Cessation of the equity method
The subsequent treatment depends on what the investor retains and whether the change creates a subsidiary, a financial asset, or a different equity-accounted interest. When the retained interest becomes a financial asset, apply the IAS 28 and IFRS 9 requirements, including relevant fair-value and disposal-gain calculations and treatment of accumulated other comprehensive income.
Worked example
An investor sells an associate interest and retains a small stake that no longer gives significant influence. It stops applying the equity method and assesses the retained stake under IFRS 9, including the IAS 28 disposal calculation.
Common mistake
Continuing equity accounting solely because some shares are retained, or assuming the same gain calculation applies when an associate becomes a subsidiary.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Supporting | September 2026–June 2027 |