11 April 2022

Equity method - the problem child

Multiple-choice questions: In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again

  1. Which of these is the correct method for accounting for a joint venture?

  2. Which of the following standards covers accounting for a joint venture?

  3. How is the equity method applied in the statement of profit or loss?

  4. The equity method is also applied to which other type of entity in consolidated financial statements?

  5. Where is the share of profit/loss to be shown in the statement of profit or loss?

  6. What other current IASB project has looked at the equity method?

  7. What was the unpopular proposal mentioned in the Primary Financial Statements exposure draft?

  8. Which of the following statements are true regarding the IASB’s plans? Statement 1 - The equity method remains on the IASB’s workplan, or Statement 2 - The current discussion is around the technical application of the equity method

  9. The general consensus from the feedback received on the equity method project preferred that the share of profit or joint ventures/associates was shown where?

  10. Which, if any, of the following statements is correct? Statement 1 - As well as one line in the statement of profit or loss, the equity method requires one line to be recorded in the statement of financial position, or Statement 2 - Entities can claim an exemption from the equity method and apply proportionate consolidation if doing so will result in a more relevant presentation of transactions

1 Unit