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The success story of international additives producer AG: a case study on categorization of investments under IFRS

  • International Additives Producer AG (IAP) recently announced ambitious forecasts regarding revenue and operating income to the capital market. These key performance indicators depend on the way IAP's iestments are currently accounted for in its consolidated financial statements, a situation that is seriously questioned by the newly appointed auditor. In this context, the case requires the application of the relevant International Financial Reporting Standards (IFRS) regarding the categorization of iestments for group reporting purposes. Specifically, Part I of the case requires the application of the control concept of IFRS 10 as well as the classification rules of IFRS 11 for joint arrangements, while Part II of the case introduces the assessment of significant influence according to IAS 28. Throughout the case the consequences of iestment categorization on external reporting and related management incentives that arise from the interplay between financial reporting and capital markets, compensation contracts and additional disclosure requirements are discussed.

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Document Type:Article
Author:Torben Teuteberg, Daniel Voll, Henning ZülchORCiD
Chairs and Professorships:Chair of Accounting and Auditing
Year of Completion:2016
In: Journal of Accounting Education, 34 (2016), 13-29