Chapter 20 - Associates and joint arrangements

Question 1

What is IAS 28?

Answer 1

IAS 28 is Investments in Associates and Joint Ventures

• an associate is an entity over which the investor has significant influence
• significant influence is the power to participate in the financial and operating policy decisions of the invest but is not control or joint control of those policies

Question 2

IAS28 requires that an investment in an associate should normally be accounted for using the?

Answer 2

Equity method - a method of accounting whereby the investment is initially recognise at cost and adjusted thereafter for the post-acquisition change in the investor’s share of the investor’s net assets”