CoreBeginner · Intermediate
Indicators of significant influence
Learning objectives
- Identify the indicators of significant influence (board representation, participation in policy-making, material transactions, interchange of managerial personnel, essential technical information).L1, L2
- Analyse a set of facts to assess influence against these indicators.L2
Normative references
- IAS 28 §6The existence of significant influence is usually evidenced by one or more indicators: representation on the board of directors, participation in policy-making processes (including decisions about dividends), material transactions with the investee, interchange of managerial personnel, provision of essential technical information.
Original summaries of the paragraphs (reference register), never a quotation of the standard.
3 questions
- Which of these are indications of significant influence? More than one answer is possible.L1
- Alba SA holds 15% of Brise SA. It has a director on Brise's board, enters into material transactions with Brise and provides it with essential technical information (case data). What can be said about Alba's significant influence?L2
- Alba SA holds 12% of Brise SA, with no board seat. It provides essential technical information to it, exchanges managerial personnel with it and takes part in the discussions on dividend policy (case data). Write a short note concluding on Alba's significant influence, distinguishing case facts, rule and professional judgement.L2
Practical cases
- Significant influence: rebuttable 20 % presumption, indicators, definitions and basic equity method (cost, share, dividends)L1
- Equity method with goodwill, fair value adjustment, uniform policies, potential voting rights and capped lossesL2
- Group file: significant influence, equity method, eliminations, losses and impairment, cessation of influence (IAS 28)L4