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EFRAG Research Project Equity Instruments - Research on Measurement



IFRS 9 Financial Instruments was issued by the IASB in July 2014 and is effective for annual periods beginning on or after 1 January 2018.

All equity instruments have to be measured at fair value in the statement of financial position. For instruments other than those held for trading and contingent consideration recognised in a business combination, the IASB has introduced an irrevocable option at inception on an instrument-by-instrument basis to report  changes in fair value through other comprehensive income, with no impairment losses recognised in profit or loss and no reclassification in profit or loss of gains or losses upon derecognition.​

What is the objective of the project?

This research project intends to consider possible alternative measurement basis for equity and equity-type investments, especially in the context of a long-term investment business model.

The European Commission's request

In June 2018, the European Commission requested EFRAG  to consider alternative accounting treatments to measurement at FVPL for equity instruments. Possible accounting treatments should properly portray the performance and risk of long term investment business models in particular for those equity and equity type investments that are much needed for achieving the UN Sustainable Development Goals and the goals of the Paris Agreement on climate change.

EFRAG received a letter from the European Commission, which you can download​ here.

EFRAG consultation on Equity Instruments 

On 6 May 2019 EFRAG launched a public consultation to gather constituents' views on whether alternative accounting treatments to those in IFRS 9 are needed to portray the performance and risks of equity and equity-type instruments held in long-term investment business models. The public consultation was open until 5 July 2019.

EFRAG response to the European Commission

On  30 January 2020 EFRAG issued its advice ​​to the European Commission on on alternative accounting treatments to measurement at fair value through profit or loss for equity and equity-type instruments held in long-term investment business m​odels.​ This was accompanied by its Feedback Statement​ from the public consultation and a supporting paper​.​

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