Investment entity
It obtains funds from one or more investors to provide investment management services, commits to investing solely for returns from capital appreciation, investment income or both, and measures and evaluates substantially all investments on a fair-value basis. Subject to IFRS 10’s requirements, an investment entity generally measures controlled investees at fair value through profit or loss rather than consolidating them, with an exception for certain investment-related subsidiaries. Its parent’s accounting requires separate assessment.
Worked example
A qualifying fund obtains investor capital, invests solely for capital appreciation and evaluates substantially all investments at fair value. It assesses the IFRS 10 investment-entity exception for its controlled investees.
Common mistake
Assuming any company that owns investments is an investment entity or that every subsidiary of an investment entity is automatically exempt from consolidation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Supporting | September 2026–June 2027 |