[ACECFAS] INVESTMENT IN ASSOCIATE (TOA)

Associate

It is an entity over which the investor has significant influence

a deduction from the investment amount

when an investor uses the equity method to account for investment in ordinary shares, cash dividends received by the investor from the investee shall be recorded as

Included in the carrying amount of the investment and not amortized

Goodwill arising from an investment in associate is

Be increased by the share of the earnings of the investte and decreased by the share of the losses of the investee

After the date of acquisition, the investment account using the equity method would

The investor ceases to have significant influence over the associate

An investor shall discontinue the equity method when

The total receivable should be reported separately

An investor uses the cost method to account for a 15% ownership in an investee. At year-end, the investor has a receivable from the investee. How should the receivable be reported?

The total amount of dividends received this year

An investor uses the cost method to account for an investment in ordinary shares. A portion of the dividends received this year were in excess of the investor's share of investee's earnings subsequent to the date of investment. The amount of dividend revenue that should be reported in the investor's income statement for this year would be

The total receivable should be disclosed separately

An investor uses the equity method of accounting for a 30% ownership in an investee. At year-end, the investor has a receivable from the investee. How should the receivable be reported in the investor's financial statements for the current year?

decreases the investment account

An investor uses the equity method to account for investment in ordinary shares. The purchase price implies a fair value of the investee's depreciable assets in excess of the investee's net asset carrying amount. The investor's amortization of the excess

Investory excess Land Excess Decrease No effect

An investor uses the equity method to account for the purchase of another entity's ordinary shares. On the date of acquisition, the fair value of the investee's inventory and land exceeded their carrying amount. How do these excesses of fair value over carrying amount affect the investor's equity in earnings of the investee for the current year?

The entire carrying amount of the investment is tested for impairment by comparing the recoverable amount with carrying amount

How is the impairment test carried out for an invesment in associate?

After adjusting for the preference dividends, whether or not the dividends have been declared

If an associate has outstanding cumulative preference shares held by outside interests, the investor computes share of profit or loss

40% of investee's income from August 1 to December 31

On Jan. 1 of the current year, an entity purchased 10% of another entity's ordinary share. The entity purchased additional shares bringing the ownership up to 40% of the investee's ordinary shares outstanding on august 1 of the current year. During October of the current year, the investee declared and paid a cash dividend on all of the outstanding ordinary shares. How much income from the investment should be reported for the year?

The fair value of any retained investments, any proceeds from disposing of the part interest and the carrying amount of the investment at the date significant influence is lost

On the loss of signifant influence, the investor shall recognize in profit or loss any difference between

Twelve months from date of classification as held for sale

The equity methos is not required when the associate has been required and held with a view to disposal within what time period?

Recognized as income in the determination of the investor's share of the associate's profit or loss

The excess of the investor's share of the net fair value of the associate's net assets over the cost of the investment is

Earnings are reported by the investee

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

The associate shall prepare financial statements at the same date as that of the investor

What should happen when the financial statements of an associate are not prepared as of the same date as the financial statements of the investor?

The investor should use the equity method unless circumstances indicate that it is unable to exercise significant influence over the investee

When an entity holds between 20% abd 50% of the voting power of an investee, which statement is true?

Is regarded as its fair value on initial recognition as a financial asset

When an investment ceases to be an associate and is accounted for in accordance with IFRS 9, the fair value of investment at the date when it ceases to be an associate

Dividend Income

When an investor uses the cost method to account for investment in ordinary shares, cash dividends received by the investor from the investee should be recorded as

A proportionate interest in the net income of the investee

When an investor uses the equity method to account for investment in ordinary shares, the investment account is increased when the investor recognizes

The excess is amortized over the time period that is reasonable in the light of the underlying cause of the excess

When an investro purchases sufficent ordinary share to gain significant influence over the investee, what is the proper accounting treatment of any excess of cost over the carrying amount of the net assets acquired?

The power to participate in the financial and operating policy decisions of an entity

Which statement best describes "significant influences"?

Distributions received from the investee are accounted for a dividend income

Which statement is incorrect concerning the equity method?

All of these statements are true about significance influence

Which statement is true concerning signifcant influence?

Increases dividend revenue

an investor uses the cost method to account for investment in ordinary shares. Dividends received in excess of the investor's share of investee's earnings subsequent to the date of investment