Introduction and consolidated statement of financial position

In this lesson

1. 0:00 Introduction to associates and definitions
2. 0:30 Identifying significant influence and shareholding
3. 2:28 Initial recording and measurement of associates
4. 3:51 Impact on consolidated financial statements
5. 4:46 Classifying investments as associates
6. 6:11 Consolidation workings for associates
7. 9:00 Unrealised profit and fair value adjustments
8. 10:22 Worked example: Full consolidation with associate
9. 17:16 Preparing the consolidated statement of financial position

About this lesson

You'll explore the definition of significant influence, how to identify associates based on shareholding percentages and board representation, and the key differences in consolidation treatment compared to subsidiaries. The video walks you through the consolidated statement of financial position (CSFP) and how associates impact group accounting. Unlike subsidiaries, associates don't require net asset summaries, goodwill calculations, or noncontrolling interest workings. Instead, you'll add two new elements: a separate line for the investment in the associate (measured at cost plus your share of post-acquisition profits, adjusted for impairments) and an additional component in group retained earnings reflecting your share of the associate's post-acquisition results. The session includes a complete worked example showing a parent company with both a subsidiary and an associate, demonstrating how to handle unrealised profit adjustments on transactions between the parent and associate, and how to prepare the full consolidated statement of financial position. This content is essential for Strategic Business Reporting (SBR) and covers the practical mechanics you'll need to master for exam questions involving group structures with multiple investment types.

Duration: 19m