This document outlines Accounting Standard 23 which provides guidance on recognizing investments in associates in consolidated financial statements. It states that the standard should be applied when accounting for investments in associates where the investor has at least a 20% stake. The standard outlines that such investments should be recorded using either the equity method, where the investment is recorded based on the associate's net assets, or the non-equity method, which accounts for inflation-related changes between the time of recording and purchase.

1. Accounting Standard 23
Accounting for Investments in
Associates in Consolidated
Financial Statements

2. Objective
• to set out principles and procedures for
recognizing, in the consolidated financial
statements, the effects of the investments in
associates on the financial position and
operating results of a group.

3. Scope
1. This Standard should be applied in
accounting for investments in associates in
the preparation and presentation of
consolidated financial statements by an
investor.
2. This Standard does not deal with accounting
for investments in associates in the
preparation and presentation of separate
financial statements by an investor.

4. Overview
• very helpful to corporate type investors
• simple rule is that investor must record all
investment in associates
• Associates - if an investor invests his fund‘s
20% or more in any other company

5. Methods To Record
1. Equity Method
1. Non-Equity Method

6. Equity Method
• Investment in associate is record on the real
cost of investment
• Equity = Assets – Liabilities
• Amount paid for getting investment in
associate will only recorded in books of
investor

7. Non-Equity Method
• It is related with inflation accounting
• If any fluctuation arise between the time of
recording and the time of actual purchase
• Those changes are recorded