Equity procedure (X)

Abstract

The purpose of this work is to learn the later stages of the method of the equity method, and the processing of changes in participation and investment, internal operations, damage, and loss of associated company status or jointly, in appropriate.

At first, we will analyze the treatment of increased equity of the company equity, which shows that the various adjustments are intended to value the equity participation by the initial value and the increased equity in the years thereafter.

In a second step, we study the treatment of internal operations, going beyond the rules to distinguish between upstream and downstream operations. The ultimate goal of this phase is to adjust the outcome of internal operations for the percentage of participation.

In the third section, will address the change in the shares, with special emphasis on the different typologies. Could discriminate between two groups: change in the percentage of participation and investment, and the rest.

Then, being the equity participation of a financial investment and therefore an asset, is subject to deterioration, an aspect discussed in this work.

Finally, we study different cases in which it happens the loss of status associated company or jointly, as appropriate. Would emphasize that the treatment of gaining control of a company over which significant influence exercised previously is the same than in the cases that no significant influence existed before. In addition, note is the transfer of equity participation in financial assets available for sale, since the purpose of further consolidation should take into account the adjustments that had been done previously, during the phase in which it was considered that participation as equity.