Question 1

Which of the following statements is correct?

Accepted Answer

A)  All joint arrangements are accounted for under IAS 28. 
B)  Joint arrangements classified as joint ventures are accounted for under IFRS 11. 
C)  Joint arrangements classified as joint ventures are accounted for under IAS 28. 
D)  Joint arrangements classified as joint operations are accounted for under IAS 28. 
A)  All joint arrangements are accounted for under IAS 28. 
B)  Joint arrangements classified as joint ventures are accounted for under IFRS 11. 
C)  Joint arrangements classified as joint ventures are accounted for under IAS 28. 
D)  Joint arrangements classified as joint operations are accounted for under IAS 28.

Question 2

Clovelly Ltd, owns 25% of Bronte Ltd. Bronte's profit after tax for the year ended 30 June 20X3 is £30 000. The tax rate is 30%. During the year ended 30 June 20X4, Bronte sold £5000 worth of inventory to Clovelly. These items had previously cost Bronte £3000. All the items remain unsold by the Clovelly at 30 June 20X3. Clovelly's share of Bronte's profit for the year ended 30 June 20X3 is:

Accepted Answer

A)  £5500 
B)  £6250 
C)  £7150 
D)  £7000 
A)  £5500 
B)  £6250 
C)  £7150 
D)  £7000

Question 3

Codger Limited acquired a 40% investment in Lodger Limited for €50 000. Lodger declared and paid a dividend of €10 000. Codger Limited does not prepare consolidated financial statements. The appropriate entry for the investor to record this dividend is:

Accepted Answer

A)  
$\begin{array} { l l l } 
\text { DR } & \text { Cash } & € 4000 \
& \text { CR Investment in associate } & € 4000
\end{array}$ 
B) 
$\text { DR Dividends payable } \quad € 4000$
$\text { CR Cash } \quad € 4000$ 
C) 
$\begin{array}{lll}
\text { DR } & \text { Cash } & € 4000 \
\text { CR} & \text { Dividend revenue } & € 4000
\end{array}$ 
D)  
$\begin{array}{ll}
\text { DR Investment in associate } & € 4000 \
\text { CR Dividend revenue } & € 4000
\end{array}$ 
A)  
$\begin{array} { l l l } 
\text { DR } & \text { Cash } & € 4000 \
& \text { CR Investment in associate } & € 4000
\end{array}$ 
B) 
$\text { DR Dividends payable } \quad € 4000$
$\text { CR Cash } \quad € 4000$ 
C) 
$\begin{array}{lll}
\text { DR } & \text { Cash } & € 4000 \
\text { CR} & \text { Dividend revenue } & € 4000
\end{array}$ 
D)  
$\begin{array}{ll}
\text { DR Investment in associate } & € 4000 \
\text { CR Dividend revenue } & € 4000
\end{array}$

Question 4

When disclosing information about investments in associates, IAS 28, requires separate disclosure of which of the following? 
I Shares in associates, in the statement of financial position.
II Share of profit or loss of associates, in the statement of profit or loss and other comprehensive income.
III Share of any discontinuing operations, in the statement of changes in equity.
IV Shares of changes recognised directly in the associate's equity, in the statement of changes in equity.

Accepted Answer

A)  I, II, III and IV; 
B)  I, II and IV only; 
C)  II, II and IV only; 
D)  I, II and III only. 
A)  I, II, III and IV; 
B)  I, II and IV only; 
C)  II, II and IV only; 
D)  I, II and III only.

Question 5

If an associate incurs losses the investor is required to:

Accepted Answer

A)  ignore the losses for the purposes of equity accounting adjustments; 
B)  recognise losses only to the point where the carrying amount is equal to the initial investment; 
C)  recognise losses to the point where the carrying amount of the investment is zero; 
D)  reclassify the investment as a current asset. 
A)  ignore the losses for the purposes of equity accounting adjustments; 
B)  recognise losses only to the point where the carrying amount is equal to the initial investment; 
C)  recognise losses to the point where the carrying amount of the investment is zero; 
D)  reclassify the investment as a current asset.

Question 6

The following information relates to questions 
On 1 July 2013 Joey Ltd acquired 25% of the shares of Leo Ltd for £100 000. At that date the equity of Leo Ltd was £400 000, with all identifiable assets and liabilities being measured at fair value. Profits/(losses) made since the date of acquisition are as follows:
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Year ended } \
\text { 30 June }
\end{array} & \begin{array} { c } 
\text { Prafit(Lass) } \
\mathbf { £ }
\end{array} \
\hline 20 \times 5 & 20,000 \
\hline 20 \times 6 & ( 200,000 ) \
\hline 20 \times 7 & ( 250,000 ) \
\hline 20 \times 1 & 16,000 \
\hline 20 \times 9 & 20,000 \
\hline
\end{array}$$ 
There have been no dividends paid or movements in reserves since the date of acquisition.
-At 30 June 20X5 the equity accounted balance of the investment in Leo was:

Accepted Answer

A)  £50 000 
B)  £55 000 
C)  £100 000 
D)  £105 000 
A)  £50 000 
B)  £55 000 
C)  £100 000 
D)  £105 000

Which of the following statements is correct?

Codger Limited acquired a 40% investment in Lodger Limited for €50 000. Lodger declared and paid a dividend of €10 000. Codger Limited does not prepare consolidated financial statements. The appropriate entry for the investor to record this dividend is:

If an associate incurs losses the investor is required to:

The Iasb and Its Conceptual Framework

Owners Equity: Share Capital and Reserves

Fair Value Measurement

Revenue From Contracts With Customers

Provisions, Contingent Liabilities and Contingent Assets

Financial Instruments

Share-Based Payment

Inventories

Employee Benefits

Leases

Impairment of Assets

Financial Statement Presentation

Statement of Cash Flows

Operating Segments

Other Key Notes Disclosures

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Translation of the Financial Statements of Foreign Entities

Agriculture

Joint Arrangements

Revenue From Contracts With Customers

Financial Instruments

Financial Instruments

Share-Based Payment

Exploration for and Evaluation of Mineral Resources

Filters

Exam 21: Associates and Joint Ventures

Which of the following statements is correct?

Codger Limited acquired a 40% investment in Lodger Limited for €50 000. Lodger declared and paid a dividend of €10 000. Codger Limited does not prepare consolidated financial statements. The appropriate entry for the investor to record this dividend is:

If an associate incurs losses the investor is required to:

The Iasb and Its Conceptual Framework

Owners Equity: Share Capital and Reserves

Fair Value Measurement

Revenue From Contracts With Customers

Provisions, Contingent Liabilities and Contingent Assets

Financial Instruments

Share-Based Payment

Inventories

Employee Benefits

Leases

Impairment of Assets

Financial Statement Presentation

Statement of Cash Flows

Operating Segments

Other Key Notes Disclosures

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Translation of the Financial Statements of Foreign Entities

Agriculture

Joint Arrangements

Revenue From Contracts With Customers

Financial Instruments

Financial Instruments

Share-Based Payment

Exploration for and Evaluation of Mineral Resources

Filters