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Associates and Joint Ventures: Chapter Aim
Associates and Joint Ventures: Chapter Aim
Associates and Joint Ventures: Chapter Aim
Associates and
joint ventures
CHAPTER AIM
This chapter discusses the application of AASB 128/IAS 28 Investments in Associates and Joint Ventures.
The objectives of this standard are to prescribe the accounting for investments in associates and to set out
the requirements for the application of the equity method when accounting for investments in associates and
joint ventures.
LEARNING OBJECTIVES
Before studying this chapter, you should understand and, if necessary, revise:
• the nature of goodwill or gain on bargain purchase in a business combination including fair value increments
at acquisition
• incremental and decremental revaluations of non-current assets
• accounting for unrealised gains arising from intragroup transactions between entities within a group
• the criteria for identifying parent entities and subsidiaries and the requirement to prepare consolidated
financial statements.
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31.1 Introduction and scope
LEARNING OBJECTIVE 31.1 Explain the nature of associates and joint ventures.
An equity investment is where one entity holds shares in another entity. Where such an investment exceeds
50% we generally identify that the investor has control over the investee, giving rise to a parent–subsidiary
relationship. As we saw in chapters 26–30 of this text, the parent entity is required to prepare consolidated
financial statements under AASB 10/IFRS 10 Consolidated Financial Statements (i.e. a set of financial
statements of the parent and its subsidiaries presented as those of a single economic entity).
Other equity investments may be relatively insignificant and simply carried at either cost or fair value
under AASB 9/IFRS 9 Financial Instruments. Other investments may involve less than 50% ownership and
yet still be significant. For example, in the disclosure note reproduced in figure 31.1, one of Australia’s
largest listed companies, Wesfarmers Limited, lists its interests in a diverse range of associates. These
investments are in the range of 20% to 50%, below the level indicative of control yet they are not
insignificant. All are accounted for using the equity method of accounting.
Investments in associates
Recognition and measurement
The Group’s investments in its associates, being entities in which the Group has significant influence and
are neither subsidiaries nor jointly controlled assets, are accounted for using the equity method. Under
this method, the investment in associates is carried in the consolidated balance sheet at cost plus post-
acquisition changes in the Group’s share of the associates’ net assets.
Goodwill relating to associates is included in the carrying amount of the investment and is not amortised.
After application of the equity method, the Group determines whether it is necessary to recognise any
additional impairment loss with respect to the Group’s investment. The Group’s income statement reflects
the Group’s share of the associate’s result.
Where there has been a change recognised directly in the associate’s equity, the Group recognises its
share of any changes and discloses this in the consolidated statement of comprehensive income.
Where the reporting dates of the associates and the Group vary, management accounts of the
associate for the period to the Group’s balance date are used for equity accounting. The associates’
accounting policies are consistent with those used by the Group for like transactions and events in similar
circumstances.
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Investment properties owned by associates are initially measured at cost, including transaction costs.
Subsequent to initial recognition, investment properties are stated at fair value, which reflects market
conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment
properties are recognised in profit or loss of the associate, in the year in which they arise. This is consistent
with the Group’s policy.
Interests in joint arrangements
Recognition and measurement
The Group recognises its share of the assets, liabilities, expenses and income from the use and output of
its joint operations. The Group’s investment in its joint venture is accounted for using the equity method
of accounting.
Key judgement: control and significant influence
The Group has a number of management agreements with associates and joint arrangements it considers
when determining whether it has control, joint control or significant influence. The Group assesses whether
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it has the power to direct the relevant activities of the investee by considering the rights it holds to appoint
or remove key management and the decision-making rights and scope of powers specified in the contract.
Where the Group has the unilateral power to direct the relevant activities of an investee, the Group
then assesses whether the power it holds is for its own benefit (acting as principal) or for the benefit of
others (acting as agent). This determination is based on a number of factors including an assessment of
the magnitude and variability of the Group’s exposure to variable returns associated with its involvement
with the investee. In an agency capacity, the Group is considered to be acting on behalf of other parties
and therefore does not control the investee when it exercises its decision-making powers.
Interests in associates and joint arrangements
Country of 2018 2017
Associates Principal activity Reporting date incorporation % %
Australian Energy
Consortium Pty Ltd1 Oil and gas 31 December Australia 27.4 27.4
Bengalla Coal Sales
Company Pty Limited Sales agent 31 December Australia 40.0 40.0
Bengalla Mining
Company Pty Limited Management company 31 December Australia 40.0 40.0
BWP Trust Property investment 30 June Australia 24.8 24.8
Gresham Partners
Group Limited Investment banking 30 September Australia 50.0 50.0
Gresham Private
Equity Funds Private equity fund 30 June Australia (a) (a)
Queensland Nitrates
Management Pty Ltd Chemical manufacture 30 June Australia 50.0 50.0
Queensland Nitrates
Pty Ltd Chemical manufacture 30 June Australia 50.0 50.0
Wespine Industries
Pty Ltd Pine sawmillers 30 June Australia 50.0 50.0
Country of
Joint operations Principal activity Reporting date incorporation % %
Sodium cyanide
Sodium Cyanide manufacture 30 June Australia 75.0 75.0
Bengalla Coal mining 31 December Australia 40.0 40.0
ISPT Property ownership 30 June Australia 25.0 25.0
Country of
Joint ventures Principal activity Reporting date incorporation % %
BPI NO 1 Pty Ltd Property management 30 June Australia (b) (b)
1
Australian Energy Consortium Pty Ltd has a 50.0 per cent interest in Quadrant Energy Holdings Pty Ltd.
(a) Gresham Private Equity Funds: Whilst the Group’s interest in the unit holders’ funds of Gresham Private Equity Fund
No. 2 amounts to greater than 50.0 per cent, it is not a controlled entity as the Group does not have the practical ability
to direct their relevant activities. Such control requires a unit holders’ resolution of 75.0 per cent of votes pursuant
to the Funds’ trust deeds.
(b) BPI NO 1 Pty Ltd: Whilst the Group owns the only equity share in BPI NO 1 Pty Ltd, the Group’s effective interest
approximates 50.0 per cent and joint control is effected through contractual arrangements with the joint venture partner.
Source: Wesfarmers Limited (2018, p. 131).
The purpose of this chapter is to detail the nature of associates and joint ventures and to set out how they
are accounted for. The appropriate accounting standard is AASB 128/IAS 28 Investments in Associates
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and Joint Ventures. Under AASB 128/IAS 28, the equity method is applied to both associates and joint
ventures. Accounting for joint arrangements is covered by AASB 11/IFRS 11 Joint Arrangements (see
chapter 32).
LEARNING CHECK
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31.2 Identifying associates and joint ventures
LEARNING OBJECTIVE 31.2 Discuss the concepts of significant influence and joint control.
31.2.1 Associates
An associate is defined in paragraph 3 of AASB 128/IAS 28 as:
an entity over which the investor has significant influence.
The distinction between a direct and an indirect holding in an associate is depicted in figure 31.2.
Direct
25%
Investor Associate
Indirect
100% 25%
Parent Subsidiary Associate
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So, while 20% of the voting power over an investee is the quantitative indicator, there is scope for other
factors to override this determination either side of this threshold. For example, an entity may have 25%
of the voting power in an investee while another entity holds 60%. Despite their voting power exceeding
20%, the fact that another entity has control may lead the preparer to the conclusion that they do not have
significant influence over the investee.
There is no requirement that the investor holds any shares, or has any beneficial interest in the associate.
However, as discussed later, the application of the equity method is possible only where the investor
holds shares in the associate. In other cases, the investor is required to make specific disclosures in its
financial statements.
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According to paragraph 6 of AASB 128/IAS 28, the existence of significant influence by an entity is
usually evidenced in one or more of the following ways:
(a) representation on the board of directors or equivalent governing body of the investee;
(b) participation in policy-making processes, including participation in decisions about dividends or other
distributions;
(c) material transactions between the entity and its investee;
(d) interchange of managerial personnel; or
(e) provision of essential technical information.
Due to the voting power the investor typically has in the investee, the most common form of participation
is that of representation on the board of directors.
Investor A Investor B
50% 50%
Joint
venture
Joint control is defined in paragraph 3 of AASB 128/IAS 28 as the contractually agreed sharing of
control of an arrangement, which exists only when decisions about the relevant activities require the
unanimous consent of the parties sharing control. The key element of joint control is there must be at
least two investors who have shared control of the investee.
In summary then, there are three investor–investee relationships, which are based on different levels of
control, as follows.
According to paragraph 14 of AASB 11/IFRS 11, an investor in a joint arrangement must determine
whether the arrangement is a joint operation or a joint venture. This classification depends on the rights
and obligations of the parties to the arrangement. Joint ventures are accounted for under AASB 128/IAS 28
while joint operations are accounted for under AASB 11/IFRS 11. This distinction is covered in detail in
chapter 32. In this chapter, it is sufficient to note that a joint venture is an arrangement where the investor
has a right to an investment in the investee. The investee will have the following features.
• The legal form of the investee and the contractual arrangements are such that the investor does not have
rights to the assets and obligations for the liabilities of the investee.
• The investee has been designed to have a trade of its own and as such must directly face the risks arising
from the activities it undertakes, such as demand, credit or inventories risks.
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In the examples used in this chapter, an investor will hold between 20% and 50% of the shares in
an investee. The classification of that investment as an investor–associate relationship or a joint venture
will depend on whether the investor has significant influence over or joint control of the investee. The
subsequent accounting for either structure is the same.
LEARNING CHECK
The key criterion for identifying an investor–associate relationship is that the investor has significant
influence over the associate.
