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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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