RSM321H1 Chapter Notes - Chapter 2: Historical Cost, Book Value, Comprehensive Income

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Published on 22 Mar 2016
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RSM 321: Textbook Notes
Chapter 2: Investments in Equity Securities
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Type of Investment Reporting
Method
Reporting of Unrealized
Gains
Strategic Investments
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Non-strategic Investments
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Document Summary

Reporting methods for investments in equity securities: Ifrs"s directly related to determining how to account for an equity investment: ifrs 10: consolidated financial statements. Where one company controls another company, the former is called the parent and the latter the subsidiary. Consolidated financial statements must be prepared by the parent whereby the investment is removed from the parent"s sfp and the assets/liabilities of the subsidiary added instead. Control: when an investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Presumed to exist where the investor has +50% of the voting: ias 28: investments in associates and joint ventures shares in the investee (only a guideline). An investee company is said to be the associate of the investor company where the latter has significant influence over the former.

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