Significant influence is the power to participate in the policy decisions of the investee, but it does not
extend to control as required for a parent–subsidiary relationship.
The investor does not need to hold shares in an associate, but where more than 20% of the voting
power is held, significant influence is presumed to exist.
AASB 128/IAS 28 provides guidelines to help determine the existence of significant influence, including
the ability to influence the investee’s board of directors, and the existence of material transactions
between the investor and the investee.
The key criterion for identifying a joint arrangement is that two or more parties have joint control over
the investee.
Joint control exists only when decisions about the relevant activities of the joint venture require the
unanimous consent of the parties sharing control.
profit or loss.
Under the cost method, the only information provided about the associate’s performance would be in
relation to dividends received or receivable from the associate.
The equity method is designed to provide more information than that provided by the cost method, but
less than that given under the consolidation method. However, as stated in paragraph 26 of AASB 128/
IAS 28:
Many of the procedures that are appropriate for the application of the equity method are similar to the
consolidation procedures described in AASB 10 [IFRS 10]. Furthermore, the concepts underlying the
procedures used in accounting for the acquisition of a subsidiary are also adopted in accounting for
the acquisition of an investment in an associate or a joint venture.
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Because of the similarity with the principles and procedures of consolidation, the equity method has
sometimes been described as ‘one-line consolidation’. Importantly, however, the equity method as applied
under AASB 128/IAS 28 is not entirely consistent with consolidation principles.
The standard setters do not explain why the equity method is preferred to the fair value method. Further,
where there is a departure from consolidation principles, AASB 128/IAS 28 does not supply a justification
for the departure. This makes it difficult to evaluate the equity method on the basis of it being a one-line
consolidation method or simply another measurement method competing with fair value.
LEARNING CHECK
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31.4 Applying the equity method: basic principles
LEARNING OBJECTIVE 31.4 Apply the equity method to an investment in an associate.
The investor applies the equity method in accounting for its investment in the investee, being either an
associate or a joint venture investee, from the date it acquires significant influence. Paragraph 10 of
AASB 128/IAS 28 describes the basics of the equity method. There are four key steps in its application.
1. Recognise the initial investment in the investee at cost. If the investment has already been recorded at
fair value, an adjustment must be made to restate the investment back to its original cost.
2. Increase or decrease the carrying amount of the investment by the investor’s share of the profit or loss
of the investee after the acquisition date — that is, post-acquisition profit or loss.
3. Reduce the carrying amount of the investment by distributions, such as dividends, received from
the investee.
4. Increase or decrease the carrying amount of the investment for the investor’s share of changes arising
in the investee’s other comprehensive income. Such changes include those arising from the revaluation
of assets where the movements are recognised in the reserves of the investee’s equity rather than in
profit or loss.
Although potential voting rights may be considered in the assessment of significant influence, it is the
equity interest that is used in any of the above calculations of proportionate share.
During the 2023–24 year, Joey Ltd reported an after-tax profit of $25 000. As reported in other
comprehensive income, the asset revaluation surplus increased by $5000. Joey Ltd paid a $4000 dividend
and transferred $3000 to general reserve.
Step 1. Recognition of the initial investment
At 1 July 2023, Kangaroo Ltd would record the investment in Joey Ltd at a cost of $42 500.
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The share of profit or loss of associates and joint ventures is disclosed as a separate line item in
the statement of profit or loss and other comprehensive income in accordance with paragraph 82(c) of
AASB 101/IAS 1.
Step 3. Recognition of share of other comprehensive income: increase in asset
revaluation surplus
The asset revaluation surplus has increased by $5000, with this also being reported by the investee in
other comprehensive income. This is post-acquisition equity and the investor is entitled to a 25% share.
The investment in the associate/joint venture is increased, and the share of other comprehensive income
is recognised, this being then accumulated in equity. The journal entries in the records of the investor at
30 June 2024 are as follows.
Paragraph 82A of AASB 101/IAS 1 requires that the share of other comprehensive income of associates
and joint ventures be disclosed separately in the other comprehensive income section of the statement
of profit or loss and other comprehensive income.
The general reserve has also been increased by $3000. However, there is no need to pass any journal
entries relating to this transfer from current profits to reserves because there is no net change in the equity
of the investee. The investor, under step 2 above, recognised its share of the investee’s profit. This includes
a share of the amount transferred to general reserve. To recognise a share of the general reserve as well
as a share of the profit would double count the investor’s share of equity.
Step 4. Adjustment for dividend paid by associate/joint venture
In the current period, the investee paid a dividend of $4000. Under the equity method, the investor
recognises its share of the investee’s profit as income. If dividends are a distribution of such profits, then
to recognise dividends as income would be double counting. Accordingly, under the equity method the
dividend is not recognised as revenue by the investor; rather it reduces the investor’s share of the equity
of the investee. Hence, the investor passes a journal entry to recognise the receipt of cash on payment of
the dividend and reduces its investment in the investee.
The entry at 30 June 2024 is as follows.
Note that if the dividend had been declared by the investee but not paid, the investor would recognise a
dividend receivable instead of cash and still reduce its investment in the investee. Also, this entry would be
recorded on the date the dividend was declared and/or received. In this example this date was assumed
to be 30 June.
At 30 June 2024, the carrying amount of the investment in the associate is measured at $49 000.
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Step 5. Adjustment for dividend paid by associate/joint venture
Because the investor carries the investment at cost, and does not recognise any share of profit in its
individual records, the cash dividend from the investee is recognised as revenue. To avoid the double
counting mentioned previously the worksheet entry must eliminate the dividend revenue recorded by the
investor and reduce the carrying amount of investment in the associate.
The consolidation worksheet entry at 30 June 2024 is as follows.
If the dividend had been declared but not paid, the adjustment entry would be the same as above.
LEARNING CHECK
The equity method is applied from the date the investor obtains significant influence over the investee.
The investment in an associate/joint venture is initially recorded at cost.
The equity method requires the carrying amount of the investment in an associate/joint venture to be
increased or decreased for the investor’s share of the post-acquisition movements in the equity of the
associate/joint venture.
The investor’s share of current period profit or loss of associates and joint ventures is disclosed as a
separate line item in the investor’s statement of profit or loss and other comprehensive income.
The investor’s share of other comprehensive income of associates and joint ventures is disclosed as a
separate line item in the investor’s statement of profit or loss and other comprehensive income.
Dividends from the investee are recognised as reductions in the carrying amount of the investment.
Where dividends are paid/declared by an associate/joint venture and the investor does not prepare
consolidated financial statements, no dividend revenue is recognised by the investor.
Where dividends are paid/declared by an associate/joint venture and the investor prepares consol-
idated financial statements, the dividend revenue recognised in the parent’s accounts is eliminated
on consolidation.
• the recorded equity of the investee, equal to the recorded carrying amounts of the assets and liabilities
of the investee
• the differences between the carrying amounts of the assets and liabilities of the investee and the fair
values of these assets and liabilities
• the fair values of any assets and liabilities not recognised by the investee
• any goodwill existing in the investee.
As the investment is initially recognised at cost, the initial carrying amount of the investor’s interest in
the investee reflects all of these amounts — the pre-acquisition equity of the investee effectively equals the
sum of the fair values of the assets and liabilities of the investee (recorded and unrecorded) and the cost of
any goodwill acquired.
The investee does not record all the pre-acquisition equity at acquisition date. It may, however, recognise
some of it subsequent to acquisition date. For example, assume the investee’s sole asset at acquisition date
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was land that was recorded at acquisition date at $100 000 but had a fair value at that date of $120 000.
Although the investee’s recorded equity at acquisition date is $100 000 the real pre-acquisition equity is
$114 000 after taking into account the deferred tax effect. If in the year following the acquisition date the
investee sold the land for $120 000, the before-tax gain on sale of $20 000 from the investor’s perspective
is the realisation of pre-acquisition equity, not a post-acquisition change in equity. Under the application of
the equity method, the carrying amount of the investor’s investment in the investee should not be increased
by a share of this gain.
In order for post-acquisition changes in the equity of the investee to be identified, an analysis is
undertaken at acquisition date to identify the pre-acquisition equity. This is done in the same way as
demonstrated in chapters 26–30 when accounting for a parent’s acquisition in a subsidiary.
The acquisition analysis involves comparing the cost of the investment in the associate/joint venture
with the net fair value of the identifiable assets and liabilities of the investee, determining whether any
goodwill or excess arose at acquisition date.
In applying the equity method, the share of the investee’s post-acquisition profit or loss is adjusted for
differences between carrying amounts and fair values of identifiable assets and liabilities at acquisition
date and for any impairment of the investment. These adjustments are only notional adjustments; that is,
they are not made in the records of the investee but are simply used in the calculation of the investor’s
share of post-acquisition equity of the investee. Because the investor’s share of post-acquisition profit or
loss of the investee is after tax, these adjustments are also calculated on an after-tax basis.
Illustrative example 31.2 shows the accounting for fair value/carrying amount differences at acquisition
date and goodwill acquired by the investor. Illustrative example 31.3 shows the accounting where an
excess occurs.
At the acquisition date, all the identifiable assets and liabilities of Bilby Ltd were recorded at fair value,
except for plant for which the fair value was $10 000 greater than its carrying amount, and inventories
whose fair value was $5000 greater than its cost. The tax rate is 30%. The plant has a further 5-year life.
The inventories were all sold by 30 June 2022. In the reporting period ending 30 June 2022, Bilby Ltd
reported a profit of $15 000.
The acquisition analysis at 1 July 2021 is as follows.
