Which measurement basis is used for passive investments under FVTPL and FVTOCI?

The measurement basis used for passive investments under FVTPL (Fair Value Through Profit or Loss) and FVTOCI (Fair Value Through Other Comprehensive Income) is fair value.

This is because both accounting treatments require that investments be recorded and reported at their current market value rather than their historical cost or any book value. FVTPL is utilized for measuring investments where changes in fair value are recognized directly in profit or loss, reflecting the investment’s real-time financial performance. Conversely, FVTOCI allows for changes in fair value to be recorded in other comprehensive income, which will not affect net income until the investment is sold or derecognized. Both approaches emphasize reflecting the current conditions of the market and ensuring that financial statements present an accurate depiction of an entity's financial position based on the latest available data.

Historical cost, book value, and amortized cost do not provide the level of transparency and timeliness regarding market changes that current fair value measurements deliver, making fair value the appropriate basis for these reporting requirements.