Associates - Unit 11

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confused!!
confused!! Registered Posts: 130 Dedicated contributor 🦉
Hi

Does anybody know a quick way of remembering how to account for Associates? is it kind of like the Minority Interest working?

Thanks!

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  • peugeot
    peugeot Registered Posts: 624 Epic contributor 🐘
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    Hi ,

    Investments in Associates are dealt with in IAS 28 - so you might want to have a quick look at the standard if you find this a challenge.

    To account for an investment in an associate you should use the 'equity' method of accounting. What this does is records the initial equity investment at cost and subsequently adjusts the investment for the parent's share of their profit or loss.

    There isn't really a quick way to remember this accounting (not that I am aware of anyway), but practising exam standard questions using an associate in the question will help you grasp the technique. Have a look at the DFS past papers and see if there are any associates in them as this will illustrate the way in which it could be examined.

    Don't forget that you have an associate when you (the parent) have 20% - 50% of the shares in the investee - anything more than 50% you will consolidate as a subsidiary.


    Kind regards
    Steve
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