financial Instruments: Recognition and Measurement if IFRS 9 is not yet being applied). Therefore, investment entities would no longer apply consolidation accounting guidance to their controlled investments. However, a parent of an investment entity would consolidate all entities it controls (including those held through an investment entity) unless the parent is also an investment entity. The parent of an investment entity would not be permitted to retain the fair value accounting applied by the investment entity.