The objective of this Standard is to prescribe the accounting policies and procedures in relation to investments in associates, including:

recognition of investments in associates in separate financial statement of investor and consolidated financial statement as the basis for bookkeeping, preparation and presentation of financial statements.

02. This Standard should be applied in accounting by an investor who has significant influence for investments in associates.

03. The following terms are used in this Standard with the meanings specified:

An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture of the investor.

Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies.

Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.

A subsidiary is an enterprise that is controlled by another enterprise (known as the parent).

The equity method is a method of accounting whereby the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the investor’s share of net assets of the investee. The income statement reflects the investor’s share of the results of operations of the investee.

The cost method is a method of accounting whereby the investment is recorded at cost without adjustment thereafter for the post acquisition change in the investor’s share of net assets of the investee. The income statement reflects income from the investment only to the extent that the investor receives distributions from accumulated net profits of the investee arising subsequent to the date of acquisition.