PAS 28 - PAS 28 INVESTMENTS IN ASSOCIATES SCOPE Applied to...

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PAS 28 INVESTMENTS IN ASSOCIATES
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SCOPE Applied to all accounting for investments in associates Does not apply to investments in associates held by a venture capital organization, a mutual fund, a unit trust, and a similar entity (use PFRS 4) Does not apply to investments that upon initial recognition are designated as FVPL (use PAS 32 and 39)
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KEY TERMS Associate – an entity in which an investor has significant influence, but which is neither a subsidiary nor an interest in joint venture Significant Influence – the power to participate in the financial and operating policy decisions of the investee but not to control them
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SIGNIFICANT INFLUENCE It is presumed that significant influence is exercised by the investor if it holds directly or indirectly 20% or more of the voting power of the associate, unless it can be shown that significant influence does not exist. If the holding is less than 20%, the investor is presumed not to have significant influence unless such influence can be strongly demonstrated.
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INDICATORS OF SIGNIFICANT  INFLUENCE Representation on the board of directors Participation in the policy making process Material transactions occurring between the investor and investee Interchange of managerial personnel Provision of essential technical information
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ACCOUNTING METHOD An investment in associate shall be accounted for using the equity method, except when The investment is classified as Held for Sale The exception for consolidated FS applies
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This note was uploaded on 11/30/2011 for the course ECON 310 taught by Professor Johnsmith during the Spring '11 term at Kentucky.

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PAS 28 - PAS 28 INVESTMENTS IN ASSOCIATES SCOPE Applied to...

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