Associate company

A company is an associate if the investor has a significant but not controlling influence over the associated company for another company (investor). The term of the associated company is used in accounting, particularly in the financial statements. The investments in and relationships with these entities are accounted for in the consolidated financial statements of the investor under the equity method. The term " associate " is emphasized by the International Financial Reporting Standards (IAS 28), the German Commercial Code ( § 311 HGB) and the Austrian Business Enterprise Code ( § 263 UGB ) was used.

Definition of the associated company

An associated company refers to the property that has a company for another company (investor). A company is therefore never in itself an associate. The investor must have a significant but not controlling influence over the associate. Thus the company can be an associated company of several companies (investors). The German Commercial Code and the Austrian Business Enterprise Code also require that the investor holds an interest in the associated company. Companies which are included as a joint venture in the consolidated financial statements, are not associates. Whether non-consolidated subsidiaries and not proportionately consolidated joint ventures associated companies in the broader sense, is seen differently.

An investor has a " significant influence " over another undertaking, where the owner has the opportunity to participate in decisions on the financial and operating policies of the company, but he can not control this company. To clarify this definition, several indicators have been developed to individually or together indicate that there is a significant influence. Common indicators are:

  • The investor has a representative on the executive and / or supervisory body or a similar governing body of the investee,
  • Exist between the investor and the investee companies significant business,
  • The investor participates in the decision-making processes of the associated company,
  • Between the investor and associated undertakings managers is replaced,
  • The investor, the associate important technical information.

In the event that an investor holds at least 20% and less than 50 % of the voting rights associated companies, assume all accounting systems that the investor has significant influence over the associate. Depending on the accounting system voting rights to be added, which are exercised through subsidiaries. Furthermore, ( 28.8 IAS) are counted also certain potential voting rights in the accounting under IFRS. Can prove to the investor that he still does not have significant influence, contrary to the assumption or can exercise, it does not apply the equity method. Even if the investor has less than 20% of the voting rights may exist, which can be demonstrated by the presence of one or more of the above indicators has a significant influence.

Representation of the associated companies in the consolidated financial statements of the investor

The classification of a company as an associate has particular implications for the consolidated financial statements of the investor. There, investments in associated companies and the relationships with these entities are accounted for in the rule for using the equity method. Furthermore, the investments in associated companies are shown separately in the consolidated financial statements.

In the consolidated financial statements of the investor's principal associates with name, address and shareholding must specify.

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