Based on IFRS 10 B91, IFRS 9 does not apply to interests in subsidiaries that are consolidated. When instruments containing potential voting rights in substance currently give access to the returns associated with an ownership interest in a subsidiary, the instruments are not subject to the requirement of IFRS 9.
In a case that a company has 40% shares in an associate, and holds a prefs shares instrument which gives the company voting rights and dividends, and also an option over 20% of the other shareholder's holding which, if exercised, would give the company 60% interest in the associate.
In such a case, I would think that the preference shares should not be assessed under IFRS 9, rather going through the whole (debt/equity and SPPI tests), one can directly apply this exemption and consolidate at 60%?
I'm wondering whether it can be applied to the separate FS under IAS 27 of the company, to directly account it as an investment instead of a financial asset under IFRS 9?