Equity accounting: Which investments qualify?

Abstract

AC110 Accounting for the results of associated companies and non-consolidated subsidiaries continues to be a subject of debate. The selection of an investment for which equity accounting is the appropriate method of reporting, has not been made easier by definitions based on competing criteria. This paper challenges the validity of a quantitative benchmark and examines the circumstances which purport to indicate the existence of a qualitative measure. It is contended that there is, in fact, only one criterion upon which a qualifying investment can be selected, and that neither of She alternative definitions is wholly acceptable.

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Notes on contributors

M.D.F. Steele

Margo Steele is Professor of Accounting at the University of the Witwatersrand.