Question 1

Under ASPE, what are the types of joint ventures?

Accepted Answer

A) Jointly controlled operations, jointly controlled assets, and jointly controlled enterprises. 
B) Jointly controlled operations, jointly controlled liabilities, and jointly controlled enterprises. 
C) Jointly controlled operations, jointly controlled assets, and jointly controlled ventures. 
D) Jointly controlled operations, jointly controlled liabilities, and jointly controlled ventures. 
A) Jointly controlled operations, jointly controlled assets, and jointly controlled enterprises. 
B) Jointly controlled operations, jointly controlled liabilities, and jointly controlled enterprises. 
C) Jointly controlled operations, jointly controlled assets, and jointly controlled ventures. 
D) Jointly controlled operations, jointly controlled liabilities, and jointly controlled ventures. A

Question 2

Which of the following statements is FALSE?

Accepted Answer

A) A joint arrangement is a contractual arrangement which provides for joint control. 
B) Joint control requires majority agreement among the parties sharing control. 
C) Two types of joint arrangements exist: joint operations and joint ventures. 
D) The parties to a joint operation are required to report their share of each asset and liability. 
A) A joint arrangement is a contractual arrangement which provides for joint control. 
B) Joint control requires majority agreement among the parties sharing control. 
C) Two types of joint arrangements exist: joint operations and joint ventures. 
D) The parties to a joint operation are required to report their share of each asset and liability. B

Question 3

______________ has sometimes been described as 'one-line consolidation'.

Accepted Answer

A) The equity method of accounting 
B) A joint venture 
C) A passive investment 
D) Significant influence 
A) The equity method of accounting 
B) A joint venture 
C) A passive investment 
D) Significant influence A

Question 4

Which of the following would be considered to be a joint operation?

Accepted Answer

A) Two investors create a separate company which provides for joint control. The assets and liabilities of the company are the responsibility of the investors up to their ownership interest. 
B) Two investors create a separate company which provides for joint control. The assets and liabilities of the company are the responsibility of the company. 
C) Two investors create a company. Neither investor controls the individual assets or is obligated to pay for the liabilities and expenses of the separate company. 
D) None of the above would be considered a joint operation. 
A) Two investors create a separate company which provides for joint control. The assets and liabilities of the company are the responsibility of the investors up to their ownership interest. 
B) Two investors create a separate company which provides for joint control. The assets and liabilities of the company are the responsibility of the company. 
C) Two investors create a company. Neither investor controls the individual assets or is obligated to pay for the liabilities and expenses of the separate company. 
D) None of the above would be considered a joint operation.

Question 5

Which of the following statements is FALSE?

Accepted Answer

A) Entities are required to present non-strategic investments in equity as financial assets. 
B) Financial assets under IFRS 9 are shown at fair value with the difference in fair value going through income. 
C) Entities may make an irrevocable election to show the gains and losses of financial assets through other comprehensive income. 
D) Under ASPE, all financial investments in shares are reflected at fair value unless the shares trade in a public market. 
A) Entities are required to present non-strategic investments in equity as financial assets. 
B) Financial assets under IFRS 9 are shown at fair value with the difference in fair value going through income. 
C) Entities may make an irrevocable election to show the gains and losses of financial assets through other comprehensive income. 
D) Under ASPE, all financial investments in shares are reflected at fair value unless the shares trade in a public market.

Question 6

A financial asset includes all of the following EXCEPT:

Accepted Answer

A) Cash. 
B) A contractual right to receive cash or another financial asset from another company. 
C) A contractual right to exchange financial instruments under conditions that are potentially favourable. 
D) All of the above are financial assets 
A) Cash. 
B) A contractual right to receive cash or another financial asset from another company. 
C) A contractual right to exchange financial instruments under conditions that are potentially favourable. 
D) All of the above are financial assets

Question 7

The investor does not need to hold shares in an associate, but where more than 20% of the voting power is held, significant influence is presumed to exist.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following factors does NOT provide evidence of the existence of significant influence?

