The exception: fair value instead of consolidation

Learning objectives

• Explain that an investment entity measures its subsidiaries at fair value through profit or loss, except a subsidiary that provides services relating to its investment activities.L3

Normative references

• IFRS 10 §31Except as described in para. 32, an investment entity does not consolidate its subsidiaries or apply IFRS 3 when it obtains control of another entity; it measures its investment in a subsidiary at fair value through profit or loss in accordance with IFRS 9.
• IFRS 10 §32As an exception to para. 31, an investment entity consolidates, in accordance with paras. 19 to 26, a subsidiary that is not itself an investment entity and whose main purpose and activities are providing services that relate to the investment entity's investment activities, and applies IFRS 3 to the acquisition of any such subsidiary.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• An investment entity obtains control of another entity. How does it generally account for its investment in that subsidiary?L3