IAS 28

Investments in Associates and Joint Ventures

1Objective and scope

IAS 28 prescribes the accounting for investments in associates, and sets out the requirements for applying the equity method when accounting for investments in associates and joint ventures.

2Key definitions

3Applying the equity method

The investor's share of the associate's losses is recognised until the carrying amount of the investment is reduced to zero; further losses are recognised only to the extent the investor has incurred legal or constructive obligations, or made payments, on the associate's behalf. Unrealised profits and losses on transactions between the investor and the associate are eliminated to the extent of the investor's interest in the associate. The whole investment (not the underlying net assets separately) is tested for impairment under IAS 36 whenever indicators exist.

A joint venturer (a party with joint control of a joint venture, as defined by IFRS 11) accounts for its interest using the same equity method, rather than proportionate consolidation, which is no longer permitted under IFRS.

4Presentation and disclosure

• The investor's share of the associate's profit or loss is presented as a single line item in the investor's statement of profit or loss (below operating profit), not analysed into its constituent revenue and expense lines
• Significant judgements made in determining that an entity has significant influence or joint control
• Summarised financial information of material associates and joint ventures

5Examinable focus