Exam 23: Associates and Joint Ventures

The contractually agreed sharing of control of an arrangement which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control is referred to as:

Where the carrying amount of an associate's depreciable assets is lower than their fair values at the date of acquisition,an adjustment is required to be made to restate the assets to their fair values.

Voyager Ltd acquired a 40% interest in Sea Ltd for $60 000.Voyager Ltd is part of a consolidated group.In the financial period immediately following the date on which it became an associate,Sea Ltd generated profits after tax of $32 000 and paid a dividend of $6000. After equity accounting has been applied,the balance in the investor's account 'shares in associate' is:

Where an investor has significant influence over an associate,the method of accounting used to account for such interests is referred to as the partial consolidation method.

On 1 July 2004 Girls Ltd acquired 25% of the shares of Spice Ltd for $200 000.At that date the equity of Spice Ltd was $800 000,with all identifiable assets and liabilities being measured at fair value.Profits/(losses)made since the date of acquisition are as follows. There have been no dividends paid or movements in reserves since the date of acquisition. At 30 June 2008 the equity accounted balance of the investment in Spice was:

Where which of the following conditions exist,is the equity method not applied to associates? I.The entity is a wholly owned subsidiary or a partly owned subsidiary and its owners do not object to the entity not applying the equity method. II.The entity's debt or equity securities are not traded in a public market. III.The entity has not filed financial statements with a regulatory organisation for the purpose of issuing any class of securities in a public market. IV.The ultimate parent of the entity publishes consolidated financial statements that comply with IFRS.

Where an investment in an associate is made in a number of separate acquisitions,the equity method is applied from the date that significant influence is obtained.

Which of the following statements is incorrect?