An associate is an enterprise, other than a subsidiary or joint venture, over which the investor has significant influence.
Significant influence means the power to participate in financial and operating policy decisions.
Such influence is presumed to exist if the investor owns more than 20 per cent of the associate. Associates should be accounted for by the equity method in consolidated financial statements. However, if an investment was acquired and held exclusively with an intent to dispose of it in the near future, it should be accounted for by the cost method. Under the equity method, the investor recognises its proportionate share of the associate's reported net profit or loss whether or not remitted as a dividend. The investor must amortise any goodwill implicit in the investment.