(IAS) 28, "Investments in Associates,"

International Accounting Standard (IAS) 28, "Investments in Associates"

International Accounting Standard (IAS) 28, "Investments in Associates," was revised in 2011 and retitled as "Investments in Associates and Joint Ventures." The revised standard addresses how to apply the equity method when accounting for investments in associates and joint ventures. However, I can provide an overview of the key aspects of the original IAS 28, focusing on investments in associates:

IAS 28: Investments in Associates (Original Standard)

1. Definition of an Associate: An associate is an entity over which the investor has significant influence but not control or joint control. Significant influence is presumed if the investor holds, directly or indirectly (for example, through subsidiaries), 20% or more of the voting power of the investee.

2. Use of the Equity Method: Under the original IAS 28, investments in associates were accounted for using the equity method of accounting in the investor's consolidated financial statements. Under this method, the investment is initially recognized at cost and adjusted thereafter for the post-acquisition changes in the investor's share of the net assets of the associate.

3. Recognition of Share of Profits and Losses: The investor's share of the associate's profits or losses after acquisition was recognized in the investor's profit or loss. This meant that the carrying amount of the investment in the associate was adjusted to recognize the investor's share of those profits or losses.

4. Impairment Losses: The standard required an assessment at each reporting date as to whether there is any indication that the investment in the associate may be impaired. If any such indication exists, the entire carrying amount of the investment (not just the investor's share of the net assets) is tested for impairment as a single asset.

5. Disclosures: IAS 28 required disclosures to enable users of the financial statements to evaluate the nature and financial effects of the investment in the associate, including the financial performance of the associate and the extent of the investor’s involvement in the associate.

6. Separate Financial Statements: In an investor's separate financial statements, investments in associates could be accounted for either at cost or in accordance with IAS 39 Financial Instruments: Recognition and Measurement (now superseded by IFRS 9 Financial Instruments).

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