Chapter 14: Activity

An investment that provides the investor significant influence over the investee is accounted for using the equity method.

• True

• False

Significant influence is presumed to exist if the investor holds at least 10% of the voting power of the investee.

• True

• False

An investor's representation in the board of directors of the investee may provide evidence of significant influence.

• True

• False

Investments in associates are measured at fair value at each reporting date and changes in fair value are recognized in profit or loss.

• True

• False

Significant influence may be achieved from additional purchase of shares resulting to an increase in ownership interest

• TRUE

• FALSE

When an investment in equity securities has been accounted for under the equity method but a change in circumstances dictates a change to the fair value accounting, a retrospective application of the new accounting is required

• TRUE

• FALSE

A reclassification adiustment to profit or loss, or a transter within equity, is required for the investor's accumulated share in the investee's other comprehensive income when the investor loses significant influence over the investee.

• TRUE

• FALSE

According to PAS 28, an investor shares in the losses of the associate is up to the carrying amount and other components of the interest in associate

• TRUE

• FALSE

Under the equity method, investment income that is recognized in profit or loss is equal to the investor's share in the investee's profit or loss for the period adjusted for the depreciation or amortization of any undervaluation or overvaluation of the investee's net identifiable assets as at the date significant influence was obtained.

• TRUE

• FALSE

Dividends received from investments in associates are recognized as income.

• TRUE

• FALSE