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
consolidated
The IASB t amend IFR
B proposes to RS 10 to con he exemption
nfirm that th aring consolidated
n from prepa
p
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?
e:
Response
p
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
es
activitie
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?
e:
Response
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
r
"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
Questio
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,
the
t fair valu ment applied by an inves
ue measurem y associate to
stment entity ts in
o its interest
s ; and
subsidiaries;
clarify that a non-invest
(b) c y investor th
tment entity t venturer in
hat is a joint n a joint vennture
that
t nvestment en
is an in ntity cannot, when appllying the equity method d, retain the fair
value
v measuurement appplied by the investment t entity joint o its interest
t venture to ts in
s
subsidiaries..
t proposed
Do you agree with the nts? Why or why
d amendmen w not?
e:
Response
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
h
have been ap pplied in caase of acqui dditional inte
isition of ad erests in joint operationn that
constitutes
c w
a business which requi
ires goodwil ll to be reccognised on n each addit tional
a
acquition wh he case when
hich is not th n an entity has
h control ov ver a subsiddiary and acqquires
additional
a nterests. Hen
in nce, if the objective ofo the above e amendme ent of requ uiring
u
unwinding he fair valu
th ue measurem ment used by b a joint venture is to o have consi istent
measuremen
m t principles between co ontrol and jooint control, such an obj uld be
jective shou
followed
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
fair
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
d
difficulties w be faced
will d by a ventur rer in unwinding the fairr value meas surement useed by
the
t joint vent ture. Therefo
fore, IASB may
m consider r to have a un ciple of prov
niform princ viding
r
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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