Page 13 - FAC4862_4 Topic 2 slides cm

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Initial recognition of associate

• Like with sub, identify fair value of identifiable net assets at

date investment becomes an associate

• i.e. date significant influence is acquired

• Treatment of goodwill

• Goodwill on a separate line item only when control is obtained -
IFRS 3

• i.e. goodwill only separately recognised for a sub

• Implied “goodwill” included in “Investment in Associate”
• Gain on bargain purchase

• i.e. Share of FV of identifiable net assets > consideration paid
• Excess is recognised in P/L immediately (.32(b))

• FV adjustments at initial recognition

• Result in adjustments to group earnings

• Example: PPE undervalued at acquisition

13