QUESTION 8

1. Where an investor sells inventory to an associate and the inventory is still on hand at the end of the year, the investors share of the associates profit is:

   		not affected as unrealised profits are only considered to arise in a parent-subsidiary relationship.
   		decreased by the investors share of the unrealised profit.
   		not affected as the unrealised profit is in the books of the investor, not the associate.
   		increased by the investors share of the unrealised profit.

QUESTION 9

1. Where an investor sells inventory to an associate in a prior year and the inventory is sold by the associate during the current year, the investment in associate account is:

   		not adjusted as the profit has been realised.
   		decreased by the investors share of the realised profit.
   		increased by the full amount of the realised profit.
   		increased by the investors share of the realised profit.

QUESTION 10

1. Where an investor has discontinued the use of the equity method because the associate has incurred losses, it must disclose the:

   		Unrecognised share of current period and cumulative losses of the associate.
   		Effect on the statement of changes in equity if it had continued to use the method.
   		Accounting policy it has adopted in place of the equity method.
   		Reason why it has discontinued the method.