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Associate

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Associate

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by Stephen Widberg.
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  • October 19, 2019 at 12:45 pm #550170
    ginetta86
    Participant
    • Topics: 18
    • Replies: 40
    • ☆☆

    Distributions received from the investee reduce the carrying amount of the investment. Adjustments to the carrying amount may also be required arising from changes in the investee’s other comprehensive income that have not been included in profit or loss (for example, revaluations). [IAS 28.11]

    Could you please explain why dividend received from an associate reduce the carrying amount of the investment in the associate.

    Could you please also explain or give an example for changes in OCI that would reduce the carrying amount

    Many thanks

    October 19, 2019 at 2:23 pm #550183
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    The carrying amount basically represents parent’s share of associate’s net assets – if the associate pays a dividend it will have less money – so my share of net assets goes down

    A revaluation downwards would decrease parent’s share of net assets (so there’s an OCI example.

    This will come clearer when you practice cash flow workings.

    October 20, 2019 at 10:30 pm #550298
    ginetta86
    Participant
    • Topics: 18
    • Replies: 40
    • ☆☆

    Thanks Stephen for the explanation.Appreciated

    October 21, 2019 at 9:15 am #550331
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    My pleasure
    Have a great day

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