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

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  • Teuteberg, Torben
  • Voll, Daniel
  • Zülch, Henning

Abstract

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 investments 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 investments 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 investment 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.

Suggested Citation

  • Teuteberg, Torben & Voll, Daniel & Zülch, Henning, 2016. "The success story of international additives producer AG: A case study on categorization of investments under IFRS," Journal of Accounting Education, Elsevier, vol. 34(C), pages 13-29.
    • Handle: RePEc:eee:joaced:v:34:y:2016:i:c:p:13-29
    DOI: 10.1016/j.jaccedu.2015.11.003
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    References listed on IDEAS

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    1. Dominic Detzen & Sebastian Hoffmann & Henning Zülch, 2013. "Bright Pharmaceuticals SE: Accounting for a Business Combination under IFRS 3," Accounting Education, Taylor & Francis Journals, vol. 22(3), pages 282-294, June.
    2. Churyk, Natalie Tatiana & Stenka, Renata, 2014. "Accounting for complex investment transactions," Journal of Accounting Education, Elsevier, vol. 32(4), pages 58-70.
    3. Davis, Larry R. & Matson, Diane M., 2014. "A river runs between them: An instructional case in professional services provided by a CPA firm," Journal of Accounting Education, Elsevier, vol. 32(4), pages 49-57.
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    5. Neely, Daniel Gordon & Tinkelman, Daniel, 2013. "The Whip Cancer Walk: A case of real earnings management in the nonprofit sector," Journal of Accounting Education, Elsevier, vol. 31(3), pages 294-309.
    6. Holtzblatt, Mark & Tschakert, Norbert, 2014. "Baker Hughes: Greasing the wheels in Kazakhstan (FCPA violations and implementation of a corporate ethics and anti-corruption compliance program)," Journal of Accounting Education, Elsevier, vol. 32(1), pages 36-60.
    7. Braun, Karen W., 2013. "Custom fabric ventures: An instructional resource in job costing for the introductory managerial accounting course," Journal of Accounting Education, Elsevier, vol. 31(4), pages 400-429.
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    Cited by:

    1. Hedi Baazaoui, 2020. "For A New Method Of Calculating The Disclosure Index," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(2), pages 9-24.

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