Net fair value of the identifiable assets and liabilities of Bilby Ltd = ($100 000 + $50 000 + $20 000) (equity)
+ $10 000(1 − 30%) (plant)
+ $5000(1 − 30%) (inventories)
= $180 500
Net fair value acquired by Emu Ltd = 25% × $180 500
= $45 125
Cost of investment = $49 375
Goodwill = $4250
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The analysis has determined that Emu Ltd has acquired goodwill of $4250 in Bilby Ltd. This goodwill
is already included in the carrying amount of the investment and is not separately recognised as it is in a
business combination. Paragraph 42 of AASB 128/IAS 28 points out that, as goodwill in an associate or
joint venture is not separately recognised, it is not separately tested for impairment. Instead, the investment
is tested for impairment as a single asset. Unlike a cash-generating unit where impairment is first allocated
to goodwill and can never be reversed, any impairment of an investment in an associate or joint venture
is recognised against the investment and can be reversed in subsequent periods.
As the investee reports its profit or loss post-acquisition, it does so depreciating its assets according
to the investee’s carrying amounts. Paragraph 32 of AASB 128/IAS 28 requires appropriate adjustments
be made to the investee’s profit or loss to account for depreciation of assets based on their acquisition-
date fair values. The $7000 after-tax fair value increment in the plant is allocated as a short-depreciation
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adjustment against the investee’s profit over the next 5 years as follows.
Depreciation adjustment = [$10 000 (1 − 30%)]/5 years
= $1400
Similarly, the investee will allocate the acquisition-date carrying amount for inventories to cost of sales
when determining its profit. AASB 128/IAS 28 requires the investee’s profit to be adjusted to account for
the fair value of these inventories as follows.
Inventories adjustment = $5000 (1 − 30%)
= $3500
Hence, the investor’s share of post-acquisition equity at 30 June 2022 is as follows.
The journal entry to reflect the application of the equity method to the investment in the investee is
as follows.
This entry is the same regardless of whether the investor prepares consolidated financial statements or
the entries are made in the records of the investor.
Excess
In the event that the analysis of the acquisition identifies the consideration to be less than the fair value
of the investee’s identifiable net assets, paragraph 32 of AASB 128/IAS 28 requires this excess to be
included as income in the determination of the investor’s share of the investee’s profit or loss in the period
in which the investment is acquired.
Assume in illustrative example 31.2 that the cost of the investment was $45 000. The acquisition analysis
would then show the following.
The amount of the adjustment needed in applying equity-method accounting to the investment in the
associate at 30 June 2022 is then as follows.
Pre-acquisition adjustments
Depreciation of plant $(1 400)
Sale of inventories (3 500) (4 900)
10 100
Investor’s share of post-acquisition profit (25%) 2 525
Adjustment for excess 125
$ 2 650
Note that the excess relates to the investor’s 25% investment in the investee and so is added after the
pre-acquisition adjustments are made to the recorded profit.
The journal entry to reflect the application of the equity method to the investment in the investee is
as follows.
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Investment in Bilby Ltd Dr 2 650
Share of profit or loss of associates and joint ventures Cr 2 650
(Recognition of share of post-acquisition profit of investee)
Multiple periods
On 1 July 2022, Platypus Ltd acquired 40% of the shares of Koala Ltd for $122 400. The equity of
Koala Ltd at acquisition date consisted of the following.
At 1 July 2022, all the identifiable assets and liabilities of Koala Ltd were recorded at fair value except
for the following.
Carrying amount Fair value
Machinery $140 000 $160 000
Inventories 35 000 45 000
By 30 June 2023, the inventories on hand at 1 July 2022 had been sold by Koala Ltd. The machinery was
expected to provide future benefits evenly over the next 2 years and then be scrapped. The tax rate is 30%.
Dividends declared at 30 June are paid within the following 3 months, with liabilities being raised at the
date of declaration.
In January 2025, Koala Ltd revalued furniture upwards by $6000, affecting the asset revaluation surplus
by $4200.
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The financial statements of Koala Ltd over three periods contained the following information.
30 June 2023 30 June 2024 30 June 2025
Profit or loss $ 40 000 $ 60 000 $ 70 000
Retained earnings (opening balance) 80 000 98 000 123 000
120 000 158 000 193 000
Dividend paid (5 000) (10 000) (15 000)
Dividend declared (7 000) (15 000) (20 000)
Transfer to general reserve (10 000) (10 000) 0
(22 000) (35 000) (35 000)
Retained earnings (closing balance) $ 98 000 $123 000 $158 000
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Required
Prepare the entries in the consolidation worksheet of Platypus Ltd to apply the equity method to its
investment in Koala Ltd for each of the 3 years ending 30 June 2023, 2024 and 2025.
Solution
Acquisition analysis
Net fair value of identifiable assets and liabilities of Koala Ltd = $200 000 + $80 000 (equity)
+ $20 000(1 − 30%) (machinery)
+ $10 000(1 − 30%) (inventories)
= $301 000
Net fair value acquired by Platypus Ltd = 40% × $301 000
= $120 400
Cost of investment = $122 400
Goodwill = $2000
Pre-acquisition effects:
Depreciation of machinery p.a. after tax = 50% × $20 000(1 − 30%)
= $7000
After tax profit on sale of inventories = $10 000(1 − 30%)
= $7000
The entries in the consolidation worksheet of Platypus Ltd at 30 June 2023 are as follows.
Note that the net increase in in the carrying amount of the investment for the year equals $5600
(i.e. $10 400 − $4800).
Consolidation worksheet 30 June 2024
Share of prior period’s equity
The first journal entry in the consolidation worksheet recognises the investor’s share of the movement in
equity of the investee in the prior period. The only account affected by prior period movements is retained
earnings. Note that the movement in the general reserve has to be added back to retained earnings as this
was effectively a transfer from profit. The calculation of the investor’s share of prior period movements in
equity is as follows.
Movement in retained earnings since acquisition date
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The consolidation worksheet entry at 30 June 2024 is as follows.
Note that the above entry is necessary because the equity accounting entries are made in the
consolidation worksheet and not in the actual records of the investor.
Share of current period equity
The next set of entries relates to the investor’s share of equity for the 2023–24 year.
Workings
The entries in the consolidation worksheet at 30 June 2024 reflecting the effects of the profit generated
and the dividends declared/paid are as follows.
Note that the net increase in equity and in the investment account as a result of applying the equity
method is $16 800 (i.e. $5600 + $21 200 − $10 000).
Consolidation worksheet 30 June 2025
Share of prior period equity
The first journal entry in the consolidation worksheet recognises the investor’s share of the movement in
equity of the investee in the prior period. The calculation of the investor’s share of prior period movements
in equity is as follows.
Movement in retained earnings since acquisition date
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Workings
Recorded profit of investee $70 000
Pre-acquisition adjustments
Nil Nil
70 000
Investor’s share — 40% $28 000
Other comprehensive income of investee
$6000(1 − 30%) $ 4 200
Investor’s share — 40% $ 1 680
The entries in the consolidation worksheet at 30 June 2025 reflecting the effects of the profit and other
comprehensive income generated and the dividends declared/paid are as follows.
LEARNING CHECK
Goodwill arising from the acquisition of an associate or joint venture is not separately recognised.
Accordingly, goodwill is not tested separately for impairment.
Excess on acquisition is recognised along with share of profit of the investee at the first reporting date
after acquisition.
Calculation of adjustments for differences between carrying amounts and fair values is always on an
after-tax basis.
Where differences between fair values and carrying amounts exist at acquisition date for the investee’s
identifiable assets and liabilities, subsequent equity recognised by the associate may include pre-
acquisition adjustments relating to these differences.
Prior to calculating the investor’s share, reported profit of an associate or joint venture must first be
adjusted to account for fair value differences at acquisition.
Where the investor prepares consolidated financial statements, the equity method is applied in the
consolidation worksheet. As consolidation entries are never posted, the effects of all prior periods’
equity method adjustments must be accounted for along with the current period’s adjustments.
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As stated in paragraph 26 of AASB 128/IAS 28, many of the procedures that are appropriate for the
application of the equity method are similar to consolidation procedures described in AASB 10/IFRS 10.
Where a parent or its consolidated subsidiaries undertake transactions with an associate or a joint venture,
adjustments must be made for unrealised gains and losses on those transactions.
The principles for adjusting the effects of inter-entity transactions under equity accounting are
as follows.
• Adjustments are made for transactions between an associate/joint venture and the investor that give rise
to unrealised profits and losses. Such transactions include the sale of inventories from the investor to
the investee. Realisation of the profits or losses on these transactions occurs when the asset on which
the profit or loss accrued is sold to an external entity, or as the future benefits embodied in the asset are
consumed.
Unlike consolidation, there is no need to adjust for transactions between the investor and the investee —
only any unrealised gains or losses arising from those transactions. Therefore, transactions such as a loan
between the entities, or the payment of interest on the loan, do not require an adjustment under equity
accounting.
• Adjustments for transactions between an investor and an investee are done on a proportional basis,
determined in accordance with the investor’s ownership interest in the investee. This differs from
consolidation adjustments where the adjustments are made on a 100% basis, and are unaffected by
the parent’s ownership interest in the subsidiary.
• Adjustments are made on an after-tax basis to the share of profit or loss of associates and joint ventures
and investment in associates and joint ventures accounts. AASB 128/IAS 28 does not detail which
accounts should be adjusted under the equity method. For example, if an investee sells inventories to
an investor at a profit, should the inventories account of the investor be adjusted? In this chapter, the
only accounts adjusted are the Share of profits or losses in associates and joint ventures account and the
Investments in associates and joint ventures account — no adjustments are made to specific accounts of
the investor or investee.
