IAS 28 – Investments in Associates and Joint Ventures – Theory – 3

If, in addition to receiving an equity interest in an associate or a joint venture, an entity receives monetary or non-monetary assets, the entity recognises in full in profit or loss the portion of the gain or loss on the non-monetary contribution relating to the monetary or non-monetary assets received.

How shall an entity account for the difference between the cost of the investment and the entity’s share of the net fair value of the investee’s identifiable assets and liabilities on acquisition of the investment?

__________ an entity’s share of losses of an associate or a joint venture equals or exceeds its interest in the associate or joint venture, the entity __________ recognising its share of further losses.

The interest in an associate or a joint venture is the carrying amount of the investment in the associate or joint venture determined using the equity method together with any long-term interests that, in substance, form part of the entity’s net investment in the associate or joint venture.

Which of the following is not objective evidence that the net investment is impaired?

The disappearance of an active market because the associate’s or joint venture’s equity or financial instruments are no longer publicly traded may indicate impairment.

Which of the following is true with respect to goodwill that forms part of the carrying amount of the net investment in an associate or a joint venture?

Which of the following shall an entity estimate in order to determine the value in use of the net investment?

Entity X owns 85% of entity S (subsidiary) and 35% of entity A (associate) for several years. For the year ended 31 December 20X5 entities X, S and A recorded $15 million, $7 million and $2 million of revenue respectively. What amount of revenue shall be recorded in the consolidated statement of profit or loss for the year ended 31 December 20X5?

Entity X owns 40% of entity Z. Entity X sells goods to entity Z for $1,500 which originally cost parent $1,200. The goods are still in associate’s inventory at the year end. How will this transaction influence the year end consolidated net assets and port-acquisition profits?