January 5, 2010

SIGNIFICANT INFLUENCES

3 types of company that cannot be consolidate but for which equity basis is suitable in preparing consolidated accounts are:



a) subsidiaries that are not consolidated but investment in long term

b) Associates company where investor holds substantial amount of equity shares and able to exert influence and not control

c) Joint ventures



Associate definition according Malaysian Accounting Standard Board (MBSB 12)

- enterprise in which investor has a significant influence



Significant influence

- investor holds directly or indirectly 20% or more voting right of the investee.

- 20 % - 49 %

Measure Significant

- measure by participation in the financial and operating policy decision of the investee but not control of those policy

How to evide Significant

- representation in the Board of Directors

- policy making process

- material inter-company transaction

- interchange of managerial personnel

- dependency on technical information