Key Considerations under IAS 28 for accounting investments under equity method of Associates
by Reina Consulting | Apr 28, 2026
| Area |
Guidance / Impact |
| Initial Recognition |
Investments in associates or joint ventures are initially recognised at cost. |
| Subsequent Measurement |
The carrying amount is increased or decreased to reflect the investor’s share of the investee’s profit or loss after acquisition. |
| Profit or Loss Impact |
The investor’s share of the investee’s profit or loss is recognised in the investor’s statement of profit or loss. |
| Distributions / Dividends |
Dividends or distributions received from the investee reduce the carrying amount of the investment. |
| Other Comprehensive Income (OCI) |
The carrying amount is adjusted for the investor’s share of changes in the investee’s OCI, such as revaluation gains/losses and foreign currency translation differences. |
| Why Equity Method is Important |
Recognising income only on dividends received may not reflect the actual performance of the investee. Dividends may not correlate with profitability. |
| Corporate Tax |
Accounting income must be adjusted by replacing the effect of the Equity Method of Accounting with the Cost Method of Accounting (where the equity method has been applied), in line with IFRS, when calculating taxable income for Corporate Tax purposes. |
