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You need to Sign in to use this feature. While we believe that we ended up in the right place, accounting for financial instruments has always generated a lot of controversy and IFRS 9 is no exception. One of the areas of concern to some stakeholders is how the new requirements for equity investments can impact long-term investment.
Some stakeholders have suggested that the requirements for equity investments in IFRS 9 could discourage long-term investment. This gives rise to a concern that if neither of these accounting treatments is appealing, then long-term investors may be disincentivised to hold equity investments on a long-term basis.
As a result, some have suggested that the Board consider changing the requirements in IFRS 9 for equity investments. IAS 39 already required that almost all equity investments are measured at fair value on the balance sheet. In our view, clearly visible information about changes in the value of an equity investment is always important, even if the investment is not going to be sold in the near term.
Value appreciation is probably the most important goal Frågelådan any long-term investor. For example, consider a share that an investor purchases for CU and sells 20 years later for CU That value appreciation took place over an investment period of 20 years.
Because such circumstances exist, IFRS 9 allows companies to choose to recognise changes in the value of equity investments in OCI as long as the investment is not held for trading purposes. While it is not further limited in scope, the Board consciously designed this election for a narrow population of equity investments that are held for such strategic reasons or benefits.
During the development of this election, the Board discussed circumstances such as cross-shareholding in Japan where companies invest in each other in order to strengthen and solidify their long-term business relationships.