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Mark True or False in the Left Margin Opposite the Question

Question 128

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Mark True or False in the left margin opposite the question number.
When an investor follows IFRS in accounting for its investments:

Premises:

Responses:

_______The investor may use the equity method to account for the investment if certain conditions are met and ASPE is followed.

True

_______Investments in subsidiaries must be accounted for under the equity method.

False

_______Transaction costs must be capitalized except when the investment is accounted for under the fair value through net income model.

_______Under IFRS, the investment would generally require more extensive disclosures.

_______Gains and losses are always recognized in net income.

_______The investor may use the cost method to account for the investment if certain conditions are met and IFRS is followed.

_______Reclassifications between measurement models are allowed in rare circumstances.

Premises:

_______The investor may use the equity method to account for the investment if certain conditions are met and ASPE is followed.

_______Investments in subsidiaries must be accounted for under the equity method.

_______Transaction costs must be capitalized except when the investment is accounted for under the fair value through net income model.

_______Under IFRS, the investment would generally require more extensive disclosures.

_______Gains and losses are always recognized in net income.

_______The investor may use the cost method to account for the investment if certain conditions are met and IFRS is followed.

_______Reclassifications between measurement models are allowed in rare circumstances.

Responses:

True

False

Correct Answer:

Premises:

Responses:

_______The investor may use the equity method to account for the investment if certain conditions are met and ASPE is followed.

_______Investments in subsidiaries must be accounted for under the equity method.

_______Transaction costs must be capitalized except when the investment is accounted for under the fair value through net income model.

_______Under IFRS, the investment would generally require more extensive disclosures.

_______Gains and losses are always recognized in net income.

_______The investor may use the cost method to account for the investment if certain conditions are met and IFRS is followed.

_______Reclassifications between measurement models are allowed in rare circumstances.

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