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ACCA Applied Skills · Financial Reporting · The concepts and principles of groups and consolidated financial statements

Which of the following is the most likely indicator of significant influence over an investee under IAS 28?

Representation on the investee's board of directors is an indicator of significant influence under IAS 28. A 60% holding usually gives control, while a small holding without involvement or a lending relationship does not on its own show significant influence.

  1. AHolding 60% of the voting rights
  2. BHolding 15% of the voting rights with no board representation or other involvement
  3. CRepresentation on the investee's board of directorsCorrect
  4. DHolding a bank loan to the investee

Explanation

IAS 28 lists indicators of significant influence such as board representation, participation in policy decisions, material transactions, interchange of managerial personnel and technological dependency. A 60% holding normally indicates control, and a loan or a small holding with no involvement does not indicate significant influence.

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