Module I· Consolidation & Equity MethodBasic
Question
When is an investment not an associate or joint venture, but a financial investment?
Answer
Financial investment
The investor does not control the company and does not have significant influence or joint control.
Typical indicators
- ownership below 20%
- no board seat
- no veto rights over relevant activities
- no operational involvement
- investment held for financial return
Accounting
Usually measured under IFRS 9 at fair value through profit or loss or OCI, depending on classification.
IB implication
Financial investments are usually non-operating assets. In an EV-to-equity bridge, add them to equity value if they are not included in operating EV.