IAS 28

Question 1

What is an associate?

Answer 1

An entiy which the investor has significant influence

Question 2

What is a significant influence?

Answer 2

Power to participate in financial and operating policy decisions of the investee but is not in control over those policies

Question 3

How can significant influence be shown?

Answer 3

Representation on board of directors

Participation in policy-making processes

Material transactions between entity and investee

Interchange of managerial personnel

Provision of essential technical information

Question 4

What if investor holds > 20% of voting power?

Answer 4

Presumption of significant influence unless demonstrated otherwise

Question 5

What is an upstream transaction?

Answer 5

Associate sells goods to a parent

Question 6

What is an downstream transaction?

Answer 6

Parent sells goods to associate

Question 7

Investment in associate relevant percentage?

Answer 7

Between 20% to 50%

Question 8

CSFP Investment in associate calculation?

Answer 8

Cost of investment in A + A’s % post-acq reserves - Impairment of goodwill

Question 9

CSPL Investment in associate calculation?

Answer 9

% of A’s PFY
- impairment of goodwill

Question 10

If parent sells to associate? (PUP)

Answer 10

Debit: Group retained earnings/Cost of sales
Credit: Investment in associate

Question 11

If associate sells to parent? (PUP)

Answer 11

Debit: Group retained earnings/Investment in associate
Credit: Group inventory