27.1 Introduction

The term fixed asset investments covers a broad spectrum including investments in subsidiaries, associates, joint ventures, joint arrangements and other investments which do not fit into any of the earlier categories.

The purpose of this chapter is to explain how fixed asset investments should be categorized, and how they should be accounted for and disclosed in accordance with FRS 9 to which reference should be made in complex cases.

It is always important to appreciate the distinction between the accounting treatment in the accounts of an individual company, i.e. the parent company, and the treatment in the consolidated or group accounts. For example, investments in subsidiaries will usually be stated at cost in the parent company's balance sheet, whilst the parent company's profit and loss account will include dividends received and receivable from subsidiaries. By contrast, the consolidated balance sheet will include the assets and liabilities of individual subsidiaries on a line by line basis, and the consolidated profit and loss account will include income and expenses, on a line by line basis, of the various subsidiaries.

27.2 Regulatory Environment Overview