Chapter 16, 17, 18 – Key Words

Associate:
It is an entity over which the investor has significant influence

Joint Arrangement:
Is an arrangement that two or more parties have joint control

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. These parties are called joint venturers.

Significant influence:
Is presumed when an entity holds, directly or indirectly, 20% or more of the voting power
of the investee

Equity Method:
Used in recognizing investment associate

Loss event:
Objective evidence of impairment as a result of one or more events that occurred after the
initial recognition of the net investment

Recoverable amount
Is measured at higher between fair value less cost if disposal and value in use

Fair market value:

Is the price that would be sold to sell an asset in an orderly transaction between market
participants at the measurement date

Contractual Arrangement
Is the agreement between parties of the joint arrangement

Enforceable contractual arrangement

is often but not always in writing, usually in the form of a contract or documented
discussions between the parties

Joint control
Is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about relevant activities require the unanimous consent of the parties sharing control

Note:
Classification depends upon the rights and obligations of the parties to the arrangement

Parent:
An entity that controls one or more entities
Associate:
An entity over which the investor has significant influence

Joint venture:
Is a party to a joint venture that has joint control over that joint venture.

Unconsolidated Financial Statements

Financial statements that refer only to a parent’s financial statements

Joint Operation
Is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. Those parties
are called joint operators.

Separate vehicle
A separate identifiable financial structure, including separate legal entities or entities
recognized by statute, regardless of whether those entities have legal personality.