Acca financial Accounting (FA) Study Text ac ca (FA)

Chapter 22 

KAPLAN PUBLISHING

 

455 

 

IAS 28 Investments in Associates and Joint Ventures 

 

Accounting for associates according to IAS 28 

The equity method of accounting is normally used to account for 

associates in the consolidated financial statements. 

The equity method should not be used if: 

•

 

the investment is classified as held

­

for

­

sale in accordance with IFRS 

5, or 

•

 

the parent is exempted from having to prepare consolidated 

accounts on the grounds that it is, itself, a wholly or partially owned 

subsidiary of another entity (IFRS 10). 

8 

Associates in the consolidated statement of financial position 

Preparing the CSFP including an associate 

The CSFP is prepared on a normal line

­

by

­

line basis following the acquisition 

method for the parent and subsidiary. 

The associate is included as a one

­

line item as a non

­

current asset investment 

calculated as follows: 

 $000 

Cost of investment 

X 

Share of post

­

acquisition profits 

X 

Less: impairment losses 

(X) 

Less: group share of PURP (P = seller) 

(X) 

 ––– 

 

X 

 ––– 

The group share of the associate’s post

­

acquisition profits or losses and any 

impairment of the investment in the associate will also be included in the group 

retained earnings calculation.