The IASB discussed the unit of account for investments in subsidiaries, joint ventures and associates. The IASB had received two letters asking whether the unit of account for such investments is the investment as a whole or the individual financial instruments that make up the investment. The IASB also discussed the interaction between the unit of account of those investments and their fair value measurement.
The IASB tentatively decided that the unit of account for investments in subsidiaries, joint ventures and associates is the investment as a whole. Nine IASB members agreed.
The IASB tentatively decided that the fair value measurement of an investment composed of quoted financial instruments should be the product of the quoted price of the financial instrument (P) multiplied by the quantity (Q) of instruments held (ie P × Q). The IASB noted that quoted prices in an active market provide the most reliable evidence of fair value. Eight IASB members agreed.
In the same way, the IASB also tentatively decided that the fair value measurement of cash-generating units (CGUs) for impairment testing when those CGUs correspond to a quoted entity should be the product of their quoted price (P) multiplied by the quantity (Q) of instruments held (ie P × Q). Eight IASB members agreed.
Although eight IASB members supported these measurement decisions, two IASB members indicated their tentative intention to present an alternative view in the forthcoming Exposure Draft that will include such proposals.
The IASB staff will present to the IASB a summary of the due process steps undertaken, before preparing an Exposure Draft of proposed amendments to IFRS 13 Fair Value Measurement.