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I have a question bout associates. In the text it says that an associate should have uniform accounting policies.
What if there are two owners of company A, Owner 1 has 70 % and owner 2 has 30% ownership.
Owner 1 that has 70 % consolidates and has control, so will of course apply its policies on company A.
For the owner 2 with 30% those accounting policies could be different. Does it mean that company 2 has to adjust the profit from company A to match its accounting policies? Have there been such question before in the exam?
Hi,
Associate’s accounting policies. If the associate uses accounting policies that differ from those of the investor, the associate’s financial statements should be adjusted to reflect the investor’s accounting policies for the purpose of applying the equity method. [IAS 28.27]
Source: iasplus website
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