B.2 NAV Practical Expedient
The accounting requirements for measuring the fair value of investments
in investment companies under U.S. GAAP differ from those under IFRS Accounting
Standards.
- Under U.S. GAAP, ASC 820-10-35-59 contains a practical expedient that permits entities to measure the fair value of an investment that (1) does not have a readily determinable fair value and (2) is in an investment company within the scope of ASC 946 or a real estate fund for which it is industry practice to apply investment-company accounting at NAV.
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The IASB decided against providing any such practical expedient. In the U.S. GAAP–IFRS comparison section in the opening summary in ASU 2011-04, the FASB explains the IASB’s decision as follows:[T]he IASB decided that it would be difficult to identify when such a practical expedient could be applied given the different practices for calculating net asset values in jurisdictions around the world. For example, . . . investment companies may report in accordance with national GAAP, which may have recognition and measurement requirements that differ from those in IFRSs (that is, the underlying investments might not be measured at fair value or they might be measured at fair value in accordance with national GAAP, not IFRSs).
See Section 2.2.2 for further discussion of when
this practical expedient may be applied under U.S. GAAP.