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IAS 28 Investments in Associates and Joint Ventures

IAS 28 Investments in Associates and Joint Ventures prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.

Published May 2011. Effective 1 January 2013 (1 January 2014 for EU preparers).

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Synopsis

IAS 28 prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.

An associate is an entity over which the investor has significant influence. A shareholding of 20% or more of an entity is presumed to result in significant influence, although where a shareholding is less than this, significant influence can be established by other means.

In the consolidated financial statements, equity accounting is applied to investments in associates and joint ventures:

  • In the consolidated statement of financial position the investment is initially carried at cost and subsequently adjusted for the investor’s share of profits or losses and other comprehensive income made by the investee. Distributions received from the investee reduce the carrying value of the investment.
  • The investor’s share of the investee’s profit or loss and other comprehensive income are reported in the consolidated statement of profit or loss and other comprehensive income.

IAS 28 does not include any disclosure requirements; these are included in IFRS 12 Disclosure of Interests in Other Entities. 

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Annual period starts
Effective version of standard
Notes on amendments 
On or after 1 January 2021 IAS 28 2019 Issued Standards 
Includes amendments 1-7; amendment 3 is not mandatory
1 January 2019 – 31 December 2020
IAS 28 2019 Required Standards
Includes amendments 1, 2, 4, 5 and 7
I January 2018 – 31 December 2018
IAS 28 2018 Required Standards
Includes amendments 1, 2, 4 and 5
1 January 2016 – 31 December 2017
IAS 28 2017 Required Standards
Includes amendments 2 and 4

Required Standards book for a particular year assumes that there is no early application of issued but not yet effective IFRSs; The Issued Standards book assumes early application of all issued IFRSs. For the latest version of the standard, and where the amendments are to be adopted early, refer to IAS 28 2019 Issued Standards.

Recent amendments

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1. IFRS 9 amendment to IAS 28

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

As a result of the issue of IFRS 9 additional guidance is added to IAS 28 in respect of identifying and accounting for the impairment of an investment in an associate or joint venture.

2. Equity Method in Separate Financial Statements amendments to IAS 27

Effective for annual periods beginning on or after 1 January 2016. Earlier application is permitted.

The amendments to IAS 27 allow an entity to apply the equity method in accounting for its investments in subsidiaries, joint ventures and associates in its separate financial statements. A consequential amendment is made to IAS 28 to reflect this option.

3. Sale or Contribution of Assets between an Investor and its Associate or Joint Venture amendments to IFRS 10 and IAS 28

In December 2015, the IASB deferred indefinitely the effective date of this amendment.

IAS 28 is amended to clarify that the guidance on gains or losses from upstream and downstream transactions only relates to transactions involving assets that do not constitute a business as defined in IFRS 3.

Where transactions involving assets that do constitute a business take place, an entity must now recognise any gain or loss in full. 

4. Investment entities: Applying the Consolidation Exception amendments to IFRS 10, IFRS 12 and IAS 28

Effective for annual periods beginning on or after 1 January 2016.

The narrow scope amendments to IAS 28 confirm that that the exemption from applying the equity method available to an investment entity is also applicable to an investor in an associate or joint venture where that investor is a subsidiary of an investment entity. This is the case even if the investment entity parent measures all subsidiaries at fair value. 

 

5. Annual Improvements to IFRS 2014-2016

To be applied to annual periods beginning on or after 1 January 2018. Earlier application is permitted.

IAS 28 is amended to clarify that a venture capital organization or other qualifying entity has an investment-by-investment choice for measuring investees at fair value through profit or loss upon initial recognition.

6. IFRS 17 Insurance Contracts amendment to IAS 28*

 To be applied to periods beginning on or after 1 January 2021. Earlier adoption is permitted.

IAS 28 provides an exemption from applying the equity method to investment-linked insurance funds. The standard is amended to clarify that a fund held by an entity as the underlying items for a group of insurance contracts with direct participation features is an example of an investment-linked insurance fund.

7. Long-term Interests in Associates and Joint Ventures

Effective for annual periods beginning on or after 1 January 2019. Earlier application is permitted.

IAS 28 is amended to clarify that an entity should apply IFRS 9 as well as IAS 28 to long-term interests in associates and joint ventures that in substance form part of the net investment in the associate or joint venture.

*Not EU endorsed as at 26 March 2019. Read more on EU Endorsement

Current proposals

  1. ED/2014/4 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value was issued in September 2014. IAS 28 allows certain entities to elect to account for investments in associates and joint ventures at fair value. Where these investments are quoted in an active market, the proposed amendments would require that fair value is determined on the basis of quoted market prices without adjustment. The IASB has decided to incorporate work on this project into the post-implementation review of IFRS 13; a Request for Information was issued in May 2017 in respect of the review.

Other resources

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This page was last updated 26 March 2019

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