Associate
An associate is an entity over which an investor has significant influence but neither control nor joint control. Significant influence means being able to participate in financial and operating policy decisions without directing those policies. A holding of 20% or more of voting power normally suggests significant influence, subject to contrary evidence. The basic group accounting treatment is the equity method.
Worked example
A 25% voting interest combined with board representation may make the investee an associate rather than a subsidiary.
Common mistake
Do not decide solely from a share percentage: rights, agreements and other evidence can rebut the usual presumption.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| ACCA | SBR | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |