INT ACC 1B (Investment in Associate)

33問 • 11ヶ月前

問題一覧

It is an entity over which the investor has significant influence

associate

It is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policy

significant influence

Significant influence is presumed to exist if the investor holds directly or indirectly of what percent?

20% or more

Other evidences are significant influence except one

significant influence or the power to decide in the company

For significant influence to exist, the investment should provide the investor’s

voting rights

Voting rights are usually obtained from holding what?

ordinary shares

Under this method, the investment is initially recognized at cost and subsequently adjusted for the investor’s share in the investees changes in equity

equity method

It is recognized as s reduction to the carrying amount of the investment rather than income

dividends

When can an investor starts to apply the equity method?

from the date it obtains significant influence over an investee

If cost is greater than the fair value of the interest acquired, the excess is?

goodwill

If the carrying amount of an associate’s asset is less than its fair value , the investor’s share on the undervaluation is recognized on a rational basis as

deduction to both investment income and investment account over the remaining life of the asset

If the carrying amount of an associate's liability is less than its fair value, the investor's share on the undervaluation is recognized on a rational basis as

addition to both investment income and investment account over the remaining term of the liability.

When applying the equity method, the investor uses the investee’s what?

most recent financial statements

The equity method of accounting is required when an investor has significant influence over an investee. Equity is not applicable except one

the investors uses the investees most recent financial statements

When an investor participates in the management of another entity, the investor has an interest in that entity's performance; thus, the investor should report its share in the entity's performance.

PAS 28 does not specifically require an investor to adjust the investment in associate account for its share in which of the following?

d. Changes in the associate's allowance for doubtful accounts

The equity method is least likely to be applied in which of the following?

An investment that is acquired solely for disposal within twelve months from acquisition date.

Daybreak Co. acquires less than 20% of the voting rights of Cold Co. Daybreak is not precluded from applying the equity method if which of the following exists?

d. any of these

In which of the following does X Co. have significant influence?

X Co. owns 15% of the voting shares of Alphabets Co. All the other shares of Alphabets are held in small blocks and therefore X Co. has representatives in the board of directors of Alphabets.

In assessing whether significant influence exists, an investor considers any potential voting rights held only if

c. a and b

Investments accounted for under the equity method are initially measured at

cost

When accounting for an investment in associate, the investor does not

recognize shares in the associate's revenue, expenses and profit.

Which of the following does not correctly relate to the application of the equity method?

d, The investor accounts only its proportionate share in the profit or loss of the associate but not in other comprehensive income and discontinued operations.

Under the equity method, which of the following does not decrease the investment account?

share in cash dividends declared by the associate

When an investor uses fair value accounting to account forinvestments in common stock, cash dividends received by theinvestor from the investee would normally be recorded as

dividend revenue

Goodwill arising from an investment in associate is

Included in the carrying amount of the investment andnot amortized

The equity method of accounting should be used when an investment

enables the investor to exercise significant influence overthe investee

When an investor uses the equity method to account for investment in common stock, the investment account will be increased when the investor recognizes

a proportionate share of the net income of the investee

When an investor uses the equity method, cash dividends received from the investee are recorded as

a deduction from the investment account

Dane, Inc. owns 35% of Marin Corporation. During the calendar year 2004, Marin had net earnings of ₱300,000 and paid dividends of ₱30,000. Dane mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. Dane recognized ₱20,000 gain on thechange in fair value of the investment during the year. What effect would this have on the investment account, net income,and retained earnings, respectively

Understate, understate, understate

Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the

earnings are reported by the investee in its financial statements

When the investor discontinues the use of the equity method because significant influence is lost, the investment in associate retained by the investor shall be measured at

fair value

An investor shall discontinue the use of the equity method when

The investor ceases to have significant influence over the associate

Cfas (overview of accounting)

ユーザ名非公開 · 75問 · 11ヶ月前

Cfas (overview of accounting)