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Indirect Interest in Associates

The document discusses accounting for indirect interests in associates. It provides two situations: 1) Company A has significant influence over associate C through subsidiary B. A must disclose its full interest in C as an investment in associate in its consolidated financial statements. 2) Company H has a 40% interest in associate A through partly owned subsidiary S. H's consolidated financial statements must equity account for the 40% interest, not the 32% indirect interest. The non-controlling interest share of S must be included in the consolidated net assets and results.

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Rabiatul Adawiyah
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105 views3 pages

Indirect Interest in Associates

The document discusses accounting for indirect interests in associates. It provides two situations: 1) Company A has significant influence over associate C through subsidiary B. A must disclose its full interest in C as an investment in associate in its consolidated financial statements. 2) Company H has a 40% interest in associate A through partly owned subsidiary S. H's consolidated financial statements must equity account for the 40% interest, not the 32% indirect interest. The non-controlling interest share of S must be included in the consolidated net assets and results.

Uploaded by

Rabiatul Adawiyah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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INDIRECT INTEREST IN

ASSOCIATES

There could be instances


Equity method will be used
where the subsidiary may
to account for interest in
have interest in associates
associate or joint venture.
or joint ventures.
Situation A

C is associate of B. B has ability to exercise


significant influence over C.

Since B is subsidiary of A, A can exercise


significant influences over C through B.

Full share of interest B in C should be disclosed as


investment in associate, in consolidated financial
position and in share of profits of associates in
consolidated income statement.
Situation B
Consolidated financial statements of A will
be used to equity account Hs share if
interest in A. H is 40% and NOT 32%
Groups investment in an associate is held
H (Parent) by a partly owned subsidiary, the non-
controlling interest shown in consolidated
financial statements of the group should
include the non-controlling interests share
S (Subsidiary) 80% of the of the subsidiarys interest in the
results and net assetsitself
If associate of the associate.
has
subsidiaries/associates, the results and net
assets accounted for in the investing
A (Associate) 40% groups consolidated financial statements
are its attributable share of the results and
net assets of the group (associate is
parent).
X Y
(Subsidiary of A) 75% (Subsidiary of S) 100%

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