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EFRAG supports the first amendment that proposes to amend IFRS 10 Consolidated Financial Statements to extend the exception from preparing consolidated financial statements to an intermediate parent that is a subsidiary of an investment entity. EFRAG also supports the consequential amendments to IAS 28 Investments in Associates and Joint Ventures. EFRAG explains in the appendix why it concludes differently from a number of its constituents who consider that this will lead to a loss of information for some users of financial statements. EFRAG also notes that the possible interaction between the proposed amendment and the EU Accounting Directive (2013) needs to be investigated further.
EFRAG disagrees with the second proposal that the requirement for an investment entity to consolidate a subsidiary, instead of measuring it at fair value, applies only to those subsidiaries that act as an extension of the operations of the investment entity parent, and do not themselves qualify as investment entities. In EFRAG´s view, further work is required to ensure that activities that are extensions of operations of the parent are not subject to fair value measurement if they are undertaken by an investment entity subsidiary.
Finally, in EFRAG’s view, fair value measurement of an investment entity’s subsidiaries provides the most useful information and should be retained by a non-investment entity investor when applying the equity method to its investment entity investees (associates and joint ventures). Moreover, EFRAG sees no conceptual basis for applying the equity method differently to associates and joint ventures in the cases addressed in the ED.