13.
Equity Accounting
13.
Equity Accounting........................................................................................................... 2
13.1 Background ................................................................................................................ 2
13.2
Issues ........................................................................................................................... 3
13.2.1
Identifying associates........................................................................................... 3
13.2.2
Equity accounting for associates.......................................................................... 3
13.2.3
Share of the associate........................................................................................... 4
13.2.4
Accounting for the initial investment .................................................................. 5
13.2.5
Transactions between associate and investor....................................................... 5
13.2.6
Subsequent adjustments to equity-accounted investment.................................... 6
Share of current profits ............................................................................................ 6
Amortisation of goodwill ......................................................................................... 6
Dividend income from the associate........................................................................ 6
13.2.7
Post acquisition reserve changes.......................................................................... 6
13.2.8
Recoverable amounts test .................................................................................... 7
13.2.9
Other preparation issues....................................................................................... 7
13.2.10
Disclosures....................................................................................................... 7
13.2.11
An illustrative equity accounting example ...............................