MPERS vs MFRS : Associates

In this article, we share the main differences in the accounting requirements for associates under MFRS 128 and Section 14 of MPERS.

01Associates

Investment in associate refers to the investment in an entity in which the investor has significant influence but does not have full control like a parent and a subsidiary relationship. Usually, the investor has a significant impact when it has 20% to 50% of shares of another entity.

02Section 14 of MPERS - Associates

Measure investment in associates

• The cost modelInvestment is measured at cost less impairment. The quoted associate must be measured at fair value.
• The equity methodNo exception for temporary investment and for conditions of severe restriction.
• The fair value modelInvestment is measured at fair value through profit and loss. Any investment which is impracticable to measure fair value must be measured using the cost model.

When an associate becomes a subsidiary or joint venture, a remeasurement is required with gain or loss recognized in P/L account

03MFRS 128 - Associates

Measure investment in associates under the equity method in the consolidated financial statements.

No exception for temporary investment and for conditions of severe restriction.

When an associate becomes a subsidiary (not joint venture), a remeasurement is required.

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