Dividends Dividends from a subsidiary, associate or joint venture are recognized in profit or loss when the entity's right to receive the dividends is established, except when the investment is accounted for using the equity method, in which case the dividends are recognized as deduction to the carrying amount of the investment.

Dividends Dividends from a subsidiary, associate or joint venture are recognized in profit or loss when the entity's right to receive the dividends is established, except when the investment is accounted for using the equity method, in which case the dividends are recognized as deduction to the carrying amount of the investment.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Under fair-value accounting for an equity investment, which of the following affects the income the investor recognizes from its ownership of the investee? The investee’s reported income adjusted for excess cost over book value amortizations. Changes in the fair value of the investor’s ownership shares of the investee. Intra-entity profits from upstream sales. Other comprehensive income reported by the investee.
For cash-settled share based payment transactions, until the liability is settled, the entity is required to re-measure the fair value of the liability at each reporting date and at the date of settlement and any changes in fair values are: a. Not recognized b. Included in earnings c. Included in accumulated profits d. Treated as a component of equity
If the entity is using the equity method to account for investment in subsidiary, the entry to recognize dividends received from the subsidiary will: a.Be recognized in profit or loss b.Increase the carrying amount of investment c.Decrease the carrying amount of investment d.Be recognized in other comprehensive income
Please concisely explain how the excess investment cost over book value is allocated. When is the intra-entity’s profits recognized on transfers between the investor and investee? What is the controlling interest percentage for a consolidated accounting financial statement?
When an investor uses the cost method to account for investments in subsidiary, cash dividends received by the investor from the investee should normally be recorded as: A. Ignored. B. Dividend income. C. An addition to the investor’s share of the investee’s profit. D. A deduction from the investment account E. A deduction from the investor’s share of the investee’s profit.
Q. Which of the following is within the scope of investments accounted for using the equity method of accounting?a) Investment in a wholly-owned or partly-owned subsidiaryb) Joint venture's debt or equity instruments traded in a public marketc) Investment in associate that meets the criteria to be classified as held forsaled) Investment in a financial asset, measured at fair value
According to IAS 28, Investments in Associates and Joint Ventures, an investment classified as a joint venture should be equity accounted in the consolidated financial statements of the investor company. Which statement below can be used to describe the Equity accounting method? Select one: O a. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for amortization over an agreed period of time. O b. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for amortization over an agreed period of time. O c. It is an accounting method whereby an investment is initially recorded at cost and is subsequently adjusted for post-acquisition changes in the investor's share of the net assets of the investee. O d. It is an accounting method whereby an investment is initially recorded at fair value and is subsequently adjusted for post-acquisition changes in the investor's share of the…
Dividends are recognized in profit or loss only when: The amount of the dividend can be measured reliably. All of these. The entity's right to receive payment of the dividend is established. It is probable that the economic benefits associated with the dividend will flow to the entity.
Dividends are recognized in profit or loss only when: a. It is probable that the economic benefits associated with the dividend will flow to the entity. b. The amount of the dividend can be measured reliably. c. All of these. d. The entity’s right to receive payment of the dividend is established.
Which of the following statements is TRUE? O The acquirer shall measure the identifiable assets acquired and the liabilities assumed at their acquisition-date fair value. O According to IFRS #3: Revised, cost directly attributable in effecting the business combination (e.g., finders' fee and other direct cost) must be charged to share premium. Transaction costs directly related to the issue of debt instruments are deducted from the fair value of the debt on initial recognition and are amortized over the life of the debt as part of the effective interest rate. Directly attributable transaction costs incurred issuing equity instruments are deducted from revenue. In net asset acquisition, gain on bargain purchase is recognized in the Profit or Loss of the acquirer (after reassessment) if the consideration transferred is more than the fair value of net assets acquired.
What is the correct method for treating a vesting differential linked to the acquisition of shares? privileged rights of the subsidiary by the parent company? Select an answer: a. It must be allocated to identifiable net assets or goodwill. b. It must be distributed in proportion to the identifiable assets and liabilities of the subsidiary. c. It must be charged to consolidated retained earnings or credited to contributed surplus. d. It must be taken care of in the current year.
Dividends are recognized in profit or loss only when: Group of answer choices: The entity’s right to receive payment of the dividend is established. It is probable that the economic benefits associated with the dividend will flow to the entity. The amount of the dividend can be measured reliably. All of these.