HGB §§311–312
Associate Companies
Assoziierte Unternehmen
The HGB provisions governing associate companies (assoziierte Unternehmen), including the equity method, significant influence, and measurement rules.
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Conceptual Framework Linkage
THE THIRD TECHNIQUE, AND THE ONLY MANDATORY ONE: unlike §310's proportionate consolidation (a genuine election), the equity method under §§311–312 is REQUIRED once significant influence is established – reusing the SAME 20% Beteiligung presumption from §271(1), all the way back in the individual-accounts Bilanz poster.
The third technique in the consolidation toolkit, and the only mandatory one
This poster series has now covered all three of HGB's major consolidation techniques: full consolidation (§300, for control), proportionate consolidation (§310, an ELECTION for joint management), and now the equity method (§§311–312, MANDATORY once significant influence is established, with no equivalent choice available). Where full and proportionate consolidation bring the investee's individual assets and liabilities into the group accounts line by line, the equity method instead reduces the ENTIRE relationship to a SINGLE net investment figure on the Konzernbilanz.
HOW §§311–312 MAP TO GERMAN ACCOUNTING PRINCIPLES
Wirtschaftliche Betrachtungsweise – significant influence, though short of control, still means the investor's own results are genuinely tied to the investee's performance, warranting more than a static cost-based figure Realisationsprinzip, respected even here – §312(4)'s dividend treatment exists specifically to avoid double-counting income already recognised the year it was earned
What §§311–312 require, at a glance
§Core requirement
311(1)Significant influence (presumed at 20%+) makes the equity method MANDATORY
311(2)A materiality carve-out for genuinely immaterial interests
312(1)Two initial measurement methods – book value or capital share
312(2)The resulting difference treated per the same rules as capital consolidation goodwill
312(3)–(4)Annual share-of-profit adjustment; dividends reduce the investment
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Scope
Investments held by any group member, in enterprises outside the consolidation scope
§§311–312 apply to any Beteiligung held by the parent or any INCLUDED group member in an enterprise that is NEITHER a consolidated subsidiary (§290) NOR proportionately consolidated (§310) – where the investor nonetheless exercises significant influence over the investee's business and financial policy decisions.
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§311(1) – Defining an Assoziiertes Unternehmen
Significant influence – genuinely more than a passive investment, genuinely less than control
§311(1) defines an assoziiertes Unternehmen as an enterprise, HELD as a Beteiligung by a group member but NOT included in the Konzernabschluss, over which the holder exercises a SIGNIFICANT INFLUENCE (maßgeblichen Einfluss) on its business and financial policy decisions – genuinely stronger than a passive investment, but stopping SHORT of the control that would instead trigger full consolidation under §290.
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The 20% Presumption – Reusing §271(1)'s Beteiligung Test
The exact same threshold, doing double duty across the whole framework
§311(1) sentence 2 establishes a REBUTTABLE PRESUMPTION of significant influence at 20% or more of the voting rights – directly reusing the SAME 20%-ownership presumption §271(1) established for the general "Beteiligung" concept, all the way back in the individual-accounts Bilanz poster. This single threshold does genuine double duty across HGB: it first identifies WHETHER a holding counts as a Beteiligung at all (§271(1)), and THEN, specifically within the Konzernabschluss context, whether that Beteiligung rises to the level of significant influence requiring equity-method treatment (§311(1)).
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Worked Example – Testing Significant Influence
A 20%+ stake, presumed significant, without genuine control
Example 1: A 30% stake with a board seat, but no control
A group member holds 30% of the voting shares of another company, and has secured a single seat on its supervisory board, giving it meaningful visibility into and input on the investee's strategic decisions – but the REMAINING 70% is held by a single other shareholder who retains full, sole control over ordinary operating decisions.
The 30% stake TRIGGERS the §311(1) rebuttable presumption of significant influence (well above the 20% threshold), and the board seat REINFORCES this conclusion with genuine, substantive evidence of influence over financial and operating policy – the investment MUST be accounted for using the equity method under §312, REGARDLESS of the other shareholder's own dominant 70% control.
