Q1 According to IAS 28, Investments in Associates and Joint Ventures, an investment classified as a joint venture should be equity accounted in the consolidated financial statements of the investor company. Which statement below can be used to describe the Equity accounting method? Select one: a. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for post-acquisition changes in the investor’s share of the net assets of the investee. b. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for amortization over an agreed period of time. c. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for post-acquisition changes in the investor’s share of the net assets of the investee. d. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for amortization over an agreed period of time.
Q1 According to IAS 28, Investments in Associates and Joint Ventures, an investment classified as a joint venture should be equity accounted in the consolidated financial statements of the investor company. Which statement below can be used to describe the Equity accounting method? Select one: a. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for post-acquisition changes in the investor’s share of the net assets of the investee. b. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for amortization over an agreed period of time. c. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for post-acquisition changes in the investor’s share of the net assets of the investee. d. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for amortization over an agreed period of time.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q1
According to IAS 28, Investments in Associates and Joint Ventures, an investment classified as a joint venture should be equity accounted in the consolidated financial statements of the investor company. Which statement below can be used to describe the Equity accounting method?
Select one:
a. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for post-acquisition changes in the investor’s share of the net assets of the investee.
b. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for amortization over an agreed period of time.
c. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for post-acquisition changes in the investor’s share of the net assets of the investee.
d. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for amortization over an agreed period of time.
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Introduction:
An investor to account for its investment in associates using the equity method as per IAS 28. This standard describes how to use equity method when accounting for investments in associates and joint ventures. An associate is an entity by which investor has significant influence. For example if an entity holds 20% or more voting power of any other entity, In that case the investor entity has significance influence in that investee entity. where as a joint venture is a joint arrangement done by the parties that have joint control of the arrangements and have rights to the net assets of the venture.
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