This is written for a company that has an investment ownership interest in another entity, however not total control or joint control. The level of influence in which the owner has over the associate is measured in level of control, usually voting power, the owner has. For the purposes of this standard, significant influence is considered to be the 20% threshold; under 20% is considered to not possess significant influence, over 20% is considered to hold such power unless the owner can demonstrate otherwise. In the case of the owner having over 20% influence, the company should be applying the equity method of investing.
IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.
Accounting made easy, for FREE!
Access the contact form and send us your feedback, questions, etc. We are always welcome to help someone out. You can also contact us if you wish to submit your writing, cartoons, jokes, etc. and we will consider posting them to share with the world! The Facebook and LinkedIn groups are also good areas to find people interested in accounting like yourself, don’t hesitate to join as everyone of all levels are welcome to become part of the community.