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§311(2) – the Materiality Carve-Out
Genuinely immaterial interests need not bother with equity-method mechanics
§311(2) provides that the equity method need NOT be applied where the interest is of subordinate importance for giving a true and fair view of the group's position – the SAME materiality relief pattern seen repeatedly throughout this whole Konzernabschluss subsection (§296's exclusion grounds, §304's profit-elimination exception, §308(2)'s restatement carve-out).
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§312(1) – Two Initial Measurement Methods, a Genuine Choice
Book value or capital share – an actual election, unlike full consolidation's single mandated approach
§312(1) permits the investment to be initially measured using EITHER the Buchwertmethode (book value method – starting from the investment's own historical acquisition cost) OR the Kapitalanteilsmethode (capital share method – the parent's proportionate share of the associated company's REVALUED equity at the point significant influence was acquired, directly analogous to §301's own Neubewertungsmethode for full consolidation). This is a genuine METHOD CHOICE – unlike full consolidation under §301, which mandates the revaluation approach without alternative.
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Worked Example – Computing Goodwill at Initial Recognition
A single net figure, with an embedded goodwill component
Example 2: Acquiring a 25% associate stake
A group member acquires 25% of another enterprise for €1,800,000, qualifying as an associated company under §311(1). Applying the Kapitalanteilsmethode, the investee's identifiable net assets, revalued to fair value, total €6,400,000 – of which the 25% share is €1,600,000.
Goodwill embedded within the investment = €1,800,000 − €1,600,000 = €200,000. UNLIKE full or proportionate consolidation, this goodwill is NOT shown as a separate line item on the Konzernbilanz – it remains EMBEDDED within the single "Anteile an assoziierten Unternehmen" investment line, though its amortisation still follows the SAME general rules established for capital consolidation goodwill under §312(2)'s cross-reference to §301(3)/§309.
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§312(2) – the Difference Amount, Cross-Referenced to §301/§309
No separate regime – the same rules, just embedded within one line
§312(2) provides that any resulting difference – POSITIVE (goodwill-like) or NEGATIVE (bargain-purchase-like) – is treated according to the SAME general principles established for capital consolidation under §301(3) and its subsequent-period treatment under §309: mandatory amortisation for a positive difference; potential, conditions-based release to income for a negative one. The MECHANICS are identical to full consolidation; only the PRESENTATION differs, since the difference is embedded within a single investment line rather than shown as its own separate Konzernbilanz item.
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§312(3) – the Annual Share-of-Profit Adjustment
The single most distinctive, ongoing mechanic of equity method accounting
§312(3) requires the investment's carrying amount to be ADJUSTED each subsequent year to reflect the investor's proportionate SHARE of the associated company's OWN profits or losses for the period – with the corresponding amount flowing through the Konzern-GuV (typically as "Ergebnis aus assoziierten Unternehmen," or equity-method income). This is what most distinguishes the equity method from either full consolidation (which shows every underlying line item) or a static cost-based holding (which would never move at all): a SINGLE net investment figure that rises and falls each year with the investee's OWN performance.
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Worked Example – Rolling the Investment Forward a Full Year
The investment grows purely because the associate itself performed well
Example 3: A profitable year for the associate
Continuing Example 2: the associated company generates €480,000 of net income in the following year. The group's 25% share is therefore €120,000.
The investment's carrying amount INCREASES from €1,800,000 to €1,920,000 (€1,800,000 + €120,000), and the group recognises €120,000 of equity-method income in its OWN Konzern-GuV – DESPITE having received NO cash whatsoever from the associate during the year. The group's own reported results move in step with the associate's performance, purely through this single adjusting entry.
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§312(4) – Why Dividends Reduce the Investment, Not Investment Income
Avoiding double-counting income already recognised the year it was earned
§312(4) requires dividends actually RECEIVED from the associated company to REDUCE the investment's carrying amount, RATHER than being recognised as new investment income – since the underlying profit was ALREADY recognised via the §312(3) share-of-profit adjustment in the YEAR IT WAS EARNED. The dividend itself is merely a return OF value already reflected in the group's accounts, not a genuinely NEW economic event; recognising it again as income would DOUBLE-COUNT the same profit.
