Do you consolidate associates?
Considering this, how do you account investment with an associates?
Investments in Associates The original investment is recorded on the balance sheet at cost (fair value). Subsequent earnings by the investee are added to the investing firm's balance sheet ownership stake (proportionate to ownership), with any dividends paid out by the investee reducing that amount.
Also Know, how do you account for dividends from associates? When an investee distributes some dividends to the investor, then such a distribution decreases the carrying amount of the investment. The journal entry is: Debit Cash (or whatever applies here) and. Credit Investment in the statement of financial position.
Also know, what is share of profit of associates?
In the consolidated statement of profit or loss, any dividend income received from the associate is replaced by bringing in one line that shows the parent's share of the associate's profit. This is presented as 'Share of profits of Associate' as a new heading immediately before the consolidated profit before tax.
Is income from associates taxed?
Under this approach, the share of the profit or loss of associates and joint ventures is considered a pre-tax amount that would be presented above the entity's profit before tax subtotal. For example, payment of tax on dividends from the investee (ie an associate or a joint venture).