Basics of investment accounting methodology in associated enterprises

This article discusses the management of investments in associated enterprises, as well as the main accounting objects and risks in associated enterprises. The article also discusses the reflection of investments in associated companies by the equity method, and also gives the concept of investments in joint companies which are reflected by the proportional consolidation method or the equity method. It also describes how an investment in an associate is accounted for in the consolidated financial statements using the equity method. The concept of how dividend policy is taken into account using the equity method is given. The equity method is where the investor records the investment at purchase price at the time it is acquired and the amount of all dividends due is reflected by the investor as a reduction in the carrying amount of the investment.