AASB 10 Consolidated Financial Statements 27-30,B85A-B85W: Investment entity status: determine whether the parent obtains funds to provide investment management services, commits to investing solely for capital appreciation or investment income, and measures substantially all investments at fair value, weighing the typical characteristics and reassessing on change

What does 27-30,B85A-B85W require?

Each parent decides whether it is an investment entity, which requires all three features: it raises funds from investors to provide them with investment management services; it commits to them that its business purpose is investing solely to earn capital growth, investment income or a mix of the two; and it measures and judges substantially all of its investments using fair value. Application guidance covers the business purpose (exit strategies for equity and non-financial investments, services to investees or third parties, and benefits from investees not available to others, which would disqualify), fair value reporting to key management and investors, and earnings. It also considers four typical characteristics (more than one investment, more than one investor, investors that are not related parties, and ownership in equity-type interests); lacking one does not disqualify but triggers the extra AASB 12 disclosure. Status is reassessed whenever the defining features or characteristics change, and any change is applied prospectively from the date it occurs.