Page 11 - FAC4862_4 Topic 2 slides cm
P. 11
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Equity accounting
• The recognition of an investor’s share of the losses of
the associate (investee) will decrease the carrying
amount of the investment in the associate.
• When the investor’s share of the losses equals or
exceeds its interest in the associate, the investor will
discontinue recognising any further share of losses.
• Should the investee once again make profits, such
profits will only be recognised after the share of profits
equals the losses not recognised.
• Any dividends received from the associate will be
accounted for as a reduction in the carrying amount of
the investment in the associate.
11