Note that the adjustments are made on an after-tax basis as the equity method recognises a share of
after-tax profits only.
The adjustments are the same for all transactions regardless of whether they are upstream (where an
associate/joint venture sells to an investor) or downstream (where an investor sells to an associate/joint
venture). The direction of the transaction is irrelevant in determining the accounts affected by the
application of the equity method.
It is difficult to find a rationale for the adjustments for inter-entity transactions under the equity method
of accounting as applied under AASB 128/IAS 28. Unlike subsidiaries, associates and joint ventures are not
part of the single economic entity and so the consolidation rationale is not applicable. The main argument
for the method used is simplicity. However, the method does lead to some strange results. For example,
where an investor sells inventories to an investee, the adjustment is to the share of profit or loss of associates
and joint ventures account even though the profit was made by the investor and not the investee. The
incremental change to the investment account does not therefore reflect only changes in the equity of the
investee, but includes unrealised profits made by the investor.
Devil Ltd 2 years prior on 1 July 2022, when the retained earnings balance of Devil Ltd was $100 000.
At this date, all the identifiable assets and liabilities of Devil Ltd were recorded at fair value
• at 30 June 2023, the retained earnings balance in Devil Ltd is $140 000, and the profit recorded for the
2023–24 period is $30 000. The tax rate is 30%.
The adjustment entries may differ according to whether they are made in the consolidation worksheet or
in the accounting records of the investor. Differences in particular arise where the effects of a transaction
occur across 2 or more years.
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Example 1. Sale of inventories from associate to investor in the
current period
During the 2023–24 period, Devil Ltd sold $5000 worth of inventories to Tasmanian Ltd. These items had
previously cost Devil Ltd $3000. All the items remain unsold by the investor at 30 June 2024.
The calculations for applying the equity method are as follows.
2022–23 period
Change in retained earnings since acquisition date: $140 000 − $100 000 $40 000
Investor’s share — 25% $10 000
2023–24 period
Current period profit $30 000
Adjustments for inter-entity transactions
Unrealised after-tax profit in ending inventories: $2000(1 − 30%) (1 400)
28 600
Investor’s share — 25% $ 7 150
If the investor prepares consolidated financial statements, the entries in the consolidation worksheet at
30 June 2024 to apply the equity method to its associate/joint venture are as follows.
If the investor does not prepare consolidated financial statements, the entries are made in the records of
the investor. The first entry would be made at 30 June 2023 and only the second entry from above would
be made at 30 June 2024.
2022–23 period
As for example 1: Investor’s share — 25% $10 000
2023–24 period
Current period profit $30 000
Adjustment for inter-entity transactions
Unrealised after-tax profit in ending inventories: $1000(1 − 30%) (700)
29 300
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If the investor prepares consolidated financial statements, at 30 June 2024, the entries in the consolida-
tion worksheet to apply the equity method to its associate are as follows.
If the investor does not prepare consolidated financial statements, in the 2023–24 period only the second
of the above two entries is required.
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Example 4. Sale of inventories in the previous period
During the 2022–23 period, Tasmanian Ltd sold $5000 worth of inventories to Devil Ltd. These items had
previously cost Tasmanian Ltd $3000. All the items remain unsold by Devil Ltd at 30 June 2023. These
were all sold to other entities by 30 June 2024.
The calculations for applying the equity method are as follows.
2022–23 period
Change in retained earnings since acquisition date: $140 000 − $100 000 $40 000
Adjustment for inter-entity transactions
Unrealised after-tax profit in ending inventories: $2000(1 − 30%) (1 400)
38 600
Investor’s share — 25% $ 9 650
2023–24 period
Current period’s profit $30 000
Adjustment for inter-entity transactions
Realised after-tax profit in opening inventories: $2000(1 − 30%) 1 400
31 400
Investor’s share — 25% $ 7 850
In the 2023–24 period, the profit that was unrealised in the previous period becomes realised. Hence,
the amount is added back in the calculation of the 2023–24 share of equity. Across the two periods, the
net effect is zero as the unrealised gain in 2022–23 is offset when it is realised in 2023–24.
If the investor prepares consolidated financial statements at 30 June 2024, the entries in the consolidation
worksheet to apply the equity method to its associate are as follows.
If the investor does not prepare consolidated statements, the only entry passed at 30 June 2024 is the
second entry above.
2022–23 period
Change in retained earnings since acquisition date $40 000
Adjustments for inter-entity transactions
Unrealised after-tax gain on sale of plant: $5000(1 − 30%) (3 500)
1
Realised after-tax gain on sale of plant: × $3500 700
5
37 200
Investor’s share — 25% $ 9 300
Note that at the time of sale of the plant the gain on the sale is unrealised. The profit is realised as the
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asset is consumed or used by the entity holding the asset. The consumption of benefits is measured by the
depreciation of the asset. Hence, as the plant is depreciated on a straight-line basis over a 5-year period,
one-fifth of the profit is realised in each year after the inter-entity transfer.
2023–24 period
Current period profit $30 000
Adjustment for inter-entity transactions
1
Realised after-tax gain on sale of plant: × $3500 700
5
30 700
Investor’s share — 25% $ 7 675
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A further one-fifth of the unrealised profit is realised in the 2023–24 period as the benefits from the asset
are further consumed. By the end of the 5-year period, the whole of the profit is realised.
If the investor prepares consolidated financial statements at 30 June 2024, the entries in the consolidation
worksheet to apply the equity method to its associate/joint venture are as follows.
If the investor does not prepare consolidated statements, only the second of the above entries is passed
at 30 June 2024.
At 1 July 2021, all the identifiable net assets of Numbat Ltd were recorded at fair value except for
the following.
The inventories were all sold by 30 June 2022. The plant had a further expected useful life of 10 years.
Additional information
(a) On 1 July 2022, Dingo Ltd held inventories sold to it by Numbat Ltd at a profit before income tax of
$150 000. This was all sold by 30 June 2023.
(b) In February 2023, Numbat Ltd sold inventories to Dingo Ltd at a profit before income tax of $600 000.
Half of this was still held by Dingo Ltd at 30 June 2023.
(c) On 30 June 2023, Numbat Ltd held inventories sold to it by Dingo Ltd at a profit before income tax of
$250 000. This had been sold to Numbat Ltd for $2 000 000.
(d) On 2 July 2021, Numbat Ltd sold some equipment to Dingo Ltd for $1 500 000, with Numbat Ltd
recording a profit before income tax of $ 400 000. The equipment had a further 4-year life, with benefits
expected to occur evenly in these years.
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(e) In June 2022, Numbat Ltd provided for a dividend of $1 000 000. This dividend was paid in August
2022. Dividend revenue is recognised when the dividend is provided for.
(f) The balances in the general reserve have resulted from transfers from retained earnings.
(g) The tax rate is 30%.
(h) Each share in Numbat Ltd has a fair value at 30 June 2023 of $4.
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The consolidated financial statements of Dingo Ltd and the financial statements of Numbat Ltd at
30 June 2023, not including the equity-accounted figures, are as follows.
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Required
Prepare the consolidated financial statements of Dingo Ltd at 30 June 2023, applying the equity method
of accounting to the investment in Numbat Ltd.
Solution
The first step is to prepare an acquisition analysis which compares at acquisition date, 1 July 2021, the cost
of the investment in Numbat Ltd and the share of the net fair value of the identifiable assets and liabilities of
Numbat Ltd. This analysis is the same as the acquisition analysis used in preparing consolidated financial
statements, and results in the determination of any goodwill or excess.
Acquisition analysis
At 1 July 2021:
Net fair value of identifiable assets and liabilities of Numbat Ltd = ($3 000 000 + $3 000 000) (equity)
+ $200 000(1 − 30%) (inventories)
+ $500 000(1 − 30%) (plant)
= $6 490 000
Net fair value acquired by Dingo Ltd = 40% × $6 490 000
= $2 596 000
Cost of investment = $2 696 000
Goodwill = $100 000
As a result of the analysis, the effects of the adjustments to assets on hand at acquisition date can be
calculated. In relation to the plant, there is a $500 000 difference between the fair value and the carrying
amount at acquisition date. As a result, the reported profits of the associate after acquisition date will
include amounts that were paid for by the investor at acquisition date. The equity method recognises a
share of post-acquisition equity only. The plant is being depreciated by the associate at 20% p.a. straight-
line. The after-tax effect of the depreciation each year is calculated as follows.
Depreciation of plant p.a. = [$500 000 (1 − 30%)] /10 years
= $35 000
In each of the 10 years subsequent to the acquisition date, the reported profit of the associate is reduced
by $35 000 p.a. prior to calculating the investor’s share of post-acquisition equity.
In relation to inventories, there is a $200 000 difference between fair value and carrying amount at
acquisition date. When the associate sells the inventories, it will report a profit that includes pre-acquisition
equity to the investor. The after-tax effect on profit on sale of the inventories is as follows.
Pre‐acquisition inventories effect = $200 000 (1 − 30%)
= $140 000
In the year of sale of the inventories, the investor’s share of the reported profit of the associate is reduced
by $140 000 prior to calculating the investor’s share of post-acquisition equity.
Consolidation worksheet entries — 30 June 2023
The investor’s share of the post-acquisition equity of the associate to be recognised on consolidation is
calculated in two steps: a share of post-acquisition equity between the acquisition date and the beginning
of the current period, and a share of the current period’s post-acquisition equity. A third step is necessary
to adjust for dividends paid/payable by the investee.
