Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p56
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 56/76)
Character Range: 191719–194802

AASB 3 and AASB 10, including in relation to accounting for acquired goodwill.  Superannuation entities would also be required to apply the fair value option to measuring non-controlling interests at inception, without subsequent remeasurement, in accordance with AASB 3.
BC172        Consistent with ED 179, under ED 223 it was proposed to require remeasuring acquired intangible assets at fair value at each reporting date in the consolidated financial statements; whether or not they had been acquired in a business combination.  The AASB noted that this would be a departure from AASB 3 and AASB 138 Intangible Assets when there are not active markets for the intangible assets concerned.
BC173        At the time of preparing ED 223, the AASB also noted the proposals in IASB ED/2011/4 Investment Entities[19] to account for most subsidiaries at fair value through profit or loss might address some of the concerns raised by constituents.  However, the AASB decided that it would be premature for the AASB to propose in ED 223 permitting or requiring parent superannuation entities to apply investment entity accounting before there is an outcome from the IASB's project.

Responses to the ED 179 and ED 223 consolidation proposals
BC174        Overall, respondents expressed mixed views on the proposals in ED 179 and ED 223 that a parent superannuation entity present consolidated financial statements.  Many of them identified practical difficulties, including:
(a)                   identifying entities controlled and the times when control arises or is lost;
(b)                   monitoring changes in holdings in collective investment entities, particularly when there is a high turnover of ownership interests in the investee;
(c)                   obtaining relevant, reliable and timely information to prepare consolidated financial statements, particularly in relation to 'fund of fund' investment vehicles; and
(d)                   consolidating for only part of a period because the investment in the subsidiary fluctuates either side of a controlling level (say around 50%) in its outstanding ownership interests.
BC175        Based on these practical difficulties, some constituents recommended the AASB would need to provide application guidance on how the concept of control should be interpreted and applied in a superannuation context.  To this end, some suggested a 'substance over form' approach be taken whereby entities that a parent 'actively' controls are consolidated and entities in which there is a 'passive' investment be accounted for as investments.
BC176        Other respondents suggested that, due to the nature of superannuation arrangements in Australia, in some circumstances the parent may be incapable of controlling an investee that would otherwise meet the definition of a subsidiary in a manner consistent with the notions of control in AASB 127 and AASB 10 because:
(a)                   members exercise investment choice and might collectively acquire a controlling interest in another entity, and the superannuation entity may not