MyCIMA

Investment entities to be exempt from consolidation

Posted: Monday 21 November 2011 by Nick Topazio
Replies : 0
Investment entities are commonly understood to be entities that pool investments from a wide range of investors for investment purposes only. Currently, IFRS 10 Consolidated Financial Statements would require consolidation if an investment entity controls an entity it is investing in. However, when developing IFRS 10, investors commented that this would not provide them with the information they need to assess the value of their investments. To address this issue, the exposure draft published today proposes criteria that would have to be met by an entity in order to qualify as an investment entity. These entities would be exempt from the consolidation requirements and instead would be required to account for all their investments at fair value through profit or loss. The exposure draft also includes disclosure requirements about the nature and type of these investments. The exposure draft, which can be accessed via the IASB website is open for comment until 5 January 2012.