Associate accounting

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sam
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Joined: 25 Jul 2019, 06:13

Associate accounting

Post by sam »

Hi,

I want to confirm accounting entries for disposal of associate in full. ( assume at the day 1 of the year)

In standalone FS,

Loss on disposal of associate ..........Debit
Investment in associate - Cost ........Credit

In Conso FS,

No impact.

Thanks for the help :)
JRSB
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Re: Associate accounting

Post by JRSB »

Why no impact in consol?
Student of IFRS.
DJP
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Re: Associate accounting

Post by DJP »

and why loss on disposal of associate? is it being sold for nothing?
sam
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Joined: 25 Jul 2019, 06:13

Re: Associate accounting

Post by sam »

Yes sold for nothing because the amount is not big enough.
Secondly, impact on consol is nothing except for the entry passed for disposal in standalone FS.

Please confirm ! thanks
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Marek Muc
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Location: Warsaw, Poland

Re: Associate accounting

Post by Marek Muc »

You've probably applied equity method in consolidated financial statements, so the carrying amount of associate is different than in separate financial statements
sam
Posts: 29
Joined: 25 Jul 2019, 06:13

Re: Associate accounting

Post by sam »

Yes you are right. I didn't notice the difference between two amounts. :)

I am doing consolidation in Excel and every time i am passing adjustment entry in conso books to record share of profit of associate:

For current year effect,

Investment in associate XXX
Share of associate profit for the year XXX
Share of revaluation reserve for the year XXX

For prior year effect,

Investment in associate XXX
Retained earning XXX
Revaluation reserve XXX


So this time i will not pass these adjustments and associate will be de-recognized in conso FS also.

Please confirm? thanks
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Marek Muc
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Re: Associate accounting

Post by Marek Muc »

You will pass this conso adjustment for the period up to the day of disposal, and then derecognise the investment at carrying amount under the equity method. Be careful not to recognise the expense representing the carrying amount of investment twice (depending on your consolidation mechanics some expense can be carried over from separate accounts of the investor)
sam
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Joined: 25 Jul 2019, 06:13

Re: Associate accounting

Post by sam »

thanks :)
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