International GAAP 2013: Generally Accepted Accounting Principles under International Financial Reporting Standards

Chapter 12

Investments in associates and joint ventures

1 Introduction

1.1 The origins of the equity method of accounting

1.2 Development of IAS 28

1.2.1 IAS 28 – Investments in Associates

1.2.2 IAS 28 – Investments in Associates and Joint Ventures

2 Effective date, objective and scope of IAS 28

2.1 Effective date

2.2 Objective

2.3 Scope

3 Definitions

4 Significant influence

4.1 Lack of significant influence

4.2 Holdings of less than 20% of the voting power

4.3 Potential voting rights

4.4 Voting rights held in a fiduciary capacity

4.5 Severe long-term restrictions impairing ability to transfer funds to investor

5 Exemptions from applying the equity method

5.1 Parents exempt from preparing consolidated financial statements

5.2 Subsidiaries meeting certain criteria

5.3 Investments held in associates or joint ventures held by venture capital organisations and similar organisations

5.3.1 Application of IFRS 9 (or IAS 39) to exempt investments in associates or joint ventures

5.3.1.A Entities with a mix of activities

5.3.1.B Designation of investments as ‘at fair value through profit or loss’

5.3.1.C Availability of fair value information

5.4 Partial use of fair value measurement of associates

6 Classification as held for sale (IFRS 5)

7 Application of the equity method

7.1 Overview

7.2 Similarities of equity accounting and consolidation

7.2.1 Differences between equity accounting and consolidation

7.3 Date of commencement of equity accounting

7.4 Initial carrying amount of an associate ...