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14/01/2015 - EFRAG's comment letter on the IASB's ED/2014/4 - Proposed amendments to IFRS 10, IFRS 12, IAS 27, IAS 28, IAS 36 and IFRS 13: Unit of Account

EFRAG has published its comment letter in response to the IASB's Exposure Draft ED/2014/4.

In its comment letter, EFRAG supports the clarification that the unit of account for investments within the scope of IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Venture is the investment in a subsidiary, joint venture or associate as a whole rather than the individual financial instruments included within that investment.

However, EFRAG is concerned that determining the fair value measurement of this type of investments quoted in active market as the product of the quoted price of the financial instrument multiplied by the quantity of instruments held will not always result in relevant information because, where the unit of account is the investment in a subsidiary, joint venture or associate, the price paid may include control premiums or discounts.

Therefore, before finalising these proposed amendments, EFRAG believes that the IASB should:

  • analyse current practices in measuring fair value of this type of quoted investments including premiums and discounts and reassess where to strike the balance between relevance and reliability; and
  • consider developing guidance to bring fair value estimates that are consistent with the unit of account of the investment to a reasonable level of reliability.

EFRAG's comment letter can be accessed using the following link: