IASB Clarifies Fair Value Option in IAS 28

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

Brought to you by SA Accounting Academy: The International Accounting Standards Board (IASB) has issued targeted amendments to IAS 28 Investments in Associates and Joint Ventures to clarify the application of the fair value option when implementing IFRS 18 Presentation and Disclosure in Financial Statements.

In terms of the newly issued amendments, the IASB has amended paragraphs 18—19 of IAS 28. These changes clarify that an entity whose main business activity is investing in particular types of assets, as set out in paragraph 49(a) of IFRS 18, is eligible to elect the fair value option instead of applying the equity method. This narrow-scope amendment addresses stakeholder concerns regarding diverse interpretations of how the new presentation requirements in IFRS 18 interact with the existing fair value exemptions in IAS 28.

The clarification directly impacts how income and expenses from these investments are classified in the statement of profit or loss. By aligning the terminology and criteria before IFRS 18 becomes effective, the IASB aims to prevent inconsistent accounting practices and ensure comparable financial reporting without disrupting broader application rules.

The amendments are narrow in scope and will take effect concurrently with an entity’s first-time application of IFRS 18.

Click here to download the IASB Amendments to IAS 28.

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

  • For yourself: You must familiarise yourself with the updated eligibility criteria under paragraphs 18—19 of IAS 28 to correctly advise on investment classifications.
  • For your business: Accounting firms and corporate finance teams must update their IFRS 18 implementation checklists to ensure that the fair value option is correctly applied to eligible associate and joint venture investments.
  • For your clients: Investment entities and holding companies holding associates or joint ventures must review their investment structures against paragraph 49(a) of IFRS 18 to determine if they can continue to utilise, or transition to, the fair value option.

Originally published at https://accountingacademy.co.za/news/read/iasb-amendments-clarifying-the-fair-value-option-in-ias-28

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