Accepted Answer

A) Representation on the board of directors or equivalent governing body of the investee. 
B) Material transactions between the investor and the investee. 
C) Interchange of managerial personnel. 
D) All of the above provide evidence of the existence of significant influence 
A) Representation on the board of directors or equivalent governing body of the investee. 
B) Material transactions between the investor and the investee. 
C) Interchange of managerial personnel. 
D) All of the above provide evidence of the existence of significant influence

Question 9

The ability of a company to control another cannot be affected by relationships with other parties.

Accepted Answer

A) True 
 B)False

Question 10

Companies invest in non-strategic investments to obtain a higher return than holding cash in a bank account.

Accepted Answer

A) True 
 B)False

Question 11

There is a presumption that a company which owns less than 20% of the voting shares of another company has:

Accepted Answer

A) Total control. 
B) Joint control. 
C) Significant influence. 
D) A non-strategic investment. 
A) Total control. 
B) Joint control. 
C) Significant influence. 
D) A non-strategic investment.

Question 12

When the non-strategic equity investment is initially recorded, it must be measured at its fair value.

Accepted Answer

A) True 
 B)False

Question 13

What is a joint operation?

Accepted Answer

In a joint operation, the investor has a

Question 14

The equity method is applied:

Accepted Answer

A) when one of the parties is designated as no longer being a subsidiary. 
B) when a contractual agreement is written up providing joint control. 
C) from the date the investor obtains significant influence over the investee. 
D) on that date when it becomes clear that an investor has no power to participate in the financial and operating decisions of the investee. 
A) when one of the parties is designated as no longer being a subsidiary. 
B) when a contractual agreement is written up providing joint control. 
C) from the date the investor obtains significant influence over the investee. 
D) on that date when it becomes clear that an investor has no power to participate in the financial and operating decisions of the investee.

Question 15

Regarding significant influence with respect to an associate, which of the following statements is TRUE?

Accepted Answer

A) The investor-associate relationship is directly opposite in nature compared to that existing between a parent and subsidiary. 
B) There is a requirement for the investor to hold shares, or have a beneficial interest, in the associate. 
C) The cost method is used to account for investments in associates under IFRS. 
D) If significant influence is exercised by one company over another by virtue of an association or contract other than from the holding of shares, then the equity method cannot be applied in relation to the associate. 
A) The investor-associate relationship is directly opposite in nature compared to that existing between a parent and subsidiary. 
B) There is a requirement for the investor to hold shares, or have a beneficial interest, in the associate. 
C) The cost method is used to account for investments in associates under IFRS. 
D) If significant influence is exercised by one company over another by virtue of an association or contract other than from the holding of shares, then the equity method cannot be applied in relation to the associate.

Question 16

Under the equity method, the investment account is updated for the investor's share of profit and distributions.

Accepted Answer

A) True 
 B)False

Question 17

A joint arrangement that is not structured as a separate entity is a(n)__________.

Accepted Answer

A) association. 
B) joint operation. 
C) consolidation. 
D) passive investment. 
A) association. 
B) joint operation. 
C) consolidation. 
D) passive investment.

Question 18

Which of the following statements regarding joint ventures is FALSE?

Accepted Answer

A) A joint venture must be set up as a separate vehicle. 
B) A company is a party to a joint venture when it does not have the right to the assets or the obligations for the liabilities. 
C) A company is a party to a joint venture when it has the rights to the venture's net assets. 
D) None of the above is false. 
A) A joint venture must be set up as a separate vehicle. 
B) A company is a party to a joint venture when it does not have the right to the assets or the obligations for the liabilities. 
C) A company is a party to a joint venture when it has the rights to the venture's net assets. 
D) None of the above is false.

Question 19

At the beginning of 2013, Zed Ltd. acquired 15% of the voting shares of Pine Co (a private company)for $150,000. Zed does not have any significant influence over Pine. Zed follows ASPE. In 2013, Pine earned net income of $70,000 and paid dividends of $40,000. In 2014, Pine earned net income of $80,000 and paid dividends of $100,000. At the end of 2014, what journal entry should Zed make to record the dividends from Pine?

