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Comments on Exposure Draft on Investment Entities: Applying the Consolidated Exception (Proposed Amendments to IFRS 10 and IAS 28)
September, 15th 2014
           UTE OF CHART
 THE INSTITU                A    NTANTS
                      TERED ACCOUN           DIA
                                      S OF IND

                  ments of the Institute of
               Comm                                 d Accountan
                                          f Chartered         nts of India on

                  o Investme
   Exposure Draft on                               he Consolida
                           ent Entities: Applying th                     ion (Propose
                                                              ated Excepti          ed
                                mendments to
                               am                    a IAS 28)
                                           o IFRS 10 and

       n 1--Exemp
Question                   p
                ption from preparing            d financial statements

The IASB              t amend IFR
          B proposes to           RS 10 to con            he exemption
                                              nfirm that th                     aring consolidated
                                                                     n from prepa
financial statements set out in paragraph    (a) of IFRS 10 continue
                                            4(                                  ailable to a parent
                                                                     es to be ava             p
         at is a subsidiary of an investment entity, even when the in
entity tha                                                           nvestment entity measur  res its
subsidiar             v
         ries at fair value in accordance witth paragraph            S 10. Do yo
                                                          h 31 of IFRS          ou agree wi  ith the
proposed d amendment? Why or why w not?


We agree with the proposed   ammendment in n IFRS 10 as the objec ct of paragr           ill be
                                                                              raph 4(a) wi
       d from the pe
enhanced                       f intermedia
                   erspective of                                  ent entity.
                                          ate parent of an investme

 Questio          bsidiary that provides
        on 2--A sub                                hat relate to
                                       s services th                     nt's investm
                                                               o the paren          ment

 The IASSB proposes             I
                     s to amend IFRS    10 to clarify
                                               c            imited situat
                                                       the li                        ch paragraph
                                                                         tions in whic             h 32
 applies. The IASB proposes th   hat the requ  uirement for r an investm             t consolida
                                                                        ment entity to            ate a
        ary, instead of
 subsidia            o measuring g it at fair va
                                               alue, applies             se subsidiari
                                                            s only to thos                        a an

                                                                                  ies that act as
        on of the op
 extensio                         t investme
                    perations of the                        arent, and do
                                                ent entity pa             o not themselves qualif fy as
       ment entities. The main purpose
 investm                        p          of suuch a subsiddiary is to prrovide support services that
        t the inve
 relate to           estment ent tity's invest  tment activvities (which  h may inc clude provid   ding
       ment-related services to third parties). Do you agree with the propose
 investm                                                                              ed amendment?
 Why or why not?


    We agree to the proposed am              H
                                mendment. However,       he use of the word `and' in paragrap
                                                        th                                     ph 32
    as given below could create e more than one interpre                          s
                                                         etation such that if the subsidiary is non-
       estment entit
    inve            ty and is nott an extensio           perations of the investm
                                              on of the op                                    p
                                                                                 ment entity parent
       n it will have
    then                        ured at fair value.
                    e to be measu            v
           UTE OF CHART
 THE INSTITU                A    NTANTS
                      TERED ACCOUN           DIA
                                      S OF IND

        "32 Notwithstanding the requirement                  aph 31, if an
                                                    in paragra            a investme               h a
                                                                                       ent entity has
        subssidiary that provides is not itself ann investmennt entity andd whose ma   ain purpose is to
        prov            s that relate to the inves
            vide services                        stment entityy's investme             s (see paragr
                                                                          ent activities           raphs
        B85C­B85E), it               olidate that subsidiary in
                         t shall conso                       i accordanc  ce with para agraphs 19­226 of
        this IFRS and appply the requuirements of             he acquisitio
                                                 f IFRS 3 to th           on of any suc            y."
                                                                                       ch subsidiary

It is sugg            t IASB may
          gested that the       m amend th    he above pa              r
                                                          aragraph to require                  idiary
                                                                               that if the subsi
          n an investm
itself is not                                ment entity pa
                      ment entity, the investm                         onsolidate th
                                                          arent shall co                       ry.
                                                                                   hat subsidiar

       on 3--Appli              he equity method
                    ication of th         m                               y investor to
                                                 by a non-investment entity           o an
       ment entity investee
 investm           i

       SB proposes
 The IAS                     AS 28 to:
                 s to amend IA

            require a no
        (a) r                     nt entity inv
                       on-investmen                                   a
                                              vestor to retain, when applying  the equity meth  hod,
            t fair valu          ment applied by an inves
                       ue measurem                                    y associate to
                                                          stment entity                         ts in
                                                                                   o its interest
            s           ; and

            clarify that a non-invest
        (b) c                                  y investor th
                                    tment entity                        t venturer in
                                                           hat is a joint           n a joint vennture
            t           nvestment en
                 is an in           ntity cannot, when appllying the equity method  d, retain the fair
            v      measuurement appplied by the investment t entity joint           o its interest
                                                                         t venture to            ts in

                   t proposed
 Do you agree with the               nts? Why or why
                            d amendmen           w not?


       e with the pr
We agree                     endment. We
                   roposed ame                    ver to menti
                                       e wish howev                       wing:
                                                             ion the follow

   I.      The principle of consiste
           T                          ent measureement for co ontrol and jo
                                                                          oint control does
                                                                                        d           em to
                                                                                              not see
           have  been ap pplied in caase of acqui             dditional inte
                                                  isition of ad            erests in joint operationn that
           c                         w
                        a business which     requi
                                                 ires goodwil  ll to be reccognised on n each addit tional
           acquition wh              he case when
                        hich is not th           n an entity has
                                                              h control ov ver a subsiddiary and acqquires
           a            nterests. Hen
                       in             nce, if the objective ofo the above  e amendme   ent of requ  uiring
           unwinding     he fair valu
                        th           ue measurem ment used by b a joint venture is to  o have consi  istent
           m             t principles between co ontrol and jooint control, such an obj            uld be
                                                                                        jective shou
           f         uni             a the IFRSs
                        iversally in all         s.
          UTE OF CHART
THE INSTITU                A    NTANTS
                     TERED ACCOUN           DIA
                                     S OF IND

II.   The proposed
      T            d amendmen                                         f an entity in unwindin
                                nt considers the practical difficulty for                     ng the
      f value measurement used by an investment entity assoc                      y be noted th
                                                                      ciate. It may           hat as
      p IAS 28, a joint vent
      per                                    a
                                ture is also accounted   n equity me
                                                        on            ethod. Thus, similar pracctical
      difficulties w be faced
                   will        d by a ventur rer in unwinding the fairr value meas surement useed by
      t joint vent  ture. Therefo
                               fore, IASB may
                                            m consider  r to have a un            ciple of prov
                                                                       niform princ           viding
      relief       u
             from unwinding    of
                               o fair value  e measureme ent to invest tments that are accounted as
      p equity method,
      per         m                                     v
                           such as associates and joint ventures.
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