The thesis: eligibility is now a judgment, and judgments need a record.
IAS 28 has long allowed a narrow set of entities, venture capital organisations, mutual funds, unit trusts, and similar structures, to measure an associate or joint venture at fair value through profit or loss instead of applying the equity method. On June 26, 2026, the IASB issued targeted amendments that replace the named list with a principle: an entity qualifies if it has a specified main business activity of investing in particular types of assets, the same concept IFRS 18 uses to decide how income and expenses are classified on the statement of profit or loss.
That is good news for private equity funds, family offices with professional investment operations, and insurance subsidiaries that previously sat in a gray area. It is also a new data problem. Eligibility now depends on a documented judgment about what an entity actually does, made separately for the entity holding the investment and for the group reporting on it, and that judgment has to be captured somewhere a consolidation system and an auditor can both find it.
What actually changed, and what did not.
The fair value option in IAS 28 is an election, made investment by investment at initial recognition, to measure an associate or joint venture at fair value through profit or loss rather than using the equity method. Before this amendment, only entities matching IAS 28’s own short list of examples could make that election. As groups prepared to adopt IFRS 18, stakeholders told the IASB the list did not map cleanly onto IFRS 18’s own concept of a specified main business activity, and the mismatch had direct consequences for how the resulting income would be classified on the face of the statement of profit or loss.
The amendments replace the list with the SMBA principle itself, expand eligibility to any entity that manages qualifying investments on a fair value basis and evaluates their performance that way, and remove a reference to investment-linked insurance funds that the IASB judged no longer necessary once the principle was in place. The Board was explicit that the change is deliberately narrow: it resolves the identified conflict with IFRS 18 without reopening the fair value option more broadly or disturbing existing practice elsewhere in the standard.
One detail carries the most operational weight. Eligibility for the fair value option is assessed for the entity that directly holds the investment, which in a group structure is often a subsidiary. That subsidiary’s specified main business activity can differ from the specified main business activity of the group as a whole, and IFRS 18 classification of the resulting income runs off the group-level assessment, not the subsidiary’s. A single field recording “is this entity an investor” cannot hold both answers at once.
Before and after the amendment.
| Dimension | Before the amendment | Under the June 2026 amendment |
|---|---|---|
| Who can elect fair value | A narrow, named list: venture capital organisations, mutual funds, unit trusts, and similar entities | Any entity with a specified main business activity (SMBA) of investing in particular types of assets, aligned to IFRS 18 paragraph 49(a) |
| Basis for eligibility | Entity type, checked against the named examples in IAS 28 | A documented SMBA assessment: does the entity manage these investments on a fair value basis and evaluate performance that way |
| Whose SMBA counts for measurement | Not addressed directly; practice varied for indirect holding structures | The SMBA of the entity that directly holds the investment, which can differ from the SMBA of the group as a whole |
| Whose SMBA counts for P&L classification | Not addressed directly under IFRS 18, which did not yet exist | The SMBA at the reporting entity level, consolidated or separate, independent of the measurement election made lower in the structure |
| Changing an existing election | No transition mechanism tied to a specific standard | A one-time opportunity to move from equity method to fair value through profit or loss on first applying IFRS 18, applied retrospectively under IAS 8 |
Building the consolidation eligibility register.
A consolidation platform that applies one equity-method rule to every associate and joint venture will not surface this opportunity, and will not document it if someone elects it manually outside the system. Seven fields carry most of the value in a register built for the transition.
Investment identity
The associate or joint venture name, group entity holding the investment, and whether the holding entity is a direct subsidiary or the parent itself.
Holding-entity SMBA determination
Whether the entity that directly holds the investment has a documented specified main business activity of investing in this class of asset, with the evidence used to reach that conclusion.
Group-level SMBA determination
The SMBA assessment at the consolidated reporting level, tracked separately from the holding-entity determination, since the two can diverge under an indirect structure.
Measurement method
Equity method or fair value through profit or loss, with the date the election was made and whether it was made at initial recognition or under the one-time IFRS 18 transition option.
P&L classification outcome
Whether the related income and expense lands in the operating or investing category, derived from the measurement method and the applicable SMBA rather than set as a fixed default.
Retrospective adjustment trail
For any investment moved off the equity method at transition, the IAS 8 restatement entries and the comparative-period figures they replace.
IFRS 12 disclosure flag
Whether the investment is material enough to require disclosure of its measurement basis, and the disclosure text already drafted rather than assembled at close.
The record one investment needs.
The register does not require a new platform to start. A structured record like the one below, held in whatever system already tracks the investment schedule, keeps the measurement and classification layers separate from the first entry, so they cannot be collapsed into one field by mistake.
