Document ID: chunk:federal_register_of_legislation:F2025C00173:body:0:p3
Version: federal_register_of_legislation:F2025C00173
Segment Type: other
Provision Reference: 
Character Range: 5876–8693

paragraph Aus1.1 of the Conceptual Framework.

Scope
2 This Standard shall be applied by all entities that are investors with joint control of, or significant influence over, an investee.

Definitions
3 The following terms are used in this Standard with the meanings specified:
An associate is an entity over which the investor has significant influence.
Consolidated financial statements are the financial statements of a group in which assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.
The equity method is a method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets. The investor's profit or loss includes its share of the investee's profit or loss and the investor's other comprehensive income includes its share of the investee's other comprehensive income.
A joint arrangement is an arrangement of which two or more parties have joint control.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.
A joint venturer is a party to a joint venture that has joint control of that joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies.
4 The following terms are defined in paragraph 4 of AASB 127 Separate Financial Statements and in Appendix A of AASB 10 Consolidated Financial Statements and are used in this Standard with the meanings specified in the Standards in which they are defined:
• control of an investee
• group
• parent
• separate financial statements
• subsidiary.

Significant influence
5 If an entity holds, directly or indirectly (eg through subsidiaries), 20 per cent or more of the voting power of the investee, it is presumed that the entity has significant influence, unless it can be clearly demonstrated that this is not the case. Conversely, if the entity holds, directly or indirectly (eg through subsidiaries), less than 20 per cent of the voting power of the investee, it is presumed that the entity does not have significant influence, unless such influence can be clearly demonstrated. A substantial or majority ownership by another investor does not necessarily preclude an entity from having significant influence.
6 The existence of significant influence by an entity is usually evidenced in one or more of the following ways: