International Financial Reporting Standards_guide.pdf

Chapter 8 Investments in Associates (IAS 28) 95
TABLE 8.1 Impairment of an Investment in an Associate
Original cost of
investment
Equity accounted share
of profits or losses and
changes in net asset
value of associate
Goodwill
Carrying
amount of
total
investment
If > then impaired
If < then no impairment
Recoverable
amount
Fair value less
costs to sell
Value in use
Carrying amount of investment
Original cost to acquire the investment
PLUS
Any goodwill on the acquisition
PLUS
Equity accounting share of profits and
changes in equity of associate
Fair value less costs
to sell of investment
The price in a binding sale agreement
OR
The share price where shares are
traded on an active market
OR
Recent similar transactions
LESS
Directly attributable costs of disposal
Value in use of investment
Calculated using:
– projected estimated expected future
cash flows
– discount rate
Based on management assumptions
and judgment of reasonableness—not
fixed per market or contract
8.5 PRESENTATION AND DISCLOSURE
8.5.1 The Statement of Financial Position and notes should include the following:
■ Investment in associates shown as a separate item on the face of the statement and classified
as noncurrent assets.
■ The notes should contain a list and description of significant associates, including
name, nature of the business, and the investor’s proportion of ownership interest or
voting power (if different from the ownership interest).
■ If the investor does not equity account the investment, disclose the fact, a description of
what the effect would have been had the equity method been applied, and summarized
financial information of these associates.
■ If it is not practicable to calculate adjustments when associates use accounting policies
other than those adopted by the investor, the fact should be mentioned.
■ The investor’s share of the contingent liabilities and capital commitments of an associate
for which the investor is jointly and severally liable should be disclosed.
8.5.2 The Statement of Comprehensive Income and notes should include the following:
■ The investor’s share of the associate’s profits or losses for the period and prior-period
items. The investor’s share of any discontinued operations of such associates should
also be separately disclosed.
■ The investor’s share of changes in other comprehensive income of the associate.
8.5.3 Disclose in the accounting policy notes the method used to account for associates.
8.5.4 The fair value of investments in associates for which there are published price quotations
should be disclosed.