Accepted Answer

A) No entry is required 
B) 
$\begin{array} { | c | c | } 
\hline \text { DR Cash } & 12,000 \
\hline \text { CR Investment in Pine } & 12,000 \
\hline
\end{array}$ 
C) 
$\begin{array} { | c | c | } 
\hline \text { DR Cash } & 15,000 \
\hline \text { CR Investment in Pine } & 15,000 \
\hline
\end{array}$ 
D) 
$\begin{array} { | c | c | } 
\hline \text { DR Cash } & 15,000 \
\hline \text { CR Dividend income } & 15,000 \
\hline
\end{array}$ 
A) No entry is required 
B) 
$\begin{array} { | c | c | } 
\hline \text { DR Cash } & 12,000 \
\hline \text { CR Investment in Pine } & 12,000 \
\hline
\end{array}$ 
C) 
$\begin{array} { | c | c | } 
\hline \text { DR Cash } & 15,000 \
\hline \text { CR Investment in Pine } & 15,000 \
\hline
\end{array}$ 
D) 
$\begin{array} { | c | c | } 
\hline \text { DR Cash } & 15,000 \
\hline \text { CR Dividend income } & 15,000 \
\hline
\end{array}$

Question 20

The parties to a joint venture will initially record their share of the investment at:

Accepted Answer

A) Fair value. 
B) Cost. 
C) Amortized value. 
D) Equity value. 
A) Fair value. 
B) Cost. 
C) Amortized value. 
D) Equity value.

Under ASPE, what are the types of joint ventures?

Which of the following statements is FALSE?

______________ has sometimes been described as 'one-line consolidation'.

Which of the following would be considered to be a joint operation?

Which of the following statements is FALSE?

A financial asset includes all of the following EXCEPT:

The investor does not need to hold shares in an associate, but where more than 20% of the voting power is held, significant influence is presumed to exist.

Which of the following factors does NOT provide evidence of the existence of significant influence?

The ability of a company to control another cannot be affected by relationships with other parties.

Companies invest in non-strategic investments to obtain a higher return than holding cash in a bank account.

There is a presumption that a company which owns less than 20% of the voting shares of another company has:

When the non-strategic equity investment is initially recorded, it must be measured at its fair value.

What is a joint operation?

The equity method is applied:

Regarding significant influence with respect to an associate, which of the following statements is TRUE?

Under the equity method, the investment account is updated for the investor's share of profit and distributions.

A joint arrangement that is not structured as a separate entity is a(n)__________.

Which of the following statements regarding joint ventures is FALSE?

The parties to a joint venture will initially record their share of the investment at:

Business Combinations

Consolidation: Wholly Owned Subsidiaries

Consolidations: Intragroup Transactions

Consolidation: Non-Controlling Interest

Accounting for Investments in Associates and Joint Ventures

Accounting for Foreign Currency

Accounting for Foreign Investments

Reporting for Not-For-Profit Organizations

Reporting for Public Sector Entities

Filters

Exam 1: Accounting for Investments

Under ASPE, what are the types of joint ventures?

Which of the following statements is FALSE?

______________ has sometimes been described as 'one-line consolidation'.

Which of the following would be considered to be a joint operation?

Which of the following statements is FALSE?

A financial asset includes all of the following EXCEPT:

The investor does not need to hold shares in an associate, but where more than 20% of the voting power is held, significant influence is presumed to exist.

Which of the following factors does NOT provide evidence of the existence of significant influence?

The ability of a company to control another cannot be affected by relationships with other parties.

Companies invest in non-strategic investments to obtain a higher return than holding cash in a bank account.

There is a presumption that a company which owns less than 20% of the voting shares of another company has:

When the non-strategic equity investment is initially recorded, it must be measured at its fair value.

What is a joint operation?

The equity method is applied:

Regarding significant influence with respect to an associate, which of the following statements is TRUE?

Under the equity method, the investment account is updated for the investor's share of profit and distributions.

A joint arrangement that is not structured as a separate entity is a(n)__________.

Which of the following statements regarding joint ventures is FALSE?

The parties to a joint venture will initially record their share of the investment at:

Business Combinations

Consolidation: Wholly Owned Subsidiaries

Consolidations: Intragroup Transactions

Consolidation: Non-Controlling Interest

Accounting for Investments in Associates and Joint Ventures

Accounting for Foreign Currency

Accounting for Foreign Investments

Reporting for Not-For-Profit Organizations

Reporting for Public Sector Entities

Filters