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Hi Mike,
Should this be just at cost (less impairment if applicable), in the Statement of Financial position of the Parent Co. Q148 of BPP book shows this as Cost + Share of Post Acq Profit less Dividend less impairment, which I thought was how it should be in the Consolidated SOFP?
Thanks.
Jean.Sorry Mike. It’s in BPP practice & revision Kit. CBE style OTQ bank (accounting for associates). Pinot & Noir! Thanks. Jean.
My edition of the BPP revision kit is probably older than the one you have in front of you but this is what IASPLUS has to say about the investment in the separate financial statements of the investor …
“Separate financial statements of the investor
Equity accounting is required in the separate financial statements of the investor even if consolidated accounts are not required, for example, because the investor has no subsidiaries.
(But equity accounting is not required where the investor would be exempt from preparing consolidated financial statements under IAS 27.
In that circumstance, instead of equity accounting, the parent would account for the investment either (a) at cost or (b) in accordance with IAS 39)”
and explaining the equity method, IASPLUS goes on with …
“Equity method: a method of accounting by which an equity investment is initially recorded at cost and subsequently adjusted to reflect the investor’s share of the net assets of the associate (investee)”
Does that answer it for you?
Incidentally, it would be an unusual question that asked for the value of the investment in the investor’s records
OK?
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