Question
1.Which of the following transactions does not affect the investment in associate account? a.Dividends received by the investor from the investee in the form of
1.Which of the following transactions does not affect the investment in associate account?
a.Dividends received by the investor from the investee in the form of shares.
b.Revaluation surplus and foreign currency translation adjustment recorded during the year by the investee.
c.Profit reported by the investee.
d.Any excess of the investor's share of the net fair value of the associate's identifiable assets, liabilities and contingent liabilities over the cost of the investment.
2.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:
a.Included in the determination of the investor's share of the associate's profit or loss in the period in which the investment is acquired.
b.Credited to retained earnings directly.
c.Credited to equity and amortized over the useful life.
d.A deferred gain.
3.When an investor uses the equity method to account for investment in ordinary shares, cash dividends received by the investor from the investee should be recorded as
a.Dividend income
b.A deduction from the investor's share of the investee's profit
c.A deduction from investment account
d.A deduction from goodwill
4.Which of the following is incorrect concerning the equity method?
a.The investment in associate is initially recorded at cost
b.The investment in associate is increased or decreased by the investor's share of the profit or loss of the investee after the date of acquisition.
c.The investor's share of the profit or loss of the investee is not recognized in the investor's profit or loss.
d.Distributions received from the investee reduced the carrying amount of the investment.
5.How is goodwill arising on the acquisition of an associate dealt with in the financial statements?
a.It is amortized
b.It is tested for impairment individually,
c.It is written off against profit or loss.
d.Goodwill is not recognized separately; therefore it is not amortized nor is it tested for impairment.
6.Equity investments that are acquired for trading purposes shall be classified
a.As at fair value through profit or loss.
b.As at fair value through other comprehensive income
c.Based on irrevocable choice at date of initial recognition either at fair value through profit or loss or at fair value through other comprehensive income.
d.Based on irrevocable choice at the reporting date during period of acquisition as either at fair value through profit or loss or at fair value through other comprehensive income.
7.Non-trading equity securities shall be classified
a.As at fair value through profit or loss.
b.As at fair value through other comprehensive income
c.Based on irrevocable choice at date of initial recognition either at fair value through profit or loss or at fair value through other comprehensive income.
d.Based on irrevocable choice at the reporting date during period of acquisition as either at fair value through profit or loss or at fair value through other comprehensive income.
8.Under IFRS 9, the classification of debt investments shall be made on the basis of
a.The business model for managing the financial asset
b.Contractual cash flow characteristics of the financial assets
c.Management's intention of holding the debt instruments.
d.Both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset.
9.Interest revenue for debt investments at amortized cost is computed based on the instruments'
a.Carrying amount using the effective interest rate
b.Carrying amount using the nominal interest rate
c.Face value using the effective interest rate
d.Face value using the nominal interest rate
10.The interest income reported for a debt investment at amortized cost initially acquired at a premium is equal to:
a.The effective interest rate multiplied by the face amount of the bond investment
b.The stated interest rate multiplied by the face amount of the bond investment
c.The effective interest rate multiplied by the carrying amount of the bond investment at the beginning of the year.
d.The stated interest rate multiplied by the carrying amount of the bond investment at the beginning of the year.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started