University:
Eastern Kentucky University
Course:
ACC 201 | Introduction to Financial Accounting
Academic year:

2021
Views:

489

Pages:

2
Author:

Trevon Bernard

PAS 28 Investment in Associates and Joint Ventures NATURE PAS 28 prescribes the accounting for investments in associates and the application of the equity method to investments in associates and joint ventures. Investors apply PAS 28 when they have significant influence or joint control over an investee. Associate is an entity over which the investor has significant influence. Significant influence is presumed to exist when ownership interest is 20% or more, the existence of this distinguishes an investment in associate from all other types of investments. RECOGNITION Investment in associates are accounted for using the equity method. MEASUREMENT Under the equity method, the investment is initially recognized at cost and subsequently adjusted for the investor’s share in the investee’s changes in equity. Note: An investor starts using the equity method as from the when it obtains significant influence or joint control over an investee. An inventor is exempt from applying the equity method if it is exempted from preparing consolidated financial statements. An entity stops using the equity method as from the date when it loses significant influence or joint control over the investee.