An Assessment of the Equity Method in Subsidiaries and Its Ability for Use in Tax Applications

Arif Ayluctarhan ()
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Arif Ayluctarhan: Istanbul University, Faculty of Business, Department of Commercial Law, Istanbul, Turkey

Muhasebe Enstitusu Dergisi - Journal of Accounting Institute, 2022, vol. 0, issue 67, 15-25

Abstract: In accordance with the full set of International Financial Reporting Standards/ Turkish Financial Reporting Standards (IFRS/TFRS), investments in subsidiaries and business partnerships are recorded using the equity method when significant influence has been achieved with regard to the power to participate in finance- and investment-related policies. This principle determines the value of participation and involvement and also affects the accrued dividend income. The dividend income is based on tax legislation in addition to the value of the partnership share as assessed through the purchase price and book value and is also based on collections, regardless of partnerships or the influence ratio. Although both sets of regulations serve different purposes, the following questions need to be asked in the context of the topic. How close can tax regulations be brought to financial reporting standards? When taking into account the principles that substantiate these regulations, how can these regulations be readdressed? The aim of this study is to explain the equity method and to discuss the applicability of the reporting principles within tax legislation.

Keywords: Equity Method; Significant Influence; Subsidiaries; Joint Contracts (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ist:imeder:v:0:y:2022:i:67:p:15-25

DOI: 10.26650/MED.1134703

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