No information about whether an associate has been tested for impairment Dutch recruitment company Randstad does not indicate whether an associate carried at €16.3 million has been tested for impairment in the light of its fair value being €8.6 million below the carrying amount.
Upbeat equity accounting muffles significant unrecognised market value losses
Italian bank Mediobanca – Banca di Credito Finanziario reclassifies two more investments under 20% as associates, increasing to €646 million unrecognised losses relative to market price that amount to 11% of closing equity.
Losses on investment in an associate reduce profit by 57% UK packaging company DS Smith recognises £22.6 million losses on its investment in an associate arising from currency impacts that reduce its pre-tax profit by 57%.
Gain on disposal inappropriately included in results from associates Norwegian food and chemicals company Orkla includes a NOK830 million gain from disposal of its interest in an associate in results from associates in a presentation that is misleading and falls short of IFRS.
Share portfolio write-down leads to loss for year Norwegian food and chemicals company Orkla recognises a NOK5.7 billion loss from impairments of financial assets, leading to a loss for the year, with further declines in carrying amount recognised in equity.
Impairment test result at odds with market value Swiss pharmaceutical company Novartis recognises no impairment in an associate bought at US$141 per share, when the price falls to US$89, as its own calculations support a value of US$145, but it does little to explain the difference.
10.6% interest classed as an associate without adequate explanation Italian bank Mediobanca - Banca di Credito Finanziario transfers its 1.54% share in Telecom Italia to a company it reclassifies as an associate, but its explanation of the reclassification lacks clarity.
Misleading presentation of associates' results German vehicle maker Daimler recognises in the income statement a €762 million gain on disposal of a 7.5% interest in an associate and a €704 million gain on dilution of its interest in a subsidiary, representing 16% of pre-tax profit.
Decision to extend assets' useful lives increases profit An upward revision of useful lives of property, plant and equipment by German vehicle maker Daimler boosts its pre-tax profit by €888 million, or 10.7%, but the company does not explain the timing of the change of estimate.
LBO produces income statement gain French airline Air France-KLM recognises in income €284 million gains, representing 25.2% of pre-tax profit, from a leveraged buy out in an equity-accounted company with net liabilities.
Significant influence held through 15% investment Dutch recruitment company Randstad states that agreement allowing it to approve financial and operating decisions of investee gives it significant influence.
SPEs consolidated following injections of liquidity UK bank HSBC consolidates two special purpose entities (SPEs) with total assets of US$40.7 billion, representing 1.7% of balance sheet totals, following substantial injections of liquidity that change its relationship with them.
Gain on dilution of interest in associates recognised in income UK bank HSBC recognises in the income statement US$1 billion gain on dilution of its interest in five associates, amounting to 4.1% of pre-tax profit, following non-participation in share issues.