(1) Share of changes in post-acquisition equity in previous periods
The calculation is based on post-acquisition movements in the retained earnings account and other
reserve accounts created by transfers from retained earnings, and adjusted for the effects of inter-entity
transactions. The consolidation worksheet entry for the investor’s share of the associate’s post-acquisition
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equity recognised between the date of acquisition and the beginning of the current period is calculated
as follows.
$’000 $’000
Retained earnings:
Post-acquisition retained earnings from acquisition date to
beginning of the current period: $4 000 000 − $3 000 000 1 000
Change in general reserve in previous periods 1 500
2 500
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$’000 $’000
Pre-acquisition adjustments
Depreciation of plant (35)
Sale of inventories (140) (175)
Post-acquisition retained earnings 2 325
Adjustments for inter-entity transactions
Inventories on hand at 30/6/23: $150 000(1 − 30%) (105)
Unrealised profit on sale of equipment
1
Original gain $400 000(1 − 30%) less depreciation p.a. of × $280 000 (210) (315)
4
2 010
Investor’s share (40%) of retained earnings at 1/7/22 804
Asset revaluation surplus:
Share of asset revaluation surplus in previous periods: 40% × $200 000 80
Total increase in equity-accounted carrying amount in previous periods 884
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Asset revaluation surplus
There was no asset revaluation surplus recognised in the investee at acquisition date. As per the statement
of comprehensive income, the balance at 1 July 2022 was $200 000. Hence, this entire amount is a post-
acquisition change in equity and the investor’s 40% share of this is $80 000.
Investment in associate/joint venture — Numbat Ltd
The investor’s total share of post-acquisition equity of the investee up to the beginning of the current
period is, therefore, $884 000. This amount is then added to the investment in associates and joint ventures
account, with increases recognised in the relevant equity accounts of the investor.
(2) Share of post-acquisition profit in the current period
In part (1), the investor’s share of the previous period’s post-acquisition equity was calculated. In this part,
the calculation is of the investor’s share of the post-acquisition equity of the investee relating to the current
period. In this example, increases in equity arise due to the investee’s earning of a profit and recording of
other comprehensive income relating to increases in the asset revaluation surplus.
The calculations and required consolidation adjustment entries are shown below.
$’000 $’000
Recorded profit: 3 900
Pre-acquisition adjustments
Depreciation of plant (35)
Post-acquisition profit 3 865
Adjustments for inter-entity transactions
Realised profit in opening inventories 105
1
Unrealised profit in Dingo Ltd’s ending inventories: × $600 000 (1 − 30%)
2
(210)
Unrealised profit in Numbat Ltd’s ending inventories: $250 000(1 − 30%) (175)
1
Realised profit on plant: × $280 000 70 (210)
4
3 655
Investor’s share (40%) of associate/joint venture 1 462
Other comprehensive income:
Share of increase in asset revaluation surplus: 40% × $400 000 160
Total increase in equity-accounted carrying amount in current period 1 622
This profit needs to be adjusted for any unrealised profits or losses at the end of the period arising from
transactions between the investor and the associate.
However, this profit is not all post-acquisition profit. Movements in assets and liabilities on hand at
acquisition date when fair values differed from carrying amounts give rise to pre-acquisition elements in
recorded profits. In the current period, because the plant on hand at acquisition date was recognised by
the investor at fair value, the extra depreciation on the plant reflects pre-acquisition equity. As calculated
in the acquisition analysis the pre-acquisition effect is $35 000 p.a. This is subtracted from the profit of
the period profit to give the post-acquisition profit for the period.
• Inter-entity transactions. In this problem there are four transactions noted in the additional information
that affect the current period, namely (a)–(d).
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(a) The inventories on hand at 1 July 2022 is all sold by 30 June 2023. The profit on the inter-entity sale
was unrealised at the beginning of the current period but is realised in the current period. The after-
tax profit on sale of the inventories was $105 000. Since the profit is realised in the current period, it
is added to the reported profit of the associate. Note that $105 000 is subtracted in the calculation of
the investor’s share of previous period equity and is added to the calculation of the investor’s share
of current period profit. Since the profit is now realised, there is no need to make an adjustment in
future periods.
(b) In February 2023, the associate sold inventories to the investor at an after-tax profit of $420 000.
Since half of the inventories is still on hand at 30 June 2023, there is unrealised profit at the end
of the reporting period of $210 000. This amount is subtracted from reported profit because the
investor’s share relates to realised profit only.
(c) In the current period, the investor sold inventories to the associate for an after-tax profit of $175 000.
Since these inventories remain on hand at the end of the reporting period, the unrealised profit is
subtracted from reported profit.
(d) The gain on sale of equipment was adjusted for in the calculation of the investor’s share of previous
period equity. As noted in that calculation, the unrealised profit on sale is realised as the asset is
used up and depreciated. The amount realised each year is in proportion to depreciation, namely
one-quarter p.a. The amount of the gain realised in the current period is then ¼ × $280 000, that is,
$70 000. Being realised profit, it is added back to recorded profit.
The total post-acquisition profit of the investee adjusted for the effects of inter-entity transactions is
then $3 655 000, and the investor’s 40% share is $1 462 000.
Other comprehensive income
From the statement of changes in equity it can be seen that the asset revaluation surplus has increased by
$400 000 in the current period. The investor is entitled to 40% of this, that is, $160 000. This is recognised
in other comprehensive income and accumulated in the asset revaluation surplus.
Investment in associate/joint venture — Numbat Ltd
The investor’s share of current period post-acquisition equity is then $1 622 000, which increases the
investor’s investment in the associate. This amount is disaggregated by separate line items in the
consolidated statement of comprehensive income for the share of profit of the associate, $1 462 000,
and share of other comprehensive income of associate, $160 000.
(3) Dividends paid and provided for by associate/joint venture
A further entry is necessary to take into account reductions in the investee’s equity in the current period
because of dividends. In the current period, Numbat Ltd paid a $1.5 million dividend and declared a
$1 million dividend. Because the investor recognises dividend revenue when the dividends are declared,
it would recognise dividend revenue of $1 million (i.e. 40% × [$1.5 million + $1 million]).
The following entry eliminates, on consolidation, the dividend revenue recorded by the investor. This is
because in parts (1) and (2) above, the investor’s equity has been increased by its share of the equity of
the associate/joint venture from which the dividends were paid/declared. Similarly, it is also necessary to
reduce the investment in the associate as the share of equity in the associate as calculated in parts (1)
and (2) has been reduced by the payment/declaration of the dividend. The consolidation worksheet entry
is as follows.
$2 696 000 + $884 000 + $1 622 000 − $1 000 000 = $4 202 000
The consolidated financial statements of Dingo Ltd at 30 June 2023, including the investment in the
associate/joint venture accounted for under the equity method, are as follows.
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DINGO LTD
Consolidated statement of profit or loss and other comprehensive income
for year ended 30 June 2023
$’000
Revenue ($25 000 000 − $1 000 000 dividend eliminated) 24 000
Expenses (19 200)
Share of profit or loss of associates and joint ventures accounted for using the
equity method 1 462
Profit before tax 6 262
Income tax expense (2 200)
Profit for the year 4 062
Other comprehensive income
Share of other comprehensive income of associates and joint ventures accounted for 160
using the equity method
Total comprehensive income for the year 4 222
DINGO LTD
Consolidated statement of changes in equity
for year ended 30 June 2023
$’000
Total comprehensive income for the year 4 222
Retained earnings at 1/7/22 ($4 000 000 + $804 000) 4 804
Profit or loss for the year 4 062
8 866
Dividend paid (3 000)
Dividend provided (1 500)
Retained earnings at 30/6/23 4 366
Asset revaluation surplus at 1/7/22 ($nil + $80 000) 80
Revaluation increases ($nil + $160 000) 160
Asset revaluation surplus at 30/6/23 240
General reserve at 1/7/22 1 000
General reserve at 30/6/23 1 000
DINGO LTD
Consolidated statement of financial position
as at 30 June 2023
$’000
EQUITY AND LIABILITIES
Equity
Share capital 8 000
Asset revaluation surplus 240
General reserve 1 000
Retained earnings 4 366
Total equity 13 606
Total liabilities 1 500
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LEARNING CHECK
Under the equity method of accounting, the investor recognises its share of realised equity of an
associate; hence, adjustments are made for unrealised profits.
Adjustments to the investor’s share of the equity of the associate are made for the effects of both
upstream and downstream transactions even though a downstream transaction does not affect the
equity of the associate.
Adjustments are not made to accounts such as sales and cost of sales as would occur under the
consolidation method.
In other words, once the carrying amount is reduced to zero the equity method ceases. Logically, an
investor cannot have a negative investment.
There may be circumstances where the investment in the associate or joint venture consists of more than
just the carrying amount of the investment in the associate or joint venture. The investor’s interest in the
associate/joint venture may also include other long-term interests in the associate/joint venture, such as
preference shares or long-term receivables or loans. So, the carrying amount of the investment in associates
and joint ventures account is first reduced to zero, and any further losses in excess of this are then applied
against any other components of the investor’s interest in the associate/joint venture in the reverse order of
their priority in liquidation. The rationale is that, if the associate/joint venture is making losses, then the
probability of the other investments in the associate/joint venture being realised is lessened.
Paragraph 39 of AASB 128/IAS 28 states:
If the associate or joint venture subsequently reports profits, the entity resumes recognising its share of
those profits only after its share of the profits equals the share of losses not recognised.
In other words, after the carrying amount of the associate or joint venture is reduced to zero, the
investor must still keep track of any share of additional losses. If the investee subsequently recovers to
start generating profits, the investor’s share of these profits must first offset the unrecognised losses before
resuming the equity method of accounting.
