F2C - Chapter 13: Group Accounts - Associates and joint arrangements Flashcards
What is an associate?
An entity over which the investor has significant influence
What is significant influence?
The power to participate in the finance and operating policy decisions of the investee but is not control or joint control of those policies
A holding of 20% or more of the voting power is presumed to give significant influence
According to IAS 28 when would an investor probably have significant influence?
It is represented on the board of directors
It participated in policy-making processes, including decisions about dividends or other distributions
There are material transactions between the investor and investee
There is interchange of managerial personnel
There is provision of essential technical information
What do you use to account for associated?
Equity accounting
What is a joint arrangement?
An arrangement of which two or more parties have joint control
What is joint control?
The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control
What is a joint venture?
Joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement
What is a joint operation?
Joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement
