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Deloitte comment letter on IASB ED/2014/4 "Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value"

Published on: Jan 16, 2015

Deloitte's IFRS Global Office has responded to the IASB's Exposure Draft ED/2014/4, Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value.

The IASB's proposed amendments would confirm that the unit of account for investments in subsidiaries, joint ventures and associates is the investment as a whole, but that the fair value measurement of quoted investments in subsidiaries, joint ventures and associates should be the product of the quoted price multiplied by the quantity of financial instruments held, without adjustments. The IASB also proposed to align the fair value measurement of a quoted CGU to the fair value measurement of a quoted investment. Lastly, the proposed amendments also included an addition to the Illustrative Examples for IFRS 13 to illustrate the application of paragraph 48 of that standard to a net risk exposure of Level 1 financial assets and financial liabilities.

In its comment letter, Deloitte's IFRS Global Office disagreed with the departure from the principle that fair value measurement should be consistent with the unit of account of the asset or liability to be measured. It also does not believe it is appropriate to require a departure from this principle solely due to the availability of a Level 1 input for individual assets within a larger unit of account. That is, the valuation technique and related inputs should be consistent with the unit of account prescribed by standard setters.

Deloitte's IFRS Global Office recommends that the IASB address the question of the unit of account for associates as part of its comprehensive project on the equity method of accounting, but in the meantime believes that a conclusion that the unit of account for investments in associates is the individual financial instrument held is supportable for the purposes of determining their fair value.

Download the full comment letter below.

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