Investments in Associates – Highlights

Just as a starter, two definitions!

Associate: An entity, including an unincorporated entity such as a partnership, over which an investor has significant influence and which is neither a subsidiary nor an interest in a joint venture.

Significant influence: The power to participate in the financial and operating policy decisions of the investee but it is not control or joint control over those policies.… Read more

Earnings per share

The objective of IAS 33 Earnings per share is prescribing principles for the determination and presentation of earnings per share, so as to improve performance comparisons between different entities in the same reporting period and between different reporting periods for the same entity.

Earnings per share is mostly used in the consolidated financial statements of a group with a parent:

  1. whose ordinary shares or potential ordinary shares are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
  2. that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organization for the purpose of issuing ordinary shares in a public market.
Read more

Value to the business measurement

For any given asset, the value to the business basis of measurement tries to answer the question:

How much worse off would the business be if it were deprived of it?

The answer, as a rule, is given by the asset’s replacement cost. For a liability, value to the business measures how much better off the business would be if it were relieved of it.

Because there are markets for only a proportion of the assets held by companies in the age and condition in which they exist at the balance sheet date, there is often no price available for a comparable replacement asset. For this reason, it is usual in practice to calculate replacement cost by taking the price Read more

Presentation in profit or loss of discontinued operations

The profit or loss for the year on discontinued operations is presented as a separate line in the statement of profit or loss and other comprehensive income after the figure ‘profit for the year’.

The line items from ‘Revenue’ to ‘profit for the year’ should therefore include continuing operations only. The figure for discontinued operations should include the post tax gain or loss on disposal of the assets of the operation (if sold) or the gain or loss on re-measurement following transfer to ‘held for sale’ (if relevant).

If no assets are sold or to be sold this will not be relevant. The breakdown of the profit or loss from discontinued operations (into revenue, expenses, tax etc.) is provided in … Read more