participating interest

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An interest held by an undertaking in the shares of another undertaking, which it holds on a long-term basis for the purpose of exercising some measure of control or influence over the activities of the second undertaking. This definition is based on that given in Financial Reporting Standard (FRS) 2, Accounting for Subsidiary Undertakings. A holding of 20% or more of the shares of an undertaking is presumed to be a participating interest, unless the contrary is shown. FRS 2 is a lengthy and fairly complex standard; the Accounting Standards Board issued an amended version in December 2004. See also controlling interest; minority interest; significant influence.

Subjects: Accounting.

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