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A mutual fund holds 22% of the equity of Company P. Ordinarily P would be presumed an associate. The mutual fund may:
AElect to measure the investment at fair value through profit or loss under Ind AS 109 (separate election per associate / JV at initial recognition)
BAvoid recognising P altogether
CBe required to apply equity method to its investment in P
DApply consolidation under Ind AS 110
Answer & Solution
Correct answer: A. Elect to measure the investment at fair value through profit or loss under Ind AS 109 (separate election per associate / JV at initial recognition)
Ind AS 28 paragraph 18 grants venture capital organisations, mutual funds, unit trusts and similar entities (including investment-linked insurance funds) an election to measure at FVTPL under Ind AS 109. The election is made separately for each associate/JV at initial recognition.
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