ACCT20002 Lecture Notes - Lecture 6: Equity Method, Impaired Asset, Book Value

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Degree of in uence: for any equity instrument, the investor determines its degree of in uence over the investee. The extent to which the investor considers it has the ability to in uence the investee"s. Nancial and operating policy decisions: if investor has control - apply aasb10. Prepare consolidated nancial statements: if investor has minimal capacity to in uence then apply aasb 9 financial instruments. Recognised at cost, then carried according to management"s intention, i. e. hold (cost) or trade (fv with movements taken to p&l: if degree of in uence is somewhere in between, apply aasb 128 investments in associates and joint ventures. Representation on board / governing body of investee. Interchange of managerial personnel or provision of essential technical information. Increase/decrease carrying amount of investment by the investors share of the pro t or loss. Cr share of pro t (before dividends: reduce the carrying amount of the investment by dividends received.

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