ACCA FR · Chapter 13 · Question 4 of 11
Under IAS 28, how is an associate defined?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) An entity over which the investor has significant influence, usually presumed when it holds 20% to 50% of the voting rights
Explanation
An associate is an entity over which the investor has significant influence, which is the power to participate in financial and operating policy decisions without control. Holding 20% or more of the voting power creates a rebuttable presumption of significant influence. Associates are accounted for using the equity method.
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