PAS 28 Investments IN Associates AND Joint Ventures PDF

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Summary

Summary of PAS 28 Investments IN Associates AND Joint Ventures...

Description

PAS 28 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES I.

NATURE

PAS 28 prescribes the accounting for investments in associate and the application of the equity method to investments in associates and joint ventures. Investments in associates Associates is “an entity over which the investor has significant influence.” Existence of significant influence distinguishes an investment in associate from all other types of investments. Nature of relationship with investee

Applicable reporting standard

Regular investor

PFRS 9

Significant influence

PAS 28 PFRS 3 and PFRS 10 PFRS 11 and PAS 28

Type of investment



Investment measured at fair value Investment in associate

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Investment in subsidiary

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Investment in joint venture



Control Joint control

Significant influence is “the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies.” a. Representation on the board of directors/equivalent governing body of the investee. b. Participation in policy-making processes, including participation in the decisions about dividends or other distributions. c. Material transactions between the entity and its investee. d. Interchange of managerial personnel e. Provision of essential technical information. I.

RECOGNITION

Accounting for Investments in Associates: Share in associate’s a. Profit or loss

b. Dividends c. Other comprehensive income

Effect on investment in associate Increase for share in profit/decrease for share in loss Decrease Increase for share in gain/decrease for share in loss

Effect on investment income Increase for share in profit; decrease for share in loss No effect No effect; the share in OCI is included in the investor’s OCI

Investment in associate is an asset; it has a normal debit balance....