IAS 28: future amendments to the Fair Value Option

For reference, this option allows certain entities to measure their investments in associates or joint ventures at fair value through profit or loss, and therefore not apply the equity method. This option is used in particular by insurance companies with investments in entities that hold insurance portfolios. However, there is still some diversity in practice regarding the scope of entities eligible to use this option, due to different interpretations of the concept of ‘similar entities’ in paragraph 18 of the standard: “an entity that is a venture capital organisation, or a mutual fund, unit trust and similar entities including investment-linked insurance funds”  

So far, this diversity has had no major impact on the presentation of financial statements: income and expenses from equity-accounted investments could be presented alongside those from investments measured at fair value through profit or loss in operating profit or loss.  

However, the entry into force of IFRS 18 on 1 January 2027 will change things:  

• income and expense from equity-accounted associates and joint ventures will have to be presented in the Investing category, outside of operating profit or loss;  
• income and expenses from entities measured at fair value through profit or loss will continue to be presented in operating profit or loss when they result from investments made as part of an entity’ main business activity.  

In this context, the IASB tentatively decided to clarify, in paragraphs 18–19 of IAS 28, that ‘similar entities’ include entities that invest in associates and joint ventures as a main business activity.  

The IASB also decided:  

• not to consider allowing entities to revoke the fair value option; and  
• to submit these proposals for public consultation via an exposure draft.  

The exposure draft is expected to be published in February 2026, with a 60-day comment period.  

Four members have already indicated their intention to express a dissenting opinion.