Ekvivalenční metoda v individuální účetní závěrce

The equity method has long been one of the areas of Czech accounting lacking a consistent application. Although it is based on the same economic principle, different approaches have historically been applied in the separate financial statements of business entities, financial institutions, and in consolidation. This has resulted in reduced comparability of financial information and, in some cases, a distorted view of an entity’s financial position.

The National Accounting Council addresses this issue through Interpretation I‑53, which introduces a clearer methodological framework for measuring securities and equity interests using the equity method in separate financial statements, with the aim of unifying practice. The Interpretation is based on the concept of equity accounting set out in the European Accounting Directive and emphasizes that the method should be applied consistently regardless of the type of financial statements.

The Equity Method as a Reflection of the Economic Substance of an Investment

One of the key messages of the Interpretation is the rejection of a simplified approach whereby equity interests are measured merely as a proportionate share of the carrying amount of equity of the investee. This approach is particularly problematic when the interest is acquired by purchase and the purchase price significantly exceeds the historical carrying amounts. In practice, it may lead to a distortion of the investor’s equity that does not reflect the economic substance of the investment.

Interpretation I‑53 confirms that an equity participation is initially measured at acquisition cost, which is subsequently adjusted at the balance sheet date for post‑acquisition changes in the equity of the subsidiary or associate. The adjustment of the carrying amount of the investment also includes the amortisation of the related difference between the acquisition cost and the investor’s share in the fair value of net assets at the acquisition date.

The Interpretation further emphasizes the need to consider the fair values of assets and liabilities at the acquisition date, including the related deferred tax. At the same time, the equity of the investee on which the equity method is based must be determined using the same accounting policies as those applied by the investor. Where foreign entities apply different accounting rules, the resulting differences must be taken into account when applying the equity method.

Valuation Differences and Impairment Testing

Changes in the carrying amount of equity‑accounted investments are recognised directly in equity in the separate financial statements, through the line Valuation differences. At the same time, the Interpretation reiterates the obligation to test such investments for impairment. If the recoverable amount is lower than the value determined using the equity method, the accounting entity is required, in accordance with the prudence principle, to recognise an impairment loss.

Implications for Accounting Entities

Interpretation I‑53 has a significant practical impact, particularly for entities that acquire equity interests through purchase rather than contribution in kind, hold significant influence or controlling interests outside the scope of consolidation, or have foreign investments subject to different accounting frameworks.

Although Interpretations are not legally binding, I‑53 represents an important methodological guideline to ensure that separate financial statements provide a true and fair view of an entity’s financial position. At a time when the recodification of Czech accounting remains unresolved, the National Accounting Council once again confirms its key role in promoting consistency in accounting practice.

Authors:

Kateřina Dedková
Aneta Batelková
Marie Drápalová