Page 297 - F1 Integrated Workbook STUDENT 2018
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Accounting for Investments in Subsidiaries and Associates
The impact of this level of investment on the investing entity is likely to be greater
than that of a simple investment. There is greater exposure to the results of the
associate and a decline in its value will have a greater negative impact on the
statement of financial position of the investing entity.
The information provided therefore is a step further than that provided for simple
investments.
The investment in the associate is equity accounted, the investment shown in the
statement of financial position will include the investing entity’s share of the gains of
the associate from the date the investment was made. The investing entity will show
the share of realised and recognised gains it is entitled to by virtue of this investment
rather than just the dividend received.
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