1.2 Separate Financial Statements
To determine whether separate financial statements are required
under Rule 3-09, a registrant must apply both
the investment test and the income test to each equity method investee. The test
that results in the highest significance level is used to determine the financial
statement reporting requirements.
If, on the basis of the highest test result, the significance of an
individual equity method investee is greater than 20 percent, the registrant must
provide, in its annual report or related amendment, such investee’s financial
statements for the periods in which the registrant used the equity method to account
for the investee. These financial statements are not required for interim
periods.