Question

Amalgamated Holdings provided the following information in Note 1 Significant Accounting Policies in its 2013 Annual Report:
(ii) Associates Associates are those entities for which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group's share of the total recognized gains and losses of associate on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an associate, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.
In the Parent Company's financial statements, investments in associates are initially recognized at cost, being the fair value of the consideration given and including acquisition charges associated with the investment. Where necessary, the cost is adjusted for any subsequent impairment.
(iii) Joint ventures In the consolidated financial statements, investments in joint ventures are accounted for using equity accounting principles. Investments in joint ventures are carried at the lower of the equity accounted amount and recoverable amount after adjustment for revisions arising from notional adjustments made at the date of acquisition.
The Group's share of ventures' net profit or loss is recognized in the consolidated Income Statement from the date joint control commenced until the date joint control ceases. Other movements in reserves are recognized directly in consolidated reserves.
(iv) Transactions eliminated on consolidation Intragroup balances, and any unrealized gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.
Unrealized gains arising from transactions with associates and partnerships are eliminated to the extent of the Group's interest in the company. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
Gains and losses are recognized as the contributed assets are consumed or sold by the associate or partnerships or, if not consumed or sold by the associate or partnership, when the Group's interest in such entities is sold.
Required Some companies in Amalgamated Holdings who have limited accounting knowledge, particularly about equity accounting, have asked you to provide a report to them. Write the report, commenting on:
• The differences between associates and joint ventures
• The determination of the date of significant influence
• Realization of profits/losses on intercompany transactions
• Recognition of losses of an associate or joint venture.


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  • CreatedJune 09, 2015
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