Lecture 11 Accounting for Associates

Lecture 11 Accounting for Associates - ACCT 2542 S2 2011...

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1 ACCT 2542, S2, 2011 Corporate Financial Reporting and Analysis Lecture Topic 11 Accounting for Associates: The Equity Method Lecturer: Diane Mayorga Reference readings: Picker et al. (2009), 2 nd edition: Chapter 28 AASB 128 “Investments in Associates” Lecture Notes Learning Outcomes: At the end of this topic, you should be able to: Understand that there are different methods of accounting for equity investments Apply the cost method of accounting for investments Discuss the factors that indicate a relationship between an investor and an associate Apply the equity method of accounting for investments Understand where to apply the equity method Apply the equity method in separate or consolidated financial statements Discuss the disclosures required by AASB 128
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2 Where we’re heading…. .with different types of investments Determinant Control Significant Influence Joint Control No control or influence Method of Accounting Consolidation Equity Equity or Proportional Consolidation Fair Value or Amortised Cost Accounting in the books of the Investor Cost Cost or Equity Equity or Proportional Consolidation Fair Value or Amortised Cost Where we’re heading…. .with different types of investments Subsidiaries Associates Joint Ventures Investments Determinant Control Significant Influence Joint Control No control or influence Method of Accounting Consolidation Equity Equity or Proportional Consolidation Fair Value or Amortised Cost Accounting in the books of the Investor Cost Cost or Equity Equity or Proportional Consolidation Fair Value or Amortised Cost Where we’re heading…. .with different types of investments Subsidiaries Associates Joint Ventures Investments Determinant Control Significant Influence Joint Control No control or influence Method of Accounting Consolidation Equity Equity or Proportional Consolidation Fair Value or Amortised Cost Accounting in the books of the Investor Cost Cost or Equity Equity or Proportional Consolidation Fair Value or Amortised Cost
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3 Where we’re heading…. . Determinant Control Significant Influence Joint Control No control or influence Method of Accounting Consolidation Equity Equity or Proportional Consolidation Fair Value or Amortised Cost Accounting in the books of the Investor Cost Cost or Equity Equity or Proportional Consolidation Fair Value or Amortised Cost ACCT 3563 FYI Equity investments – Equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities • usually shares in an organisation • give investor an ownership interest and therefore share in profits There are a number of accounting standards that apply to equity instruments (and equity instruments are a subset of financial instruments ), including AASB 7 ‘Financial Instruments: Disclosure’ AASB 7 Financial Instruments: Disclosure – AASB 132 ‘Financial Instruments: Presentation’ – AASB 139 ‘Financial Instruments: Recognition and Measurement’
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This note was uploaded on 09/23/2011 for the course ACCT 2542 taught by Professor Knapp during the One '11 term at University of New South Wales.

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Lecture 11 Accounting for Associates - ACCT 2542 S2 2011...

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