Sub-associate
Whether an investee is an associate depends on significant influence, not the label or share percentage alone. A group considers the relevant ownership chain and the applicable consolidation and equity-method requirements when measuring its interest. Depending on the facts the intermediate investee may itself be a subsidiary or an associate; the computation cannot be inferred from the name alone.
Worked example
Parent P controls subsidiary S, and S holds an interest giving it significant influence over A. P’s consolidated statements normally reflect the group’s interest in A using the equity method, subject to applicable exceptions.
Common mistake
Describing every indirect investment as an associate, or applying the same ownership calculation without analysing the chain and relevant rights.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Supporting | September 2026–June 2027 |