Abstract:

The International Accounting Standard (IAS) 27 should be used to prepare separate financial statements by entities with securities traded on regulated markets within the European Union (EU) that adopt IAS and International Financial Reporting Standards (IFRS). Entities are allowed to use three different accounting methods to recognise and measure their interests in subsidiaries, associates, and joint ventures, namely the cost method, the equity method under IAS 28, as well as fair value under IFRS 9. This exploratory paper aims to identify the accounting methods used for those investments as prescribed by IAS 27. The study sample consists of entities from the major indices of EU countries. At the end of the process, data from 267 entities were gathered. Notwithstanding the likely impacts of accounting choices under IAS 27, the findings indicate that the cost method is predominantly used by entities, with other methods globally not comprising more than 20%. Some differences by country and sector were also found. These results will contribute to the discussion on the issues regarding the accounting choices based on the separate financial statements where those interests are reported therein.