Page 15 - FAC4862_4 Topic 2 slides cm

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Transactions Between Investor & Associate

• Note : What is in the starting and ending points?

• Upstream transactions

• Affect associate’s profits but asset is with investor
• Downstream transactions

• Affect investor’s profit but asset is with associate

• Uniform accounting policies must be used in the group

financials (.35)

• Adjustments made if associate uses different accounting policies
(.36)

• If the associate has non-redeemable cumulative preference

shares classified as equity (.37)

• Principles are same as with subs

• The investor’s share of profit is calculated after preference
dividends allocated

• Even if the dividend has not been declared

15