Investment decision
15 December 2008
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Dear Every one,
Can any one help to solve the following problems:
Say, XY is a joint venture company between X & Y with 70:30 proportion with issued capital of $100. Now, Y intends to offload its share to Z company for a consideration of $ 80.
Now the question is how this investment would be shown in Z company’s F/S and which IAS/IFRS will cover this transaction ?
Also can any one share reconciliation between IFRS and US GAAP F/S ?
Advance thanks to every one
MM
Hi there,
My answer would be the following:
Y has a non controlling share but does have significant influence.
For seperate financial statements apply IAS 27.38: Measure at cost or in line ith IAS 39 (available for sale: apply IFRS 5)
For consolidated statements apply IAS 28: Equity method. The investment is intially recognised at cost and the carrying amount is increase or decreased based on proportion in profits/losses, impairments and distributions.
IFRS 3 would only apply in case of controlling interest when the subsidiary would be consolidated.
I hope this helps.
Regards,
Jeroen
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