IASB Proposes Amendments to IAS 28 Fair Value Option [48c217]

Posted 14 April 2026 Written by Acts Online
Category Financial and Accounting

Brought to you by SA Accounting Academy: The International Accounting Standards Board (IASB) has published an Exposure Draft proposing narrow-scope amendments to IAS 28 Investments in Associates and Joint Ventures to clarify which entities are eligible to measure investments using the fair value option.

In terms of the proposed amendments to paragraphs 18–19 of IAS 28, the IASB seeks to clarify that an entity whose main business activity involves investing in particular types of assets—as defined in paragraph 49(a) of IFRS 18 Presentation and Disclosure in Financial Statements—is eligible to elect the fair value option. This measure is intended to reduce diversity in how stakeholders interpret eligibility and how such choices affect the classification of income and expenses in the statement of profit or loss.

The consultation responds to stakeholder feedback identifying inconsistent applications of the fair value option, which has gained significance as companies prepare for the implementation of IFRS 18. The proposed amendments aim to provide regulatory clarity and improve consistency in financial reporting ahead of the IFRS 18 effective date.

Key aspects of the Exposure Draft include:

  • Clarification of the link between IAS 28 eligibility and the business activity definitions in IFRS 18.
  • Reduction of interpretive diversity regarding the measurement of associates and joint ventures at fair value through profit or loss.
  • Provision of timely guidance for entities currently restructuring their financial statements for IFRS 18 compliance.

The IASB intends to finalise these amendments by mid-2026, allowing sufficient time for the changes to be incorporated into national legislation and accounting frameworks across various jurisdictions.

Click here to download the Exposure Draft: Proposed amendments to the fair value option in IAS 28.

What this means for you, your business, or your clients

  • For yourself: You must review the proposed changes to paragraphs 18–19 of IAS 28 to ensure your technical interpretation of an ‘investing entity’ aligns with the specific criteria set out in IFRS 18 paragraph 49(a).
  • For your business: Accounting and audit firms should update their internal IFRS 18 transition checklists to include these clarified eligibility rules, ensuring that fair value elections for associates are correctly supported by the entity’s documented business activities.
  • For your clients: Clients with significant investments in associates or joint ventures must assess whether their primary business activity meets the clarified IFRS 18 definition, as this will determine their continued ability to use fair value measurement rather than the equity method.

Originally published at https://accountingacademy.co.za/news/read/iasb-exposure-draft-proposed-amendments-to-fair-value-option-in-ias-28-re-investments-in-associates-and-joint-ventures

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