OGRIN0/GPT2-ias-28-ifrs-9 · Datasets at Hugging Face

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initially recognised at cost and adjusted thereafter for the post-acquisition
change in the investor’s share of the investee’s net assets. The investor’s
profit or loss includes its share of the investee’s profit or loss and the
investor’s other comprehensive income includes its share of the investee’s
other comprehensive income.
A joint arrangement is an arrangement of which two or more parties
have joint control.
Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing control.
A joint venture is a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the
arrangement.
A joint venturer is a party to a joint venture that has joint control of that
joint venture.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint
control of those policies.1
2
3IAS 28
A1306 © IFRS Foundation
The following terms are defined in paragraph 4 of IAS 27 Separate Financial
Statements and in Appendix A of IFRS 10 Consolidated Financial Statements and are
used in this Standard with the meanings specified in the IFRSs in which they
are defined:
• control of an investee
• group
• parent
• separate financial statements
• subsidiary.
Significant influence
If an entity holds, directly or indirectly (eg through subsidiaries ), 20 per cent
or more of the voting power of the investee, it is presumed that the entity has
significant influence , unless it can be clearly demonstrated that this is not the
case. Conversely, if the entity holds, directly or indirectly (eg through
subsidiaries), less than 20 per cent of the voting power of the investee, it is
presumed that the entity does not have significant influence, unless such
influence can be clearly demonstrated. A substantial or majority ownership by
another investor does not necessarily preclude an entity from having
significant influence.
The existence of significant influence by an entity is usually evidenced in one
or more of the following ways:
(a) representation on the board of directors or equivalent governing body
of the investee;
(b) participation in policy-making processes, including participation in
decisions about dividends or other distributions;
(c) material transactions between the entity and its investee;
(d) interchange of managerial personnel; or
(e) provision of essential technical information.
An entity may own share warrants, share call options, debt or equity
instruments that are convertible into ordinary shares, or other similar
instruments that have the potential, if exercised or converted, to give the
entity additional voting power or to reduce another party’s voting power over
the financial and operating policies of another entity (ie potential voting
rights). The existence and effect of potential voting rights that are currently
exercisable or convertible, including potential voting rights held by other
entities, are considered when assessing whether an entity has significant
influence . Potential voting rights are not currently exercisable or convertible
when, for example, they cannot be exercised or converted until a future date
or until the occurrence of a future event.4
5
6
7IAS 28
© IFRS Foundation A1307
In assessing whether potential voting rights contribute to significant
influence , the entity examines all facts and circumstances (including the
terms of exercise of the potential voting rights and any other contractual
arrangements whether considered individually or in combination) that affect
potential rights, except the intentions of management and the financial ability
to exercise or convert those potential rights.
An entity loses significant influence over an investee when it loses the power
to participate in the financial and operating policy decisions of that investee.
The loss of significant influence can occur with or without a change in
absolute or relative ownership levels. It could occur, for example, when an
associate becomes subject to the control of a government, court, administrator
or regulator. It could also occur as a result of a contractual arrangement.
Equity method
Under the equity method, on initial recognition the investment in an associate
or a joint venture is recognised at cost, and the carrying amount is increased
or decreased to recognise the investor’s share of the profit or loss of the
investee after the date of acquisition. The investor’s share of the investee’s
profit or loss is recognised in the investor’s profit or loss. Distributions
received from an investee reduce the carrying amount of the investment.
Adjustments to the carrying amount may also be necessary for changes in the
investor’s proportionate interest in the investee arising from changes in the
investee’s other comprehensive income. Such changes include those arising
from the revaluation of property, plant and equipment and from foreign
exchange translation differences. The investor’s share of those changes is
recognised in the investor’s other comprehensive income (see IAS 1
Presentation of Financial Statements ).
The recognition of income on the basis of distributions received may not be an
adequate measure of the income earned by an investor on an investment in an
associate or a joint venture because the distributions received may bear little
relation to the performance of the associate or joint venture. Because the
investor has joint control of, or significant influence over, the investee, the
investor has an interest in the associate’s or joint venture’s performance and,
as a result, the return on its investment. The investor accounts for this
interest by extending the scope of its financial statements to include its share
of the profit or loss of such an investee. As a result, application of the equity
method provides more informative reporting of the investor’s net assets and

initially recognised at cost and adjusted thereafter for the post-acquisition

change in the investor’s share of the investee’s net assets. The investor’s

profit or loss includes its share of the investee’s profit or loss and the

investor’s other comprehensive income includes its share of the investee’s

other comprehensive income.

