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Dear tutor,
I hope you can help to explain the difference in how we account for both in parent accounts?
I simple add cost of investment with profit percentage for period for both, but I know that this cannot be correct?
Also please confirm if we include a gain/loss in SPL when we acquire a new subsidiary – do we automatically cr to Retained earnings as well?
Thank you
Associate – if equity accounted in parent’s accounts (this is extremely rare);
Dr Investment with % of profits
Cr P&L with % of profits
You would probably only need to get excited about equity accounting in a group accounts questionRe new subsidiary – what you are saying is correct (but please post each question separately in a different thread)
Ok thank you very much for your prompt response.
To confirm:
If simple Investment (under 20%) – just account for the profits and not the cost?
Dr Investment % profits
Cr P&L/GRE % profitsBut if
Associate – account for cost of associate + profit % for period (20% – 50%)
Dr Investment in Associate % profits
Cr P&L/GRE % profitsThanks again
No no
If not an associate, FVTOCI or FVTPL or (if no reliable valuation) cost – no equity accounting unless it is an associate
If associate then as aboveHi, I have a ques, May I know how to account for the share of other comprehensive income of associates in consolidated SOFP? Put under revaluation or retained earning?
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