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PAS 28 Does Not Require The Equity Method To Be Applied To Which of The Following Instance

I. The equity method is not required to be applied when an associate is acquired with the intention to dispose of it within twelve months, as long as there is evidence of this intention and active efforts to dispose of the associate. If not disposed of within twelve months, the equity method must be applied from the date of acquisition. II. The equity method is not required to be applied when an associate is operating under severe long-term restrictions that impair its ability to transfer funds. III. Significant influence exists when an investor has the power to participate in the financial and operating policy decisions of an entity, which is presumed to exist when an investor holds 20% or more of the voting power of the investee.

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343 views2 pages

PAS 28 Does Not Require The Equity Method To Be Applied To Which of The Following Instance

I. The equity method is not required to be applied when an associate is acquired with the intention to dispose of it within twelve months, as long as there is evidence of this intention and active efforts to dispose of the associate. If not disposed of within twelve months, the equity method must be applied from the date of acquisition. II. The equity method is not required to be applied when an associate is operating under severe long-term restrictions that impair its ability to transfer funds. III. Significant influence exists when an investor has the power to participate in the financial and operating policy decisions of an entity, which is presumed to exist when an investor holds 20% or more of the voting power of the investee.

Uploaded by

Angeline Ramirez
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1.

PAS 28 does not require the equity method to be applied to which of the following
instance(s)?
I. When an associate is acquired and held with a view to its disposal within twelve
months of acquisition. There must be evidence that the investment is acquired with
the intention to dispose of it and that management is actively seeking a buyer. The
words ‘in the near future’ were replaced with the words ‘within twelve months’.
When such an associate is not disposed of within twelve months it must be
accounted for using the equity method as from the date of acquisition, except in
narrowly specified circumstances under PFRS 5.
II. An investor continues to have significant influence over an associate; however, the
associate is operating under severe long-term restrictions that significantly impair
its ability to transfer funds to the investor.
III. An investor holds 10% interest in an investee; however, the interest held gives the
investor significant influence over the investee.
IV. An investor presents separate financial statement in accordance with PAS
27.
a. I and IV b. I, III, IV c. I, II, III, IV d. none

Significant influence
17. According to PAS 28 Investments in associates, which of the following statements best
describes the term 'significant influence'?
a. The holding of a significant proportion of the share capital in another entity
b. The contractually agreed sharing of control over an economic entity
c. The power to participate in the financial and operating policy decisions of an entity
d. The mutual sharing in the risks and benefits of a combined entity
(ACCA)

18. Significant influence is presumed to exist


a. if an investor holds, directly or indirectly (e.g. through subsidiaries), 25% or more of
the voting power of the investee.
b. if an investor holds, directly or indirectly (e.g. through subsidiaries), 51% or more of
the voting power of the investee.
c. if an investor holds, directly or indirectly (e.g. through subsidiaries), 100% or more
of the voting power of the investee.
d. if an investor holds, directly or indirectly (e.g. through subsidiaries), 20% or more of
the voting power of the investee.

19. Which of the following may provide evidence of significant influence even if the
percentage of ownership interest is less than 20%?
I. Representation on the board of directors or equivalent governing body of the
investee.
II. Participation in policy-making processes, including participation in decisions about
dividends or other distributions.
III. Material transactions between the investor and the investee IV. Interchange
of managerial personnel.
V. Provision of essential technical information.
a. I, II b. I, II, III c. I, II, IV d. any of these

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