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Note: This snapshot applies to IAS 28 Investments in Associates & Joint Ventures (effective annual periods beginning on/after Jan 1/13), which supercedes IAS 28 Investment in Associates.
SCOPE
Applied by: ALL entities that are investors with joint
control of/significant influence over an investee.
EQUITY METHOD
Account for investments in associates/joint ventures
using equity method EXCEPT if one of the following (3)
exceptions apply:
(1) Exception in IFRS 10.4(a) applies (allows parent that
also has an investment in associate or associate to NOT
prepare consolidated F/S).
(2) ALL of following apply:
Investor is 100% subsidiary/partially-owned subsidiary of
another entity and its other owners, including those not
otherwise entitled to vote, have been informed about, & do
not object to, investor not applying equity method.
Investor's debt/equity instruments are not traded in public
market (domestic/foreign stock exchange/over-counter
market, including local & regional markets).
Investor did not file, nor is in process of filing, F/S with
securities commission/other regulatory organization, for
purpose of issuing any class of instruments in public market.
Ultimate/any intermediate parent of investor produces
consolidated F/S available to public that comply with IFRS.
SIGNIFICANT INFLUENCE
Significant influence = power to participate in financial & operating policy
decisions of investee but control/joint control over those policies.
Presumed significant influence if an investor holds, directly/indirectly
(e.g. through subsidiaries) >=20% of voting power of investee UNLESS
clearly demonstrable NOT. (< 20% presumed NOT significant influence,
UNLESS such influence clearly demonstrated.)
Substantial/majority ownership by another investor does NOT
necessarily preclude an investor from having significant influence.
Consider if existence & effect of potential voting rights currently exercisable/convertible held by entity & other entities contribute to significant
influence consider all facts and circumstances EXCEPT managements intention & financial ability to exercise/convert.
RECOGNIZING LOSSES