We render the following advice based on information provided:
- IFRS 9 requires the fair value measurement of equity instruments although they are classified as unquoted equity investments.
- Cost may be an appropriate estimate of fair value in limited circumstances, certain valuation Techniques may be applied including the use of discounted cash flow analysis.
Certain indicators that cost might not be a representative of fair value include (the list is not exhaustive):
- A significant change in the performance of the investee.
- Changes in expectation that the investee’s product milestones will be achieved.
- A significant change in the performance of comparable entities.
- Internal matters of the investee such as fraud, commercial disputes.
After going over these points with you, we find that above mentioned points don't apply on this case plus adding other checking points like the investee’s having positive working capital status & positive book value status above 1 JOD ascertain that there is no need for further impairing the investment in 2013, although the investee had recognized impairment loss in their 2012 financial statements for their PP&E, as confirmed by you.
I advise that you include an emphasis of matter paragraph in 2013's Auditor report stating that:
1) This investment is to be reclassified to FVTOCI where all quarterly impairment loss recognized in 2013 to be reclassified into OCI & no recycling of gains or losses is permitted onward.
2)We have not received the audited financial statements of the investee as of date of our report & we couldn’t identify the need for further impairment, therefore we find the impairment allowance recognized for the quarters of 2013 sufficient under circumstances and available information.