TERMINOLOGY, FORMS & METHODS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS. COPYRIGHT RODERICK SEEMAN

 

Article 10. Application of the Equity Method Concerning investments in nonconsolidated subsidiaries and affiliated companies, an entry must be made in the consolidated balance sheet via a value calculated based on the equity method (meaning the method whereby the investor company each business year revises its investment account in proportion to the changes in that portion of the invested company's net assets of earnings attributable to the investor corporation. Hereinafter the same.) Provided however, concerning investments in companies which fall under any of the following items, the equity method shall not apply.

i. From among nonconsolidated subsidiaries and affiliated companies, those companies which fall under Article 5, Paragraph 1, Item i or Item ii.

ii. From among affiliated companies, those in which the company filing consolidated financial statements (when there are also subsidiaries, including the said subsidiaries) is recognized as holding only temporarily 20% or more of the voting rights.

2. From among those investments in nonconsolidated subsidiaries or affiliated companies, where an entry is to be made in the balance sheet using a value calculated based on the equity method and it is it is recognized that there is concern that this may cause misunderstandings by interested or related parties of the company filing consolidated financial statements, it is possible not to apply the provisions of the previous paragraph.

3. From among the affiliated companies, concerning investments in companies in which the voting rights held by consolidated companies are less than 20%, it is possible not to apply the provisions of Paragraph 1.