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Equity Method

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My client has LTD company, which is 100% shareholder in another company, that is based in Poland. That group is exempt from the obligation to draw up consolidated financial statements and a consolidated management report because it's small group.

Should an investment in a subsidiary be accounted for using the equity method?

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By paul.benny
23rd Dec 2021 16:41

No

FRS105 para 9.8(a) "Investments in ...subsidiaries, associates and interests in jointly controlled entities shall be measured at cost less impairment."

All FRS can be freely downloaded from the FRC website.

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Replying to paul.benny:
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By Bobbo
23rd Dec 2021 17:25

Of course if the client (parent company) is not eligible for FRS 105 and is applying FRS 102 then it is an accounting policy election between cost less impairment or fair value measurement (see para 9.26).

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