Importance The article examines new requirements of IAS 28 Investments in Associates and Joint Ventures, which exclude the methods of accounting for proportionate consolidation out of accounting for associates' results, which have still been used to keep accounting records of joint ventures of domestic entities. Objectives The research examines the substance of accounting items of associates' joint activities to recognize them in the investor's financial statements as a party to a strategic alliance. We also reveal the substance of economics of contracts, identify specific features of the equity method in the associates' accounting practice. Methods The methodology for accounting of associates' joint activities relies upon economics of contracts, which allows to seamlessly integrate clauses of positive and regulatory economics into accounting of investment for associates and recognize results of joint activities in the investor's financial statements and their structure. Results We found and prove the equity method was practicable and necessary for financial accounting of associates under IFRS. The equity method replaces the method of proportionate consolidation accounting. We determine the sequence for consolidated accounting of such enterprises and recognition of the associated partner's indicators in the investor's financial statements. Conclusions and Relevance The economics of contracts is the fundamental basis for accounting of joint activities for strategic alliances (associates). Such entities' indicators are officially recognized in financial statements of investors (stakeholders) in joint ventures only, referring only to their interest. It is not obligatory to prepare individual financial statements of the associate, depending on stakeholders' needs to have such information. The understanding of economics of contracts determines how associates should set up their accounting of joint activities and its structure. It helps reliably recognize the results of joint activities in the investor's financial statements.
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