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Worked Example – Receiving a Dividend From an Associated Company
A return of already-recognised value, not fresh income
Example 4: A cash dividend received the following year
Continuing Examples 2–3: the following year, the associated company pays a €70,000 cash dividend to the group, reflecting a portion of the prior year's already-recognised €120,000 equity-method income.
The €70,000 dividend RECEIVED REDUCES the investment's carrying amount from €1,920,000 to €1,850,000 – it is NOT recognised as fresh investment income in the Konzern-GuV, since the underlying €120,000 profit was ALREADY captured in the group's results the PRIOR year, via the §312(3) adjustment. Recognising the dividend again as income would double-count value the group has already reported.
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Critical Judgments & Practical Difficulties
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Whether significant influence genuinely exists below the 20% presumption threshold (e.g. via board representation or material transactions), or is genuinely REBUTTED despite exceeding 20% Whether an interest is genuinely immaterial enough to justify the §311(2) carve-out
PRACTICAL DIFFICULTIES
Obtaining timely, reliable financial information from an associate the group does NOT control, to support the annual §312(3) share-of-profit adjustment Choosing consistently between the Buchwertmethode and Kapitalanteilsmethode at initial recognition, and applying that choice per §252(1) no.6's consistency principle thereafter
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Relationship to IFRS (IAS 28) – a Genuinely Strong Convergence
Comparison – HGB §§311–312 vs IAS 28
FeatureHGBIAS 28
Significant influence presumption20%+ voting rights (§311(1))20%+ voting rights (IAS 28) – CONVERGED
Equity method mandatory once influence existsYES (subject to §311(2) materiality)YES (subject to general materiality) – CONVERGED
Dividends reduce investment rather than recognised as incomeYES (§312(4))YES (IAS 28) – CONVERGED
Goodwill embedded in investment, subsequent treatmentMANDATORY amortisation (via §301(3)/§309 cross-reference)NOT separately amortised – the ENTIRE investment is tested for impairment as a single unit (IAS 36/IAS 28)
This Titel shows a genuinely STRONG overall convergence with IFRS – the 20% presumption, the mandatory nature of the method once influence exists, and the dividend treatment all align closely. The ONE persistent divergence is, unsurprisingly, the SAME goodwill amortisation-vs-impairment split that has run through this entire poster series since §246(1) sentence 4.
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Statement Mapping
Where every §§311–312 event lands
Event / obligationDocument(s) affectedNotes
Initial recognition (§312(1))KonzernbilanzA single "Anteile an assoziierten Unternehmen" investment line
Annual share-of-profit adjustment (§312(3))Konzernbilanz Konzern-GuVInvestment and group income both move together
Dividend received (§312(4))KonzernbilanzReduces the investment; no Konzern-GuV impact
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Related Provisions – Cross-Reference Map
How §§311–312 connect across HGB Book 3
ProvisionNature of the connection
§271(1)Supplies the SAME 20% Beteiligung presumption §311(1) reuses for significant influence
§301(3), §309The general goodwill/negative-difference rules §312(2) applies to the equity-method investment
§310The genuine alternative treatment available for a jointly-managed enterprise, if proportionate consolidation is elected instead
§252(1) no.6The general consistency principle governing the initial §312(1) method choice over time
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Quick-Reference Glossary
Assoziiertes Unternehmen
Associated company – an enterprise over which significant (but not controlling or jointly-managing) influence is exercised.
Maßgeblicher Einfluss
Significant influence – presumed at 20%+ voting rights, the trigger for mandatory equity-method treatment.
Buchwertmethode
Book value method – initial measurement at the investment's own historical acquisition cost.
Kapitalanteilsmethode
Capital share method – initial measurement at the proportionate share of the associate's revalued equity.
Ergebnis aus assoziierten Unternehmen
Equity-method income – the group's proportionate share of the associate's own annual profit or loss.
Anteile an assoziierten Unternehmen
The single Konzernbilanz investment line representing the entire equity-method relationship.
Key
Konzernbilanz Consolidated balance sheet
Konzern-GuV Consolidated income statement