Example investment eligibility record
{
"investment_id": "example-jv-holding",
"investment_name": "Example Joint Venture Ltd",
"holding_entity": {
"name": "Example Group Investment Subsidiary",
"smba_determination": "investing_in_assets",
"smba_evidence_ref": "investment-policy-2026-06"
},
"group_smba_determination": "not_investing_main_activity",
"measurement": {
"method": "fair_value_through_profit_or_loss",
"election_basis": "ifrs18_transition_one_time_option",
"election_date": "2027-01-01",
"prior_method": "equity_method"
},
"pl_classification": "investing",
"retrospective_adjustment": {
"ias8_applied": true,
"comparative_periods_restated": ["2025", "2026"],
"opening_equity_adjustment_ref": "restatement-2027-01"
},
"ifrs12_disclosure": {
"material": true,
"disclosure_drafted": true
}
}The same structure holds whether a group has three associates or three hundred, since each investment carries its own holding-entity and group-level determinations rather than inheriting a single group-wide answer.
Implementation checklist.
Inventory every associate and joint venture across the group, not only the ones already flagged as investment-type entities under the old named list.
Assess the specified main business activity of the entity that directly holds each investment, and keep the evidence for that judgment on file before the transition date.
Assess the specified main business activity at the consolidated group level separately, since it drives P&L classification independently of the holding-entity measurement decision.
Decide, investment by investment, whether to use the one-time IFRS 18 transition opportunity to move from equity method to fair value through profit or loss.
Model the retrospective IAS 8 impact of each proposed change before electing it, including restated comparatives and opening equity adjustments.
Confirm the consolidation platform can hold a different measurement method per investment, rather than one global equity-method rule applied to every associate and joint venture.
Draft the IFRS 12 disclosure text for each material investment ahead of the first close under IFRS 18, rather than during it.
Set the election as final once made. The fair value option, once elected for an investment, is not available to reverse on a later whim.
Start the SMBA assessment well before the first IFRS 18 close. A group that has already answered the eligibility question for every associate and joint venture will treat the transition as a set of elections to confirm, not a research project to start under deadline.
Constructive failure modes to design around.
Treating the SMBA test as a one-time entity classification exercise, when it has to be assessed for the specific holding entity and again at the group level, because the two can point to different answers.
Applying a single global measurement rule in the consolidation system, so every associate and joint venture defaults to equity method regardless of the fresh eligibility this amendment opens up.
Electing fair value for an investment without first modeling the IAS 8 retrospective restatement, then discovering the comparative-period impact after the election is already final.
Leaving the P&L classification hardcoded to the investing category, when fair value measurement combined with an operating SMBA moves the related income into the operating category instead.
Waiting until the first IFRS 18 close to gather the SMBA evidence, instead of building the documentation trail during the run-up to the January 2027 effective date.
Each of these is a data-model gap, not a technical accounting gap. The standard already tells a team what to decide. The register is what makes the decision auditable.
What to ask consolidation and ERP vendors now.
Can the consolidation system store a distinct measurement method for each associate and joint venture, instead of one method applied group-wide?
Does it separately track the SMBA determination for the holding entity and for the consolidated group, and flag when the two diverge?
Can it model the IAS 8 retrospective restatement for a proposed equity-method-to-fair-value change before the election is made final?
Does the P&L classification logic derive the operating-versus-investing category from both the measurement method and the applicable SMBA, rather than a fixed mapping?
Can it generate the IFRS 12 disclosure text for each material investment directly from the register, rather than requiring manual drafting at close?
Does it lock an election once made, so a later change cannot be entered without the retrospective workflow the standard requires?
A platform that answers all six with a live configuration screen has already built the dual-layer register this amendment calls for.
Practical takeaway.
The June 2026 amendment does not force any group to change how it measures an associate or joint venture. What it does is remove a technical barrier that kept some entities out of the fair value option, and it opens a one-time transition window at IFRS 18 to act on that if the numbers make sense. A consolidation team that builds the eligibility register now, holding-entity and group-level SMBA tracked side by side, will meet the transition with a documented answer for every investment rather than a scramble to justify one after the fact.
Sources.
- IFRS.org: IASB issues amendments clarifying the fair value option in IAS 28
- IFRS.org: project page, Amendments to the Fair Value Option (IAS 28)
- IFRS.org: Exposure Draft, Amendments to the Fair Value Option for Investments in Associates and Joint Ventures
- KPMG: Fair value option for investments in associates and joint ventures, Q&A
- KPMG: Fair value option for associates and joint ventures, summary
- BDO Global: IASB issues Amendments to the Fair Value Option for Investments in Associates and Joint Ventures
- IAS Plus (Deloitte): Amendments to the fair value option, project tracker
A targeted search for public X and Twitter commentary on the IAS 28 fair value option amendments returned only professional-firm articles and standard-setter pages, short of the two to four high-signal posts this format calls for. Ordinary citations are used instead, and nothing is fabricated.