ABC Inc. is using the equity method to account for its investment in DEF. ABC’s year end is Dec. 31 and DEF’s year end is August 30. Would ABC be allowed to utilize the statements of DEF which have a different year end for the purpose of applying the equity method under IFRS?

ABC Inc. is using the equity method to account for its investment in DEF. ABC’s year end is Dec. 31 and DEF’s year end is August 30. Would ABC be allowed to utilize the statements of DEF which have a different year end for the purpose of applying the equity method under IFRS?

No – Under IFRS one is not allowed to use F/S of an associate with a year end more than 3 months different from the investor.  Therefore the financial statements of DEF would have to be prepared as at December 31 for the purpose of using the equity method.

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