In situations where the associate initially records losses, there may be indications that the investment is
impaired, in which case the investor should apply AASB 136/IAS 36 Impairment of Assets. Paragraph 42
of AASB 128/IAS 28 states that, in determining the value in use of the investment, an investor estimates:
(a) its share of the present value of the estimated future cash flows expected to be generated by the associate
or joint venture, including the cash flows from the operations of the associate or joint venture and the
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ILLUSTRATIVE EXAMPLE 31.6
TABLE 31.1 Profits and losses made by associate over first 5 years of operations
Equity-accounted
Share of Cumulative carrying amount Unrecognised
Year Profit/(loss) profit or loss share of investment losses
Table 31.1 shows that the investment account is initially recorded by Koala Ltd at $100 000, and is
progressively adjusted for Koala Ltd’s share of the profits and losses of Bear Ltd. In the 2021–22 year, the
share of the loss of the associate exceeds the carrying amount of the investment, the investor discontinues
recognising its share of future losses. Even though profits are recorded by the associate in the 2022–23
year, the balance of the investment stays at zero because the profits are not sufficient to offset losses not
recognised.
The journal entries in the consolidation worksheets of Koala Ltd over these periods are as follows.
30 June 2020
Investment in associates and joint ventures Dr 5 000
Share of profit or loss of associates and joint ventures Cr 5 000
30 June 2021
Share of profit or loss of associates and joint ventures Dr 50 000
Retained earnings (1/7/20) Cr 5 000
Investment in associates and joint ventures Cr 45 000
30 June 2022
Share of profit or loss of associates and joint ventures Dr 55 000
Retained earnings (1/7/21) Dr 45 000
Investment in associates and joint ventures Cr 100 000
30 June 2023
Retained earnings (1/7/22) Dr 100 000
Investment in associates and joint ventures Cr 100 000
30 June 2024
Retained earnings (1/7/23) Dr 100 000
Share of profit or loss of associates and joint ventures Cr 20 000
Investment in associates and joint ventures Cr 80 000
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LEARNING CHECK
The investor’s share of losses of an associate is recognised but only to the point where the carrying
amount of the investment in the associate is zero.
The share of losses may be offset against other investments the investor has in the associate, such as
long-term receivables.
If, after reporting losses, an associate earns a profit, the investor recognises a share of profits only after
the share of profits exceeds the share of past losses not recognised.
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31.8 Disclosure
LEARNING OBJECTIVE 31.8 Discuss the disclosures required in relation to associates and joint ventures.
AASB 128/IAS 28 does not address the disclosure requirements in relation to investments in associates and
joint ventures. Instead, a separate standard, AASB 12/IFRS 12 Disclosure of Interests in Other Entities,
provides the guidance relating to disclosure of such investments.
Paragraph 1 of AASB 12/IFRS 12 states the standard’s key objective:
The objective of this Standard is to require an entity to disclose information that enables users of its financial
statements to evaluate:
(a) the nature of, and risks associated with, its interests in other entities; and
(b) the effects of those interests on its financial position, financial performance and cash flows.
It is interesting to note the emphasis on the ability of users of financial statements to be able to evaluate
risks. In its introduction to IFRS 12 the IASB noted in paragraph IN5 that the global financial crisis that
started in 2007 highlighted a lack of transparency about the risks to which a reporting entity was exposed
from its involvement with structured entities. With respect to associates and joint ventures, paragraph 7 of
AASB 12/IFRS 12 requires an entity to disclose information about significant judgements and assumptions
it has made in determining that it had joint control or significant influence over another entity.
Paragraph 9 of AASB 12/IFRS 12 provides examples of situations where it is necessary for an investor
to disclose significant judgements and assumptions in relation to associates:
• where it does not have significant influence even though it holds 20% or more of the voting rights of
another entity
• where it has significant influence even though it holds less than 20% of the voting rights of another entity.
Paragraph 20 of AASB 12/IFRS 12 requires an entity to disclose information that enables users to
evaluate the nature, extent and financial effects of its interest in associates and joint ventures, including
the nature and effects of its contractual relationship with the other investors with joint control of, or
significant influence over, the same investments. To achieve this, paragraph 21 of AASB 12/IFRS 12
requires disclosures:
(a) for each joint arrangement and associate that is material to the reporting entity:
(i) the name of the joint arrangement or associate.
(ii) the nature of the entity’s relationship with the joint arrangement or associate (by, for example,
describing the nature of the activities of the joint arrangement or associate and whether they are
strategic to the entity’s activities).
(iii) the principal place of business (and country of incorporation, if applicable and different from the
principal place of business) of the joint arrangement or associate.
(iv) the proportion of ownership interest or participating share held by the entity and, if different, the
proportion of voting rights held (if applicable).
(b) for each joint venture and associate that is material to the reporting entity:
(i) whether the investment in the joint venture or associate is measured using the equity method or at
fair value.
(ii) summarised financial information about the joint venture or associate as specified in paragraphs
B12 and B13.
(iii) if the joint venture or associate is accounted for using the equity method, the fair value of its
investment in the joint venture or associate, if there is a quoted market price for the investment.
(c) financial information as specified in paragraph B16 about the entity’s investments in joint ventures and
associates that are not individually material:
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(i) in aggregate for all individually immaterial joint ventures and, separately,
(ii) in aggregate for all individually immaterial associates.
B12. For each joint venture and associate that is material to the reporting entity, an entity shall disclose:
(a) dividends received from the joint venture or associate.
(b) summarised financial information for the joint venture or associate (see paragraphs B14 and
B15) including, but not necessarily limited to:
(i) current assets.
(ii) non-current assets.
(iii) current liabilities.
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(iv) non-current liabilities.
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(v) revenue.
(vi) profit or loss from continuing operations.
(vii) post-tax profit or loss from discontinued operations.
(viii) other comprehensive income.
(ix) total comprehensive income.
B13. In addition to the summarised financial information required by paragraph B12, an entity shall disclose
for each joint venture that is material to the reporting entity the amount of:
(a) cash and cash equivalents included in paragraph B12(b)(i).
(b) current financial liabilities (excluding trade and other payables and provisions) included in
paragraph B12(b)(iii).
(c) non-current financial liabilities (excluding trade and other payables and provisions) included
in paragraph B12(b)(iv).
(d) depreciation and amortisation.
(e) interest income.
(f) interest expense.
(g) income tax expense or income.
Figure 31.4 shows the disclosures provided in relation to investments in joint ventures and associates by
CSR Limited.
Building
products
Rondo Building
Services Pty
Limited2 — 18.8 18.8 — 14.5 14.5
Gypsum
Resources
Trust Australia2 12.0 — 12.0 12.0 — 12.0
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New Zealand
Brick
Distributors3 — 7.9 7.9 — 7.8 7.8
Other2 2.4 3.0 5.4 3.1 3.3 6.4
Total investment 14.4 29.2 43.6 14.4 25.5 39.9
1. The CSR group held a 58% interest in Viridian Glass Limited Partnership until 30 June 2016 when the remaining
42% interest was acquired. Refer to note 8 for further detail. In the year ended 31 March 2017, contribution to net profit
is for the three month period ended 30 June 2016.
iii) Balances and transactions with joint venture entities.
LEARNING CHECK
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SUMMARY
This chapter has covered the principles of accounting for investments in associates and joint ventures as
contained in AASB 128/IAS 28 Investments in Associates and Joint Ventures. Some of the key principles
are as follows.
• Besides subsidiaries, an entity may have investments in other entities, known as associates and joint
ventures, with which the entity has a special relationship.
• An entity over which an investor has significant influence in the determination of financial and operating
policy decisions is referred to as an associate.
• When an investor is involved in an investment where there is a contractually agreed sharing of control
such that decisions require the unanimous consent of the parties sharing control, the investor has joint
control over the investee, which is referred to as a joint venture.
• The equity method is designed to provide more information about an investment than generally supplied
under the cost method, but provides less information than supplied under the consolidation method.
• Under the equity method, an investor recognises increases and decreases in the carrying amount of
its investment in an investee and increases and decreases in its equity based upon the investor’s
proportionate interest in the equity of the investee.
• In applying the equity method, adjustments to equity balances recorded by the investee are made to
eliminate any pre-acquisition equity.
• Adjustments are made to eliminate the effects of unrealised gains and losses arising from inter-entity
transactions. These are made for both upstream and downstream transactions with amounts being
calculated based on the investor’s proportional interest in the investee.
• The carrying amount of an investment in an associate or joint venture cannot be reduced below zero.
Where an investee incurs further losses, the application of the equity method is discontinued. The
equity method resumes once the investor’s share of the investee’s profits exceeds the investor’s share of
unrecognised losses.
• AASB 12/IFRS 12 Disclosure of Interests in Other Entities provides guidance for significant disclosures
required by investors with investments in other entities, including associates and joint ventures.
KEY TERMS
associate An entity over which the investor has significant influence.
equity method A method of accounting whereby the investment is initially recognised at cost and
adjusted thereafter for the post-acquisition change in the investor’s share of the investee’s net assets.
The investor’s profit or loss includes its share of the investee’s profit or loss and the investor’s other
comprehensive income includes its share of the investee’s other comprehensive income.
joint arrangement A contractual arrangement in which the parties involved have joint control over the
decision making in relation to the joint arrangement.
joint control The contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing control.
joint venture A joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement.
significant influence The power to participate in the financial and operating policy decisions of the
investee, but not control or joint control of those policies.
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COMPREHENSION QUESTIONS
1 What is an associate entity?
2 Why are associates distinguished from other investments held by the investor?
3 Discuss the similarities and differences between the criteria used to identify subsidiaries and those used
to identify associates.
