Consolidated Financial Statements 2022 · Page 85

Public Investment Fund and its subsidiaries 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 
(All amounts in million SAR unless otherwise stated) 
Classification: External Confidential 
82 
 
11. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 
 
 
 
 
Significant accounting policies that apply to investment in associates, joint ventures and joint operations 
Investment in associates and joint ventures 
 
An associate is an entity over which the Group has significant influence, through its investment in debt and/ or equity instruments. 
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint 
control over those policies. 
 
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets 
of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions 
about the relevant activities require the unanimous consent of the parties sharing control.   
 
The considerations made in determining significant influence or joint control are similar to those necessary to determine control over 
subsidiaries. The Group’s investment in its associate and joint venture is accounted for using the equity method.  
 
Under the equity method, the investment in an associate or a joint venture is initially recognized at cost i.e. purchase price and directly 
attributable costs. The carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the 
associate or joint venture since the acquisition date, until the date when significant influence or joint control ceases, adjusted for any 
dividend earned and accumulated impairment loss, if any. Goodwill, determined as the difference between the fair value of the net 
assets acquired and the consideration paid, relating to the associate or joint venture is included in the carrying amount of the investment 
and is not tested for impairment separately.   
 
The consolidated statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint venture. Any 
change in other comprehensive income of those investees is presented as part of the Group’s consolidated statement of other 
comprehensive income. In addition, when there has been a change recognized directly in the equity of the associate or joint venture, 
the Group recognizes its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealized gains 
and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest 
in the associate or joint venture. 
 
The aggregate of the Group’s share of profit or loss of associates and joint ventures is shown on the face of the consolidated statement 
of profit or loss and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associates and joint ventures.   
 
The financial statements of the associates or joint ventures are prepared for the same reporting period as the Group. When necessary, 
adjustments are made to bring the accounting policies in line with those of the Group. 
 
After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its investment 
in its associate or joint venture. At each reporting