A joint arrangement is an arrangement of which two or more parties

have joint control.

Joint control is the contractually agreed sharing of control of an

arrangement, which exists only when decisions about the relevant

activities require the unanimous consent of the parties sharing control.

A joint venture is a joint arrangement whereby the parties that have joint

control of the arrangement have rights to the net assets of the

arrangement.

A joint venturer is a party to a joint venture that has joint control of that

joint venture.

Significant influence is the power to participate in the financial and

operating policy decisions of the investee but is not control or joint

control of those policies.1

2

3IAS 28

A1306 © IFRS Foundation

The following terms are defined in paragraph 4 of IAS 27 Separate Financial

Statements and in Appendix A of IFRS 10 Consolidated Financial Statements and are

used in this Standard with the meanings specified in the IFRSs in which they

are defined:

• control of an investee

• group

• parent

• separate financial statements

• subsidiary.

Significant influence

If an entity holds, directly or indirectly (eg through subsidiaries ), 20 per cent

or more of the voting power of the investee, it is presumed that the entity has

significant influence , unless it can be clearly demonstrated that this is not the

case. Conversely, if the entity holds, directly or indirectly (eg through

subsidiaries), less than 20 per cent of the voting power of the investee, it is

presumed that the entity does not have significant influence, unless such

influence can be clearly demonstrated. A substantial or majority ownership by

another investor does not necessarily preclude an entity from having

significant influence.

The existence of significant influence by an entity is usually evidenced in one

or more of the following ways:

(a) representation on the board of directors or equivalent governing body

of the investee;

(b) participation in policy-making processes, including participation in

decisions about dividends or other distributions;

(c) material transactions between the entity and its investee;

(d) interchange of managerial personnel; or

(e) provision of essential technical information.

An entity may own share warrants, share call options, debt or equity

instruments that are convertible into ordinary shares, or other similar

instruments that have the potential, if exercised or converted, to give the

entity additional voting power or to reduce another party’s voting power over

the financial and operating policies of another entity (ie potential voting

rights). The existence and effect of potential voting rights that are currently

exercisable or convertible, including potential voting rights held by other

entities, are considered when assessing whether an entity has significant

influence . Potential voting rights are not currently exercisable or convertible

when, for example, they cannot be exercised or converted until a future date

or until the occurrence of a future event.4

5

6

7IAS 28

In assessing whether potential voting rights contribute to significant

influence , the entity examines all facts and circumstances (including the

terms of exercise of the potential voting rights and any other contractual

arrangements whether considered individually or in combination) that affect

potential rights, except the intentions of management and the financial ability

to exercise or convert those potential rights.

An entity loses significant influence over an investee when it loses the power

to participate in the financial and operating policy decisions of that investee.

The loss of significant influence can occur with or without a change in

absolute or relative ownership levels. It could occur, for example, when an

associate becomes subject to the control of a government, court, administrator

or regulator. It could also occur as a result of a contractual arrangement.

Equity method

Under the equity method, on initial recognition the investment in an associate

or a joint venture is recognised at cost, and the carrying amount is increased

or decreased to recognise the investor’s share of the profit or loss of the

investee after the date of acquisition. The investor’s share of the investee’s

profit or loss is recognised in the investor’s profit or loss. Distributions

received from an investee reduce the carrying amount of the investment.

Adjustments to the carrying amount may also be necessary for changes in the

investor’s proportionate interest in the investee arising from changes in the

investee’s other comprehensive income. Such changes include those arising

from the revaluation of property, plant and equipment and from foreign

exchange translation differences. The investor’s share of those changes is

recognised in the investor’s other comprehensive income (see IAS 1

Presentation of Financial Statements ).

The recognition of income on the basis of distributions received may not be an

adequate measure of the income earned by an investor on an investment in an

associate or a joint venture because the distributions received may bear little

relation to the performance of the associate or joint venture. Because the

investor has joint control of, or significant influence over, the investee, the

investor has an interest in the associate’s or joint venture’s performance and,

as a result, the return on its investment. The investor accounts for this

interest by extending the scope of its financial statements to include its share

of the profit or loss of such an investee. As a result, application of the equity

method provides more informative reporting of the investor’s net assets and