From associate to joint venture

Learning objectives

• Explain that the equity method continues to be applied and the retained interest is not remeasured.L3

Normative references

• IAS 28 §24When an investment in an associate becomes an investment in a joint venture (or vice versa), the investor continues to apply the equity method and does not remeasure the retained interest.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• When an associate becomes a joint venture, the investor discontinues the equity method and remeasures the retained interest at fair value.L3
• Alba SA holds 30% of Brise SA, an associate accounted for under the equity method. Under a new contractual agreement, Alba and another shareholder now exercise joint control over Brise, which becomes a joint venture (facts of the case). How does Alba treat its interest at the date of the change?L3