Question
1.ABC Inc. holds 17% of the common shares of XYZ Ltd. ABC is able to appoint three members of XYZ's 12-member Board of Directors. ABC
1.ABC Inc. holds 17% of the common shares of XYZ Ltd. ABC is able to appoint three members of XYZ's 12-member Board of Directors. ABC is also a supplier of raw materials to XYZ. XYZ is a private company and the remaining 83% of XYZ's common shares are widely held. Assume that ABC reports under ASPE, what are the reporting options for its investment in XYZ?
A.Equity method
B.Equity method or cost
C.Equity method, cost, or consolidation
D.Fair value through profit or loss (FVTPL) or cost.
2.Which of the following must be possible in order for a business combination to exist?
A.Ownership of 100 % of a subsidiary's voting shares
B.Control of a subsidiary's net assets that constitute a business
C.Ownership of all of a subsidiary's assets
D.Ownership of all of a subsidiary's operating assets
3.Which of the following is closest to IFRS 3 Business Combinations definition of control?
A.A company is deemed to have control over another only when it owns a majority of the voting shares of another company.
B.A company is deemed to have control when it can elect a majority of the Board members of another company.
C.Control is the ability to direct the activities of a company that most significantly affect the investor's returns.
D.Control exists only when a company has the continuing power to determine the operating and financing policies of another company and attempts to exercise such powers.
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