4 What is meant by ‘significant influence’?
5 What factors could be used to indicate the existence of significant influence?
6 What is a joint venture?
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7 What is meant by ‘joint control’?
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8 How does joint control differ from control as applied on consolidation?
9 Discuss the relative merits of accounting for investments by the cost method, the fair value method and
the equity method.
10 Outline the accounting adjustments required in relation to transactions between the investor and an
associate/joint venture. Critically evaluate the rationale for these adjustments.
11 Compare the accounting for the effects of inter-entity transactions for transactions between parent
entities and subsidiaries and between investors and associates/joint ventures.
12 Discuss whether the equity method should be viewed as a form of consolidation or a valuation
technique.
13 Explain why equity accounting is sometimes referred to as ‘one-line consolidation’.
14 Explain the differences in application of the equity method of accounting where the method is applied
in the records of the investor compared with the application in the consolidation worksheet of the
investor.
15 Explain the treatment of dividends from the associate under the equity method of accounting.
Talvez Ltd, a publicly listed company, has a 19.5% shareholding in another entity. The accountant is
considering whether or not this investment satisfies the definition of an associate under AASB 128/IAS 28
and the impacts the decision will have on the company’s financial statements.
Required
Compare and contrast the impacts on the financial statements of applying the equity method to an
investment with those of applying the cost method to the same investment.
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CASE STUDY 31.4
EQUITY ACCOUNTING
Event Hospitality & Entertainment Limited provided the following information in its 2018 annual report.
Notes to the financial statements for the year ended 30 June 2018
Section 5 — group composition
5.3 — interests in other entities
Accounting policy
Interests in equity accounted investees
The Group’s interests in equity accounted investees comprise interests in associates and interests in joint
ventures. Associates are those entities in which the Group has significant influence, but not control or
joint control, over the financial and operating policies. Significant influence is presumed to exist when the
Group holds between 20% and 50% of the voting power of another entity.
Interests in associates and joint ventures (see below) are accounted for using the equity method. They
are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the
consolidated financial statements include the Group’s share of the profit or loss and other comprehensive
income of equity accounted investees, until the date on which significant influence or joint control ceases.
Unrealised gains arising from transactions with equity accounted investees are eliminated to the extent
of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
Joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control, in which the parties
are bound by a contractual arrangement, and the contractual arrangement gives two or more of those
parties joint control of the arrangement.
The Group classifies its interests in joint arrangements as either joint operations or joint ventures
depending on the Group’s rights to the assets and obligations for the liabilities of the arrangements.
When making this assessment, the Group considers the structure of the arrangements, the legal form
of any separate vehicles, the contractual terms of the arrangements and other facts and circumstances.
The Group’s interests in joint operations, which are arrangements in which the parties have rights to the
assets and obligations for the liabilities, are accounted for on the basis of the Group’s interest in those
assets and liabilities. The Group’s interests in joint ventures, which are arrangements in which the parties
have rights to the net assets, are equity accounted.
Source: Event Hospitality & Entertainment Limited (2018, p. 73).
Required
Some investors in Event Hospitality & Entertainment Ltd who have limited accounting knowledge,
particularly about equity accounting, have asked you to provide a report to them commenting on:
1. the difference between significant influence and control
2. the differences between associates, joint ventures and joint arrangements
3. how the date of significant influence is determined
4. what is meant by the term unrealised gains and losses and why they are eliminated.
31.1 Adjustments where investor prepares and does not prepare consolidated financial
statements ⋆ LO3, 4, 5
Duckbill Ltd acquired a 30% interest in Platypus Ltd for $75 000 cash on 1 July 2021. The directors
of Duckbill Ltd believe this investment represents significant influence over the investee. The equity
of Platypus Ltd at the acquisition date was as follows.
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All the identifiable assets and liabilities of Platypus Ltd were recorded at fair value. Profits and
dividends for the years ended 30 June 2022 to 2024 were as follows.
Required
1. Prepare journal entries in the records of Duckbill Ltd for each of the years ended 30 June 2022 to
2024 in relation to its investment in the associate, Platypus Ltd. (Assume Duckbill Ltd does not
prepare consolidated financial statements.)
2. Prepare the consolidation worksheet entries to account for Duckbill Ltd’s interest in the asso-
ciate/joint venture, Platypus Ltd. (Assume Duckbill Ltd does prepare consolidated financial
statements.)
3. Calculate the carrying amount of the investment in Platypus Ltd at 30 June 2024.
31.2 Accounting for an associate/joint venture by an investor ⋆ LO4
On 1 July 2022, Pygmy Ltd issued ordinary shares to acquire a 40% interest in Possum Ltd. On
this date, these issued shares had a fair value of $170 000. The directors of Pygmy Ltd believe that
they have significant influence over the financial and operating policy decisions of Possum Ltd.
The share capital, reserves and retained earnings of Possum Ltd at the acquisition date and at
30 June 2023 were as follows.
At 1 July 2022, all the identifiable assets and liabilities of Possum Ltd were recorded at fair value.
The following is applicable to Possum Ltd for the year to 30 June 2023.
• Profit (after income tax expense of $11 000): $39 000.
• Increase in reserves:
– general (transferred from retained earnings): $15 000
– asset revaluation (revaluation of freehold land and buildings at 30 June 2023): $100 000.
• Dividends paid to shareholders: $15 000.
• The tax rate is 30%.
• Pygmy Ltd does not prepare consolidated financial statements.
Required
Prepare the journal entries in the records of Pygmy Ltd for the year ended 30 June 2023 in relation
to its investment in the associate, Possum Ltd.
31.3 Investor prepares consolidated financial statements, multiple periods ⋆ ⋆ LO4, 5
On 1 July 2021, Ground Ltd purchased 30% of the shares of Hog Ltd for $180 000. At this date, the
ledger balances of Hog Ltd were as follows.
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At 1 July 2021, all the identifiable assets and liabilities of Hog Ltd were recorded at fair value
except for plant whose fair value was $15 000 greater than carrying amount. This plant has an
expected future life of 5 years, the benefits being received evenly over this period. Dividend revenue
is recognised when dividends are declared. The tax rate is 30%.
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The results of Hog Ltd for the next 3 years were as follows.
Required
Prepare, in journal entry format, for the years ending 30 June 2022, 2023 and 2024, the consolidation
worksheet adjustments to include the equity-accounted results for the associate, Hog Ltd, in the
consolidated financial statements of Ground Ltd.
31.4 Adjustments where investor does and does not prepare consolidated financial
statements ⋆ ⋆ LO4, 5, 6
On 1 July 2021, Saltwater Ltd acquired a 30% interest in one of its suppliers, Crocodile Ltd, at
a cost of $13 650. The directors of Saltwater Ltd believe they exert ‘significant influence’ over
Crocodile Ltd.
The equity of Crocodile Ltd at acquisition date was as follows.
All the identifiable assets and liabilities of Crocodile Ltd at 1 July 2021 were recorded at fair
values except for some depreciable non-current assets with a fair value of $15 000 greater than
carrying amount. These depreciable assets are expected to have a further 5-year life.
Additional information
• At 30 June 2023, Saltwater Ltd had inventories costing $100 000 (2022: $60 000) on hand which
had been purchased from Crocodile Ltd. A profit before tax of $30 000 (2022: $10 000) had been
made on the sale.
• All companies adopt the recommendations of AASB 112 regarding tax-effect accounting. Assume
a tax rate of 30% applies.
• Information about income and changes in equity of Crocodile Ltd as at 30 June 2023 is as follows.
• All dividends may be assumed to be out of the profit for the current year. Dividend revenue is
recognised when declared by investees.
• The equity of Crocodile Ltd at 30 June 2023 was as follows.
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The asset revaluation surplus arose from a revaluation of freehold land made at 30 June 2023. The
general reserve arose from a transfer from retained earnings in June 2022.
Required
1. Assume Saltwater Ltd does not prepare consolidated financial statements. Prepare the journal
entries in the records of Saltwater Ltd for the year ended 30 June 2023 in relation to the investment
in Crocodile Ltd.
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2. Assume Saltwater Ltd does prepare consolidated financial statements. Prepare the consolidated
worksheet entries for the year ended 30 June 2023 for inclusion of the equity-accounted results
of Crocodile Ltd.
31.5 Accounting for an associate within — and where there are no — consolidated financial
statements ⋆ ⋆ LO3, 4, 5
On 1 July 2021, Flying Ltd purchased 40% of the shares of Fox Ltd for $63 200. At that date, equity
of Fox Ltd consisted of the following.
At 1 July 2021, the identifiable assets and liabilities of Fox Ltd were recorded at fair value.
Information about income and changes in equity for both companies for the year ended 30 June
2024 was as follows.
Additional information
• Flying Ltd recognises dividends as revenue when they are declared by the investee.
• On 31 December 2022, Fox Ltd sold Flying Ltd a motor vehicle for $12 000. The vehicle had
originally cost Fox Ltd $18 000 and was written down to $9000 for both tax and accounting
purposes at time of sale to Flying Ltd. Both companies depreciated motor vehicles at the rate
of 20% p.a. on cost.
• The beginning inventories of Fox Ltd included goods at $4000 bought from Flying Ltd; their cost
to Flying Ltd was $3200.
• The ending inventories of Flying Ltd included goods purchased from Fox Ltd at a profit before
tax of $1600.
• The tax rate is 30%.
Required
1. Prepare the journal entries in the records of Flying Ltd to account for the investment in Fox Ltd
under the equity method for the year ended 30 June 2024 assuming Flying Ltd does not prepare
consolidated financial statements.
