Accounting Standard: Equity Method for Investments in Associates, Disclosure Rules, and Transitional Provisions Explained
This accounting standard outlines the principles for recognizing the effects of investments in associates within consolidated financial statements. It defines key terms such as associate, significant influence, and the equity method. The standard mandates the use of the equity method for accounting investments in associates, except when the investment is intended for short-term disposal or faces severe restrictions. It requires adjustments for unrealized profits and losses from transactions between the investor and the associate. Disclosure requirements include listing associates, ownership interests, and differences in accounting policies. Transitional provisions adjust retained earnings to reflect the equity method since acquisition.
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