Page 49 - PowerPoint Presentation

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Comprehensive example - solution

COMMENT

• Furnit-Your-World Ltd has two main equity investments during
the current financial year, an investment in a subsidiary, Urban

Drapes Ltd, and an investment in an associate, Digital Decor Ltd.

• In accordance with IFRS 10.B86 Furnit-Your-World Ltd will
combine its trial balance with the trial balance of Urban Drapes

Ltd by combining all like items (i.e. add the revenue of Furnit-

Your-World Ltd of R16 081 250 to the revenue of Urban Drapes

Ltd of R6 812 500 etc.).

• In accordance with IAS 28.10 Furnit-Your-World Ltd will apply the

equity method to account for Digital Decor Ltd by recognising its

share of the profits of Digital Decor Ltd in the line item “share of

profit of associate” and the share of other comprehensive

income in “share of other comprehensive income of associate”.

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