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WorkpaperIAS 28 — Investments in Associates and Joint VenturesL1 · L2 · L3 · L4

Assessing significant influence: rebuttable 20 % presumption, indicators, potential voting rights, exemptions, held for sale and distinction from joint control

5 missions8 sections to document50 min
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Status
Published

Objective of the workpaper

List the direct and indirect voting rights, the potential rights currently exercisable and the indicators of influence (board, policy decisions, material transactions, interchange of personnel, technical information), then support the conclusion. The 20 % presumption is rebuttable in both directions: it is never an automatic threshold and the indicators prevail over the percentage.

8 sections · 18 blocks · 1 calculation · 0 entries

  • IAS 28 §5
  • IAS 28 §3
  • IAS 28 §6
  • IAS 28 §7
  • IAS 28 §8
  • IAS 28 §17
  • IAS 28 §18
  • IAS 28 §20

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

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File and entity
Significant influence: rebuttable 20 % presumption, indicators, definitions and basic equity method (cost, share, dividends)
Case tasks documented here
  • Brissan: add up the direct and indirect voting rights, apply the 20 % presumption and conclude on significant influence.
  • Tolbec: at 15 %, does significant influence exist? Examine the indicators.
  • Mirel: at 18 %, is the presumption of no influence rebutted? Examine the indicators.
  • What are an associate, significant influence and the equity method, and which of the three entities is accounted for under the equity method?
1

Facts and data

Inputs

  • Investee: activity, other shareholders, shareholder agreements

    TextRequired

    ASSOCIATE_CANDIDATE_WITH_ONE_BOARD_SEAT_OF_SEVEN

  • Voting rights held directly (%)

    Number

    22 %

  • Voting rights held indirectly, for example through subsidiaries (%)

    Number

    8 %

  • Total voting rights, direct and indirect (%)

    Number

    30 %

  • Additional voting rights from instruments currently exercisable or convertible (%)

    Number

  • Indicators: board representation, participation in policy decisions, material transactions, interchange of personnel, technical information

    Text

    ONE_DIRECTOR_APPOINTED_BY_THE_INVESTOR

  • Status of the investor: exempt parent, venture capital or similar entity, held for sale

    Text

  • Contractual sharing of control and decisions requiring unanimous consent (distinction from IFRS 11)

    Text

2

Supporting documents

Evidence

  • Documents obtained and referenced (shareholder register, agreement, board minutes, contracts with the investee)

    EvidenceRequired

3

Analysis of significant influence

Analysis

IAS 28 §5IAS 28 §3IAS 28 §6IAS 28 §7IAS 28 §8IAS 28 §17IAS 28 §18IAS 28 §20

  • Points reviewed: significant influence and scope

    ChecklistRequired

    • Power to participate in financial and operating policy decisions, without control or joint control
    • Direct and indirect voting rights compared with 20 %: influence presumed at 20 % or more, absent below, rebuttable by clear evidence
    • Indicators examined whatever the percentage: board, policy, transactions, personnel, technical information
    • Potential voting rights currently exercisable or convertible taken into account, excluding management’s intention and financial ability
    • Exemptions from the equity method: exempt parent, venture capital or similar entity measuring at fair value through profit or loss
    • Investment classified as held for sale: accounted for under IFRS 5, not under the equity method
    • Joint control ruled out or retained: joint venture accounted for under IAS 28, party without joint control but with significant influence
    • Significant judgments on significant influence taken to the interests note
4

Calculations

Calculations

IAS 28 §5

  • Voting rights held directly and indirectly (direct + indirect, %)

    Calculation

    30 %

    Voting rights held directly (%) ; Voting rights held indirectly, for example through subsidiaries (%)

5

Judgments: significant influence and exemptions

Judgment

IAS 28 §5IAS 28 §3IAS 28 §6IAS 28 §7IAS 28 §8IAS 28 §17IAS 28 §18IAS 28 §20

  • Conclusion on significant influence

    JudgmentRequired

    Significant influence established: presumption confirmed or rebutted by indicators

    Significant influence established: presumption confirmed or rebutted by indicators / No significant influence: nothing establishes it / Not applicable

    Professional judgment: the 20 % presumption is rebuttable; it is neither an automatic threshold nor an exclusion rule, and the indicators are weighed together.

  • Rationale: percentage, indicators, potential rights and evidence to the contrary

    Text

    PRESUMPTION_CONFIRMED_NOTHING_TO_THE_CONTRARY

  • Exemption from the equity method

    JudgmentRequired

    No exemption: equity method

    No exemption: equity method / Venture capital or similar entity: fair value through profit or loss elected / Exempt parent: all the cumulative conditions of the exemption met / Held for sale: IFRS 5 / Not applicable

  • Rationale: status of the investor, cumulative conditions, IFRS 5 classification

    Text

    NO_EXEMPTION_APPLIES

6

Items to document for the information on interests

Disclosure

IAS 28

  • Information to prepare for the note

    Checklist

    • Nature of the interest in the associate and related risks
    • Significant judgments made in concluding that significant influence exists or does not
7

Conclusion

Conclusion

  • Supported conclusion: significant influence or not, any exemption, with the evidence retained

    ConclusionRequired

8

Normative references

References

  • Normative references cited in this workpaper

    References

9

Checks and financial statement impact

  • Investee describedPass
  • Significant influence judgedPass
  • Direct and indirect voting rights recalculated = percentage retainedPass
Assets
0
Liabilities
0
Profit or loss
0
OCI
0
Equity
0