2. Prepare the consolidated worksheet entries in relation to the investment in Fox Ltd, assuming
Flying Ltd does prepare consolidated financial statements at 30 June 2024.
31.6 Consolidation worksheet entries including investments in joint ventures ⋆ ⋆ ⋆ LO3, 4
You are given the following details for the year ended 30 June 2023.
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Additional information
• Echidna Ltd owns 80% of the participating shares in Kangaroo Ltd and 20% of the shares in
Kookaburra Ltd. Echidna Ltd has entered into a contractual arrangement with four other venturers
in relation to Kookaburra Ltd, and the five investors have a joint control arrangement in relation
to Kookaburra Ltd.
• On 1 July 2021, all identifiable assets and liabilities of Kangaroo Ltd were recorded at fair value.
Echidna Ltd purchased 80% of Kangaroo Ltd’s shares on 1 July 2021, and paid $20 000 for
goodwill, none of which had been recorded on Kangaroo Ltd’s records. Echidna Ltd uses the
partial goodwill method.
• At the date Echidna Ltd acquired its shares in Kookaburra Ltd, Kookaburra Ltd’s recorded equity
was as follows.
All the identifiable assets and liabilities of Kookaburra Ltd were recorded at fair value.
Echidna Ltd paid $100 000 for its shares in Kookaburra Ltd on 1 July 2021. There was $12 000
transferred to general reserve by Kookaburra Ltd in the year ended 30 June 2022, out of equity
earned since 1 July 2021.
• Included in the beginning inventories of Echidna Ltd were profits before tax made by
Kangaroo Ltd: $20 000; Kookaburra Ltd: $12 000.
• Included in the ending inventories of Echidna Ltd were profits before tax made by
Kookaburra Ltd: $16 000.
• Kookaburra Ltd had recorded a profit (net of $2000 tax) of $8000 in selling certain non-current
assets to Echidna Ltd on 1 January 2023. Echidna Ltd treats the items as non-current assets and
charges depreciation at the rate of 25% p.a. straight-line from that date.
• Echidna Ltd purchased for $40 000 an item of plant from Kangaroo Ltd on 1 September 2021.
The carrying amount of the asset at that date was $28 000. The asset was depreciated at the rate
of 20% p.a. straight-line from 1 September 2021.
• During the year ended 30 June 2023, Kookaburra Ltd has revalued upwards one of its non-current
assets by $32 000. There had been no previous downward revaluations.
• Dividend revenue is recognised when dividends are declared.
• The tax rate is 30%.
Required
Prepare the consolidation worksheet entries (in journal form) needed for the consolidated statements
for the year ended 30 June 2023 for Echidna Ltd and its subsidiary Kangaroo Ltd. Include the equity-
accounted results of Kookaburra Ltd.
31.7 Inter-entity transactions where investor does not prepare consolidated financial
statements ⋆ LO6
Dolphin Ltd owns 25% of the shares of its associate, Shark Ltd. At the acquisition date, there were no
differences between the fair values and the carrying amounts of the identifiable assets and liabilities
of Shark Ltd.
For 2022–23, Shark Ltd recorded a profit of $200 000. During this period, Shark Ltd paid a
$20 000 dividend, declared in June 2022, and an interim dividend of $16 000. The tax rate is 30%.
The following transactions have occurred between Dolphin Ltd and Shark Ltd.
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• On 1 July 2021, Shark Ltd sold a non-current asset costing $20 000 to Dolphin Ltd for $24 000.
Dolphin Ltd applies a 10% p.a. on cost straight-line method of depreciation.
• On 1 January 2023, Shark Ltd sold an item of plant to Dolphin Ltd for $30 000. The carrying
amount of the asset to Shark Ltd at time of sale was $22 000. Dolphin Ltd applies a 15% p.a.
straight-line method of depreciation.
• A non-current asset with a carrying amount of $40 000 was sold by Shark Ltd to Dolphin Ltd for
$56 000 on 1 June 2023. Dolphin Ltd regarded the item as inventories and still had the item on
hand at 30 June 2023.
• On 1 July 2021, Dolphin Ltd sold an item of machinery to Shark Ltd for $14 000. This item had
cost Dolphin Ltd $8000. Dolphin Ltd regarded this item as inventories whereas Shark Ltd
intended to use the item as a non-current asset. Shark Ltd applied a 10% p.a. on cost straight-line
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depreciation method.
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Dolphin Ltd applies the equity method in accounting for its investment in Shark Ltd.
Dolphin Ltd does not prepare consolidated financial statements.
Required
Prepare the journal entries of Dolphin Ltd for the year ended 30 June 2023 in relation to its investment
in Shark Ltd.
31.8 Inter-entity transactions where investor has no subsidiaries ⋆ LO6
Dibbler Ltd acquired 20% of the ordinary shares of Potoroo Ltd on 1 July 2022. At this date, all
the identifiable assets and liabilities of Potoroo Ltd were recorded at fair value. An analysis of the
acquisition showed that $2000 of goodwill was acquired.
Dibbler Ltd has no subsidiaries, and records its investment in the associate, Potoroo Ltd, in
accordance with AASB 128. In the 20234 period, Potoroo Ltd recorded a profit of $100 000, paid
an interim dividend of $10 000 and, in June 2024, declared a further dividend of $15 000. In June
2023, Potoroo Ltd had declared a $20 000 dividend, which was paid in August 2023. Dibbler Ltd
recognises dividends as revenue when they are received.
The following transactions have occurred between the two entities (all transactions are independent
unless specified).
• In January 2024, Potoroo Ltd sold inventories to Dibbler Ltd for $15 000. These inventories had
previously cost Potoroo Ltd $10 000, and remains unsold by Dibbler Ltd at the end of the period.
• In February 2024, Dibbler Ltd sold inventories to Potoroo Ltd at a before-tax profit of $5000. Half
of this was sold by Potoroo Ltd before 30 June 2024.
• In June 2023, Potoroo Ltd sold inventories to Dibbler Ltd for $18 000. These inventories had
cost Potoroo Ltd $12 000. At 30 June 2023, these inventories remained unsold by Dibbler Ltd.
However, it was all sold by Dibbler Ltd before 30 June 2024.
• The tax rate is 30%.
Required
Prepare the journal entries in the records of Dibbler Ltd in relation to its investment in Potoroo Ltd
for the year ended 30 June 2024.
31.9 Consolidated financial statements including investments in associates ⋆ ⋆ ⋆ LO3, 4, 5, 7
Box Ltd acquired 90% of the ordinary shares of Jelly Ltd on 1 July 2018 at a cost of $150 750. At
that date the equity of Jelly Ltd was as follows.
At 1 July 2018, all the identifiable assets and liabilities of Jelly Ltd were at fair value except for
the following assets.
The inventories was all sold by 30 June 2019. Depreciable assets have an expected further 5-year
life, with depreciation being calculated on a straight-line basis. Valuation adjustments are made on
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consolidation.
Box Ltd uses the partial goodwill method.
On 1 July 2021, Box Ltd acquired 25% of the capital of Fish Ltd for $3500 entering into a joint
venture with three other venturers. All the identifiable assets and liabilities of Fish Ltd were recorded
at fair value except for the following.
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All these inventories were sold in the 12 months after 1 July 2021. The depreciable assets were
considered to have a further 5-year life.
Information on Fish Ltd’s equity position is as follows.
For the year ended 30 June 2023, Fish Ltd recorded a profit before tax of $2600 and an income
tax expense of $600. Fish Ltd paid a dividend of $200 in January 2023. Box Ltd regards Fish Ltd as
a joint venture investee.
During the year ended 30 June 2023, Fish Ltd sold inventories to Jelly Ltd for $6000. The cost
of these inventories to Fish Ltd was $4000. Jelly Ltd has resold only 20% of these items. However,
Jelly Ltd made a profit before tax of $500 on the resale of these items.
On 1 January 2022, Box Ltd sold Fish Ltd a motor vehicle for $4000, at a profit before tax of
$800 to Box Ltd. Both companies treat motor vehicles as non-current assets. Both companies charge
depreciation at 20% p.a. on the diminishing balance.
Assume a tax rate of 30%.
Information about income and changes in equity for Box Ltd and its subsidiary, Jelly Ltd, for the
year ended 30 June 2023 is as follows.
Required
1. Prepare the consolidated statement of profit or loss and other comprehensive income of Box Ltd
and its subsidiary Jelly Ltd as at 30 June 2023.
2. In the consolidated statement of financial position, what would be the balance of the investment
shares in Fish Ltd?
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REFERENCES
CSR Limited 2018, Annual report 2018, www.csr.com.au.
Event Hospitality & Entertainment Limited 2018, Annual report 2018, www.evt.com.
Wesfarmers Limited 2018, 2018 annual report, www.wesfarmers.com.au.
ACKNOWLEDGEMENTS
Figure 31.1: © Wesfarmers Limited 2018
Figure 31.4: © CSR Limited 2018
Case study 31.4: © Event Hospitality & Entertainment Limited 2018
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Text: © 2019 Australian Accounting Standards Board (AASB). The text, graphics and layout of this
publication are protected by Australian copyright law and the comparable law of other countries. No part
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should be sought in writing from the AASB. Requests in the first instance should be addressed to the
National Director, Australian Accounting Standards Board, PO Box 204, Collins Street West,
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Text: © IFRS. This publication contains copyright material of the IFRS Foundation in respect of
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accept responsibility for any loss caused by acting or refraining from acting in reliance on the material
in this publication, whether such loss is caused by negligence or otherwise.
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