International Financial Reporting Standards (IFRS)

IFRS for Small and Medium-sized Entities (SMEs)
Section 14: Investments in Associates

1. Entity B is an associate of Entity A
--> If Entity A has (1) over Entity B
--> but neither (2) nor (3)
(1) significant influence
(2) control
(3) joint control

2. Significant influence
--> power to participate in policy decisions

3. Significant influence is presumed
--> for 20% or more of voting power

4. Investments in associates are measured
--> with a choice of (1), (2), (3)
(1) cost model
(2) equity method
(3) fair value model

5. Cost model
Measured at
--> cost - accumulated impairment losses

6. Equity method
Initial measurement
--> at transaction price
--> including transaction costs

Subsequent measurement
--> investor's share of profit or loss is added
--> distributions received are deducted
--> impairment loss is deducted if impaired

7. Fair value model
Initial measurement
--> at transaction price
--> not including transaction costs

Subsequent measurement
--> at fair value
--> changes in fair value are recognised in profit or loss

8. Use fair value model
--> if published price quotation is available

9. Investments in associates
--> classified as non-current assets