INDIRECT INTEREST IN

ASSOCIATES

There could be instances

Equity method will be used
where the subsidiary may
to account for interest in
have interest in associates
associate or joint venture.
or joint ventures.
Situation A

C is associate of B. B has ability to exercise

significant influence over C.

Since B is subsidiary of A, A can exercise

significant influences over C through B.

Full share of interest B in C should be disclosed as

investment in associate, in consolidated financial
position and in share of profits of associates in
consolidated income statement.
 Situation B
Consolidated financial statements of A will
be used to equity account Hs share if
interest in A. H is 40% and NOT 32%
Groups investment in an associate is held
H (Parent) by a partly owned subsidiary, the non-
controlling interest shown in consolidated
financial statements of the group should
include the non-controlling interests share
S (Subsidiary) 80% of the of the subsidiarys interest in the
results and net assetsitself
If associate of the associate.
has
subsidiaries/associates, the results and net
assets accounted for in the investing
A (Associate) 40% groups consolidated financial statements
are its attributable share of the results and
net assets of the group (associate is
parent).
X Y
(Subsidiary of A) 75% (Subsidiary of S) 100%