Consolidation according to International Accounting Standards

Consolidated Financials are prepared in accordance with the following IFRS and IAS:


  • IAS 27 “Consolidated Financial Statements”


  • IAS 28 “Accounting for Investments in Associates”


  • IAS 31 “Financial Reporting of Interest in Joint-Ventures”


  • IAS 39 “Financial Instruments: Recognition and Measurement”


  • IFRS 3 “Business Combinations”



IAS 28 :Accounting for Investments in Associates



  1. An associate is an enterprise, other than a subsidiary or joint venture, over which the investor has significant influence. Significant influence means the power to participate in financial and operating policy decisions. Such influence is presumed to exist if the investor owns more that 20 per cent of the associate.


  1. Associates should be accounted for by the equity method in consolidated financial statements. However, if an investment was acquired and held exclusively with an intent to dispose of it in the near future, it should be accounted for by the cost method.


  1. Under the equity method, the investor recognises its proportionate share of the associate’s reported net profit or loss whether or not remitted as a dividend. The investor must amortise any goodwill implicit in the investment.


  1. An investor should discontinue using the equity method if (a) it ceases to have significant influence over the associate or the associate operates under long-term restrictions that impair its ability to transfer funds to the investor.



  1. Long-term investments should be valued at cost, at revalued amount, or for marketable equity securities at the lower of cost or market on a portfolio basis.


  1. Permanent diminutions in value should be recognised and measured on an individual basis.



Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.