Investment in Associate Flashcards
1
Q
A holding of 20% or more of the voting power will…
A
Indicate significant influence unless it can be clearly demonstrated otherwise.
2
Q
The existence of significant influence is evidenced in one or more of the ff:
A
- Representation on the board of directors or equivalent governing body of the investee
- Participation in the policy making process
- Material transactions between the investor and the investee
- Interchange of managerial personnel
- Provision of essential technical information
3
Q
Basic Principle
A
The equity investment is initially recorded at cost and is subsequently adjusted to reflect the investor’s share of the net profit or loss of the associate.
