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Quiz Pas 28 Investments in Assoc. JV
Quiz Pas 28 Investments in Assoc. JV
2. Entity A owns 25% of the voting rights in Entity B. However, Entity A has no
representation on the board of directors of Entity B. Which of the following
statements is correct?
a. Entity A cannot be presumed to have significant influence over Entity B because
Entity A does not have board representation.
b. Entity A is presumed to have signification influence over Entity B because it
holds 25% or more of the voting rights in Entity B.
c. Entity A is presumed to have signification influence over Entity B because it
holds 20% or more of the voting rights in Entity B.
d. Representation on an investee’s board of directors is never considered when
determining the existence of significant influence.
3. On January 1, 20x1, Entity A acquires 25% interest in Entity B for ₱800,000. Entity
B reports profit of ₱1,000,000 and declares dividends of ₱100,000 in 20x1. How
much is the carrying amount of the investment in associate on December 31, 20x1?
a. 800,000
b. 1,250,000
c. 1,000,000
d. 1,025,000
4. The Hanwell Company acquired a 30% equity interest in The Northfield Company
for CU400,000 on 1 January 20X6. In the year to 31 December 20X6 Northfield
earned profits of CU80,000 and paid no dividend. In the year to 31 December 20X7
Northfield incurred losses of CU32,000 and paid a dividend of CU10,000. In
Hanwell's consolidated statement of financial position at 31 December 20X7, what
should be the carrying amount of its interest in Northfield, according to IAS 28
Investments in associates?
a. CU438,000
b. CU411,400
c. CU414,400
d. CU400,000
(Adapted)
“The Spirit of the Lord will rest on him— the Spirit of wisdom and of understanding, the
Spirit of counsel and of might, the Spirit of the knowledge and fear of the Lord.“ (Isaiah
11:2)
- END –
SOLUTION:
3. Solution:
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Page | 2
Investment in associate
1/1/x1 800,000
Sh. in profit (1M x 25%) 250,000 25,000 Dividends (100K x 25%)
1,025,000 12/31/x1
4. Solution:
Investment in associate
1/1/x6 400,000
Sh. in P (80K x 30%) 24,000 - Dividends
9,600 Sh. in L (32K x 30%
3,000 Dividends (10K x 30%)
411,400 12/31/x2
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