Dr. Antony Michail
Nov 6, 2018

IFRS 3, Business combinations – A survival guide to the essentials of takeovers, Part III

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First Published: IFRS Boutique

Date: February 2018

By: Chris Ragkavas, BA, MA, FCCA, CGMA

StudySmart management consultant, senior finance & accounting tutor, IFRS technical expert

 

 

This is the third Part of the series of articles related to takeovers. You are kindly advised to read the previous Parts, before going through this Part.

 

Sometimes takeovers occur in stages. Investors may not wish to commit outright to a majority shareholding in an investee, but want to test the waters for a couple of years and then proceed with obtaining control of the investee. During the interim period, they may acquire an associate shareholding in the investee, e.g. 25%. For associate shareholdings we apply equity accounting.

 

In simple terms, this means that any post acquisition profits are simply added to the ‘Investment in associate’ account in the group statement of financial position of the investor and they are also recognized in the investor’s consolidated statement of profit or loss as ‘share of profit from associate’.

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Related Articles:

IFRS 3, Business combinations – A survival guide to the essentials of takeovers, Part I – READ MORE

IFRS 3, Business combinations – A survival guide to the essentials of takeovers, Part II – READ MORE

IFRS 3, Business combinations – A survival guide to the essentials of takeovers, Part IV – READ MORE

IFRS 3, Business combinations – A survival guide to the essentials of takeovers, Part V – READ MORE

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