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Section 3430: Investments in Associates

International Accounting Standard 28
Investments in Associates

1. First version of IAS 28
"Accounting for investments in associates" issued in April 1989

2. Revisions
December 2003: Investments in associates

[U.S. GAAP Codification Topic]
323 Investments - Equity method and joint ventures

3. Associate
If investor A has significant influence over an entity B
--> but B is neither a joint venture nor a subsidiary
--> then B is an associate.

4. Significant Influence
Power to participate in (1), but not control or joint control
(1) financial and operating policy decisions of an entity

5. Investments in Associates, IAS 28.13
Equity method is used
--> for accounting of investments in associates

6. IAS 39 is applied, IAS 28.31
--> to test the impairment of net investment in an associate

7. Equity Method

Initial recognition
--> Investment is recognised at cost, initially

After the date of acquisition
--> Investor's share of investee's profit or loss is
added to or subtracted from carrying amount of investment

Investor's share of investee's profit or loss is
--> recognised in investor's profit or loss

Investor's share of investee's other comprehensive income is
--> recognised in investor's other comprehensive income

Distribution from investee is
--> subtracted from carrying amount of investment