Page 4 - 18. COMPILER QB - INDAS 28 _ 111

Paragraph 19 of Ind AS 28 provides that, “‘when an entity has an investment in an associate, a portion of

which is held indirectly through a venture capital organization, or a mutual fund, unit trust and similar entities
including investment-linked insurance funds, the entity may elect to measure that portion of the investment

in the associate at fair value through profit or loss in accordance with Ind AS 109 regardless of whether the
venture capital organisation has significant influence over that portion of the investment. If the entity makes

that election, the entity shall apply the equity method to any remaining portion of its investment in an
associate that is not held through a venture capital organisation”. Therefore, fair value exemption can be

applied partially in such cases.

Scenario 1: Where both investments in the associate result in significant influence on a stand-alone basis.

In the present case, in accordance with paragraph 19 of Ind AS 28, P must follow equity method of
accounting for its 20% interest held by Y.

Under the partial use of fair value exemption, P may elect to measure the 25% interest held by X at fair
value through profit or loss.

Scenario 2: When neither of the investments in the associate results in significant influence on a stand-alone

basis, but do provide the parent with significant influence on a combined basis.

In the present case in accordance with the paragraph 19 of Ind AS 28, P must follow equity method of
accounting for its 10% interest held by Y, even though Y would not have significant influence on a stand-

alone basis.
Under the partial use of fair value exemption, P may elect to measure the 10% interest held by X at fair value

through profit or loss.

Scenario 3: When one of the investments in the associate results in significant influence on a stand-alone
basis and the other investment in the associate does not result in significant influence on a stand-alone basis

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