Associate/Related Party

[BARHIN]

Dear all,

Kindly assist with the situation below:

Company SAL has a 20.1% stake in Company WR. SAL has accounted for its investment in WR as an ordinary investment at FVOCI arguing that it does not exercise significant influence over WR. even though Mr. KD who is a board member of SAL , also happens to be a board member of WR. According to SAL, Mr. KD is not its rep on the board of WR and that Mr. KD was a board member of WR before it acquired the shares.

Recently, SAL acquired additional shares in WR increasing its percentage ownership to 20.9%. Just before the acquisition of the new shares, Mr. KD had been appointed the new board chairman of Company WR as well as Company SG. Company SG is the parent company of SAL.

1. Was SAL's initial assessment and the subsequent treatment of its investment in WR correct?
2. If the answer to 1 is Yes, can SAL continue with its current accounting treatment of WR given the new positions that Mr. KD has assumed?
3. Can WR be considered a related party to SAL?
4. What will be the accounting implication of having to change the treatment of the investment in WR from an ordinary investment to an associate?

Thank you.

[Marek Muc]

You should be able to find answers in our knowledge base!
https://ifrscommunity.com/knowledge-bas ... ated-party
https://ifrscommunity.com/knowledge-bas ... influence/
https://ifrscommunity.com/knowledge-bas ... ecognition