Matching
Mark True or False in the left margin opposite the question number.
When an investor follows IFRS in accounting for its investments:
Premises:
_______The investor may use the equity method to account for the investment if certain conditions are met and ASPE is followed.
_______Investments in subsidiaries must be accounted for under the equity method.
_______Transaction costs must be capitalized except when the investment is accounted for under the fair value through net income model.
_______Under IFRS, the investment would generally require more extensive disclosures.
_______Gains and losses are always recognized in net income.
_______The investor may use the cost method to account for the investment if certain conditions are met and IFRS is followed.
_______Reclassifications between measurement models are allowed in rare circumstances.
Responses:
True
False
Correct Answer:
Premises:
Responses:
_______The investor may use the equity method to account for the investment if certain conditions are met and ASPE is followed.
_______Investments in subsidiaries must be accounted for under the equity method.
_______Transaction costs must be capitalized except when the investment is accounted for under the fair value through net income model.
_______Under IFRS, the investment would generally require more extensive disclosures.
_______Gains and losses are always recognized in net income.
_______The investor may use the cost method to account for the investment if certain conditions are met and IFRS is followed.
_______Reclassifications between measurement models are allowed in rare circumstances.
Premises:
_______The investor may use the equity method to account for the investment if certain conditions are met and ASPE is followed.
_______Investments in subsidiaries must be accounted for under the equity method.
_______Transaction costs must be capitalized except when the investment is accounted for under the fair value through net income model.
_______Under IFRS, the investment would generally require more extensive disclosures.
_______Gains and losses are always recognized in net income.
_______The investor may use the cost method to account for the investment if certain conditions are met and IFRS is followed.
_______Reclassifications between measurement models are allowed in rare circumstances.
Responses:
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